Building big houses in older Cloverdale neighbourhoods

Three years ago a large house was built about 3 or 4 blocks down the road from us. Its a 2 story house on what is probably a 60 x 120 lot. Has somewhat of a front yard and perhaps a small backyard. The width of the house takes up pretty much all the allotted space and it stretches back a good way into the lot. The other houses in this block are mostly one story homes and across the street are a couple of older 2 story homes, probably built in the 1940's. About a block away on the other side of the street are two 2 story homes built in the 60's. Most of the houses in this block are owned by developers or investors and are rented out.

Its my guess that block will be developed into condos one day because there are condos right behind them.

One of those one story houses has been up for sale for over a year, probably hoping a developer would snatch it up. I saw the MLS listing and its a 1 bedroom house and I think the owner is asking just under $400,000 for it. Its on a tiny lot. I wonder why even the developers aren't touching it. I'd estimate the value of most of the houses in this block to be in the just under $400,000 range, and in most cases that would be the land value.

So right in the middle of these one story houses this 2 story house is built and the owners moved in. Or somebody moved in. Whether or not they're renters or owners I don't know. A few months later the house went up for sale and has been up for sale ever since. I looked at the listing shortly after it went up for sale and was surprised to find out the house has 2 revenue suites in the basement. In total the house has 8 or 9 bedrooms. Its a big house but I didn't think it was that big. To the best of my recollection the original price was $869,000. Recently I saw it listed at $789,000.

Now perhaps that price might be reasonable in other areas, and certainly I think the owner has probably invested a good half million and probably more in buying the lot and having the house built. But was it a wise decision to build a large house with 2 basement revenue suites in an older neighborhood with one story bungalows that occasionally come up for sale at less than half that price?

A house like that in an older neighborhood like this is not necessarily a bad thing if the owner plans to live there for a few years. Might as well have a house you like to live in and get it built the way you want and make a few bucks on renting the basement suites. But to turn around and put it up for sale so fast? 2 years later and its not sold. That speaks for itself.