Last week I was contacted by the Vancouver Observer to comment on the news that Vancouver home prices now exceed New York and London. I was asked a number of questions about the current housing market in Vancouver. Below I have posted the entire article written by Jenny Uechi, the Managing Editor of the Vancouver Observer.
Andrew Hasman has been in the business since 1993.
"The local person is completely out of this market," he said. While skyrocketing prices have made business good, Hasman said that the current market, with housing prices rising 10-15 per cent each year, is unhealthy.
"Anytime you have extremes in markets, it's never healthy," he said. "You end up with a bubble. If the local economic base can't support these levels, then at some point you're going to have a lot of people burned big time. It's not sustainable."
Leading real estate professionals reacted today to yesterday's news that home prices in Vancouver now exceed New York and London's. One realtor said he believes that buyers from Mainland China have pushed the local buyers out of the market. Each cited homes bought and traded like stocks and bonds and investment properties sitting empty, but some see the Chinese home rush as a bonus to Vancouver, while another sees it as a liability.
"Many people who buy here aren't buying because they're moving here," said Hasman.
"They're buying on speculation or to park money here ... There have been cases where people come and purchase five or six houses. No one needs five to six houses unless you're speculating."
Overseas buyers from Mainland China have been the driving force behind the price rise, Hasman said. "That's what's driving the market, really -- of single family homes that have sold in the last 18 months, I would say, they're conservatively 70 per cent, probably 80 per cent of the buyers," he said.
He said that in some cases, the houses are placed back on the market within weeks, at a 10 per cent higher price, or simply remain empty.
Anthea Poon is a local-born agent who speaks Cantonese and some Mandarin as well as English and French. She said her skills have helped significantly in serving the Chinese clients, who make up half of her clientele.
Poon said that Chinese buyers view West Vancouver as the most desirable location, though East Vancouver has also started to be in demand. "Many of them are coming with cash on hand, literally. And they're buying properties at that moment." She said that the typical house in the Cambie area -- which is "hot" at the moment -- average around $1.4 - $1.5 million, while homes in the Dunbar area are closer to $2 million.
The high volume of foreign home buyers has provoked some unease among locals in Vancouver. Real estate entrepreneur Cam Good, whose company The Key caters largely to China-based clients, wrote in The Vancouver Sun that his office was recently "inundated with emails" by people fearing a "Chinese takeover".
Poon said that the fear of outside buyers is unfounded, and that many Chinese buyers are here with the intention of settling down for their child's education or to enjoy a higher quality of life. "I've been fortunate to work closely with Chinese buyers and investors over the years and they are very humble, genuine and open minded people," she said.
However, with the average Vancouver home costing many times above the average annual income (the average home in Vancouver is 9.5 times the city's median houshold income of $63,000), some people have been calling for government to step in and restrict foreign ownership. Former city councillor Peter Ladner said last month that countries like Australia restrict foreign ownership and that Vancouver should be considering the idea.
Poon, however, believes that shutting out Asian investors would be a mistake and would reflect negatively on Vancouver's reputation.
"Chinese investment is a big reason we were able to survive the global economic downturn as well as we did," she said. "How can we set impositions on the very people who believed in and supported us throughout the economic recession?"
Hasman, meanwhile, believes that government may have to step in to bring the prices down and make housing more affordable.
-Jenny Uechi
