Chinese Investors Driving Up Metro Housing Prices

[Klazu]

North Shore News: $4-million West Vancouver 'teardown' fuels housing debate

A $4-million “teardown” that sold for $1 million over asking price in West Vancouver this week is renewing debate about money flooding into the top tiers of the Lower Mainland’s real estate market and its ripple effect on affordability.

Debate about issues like foreign buyers and real estate flipping is in the forefront after a home listed for $2.98 million in the Bayridge area of West Vancouver prompted a bidding war and eventually sold for $4.1 million to a buyer from mainland China.

The 60-year-old, four-bedroom home with a swimming pool at 4130 Burkehill Place had never been listed before, said Viv Harvey of Royal LePage Sussex, who represented the sellers in the deal.

“It’s a lovely little rancher,” she said. But that wasn’t what most of the real estate agents and prospective buyers who attended an open house last week were interested in.

“When you’re looking out from the lot, all you see is water,” she said. “There are no homes, there are no wires.” “It’s basically a teardown,” she said. “The value is in the lot.”

Harvey said at $2.98 million, the property was “sharply priced.” “It probably was under the value,” she said. “That is the best way to make sure you get full exposure.”

Harvey said she expected the property to perhaps fetch as high as $3.5 million, but having it reach $4.1 million was a surprise.

Nine offers were made on the property — the lowest among them for the full asking price. Harvey said having the house sell for $1.1 million over asking price is a first for her.

The buyer, from mainland China, already owns a home in the Lower Mainland, and plans to tear the existing home down and rebuild on the lot, said Harvey. He hasn’t decided if he’s going to live in the house or resell it, she added.

While a deal like this is still unusual, it’s indicative of what’s going on in high-end real estate markets like West Vancouver.

“It’s a market on steroids,” said Harvey. “The market has gone a little crazy.”

Increasingly the West Vancouver real estate market is attracting offshore buyers.

“With things escalating in the world, there’s a real need for people to put their money in a safe haven,” said Harvey. “Our dollar is so low that Canada is really on sale.”

Just how much real estate is being sold to foreign buyers isn’t clear, because it’s not well tracked by government statistics. Harvey estimates about 15 per cent of her business comes from overseas buyers.

Allan Angell of Angell Hasman, a West Vancouver real estate company that caters to the high end of the market, puts that figure higher. “I’m selling 80 per cent of my high-end houses to Chinese,” he said.

Most see investment in real estate as a good way to bring money into the country, he said. Others are making money by quickly flipping properties — sometimes assigning their contract of sale to a third party for a premium.

Those kinds of issues recently prompted Vancouver Mayor Gregor Robertson to call for a speculation tax on real estate. Houses that sit empty until they are flipped is another issue garnering attention.

That can contribute to the problem of housing affordability by putting pressure on housing supply, said David Wachsmuth, an urban geographer at the University of British Columbia. “It exacerbates the whole affordability crisis the city faces,” he said.

It can also lead to problems because people who leave their homes empty aren’t participating in the community, he said. West Vancouver Mayor Michael Smith said he’d support measures like a higher tax rate for homes that aren’t used as a principal residence — a practice common in other parts of the world.

“We hear that people are buying houses and they’re not renting them out,” he said. “That does not create a neighbourhood and does not create a community.”

Money made by quickly flipping real estate should also be taxed as business income, said Smith.

“There’s too much of an incentive right now for people buying houses and flipping them.

“I don’t personally believe in speculating in houses. It’s a house. It’s a place to raise your family.”

But Smith said any such measures would need approval from the province, something that hasn’t happened yet. Angell said if it wanted to preserve affordability, the government should have brought in those kinds of measures before the market exploded. “By the time they bring this in, the market will have changed,” he said.

Wachsmuth said the issue isn’t about where buyers are coming from, but what they’re doing with the properties.

“The housing market’s a weird thing,” he said. “Houses are simultaneously a possible investment and a human necessity. Because they are both of these things at the same time, you can get some really tough situations. Vancouver’s in the face of one of those right now.”

http://www.nsnews.com/news/4-million....xqEmEZut.dpuf

[st7860]

Originally Posted by Klazu

The place was underlisted to begin with, thus creating a bidding war. There is nothing wrong with tear downs as benefits everyone. This is something that has everything to do with the Province correctly refusing to intervene in the market just because of a few haters.

[WarrenC12]

Are cities free to adjust mill rates based on property value, or are they mandated to tax all residential properties at the same rate?

[ssiguy]

If any Vancouver mayors were even slightly interested in bringing prices down to earth they could put a moratorium on teardowns. You know, actually living in the place you buy.

If they had done this the house that sold would have been lucky to get half that price. This is something that is 100% the responsibility of the cities and not the province as it has to do with local planning and has no input from the province. There is nothing the province could do to stop it even if they wanted to {which they definitely would} as the province knows how vital real estate speculation is to the BC economy and the massive amounts of revenue it brings into Victoria coffers.

This would require the cities putting their money where their mouths are and it won't happen.

[WarrenC12]

Originally Posted by ssiguy

If any Vancouver mayors were even slightly interested in bringing prices down to earth they could put a moratorium on teardowns. You know, actually living in the place you buy.

If they had done this the house that sold would have been lucky to get half that price. This is something that is 100% the responsibility of the cities and not the province as it has to do with local planning and has no input from the province. There is nothing the province could do to stop it even if they wanted to {which they definitely would} as the province knows how vital real estate speculation is to the BC economy and the massive amounts of revenue it brings into Victoria coffers.

This would require the cities putting their money where their mouths are and it won't happen.

That's about the dumbest thing I've heard since people starting talking about RE being overpriced in Vancouver, about 10 years ago. Do you want this place to look like Detroit?

[Klazu]

Oh no. First Chinese and now Amuricans!

http://www.theglobeandmail.com/life/...ticle23830066/

[Steveston]

A moratorium on teardowns? All teardowns?

That's no solution to housing unaffordability. If there's any positive impact, it will be negligible, and likely impossible to track the cause and effect.

If anything, stopping teardowns could have a negative impact on affordability, especially in the SFD market where subdivisions are allowed. In several places in Richmond, for example, an old house sitting on a 66' lot is torn down, and the lot subdivided to create two houses on 33' lots. While the houses are still expensive, they're certainly cheaper than a new house on that 66' lot, and the 'gentle densification' is what cities should aspire to in their unsustainable SF zoned areas.

[red-paladin]

I don't think the city can make it blanket illegal to tear down a house on a property. You don't even need a new house plan/zoning approved to get demolition permit. In the case of heritage homes/buildings, I agree, the city should do more. But in general? There are a lot of ugly houses that the city has no legal basis to prevent demolition of.

[casper]

You would expect that if the government banded teardowns then it would also be required to compensate the owner for the lost revenue. No?

I can understand the government restricting property rights for safety, to provide balance and reduce the impact one property owner has on the neighboring properties. To try and control the market price for housing is another story.

[TourOdeon]

Poor Burnaby residents are forced to move further, maybe they should try their luck in Surrey. Chinese investors have been buying up rental apartment buildings around Metrotown.

Burnaby residents protest shortage of rental housing http://globalnews.ca/news/2048392/bu...ental-housing/

[Caliplanner1]

Originally Posted by casper

You would expect that if the government banded teardowns then it would also be required to compensate the owner for the lost revenue. No? I can understand the government restricting property rights for safety, to provide balance and reduce the impact one property owner has on the neighboring properties. To try and control the market price for housing is another story.

Remember the Great Depression (of the 1930's) and recent Great Recession in the U.S. when government did nothing and allowed blind/callous/harsh market forces to do "their thing"????????

[st7860]

Originally Posted by casper

You would expect that if the government banded teardowns then it would also be required to compensate the owner for the lost revenue. No?

I can understand the government restricting property rights for safety, to provide balance and reduce the impact one property owner has on the neighboring properties. To try and control the market price for housing is another story.

Canada and the US are obviously friends but I always do a Head-Scratch(patent pending) when people try to compare the two countries as a reason to do or not do something.

[Caliplanner1]

Originally Posted by st7860

Canada and the US are obviously friends but I always do a Head-Scratch(patent pending) when people try to compare the two countries as a reason to do or not do something.

Both economies (Canada and the U.S.) are very much intertwined with the huge U.S. economy exerting enormous force/pressure on Canada's much smaller economy (and thus influencing attendant government policies) from time-to-time!

[st7860]

There's lots of places to rent in Burnaby - check Kijiji and padmapper. There is another visible minority that buys up Surrey too.

[TourOdeon]

Originally Posted by st7860

There's lots of places to rent in Burnaby - check Kijiji and padmapper. There is another visible minority that buys up Surrey too.

Yeah, thats true. There are a ton of wealthy Indians living in Surrey.

[st7860]

Yes the US could raise rates, then Canadian rates may rise. In that case get a 10 year locked in rate if that is a concern. If the US buys less exports yes that would cause problems but then in Vancouver/Toronto there aren't many industrial workers directly contributing towards exports to the US anyway.

[casper]

Originally Posted by st7860

Yes the US could raise rates, then Canadian rates may rise. In that case get a 10 year locked in rate if that is a concern. If the US buys less exports yes that would cause problems but then in Vancouver/Toronto there aren't many industrial workers directly contributing towards exports to the US anyway.

I normally don't watch US news program, but the TV was on from a previouse show and was distracted with other things so walked in on King TV (Seattle station) 6:00 news. There was a piece on how the Chinese are coming and driving up the cost of lake front homes and other high end property.

They identified one of the key reason for the up-swing as recent changes to Canadian immigration laws that were making in harder for business owners to relocate to Vancouver so they are now going to Seattle. The influx of money and investment was viewed as a positive. They interviewed a few of these immigrants and agents. It basically came down to we can't get anything as nice as this in China (given density etc.) for these low prices. We will buy now and eventually relocate.

Some of those vacant homes may be vacation or retirement homes and owners wanting to get in now when they have the money and it is cheap.

[st7860]

Originally Posted by casper

I normally don't watch US news program, but the TV was on from a previouse show and was distracted with other things so walked in on King TV (Seattle station) 6:00 news. There was a piece on how the Chinese are coming and driving up the cost of lake front homes and other high end property.

They identified one of the key reason for the up-swing as recent changes to Canadian immigration laws that were making in harder for business owners to relocate to Vancouver so they are now going to Seattle. The influx of money and investment was viewed as a positive. They interviewed a few of these immigrants and agents. It basically came down to we can't get anything as nice as this in China (given density etc.) for these low prices. We will buy now and eventually relocate.

Some of those vacant homes may be vacation or retirement homes and owners wanting to get in now when they have the money and it is cheap.

That's one of the key differences I've noticed between Canada and the US. In the US they don't care if a foreigner buys things you use or dont use including housing since they understand thats money for their city, but in Canada people would rather those buyers spend the money elsewhere.

[Caliplanner1]

Originally Posted by st7860

That's one of the key differences I've noticed between Canada and the US. In the US they don't care if a foreigner buys things you use or dont use including housing since they understand thats money for their city, but in Canada people would rather those buyers spend the money elsewhere.

The U.S. is also much bigger in terms of population and alternative urban spaces in which to live and find cheaper housing or better jobs! If (for example) one wants warmer weather in which to live/work in the states one can live in Florida, Louisiana, Texas, Arizona, California, Hawaii and even further in Puerto Rico or the U.S. Virgin Islands etc.. If one wants to live in a "warmer area" here in Canada one really only has a choice between Vancouver and Victoria/Nanaimo etc.. So if every "warm weather" immigrant rushes to Vancouver what do you think will happen to house prices (a case of supply versus demand)???

[Xerx]

Originally Posted by Caliplanner1

The U.S. is also much bigger in terms of population and alternative urban spaces in which to live and find cheaper housing or better jobs! If (for example) one wants warmer weather in which to live/work in the states one can live in Florida, Louisiana, Texas, Arizona, California, Hawaii and even further in Puerto Rico or the U.S. Virgin Islands etc.. If one wants to live in a "warmer area" here in Canada one really only has a choice between Vancouver and Victoria/Nanaimo etc.. So if every "warm weather" immigrant rushes to Vancouver what do you think will happen to house prices (a case of supply versus demand)???

Well, this is a crazy fantasy of mine, but I'd hope that that situation would create enough political pressure to finally annex the Turks and Caicos.