As the world was falling down around us with wildfires, hurricanes, terrorism, violent political demonstrations Vancouver real estate just skipped along to yet higher prices overall and extraordinary demand in the condo market.
The big reason for continuing rising prices in the Vancouver real estate market is the total lack of good inventory. The State of the Market report from the Urban Development Institute tells us that there is not one new move-in ready concrete condo or townhome available within the city limits. Even outside Vancouver the inventory is at record lows. There are only 23 move-in ready concrete condos for sale in the whole of MetroVancouver as of the second quarter of 2017.
The pre-sale market of multi family homes reached a seven-year low in the second quarter with 1446 condos and 496 townhomes available in the entire Metro region according to an analysis in the Real Estate Weekly.
Anne McMullen president and CEO of the Urban Development Institute is quoted as saying "...Various independent and academic studies have proven supply is being throttled by restrictive single-family zoning policy and delays in permitting."
Real estate property sales rose 22.3%in August 2017 compared with August 2016 which was impacted by the newly proclaimed Foreign Buyer Tax. Last year’s sales were mainly in the detached segment. According to Jill Oudil President of the Real Estate Board of Greater Vancouver "First- time buyers have led a surge this summer in demand in our condominium and townhome markets. Homes priced between $350,000 and $750,000 have been subject to intense competition and multiple offers across the region."
"Conditions in our detached home market are distinct today from the dynamic in our condominium and townhome markets," Oudil said. "Detached homes have entered a balanced market. This means there is less upward pressure on prices and that buyers have more selection to choose from and more time to make their decisions."
The sales to active listing ratio for August 2017 is 34.6%. By property type, the ratio is 16.3% for detached homes, 44.8% for townhouses, and 76.3% for condominiums.
In August 2017 the benchmark price for a detached home in North Vancouver was $1,711,100 up 0.4% in one year, up 75.0% in 5 years and up 98.4% in 10 years. In Richmond the benchmark price was $1,676,000 down -0.9% in one year, up 70.3% in 5 years and up 138.4% in 10 years. In Vancouver East the benchmark price was $1,565,300 up 2.1% in one year, up 82.3% in 5 years and up 148.0% in 10 years. In Vancouver West the benchmark price was $3,654,500 up 1.0% in one year, up 72.5% in 5 years and up146.8% in 10 years. In West Vancouver the benchmark price was $3,189,500 down -6.3%in one year, up 66.7% in 5 years and up 109.1% in 10 years. Each year affordability declined for local buyers.
Vivagrand Developments, a real estate company out of southern China, has been using the Vancouver market as a springboard into international development. They recently cancelled Langara West, their pre-sale project at 59th and Cambie. 71 people bought pre-sale units at a price point of $750-$900 dollars per square foot.
The project will now not go forward as the financing was withdrawn due to the delays in getting a building permit from the city of Vancouver. The city planning department states that the developer did not submit revised paperwork as required after a tree on the property that was an integral part of the application was cut down anonymously.
The current price per square foot for new construction in the Cambie neighbourhood is $1200-$1400 a square foot. These buyers are receiving their deposit +50% back from the developer. No damages. Most will be unable to purchase a new unit in the area.
Delays in getting building permits in the city of Vancouver are notorious. Any prudent buyer should check the track record of the developer from whom they are considering purchasing a pre-sale product. Buyers are well advised to buy from a large builder who has access to guaranteed financing and who has the financial strength to withstand unusual delays. Vivagrand is not the only developer who has left buyers in the lurch. Chandler Development Group who has a checkered bankruptcy history is back in the news again for swindling some LA investors.
In the case of the Langara West project the developer has stated that they will be reselling the land and not going ahead with the project. Commercial realtors have estimated that the purchase price of $12.5 million in 2014 has risen three times since then so the developer will receive a large profit on the resale of the property. The trusting pre-sale buyers are out of luck.
In August 2017 the benchmark price for an apartment property across the region was $626,800. This was a 19.4% increase from August 2016. In August 2017 the benchmark price for a condo apartment in North Vancouver was $551,000 up 15.9% in one year, up 53.3% in 5 years and up 60.6% in 10 years. In Richmond the benchmark price was $594,100 up 26.4% in one year, up 70.7% in 5 years and 80.4% in 10 years. In Vancouver East the benchmark price was $529,400 up 20.4% in one year, up 72.3% in 5 years and up 90.9%in 10 years. In Vancouver West the benchmark price was $787,400 up 13.0% in one year, up 66.7% in 5 years and up 76.7% in 10 years. In West Vancouver the benchmark price was $1,128.000 up 10.9% in one year, up 54.4% in 5 years and up 56.6% in 10 years.
The NDP has brought down an interim budget that featured some money for affordable housing but did nothing to address affordability in the real estate market or raising taxes on non-resident buyers. We will have to wait until February 2018 and the full formal budget to see where those election promises are going. There is speculation that Andrew Weaver and the Greens are objecting to some of the planned implementation and so ideas need public consultation and input in the hope that will force some decisions.
Douglas Todd of the Vancouver Sun continues to report regularly on the shenanigans around real estate and the ineptitude of CRA in enforcing any tax provisions against those taking advantage of the easy rules on money laundering and tax avoidance. According to Census figures Vancouver with the most expensive real estate in Canada ranks #14 in average wages. Also interesting is the fact that Richmond, Burnaby, Vancouver West and West Vancouver with the most expensive real estate in Canada have the highest rates of poverty and the largest number of foreign born residents.
According to Richard Wozny,prominent immigration lawyer, this disparity is caused by "inappropriate reporting of family incomes" and governments need to crack down on residential property speculators. Todd reports that Wozny states that it is not logical that so many low-income residents buy expensive houses. The outcome is that Metro transit system costs, school funding is largely borne by residents of the suburbs where house prices are lower. Apparently residents of Port Moody which has average house prices have the highest taxable incomes in Metro Vancouver.
In comparing Vancouver to Seattle it is clear their house prices have not risen like ours even though they attract wealthy immigrants to their city. It appears that the difference between us is that the US taxes all residents on world-wide income. There is no escaping the wrath of the IRS. Maybe we should try that here. More anon.