Foggy Glow by Mark Faviell
The Vancouver real estate market keeps motoring on still on its upward trajectory. The only thing impeding its steady progress is a dearth of new listings. There is very little selection for all the motivated buyers out there and this is resulting in multiple offer situations on many properties and an increase in sale prices.
January 2015 sales were 14.9 per cent above the 10 year average for the month. Ray Harris, President of the Real Estate Board of Greater Vancouver is quoted as saying that homeowners are staying in their homes longer and keeping them off the market. There may be several reasons for this observation. One is that there is a limited numbers of properties to choose from for detached homeowners who would like to downsize. There are few newer townhouses available as builders prefer to maximize the density if the land is zoned for it. City Hall has a stated policy of densifying as much of Vancouver as possible. Condos in Vancouver are small in order that the developer can offer them at an affordable price to first time or downsizing buyers.
The Catch-22 is that people relocating from a detached house want more space than is commonly offered. The second part of the Catch-22 is the sticker shock. Larger luxury condos cost more than the sale price of most detached homes. Developers of new projects are getting requests from downsizing buyers to put two or three smaller suites together. Many are redesigning the plans for the building in order to accommodate these requests in a more efficient manner.
A concern of owners of pre-1940 homes in certain desirable Westside neighbourhoods is the recent ruling from City Hall that character homes have be preserved and renovated and expanded. They cannot be razed for a new home to be built. This is resulting in inequitable sale prices on the same street where a rundown home with no particular architectural merit can be sold for $500k+ more than their attractive next door neighbour. The second part of the new planning regulation is that all the millwork, flooring and finishing in these houses has to be recycled and all building materials have to be disposed of in an ecologically sensitive fashion. The new disposal rules apply to every razed home and increase the builder or home owner's cost considerably.
Due to the lack of supply prices in the Westside of Vancouver for detached homes have moved into the stratosphere. There is reliable anecdotal information about a 50'x110' waterfront lot in Point Grey that received multiple offers and sold for $16 million plus another large property further west consisting of a livable house and a total of 3 legal lots selling for $53 million. These are London and New York Prices. There is a large impact on the Vancouver market of foreign buyers both in the detached and luxury condo market. Vancouver is perceived to be a secure haven in which to park funds. It is also beautiful and safe.
The fall of the Canadian dollar has given any buyer whose currency is pegged to the $US a 20% discount on any property purchased here. As has recently been reported in the New York Times about rich foreign buyers there, most of these purchasers live here for a short period of time each year, treat it as a summer home and do not pay anything more than their property taxes. Former Mayor Michael Bloomberg was quoted as saying that when he advocated New York encouraging billionaires to buy there he thought they would become residents and contribute to the local economy.
The current low interest rates are helping buyers but selection and sale prices can be a barrier to purchase. Local buyers who grew up on the Westside are now buying in the Eastside and creating multiple offers there. Many families are moving to the suburbs in order to buy a detached or townhome at a reasonably affordable price. With the plunge in world oil prices the downside of a one industry economy is making its effects felt in Calgary.
After continuing rising real estate prices the market has come to a standstill especially in the upper price bracket. Some sellers and buyers are worried about losing their jobs, others are caught between a purchase in the heyday and a sale in the downturn. Realtors there say you can buy a home in Mount Royal (Calgary's equivalent of Shaughnessy in Vancouver or Rosedale in Toronto) for the unheard of price of $900,000.
Toronto is much like Vancouver—still on a roll. Prices are up in the detached segment 7% over the past year, getting close to a million dollars. Their listing inventory is up 9.5% so they have more selection. They also have more housing types and more local buyers but the emphasis there for affordability and first time buyers is in the condo marketplace.