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Jularc
Oct 20, 2007, 2:35 PM
A Canadian Condo Boom


http://graphics8.nytimes.com/images/2007/10/21/realestate/21nati600.1.jpg
BUILDING BOOM A condo selling for $18 million, right, has views of English Bay, left


By LINDA BAKER
Vancouver, British Columbia
October 21, 2007

ON a recent Wednesday evening at the downtown Gotham Steakhouse here, about 100 people gathered around an open bar for a party given by Ian Watt, a Century 21 broker, who had invited clients to thank them for buying property in the city.

One of the guests was Annu Gill. With her fiancé, Rick Gill, who coincidentally has the same last name, she bought a 1,200-square-foot condominium at the Sheraton Wall Centre, a 42-story hotel with 74 units in downtown Vancouver. The condo cost one million Canadian dollars, currently worth about $1.03 million.

“When I try to explain to friends in the States how much it costs here, they don’t believe me,” Ms. Gill, 29, who is a real estate broker, said of the city’s high prices. “They say, ‘You’re lying.’”

But $840 a square foot — which is how much the couple paid for their condo — is not unusual these days.

Downtown Vancouver is the most expensive housing market in Canada, according to a survey of 21 cities worldwide released last April by Century 21. The average sales price for a condo in Vancouver was around $419,750 in 2007, up 14.6 percent from last year, according to Royal Le Page Real Estate Services. The average sales price in Toronto, Canada’s largest city, was about $241,818, up 15.7 percent from last year, and in Montreal, $201,818, up 4.6 percent.

The number of homes in Vancouver selling for more than $2 million also rose this year, by 48 percent, according to Re/Max Associates. The higher prices reflect years of price gains of 15 to 20 percent, according to Helmut Pastrick, the chief economist for the Credit Union Central of British Columbia.

Fueling the high-end market are foreign and second-home buyers, he said, though not necessarily from the United States. The weak American dollar, which for the first time in decades is worth less than the Canadian dollar, has been making real estate in Canada more expensive for Americans.

Other foreign buyers make up a significant percentage of the market, according to Ian Gillespie, the president of Westbank Projects. The company is building several residential towers downtown, including the 60-story Living Shangri-La, which will be Vancouver’s tallest building after it is completed in 2009.

“This is a very multicultural city,” said Mr. Gillespie, who cited as an example a pharmaceutical executive from the Middle East, who recently bought a 1,700-square-foot $3.65 million condo at the Fairmont Pacific Rim.

The city’s population has grown substantially as a result. In 2006, there were 36,321 more people living in Vancouver than in 2005, according to Statistics Canada, and 72 percent of the newcomers were immigrants.

It’s not hard to imagine why the city is so appealing: Vancouver has been described as Canada’s version of San Francisco. It has a cosmopolitan feel, yet it is surrounded by mountains and water. The temperate climate attracts retirees, while the vibrant urban lifestyle draws young singles. The economy, supported by forest products, mining and an active film industry, is also growing, thanks in part to the development associated with serving as host of the 2010 winter Olympic Games.

The most expensive condo on the market in downtown Vancouver right now is a 7,000-square-foot waterfront penthouse listed for $18.2 million. The 38-year-old owner, an entrepreneur, said he bought the condo for $3 million four years ago, then sunk millions more into renovations.

Jamie MacDougall, an agent with Sotheby’s International Realty, said that the condo was still considered “cheap” compared with comparable properties in New York or San Francisco. It has been on the market since July.

Although price increases have slowed this year, Vancouver’s housing market is not experiencing a bubble, Mr. Pastrick said. Less aggressive mortgage underwriting practices have helped shield Canada from the credit squeeze that swept through the subprime mortgage market in the United States after the fallout in housing.

Bob Rennie, the president of Rennie Marketing Systems, a real estate marketing company, said Canadians typically put down 20 percent in nonrefundable deposits.

Every crane downtown is sitting over a building that is 75 to 100 percent sold out, with large deposits in place, Mr. Rennie said. “So the consumer is committed, and the developer is not at risk with construction,” he noted. There are about 50 condo towers under construction in the downtown area.

In 2006, Diana Becker, the owner of a culinary tourism company, paid $900,000 for a two-bedroom in the 37-story Jameson House, which is scheduled to open in 2009. Ms. Becker, who now lives on the outskirts of downtown, said she had been attracted to the development’s design. “It feels very Spanish Moroccan,” she said. Ms. Becker says she is also looking forward to being able to walk to her favorite downtown restaurants like Le Crocodile.

Not everybody is enthusiastic about Vancouver’s growth. To make room for some projects, hundreds of single-room-occupancy hotel rooms for low-income residents have been lost, said David Eby, a lawyer with the Pivot Legal Society, a legal advocacy group. High prices are pushing out middle-income renters and buyers, he added.

Gordon Price, the director of the City Program at Simon Fraser University, said the city erred by abandoning its commitment to maintain a 33 percent low-income housing mix in the Southeast False Creek site. The development is being built initially to house athletes during the Olympics. Later, it is to be converted into condominiums and town houses selling for $600,000 to $6 million.

The city reverted to a 20 percent low-income housing mix because of concerns about cost, said Jennifer Young, a city spokeswoman, explaining that there had been a drop in government financing for low-income housing.

Darek Cole, for one, says he feels lucky to afford a home in the city. “Vancouver is a difficult place to get into compared to other cities,” said Mr. Cole, 26, who works for a marketing company. He paid $270,000 for a 600-square-foot condo in the city’s Downtown Eastside neighborhood.

“I knew it would be a good investment,” he said.


http://graphics8.nytimes.com/images/2007/10/18/realestate/21nati650.2.jpg
Diana Becker bought a two-bedroom in the Jameson House, which is set to open in 2009.


Copyright 2007 The New York Times Company (http://www.nytimes.com/2007/10/21/realestate/21nati.html?ref=realestate)

VivaLFuego
Oct 20, 2007, 2:50 PM
It's not surprising; generally there is a clear direct correlation between the level of land-use controls and specifications for development, and the overall cost of purchasing property. Of course, the plus side of alot of land use controls is that it can create or otherwise preserve incredible cities. Mandating affordable housing contributions makes the problem worse, of course, because it increases the cost of development, which is simply passed onto the unit buyers.

miketoronto
Oct 21, 2007, 1:04 AM
That is just way to much. Vancouver must find a way to make room for all incomes.

wisla_krakow
Oct 21, 2007, 1:12 AM
This can be related to BC's other hot cities: Victoria and Kelowna.
Here in Kelowna a new loft development is selling units at $1200/square foot. Which is just ridiculous to say the least. But, so long as people see these cities as paradise then prices will continue to rise.

rapid_business
Oct 21, 2007, 2:14 AM
My dreams of getting into a place in downtown someday Van. seem to get smaller and smaller... here's hoping to more appreciation on my place.

dimondpark
Oct 24, 2007, 9:54 PM
what a gorgeous place. those prices seem really good imo.

dimondpark
Oct 24, 2007, 9:54 PM
It’s not hard to imagine why the city is so appealing: Vancouver has been described as Canada’s version of San Francisco.

uh, lets not get carried away...LOL

jk

Nutterbug
Oct 24, 2007, 11:59 PM
Word is, a lot of absentee owners from abroad (mainly HK) are buying up these lots and keeping them vacant as an investment, while the residents of this city suffer a housing shortage.

Just wait it out and hope that they bought at a crest and the bubble bursts on them.

rapid_business
Oct 25, 2007, 12:40 AM
Similar situation in Edmonton before we sold and moved. Investors buying 10-15 house/condos at a time.

The bubble isn't bursting anytime soon in Vancouver. Things like 2010 are fueling it, and after the world is introduced yet again to the magnificent city of Vancouver in '10, it's going to fuel continued tourism/growth/investment/etc.

Nutterbug
Oct 25, 2007, 12:53 AM
Similar situation in Edmonton before we sold and moved. Investors buying 10-15 house/condos at a time.

The bubble isn't bursting anytime soon in Vancouver. Things like 2010 are fueling it, and after the world is introduced yet again to the magnificent city of Vancouver in '10, it's going to fuel continued tourism/growth/investment/etc.
That's what the pro-Olympics hype machine would like you to believe. How much of that holds true with all the other post-Olympics has been cities?

What I figure it'll take is for the condos to sit empty for some time, the market to level off, the investors getting impatient, and a few to sell theirs off at cut rate prices for the rest to follow suit in a frenzy before the market falls too much.

I guess whether that happens and how dramatically depends on how saturated the market is though.

rapid_business
Oct 25, 2007, 2:27 AM
I suppose. There comes a point (like San Fran) when people are paying 50% of their income for mortgage payments, and they say enough is enough... There will come a point where a ceiling is reached.

raggedy13
Oct 25, 2007, 2:58 AM
EDIT: Some interesting news is that an $18m condo just sold yesterday. It was bought by a guy from Portland apparently. It's the penthouse on the 48th floor of the yet to be constructed Residences at the Hotel Georgia.

As for the effect of the Olympics, I think it will have a bigger impact on Vancouver than most Olympic cities. Why? Because first of all, Vancouver is the biggest city to host a Winter Olympics. The usual cities that host for winter are smaller and more insignificant and therefore not as worth investing in.

But then you may ask, what about the large Summer Olympic cities? Well, the thing with those cities is that by the time they get the Summer Olympics, they've already been discovered. Everybody knew Sydney quite well before it hosted the games so investing after the Olympics wasn't necessarily any more worthwhile than beforehand. Those who were interested in it were already investing there, and the rest could care less just because it had now hosted a large event. Vancouver in comparison has the combination of being a larger yet much less known city.

Internationally, maybe most people have heard of it, but either way the average global resident doesn't actually know anything about Vancouver. I think it'll surprise a lot of people who effectively didn't know such a place existed beyond the name. It would practically be like if we suddenly found out that Nuuk, Greenland was a city of 2.3 million, full of shimmering glass towers, rarely dipped below freezing in the winter, was one of the worlds most multicultural cities, had a booming economy, was growing rapidly, had access to abundant natural resources, great shipping connections, healthily growing video game, software, medical, and green technology sectors, a significant film industry, world class skiing, and a beautiful natural setting... to name a few. Why wouldn't somebody consider investing in such a hidden gem? Please excuse my profuse boosterism, but I think it has great potential for investment and I'm sure some people will take notice of that.

Either way I think Vancouver will reach a new level of international conscious awareness after the games which will at least help it out in the long run regardless of whether or not there is any international investment immediately after the games are over.

BTinSF
Oct 25, 2007, 3:37 AM
Welcome to the West Coast of North American, Vancouver. It was inevitable that your housing market would join those of Seattle, San Francisco and LA as the most expensive on the continent. It seems like people are willing to pay a lot to see the sun set into the ocean instead of rise there. ;)

Nutterbug
Oct 25, 2007, 3:40 AM
As for the effect of the Olympics, I think it will have a bigger impact on Vancouver than most Olympic cities. Why? Because first of all, Vancouver is the biggest city to host a Winter Olympics. The usual cities that host for winter are smaller and more insignificant and therefore not as worth investing in.

But then you may ask, what about the large Summer Olympic cities? Well, the thing with those cities is that by the time they get the Summer Olympics, they've already been discovered. Everybody knew Sydney quite well before it hosted the games so investing after the Olympics wasn't necessarily any more worthwhile than beforehand. Those who were interested in it were already investing there, and the rest could care less just because it had now hosted a large event. Vancouver in comparison has the combination of being a larger yet much less known city.
I'd cross out the "much". Just a less glamourous city to all the sun and surf, warm weather types. And there are too many bigger guns in its region to steal all the spotlight, whereas Sydney is the biggest of the pack in its area.

SpongeG
Oct 25, 2007, 4:15 AM
I suppose. There comes a point (like San Fran) when people are paying 50% of their income for mortgage payments, and they say enough is enough... There will come a point where a ceiling is reached.

People in Vancouver are Currently paying 70% of their income for housing/mortages

Touray
Oct 29, 2007, 5:24 PM
Welcome to the West Coast of North American, Vancouver. It was inevitable that your housing market would join those of Seattle, San Francisco and LA as the most expensive on the continent. It seems like people are willing to pay a lot to see the sun set into the ocean instead of rise there. ;)

Every one wants to live on the west coast, its beautiful, diverse, and thriving.

dimondpark
Oct 29, 2007, 6:09 PM
Welcome to the West Coast of North American, Vancouver. It was inevitable that your housing market would join those of Seattle, San Francisco and LA as the most expensive on the continent. It seems like people are willing to pay a lot to see the sun set into the ocean instead of rise there. ;)
San Diego is considerably more expensive then Seattle.

interesting point btw.

wisla_krakow
Oct 29, 2007, 7:46 PM
Vancouver, and BC for that matter, aren't in a bubble.

ssiguy
Nov 1, 2007, 4:02 PM
So much of Vancouver's growth is strickly speculative.
Yes, thee conomy is doing well but let's compare it to Toronto..........
Greater Toronto is nearly 3 times as large, it's population is growing at 100,000 compared to Vancouver's 25,000 despite Toronto {and Ontario as a whole} having higher wages.
Vancouver is completly out of wack. Infact all of BC is expensive including northern cities and small towns.
Housing in Nanaimo with just 90,000 people is more expensive than Montreal whos population is growing faster than Vancouver's. Victoria which is only growing at 3,000 a year is more expensive than Toronto or booming Calgary where wages are the highest in the country and 25-30% higher than Victoria's.
Vancouver and BC have the largest gap between the rich and poor in the country and Vancouver has the lowest rate of home ownership in Canada.
To buy a condo or house in Vancouver when also considering wages is TWICE as expensive as Toronto...............Vancouver is 70% of AFTER tax income compared to Toronto's 38%.

roadwarrior
Nov 1, 2007, 4:24 PM
San Diego is considerably more expensive then Seattle.

interesting point btw.

I would expect that to change over time. Seattle has a much more robust economy, although San Diego does have the weather.

dimondpark
Nov 1, 2007, 5:06 PM
I would expect that to change over time. Seattle has a much more robust economy, although San Diego does have the weather.
The median home price in San Diego is about 50% higher. Its more likely that Seattle's recent spurt will sputter and slow down then SDs plunging.

Doady
Nov 1, 2007, 5:31 PM
Downtown Vancouver is the most expensive housing market in Canada, according to a survey of 21 cities worldwide released last April by Century 21. The average sales price for a condo in Vancouver was around $419,750 in 2007, up 14.6 percent from last year, according to Royal Le Page Real Estate Services. The average sales price in Toronto, Canada’s largest city, was about $241,818, up 15.7 percent from last year, and in Montreal, $201,818, up 4.6 percent.

Isn't it weird how they compare just the downtown of Vancouver to the entire cities of Toronto and Montreal? It would probably make more sense to compare it to the downtowns of those cities only. Obviously they intentionally try to make Toronto and Montreal look worse.

wisla_krakow
Nov 1, 2007, 9:19 PM
Just look at the stats for any of the suburbs of Vancouver, and you'll see that they're all higher than Toronto.

Frisco_Zig
Nov 2, 2007, 5:28 AM
uh, lets not get carried away...LOL

jk


I only wish we could have a condo building boom like they have

Compared to SF these condos are still cheap ($419,750 is US right?)

BTinSF
Nov 2, 2007, 5:31 AM
Compared to SF these condos are still cheap ($419,750 is US right?)

Doesn't matter. These days the C$ and the US$ are close to parity.

Zig, what if Sue Hestor moved to Vancouver? ;)

Nutterbug
Nov 2, 2007, 5:40 AM
Doesn't matter. These days the C$ and the US$ are close to parity.

Zig, what if Sue Hestor moved to Vancouver? ;)

C$1 = US$1.06

They're drifting away from parity in opposite directions.

Waterlooson
Nov 2, 2007, 7:57 PM
1 Cd = 1.07 Usd

wisla_krakow
Nov 2, 2007, 10:26 PM
Yeah, that's a $27,000 difference we're talking about.
Because at the $1.07 rate right now that house would cost $392,000CD.

rapid_business
Nov 3, 2007, 2:05 AM
Wrong. The price mentioned is in CAD. Therefore, in USD, the price would be $449,050.55 at today's rate of 1.0698