Vancouver homes pricier than NYC. Yet, Canadians will tell you there's no bubble in Canada. The same that Australian will tell you there's no bubble in Australia, British will say no bubble in the UK, and this list could go on and on, and on, with HK, France, Italy, Singapore, India, China...
(Bloomberg - May 17th) — [...] Sales of detached homes, townhouses and condominiums in metropolitan Vancouver jumped 70 percent in February from January, to 3,097 units from 1,819, and were up 25 percent from a year earlier, according to the Real Estate Board of Greater Vancouver. In March, sales climbed 32 percent from February, to just shy of a record for the month of 4,371 transactions set in 2004. Sales increased by 80 percent from two years ago.
Buyers from mainland China are leading a wave of Asian investment in Vancouver real estate as China tries to damp property speculation at home. Good schools, a marine climate and the large, established Asian community as a result of Canada’s liberal immigration policy make Vancouver attractive, said Cathy Gong, who moved from Shanghai to the Shaughnessy neighborhood on Vancouver’s Westside about three years ago.
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In 2010, Vancouver had the third-highest housing costs among English-speaking cities worldwide, according to Canada’s Frontier Centre for Public Policy. Only Hong Kong and Sydney, another magnet of Asian immigration, were more expensive. Vancouver’s median home price of C$602,000 ($618,000) was 9.5 times the annual median household income of C$63,100, the group said in a study released Jan. 24. Canada had a 4.6 national multiple, making it “seriously unaffordable,” while the U.S. at 3.3 was “moderately unaffordable,” the study showed. To be affordable, the multiple must be 3 or less.
Vancouver was more expensive than San Francisco, London and New York by that measure, the Winnipeg-based center said.
[...] Holidays in China have been a popular time to look for houses in Vancouver. Sales picked up in October during China’s weeklong national holiday, said Winnie Chung, a Royal Pacific agent who represented buyers or sellers in C$285 million of home sales in 2009 and 2010 combined. Chung employs eight full-time assistants and travels to China twice a year to meet potential clients.
Mainland Chinese are buying houses primarily in Vancouver’s Westside, boosting the median sales price to C$2 million in the district known for its wide boulevards, beaches, expansive parks and stucco Tudor mansions. Prime Westside neighborhoods include Point Grey, Shaughnessy and Dunbar. The University of British Columbia is at the area’s western end.
“Our office has done 50 sales this year, which is pretty incredible,” said Vancouver realtor Tom Gradecak at his office in Point Grey, where he has one colleague who speaks Mandarin and Cantonese and is hiring a second. “Half of those sales are from mainland China.”
One Chinese buyer paid C$1.7 million in March for a five- bedroom, three-bath house that the previous owners had completely renovated in 2003, C$150,000 more than the asking price, said Gradecak. The buyer plans to tear it down and build anew.
“There’s more value in the land,” he said. “We’re seeing a lot of empty nesters cashing out.”
Many existing houses were built in the 1940s and ‘50s and have outdated electrical systems and plumbing and are “much smaller” than allowed today, said Vancouver architect Loy Leyland. As buyers prefer to demolish old houses than renovate, new homes for Asian clients make up two-thirds of his more than 30 current projects.
“I’ve never been busier” in a 30-year career, Leyland said. [...]
Some buyers acquire multiple homes, one to live in and others for investment, said Chung, the broker. Her clients made their money in a variety of businesses, she said, including mining, stainless steel manufacturing and real estate. About 10 percent of them speak English, she said.
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Starting about 18 months ago, so many homeowners applied to change the last two digits of their addresses to remove or shift the number 4, which in Chinese sounds like the word for death, or add the numeral 8, which is considered lucky, that Vancouver began turning down some requests, said Bonnie Lee, addressing coordinator for the city.
“We used to do eight or nine a month but in March we did 25,” said Lee. “A lot of it is cultural. A lot of it is just people trying to change it before they list because estate agents are telling them to.”
It’s not just the Chinese who are shopping for homes, said Gradecak. Korean and Taiwanese buyers also have been active, he said.
“Foreign investment in Vancouver residential real estate is showing no signs of slowing,” said Gregory Klump, chief economist of the Ottawa-based Canadian Real Estate Association, in a May 9 report. The surge of multimillion-dollar sales in Vancouver prompted the trade group to revise its forecast for national home sales. It now expects Canada home sales through the Multiple Listing Service to fall 1.3 percent in 2011 to 441,100 units, less than the 1.6 percent decline it forecast in February.
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“There is this psychological fear that ‘Ok, if I don’t get into the market, I might not be able to get in later on,” said Wong.
Chinese buyers frequently are absentee owners, wealthy businessmen who buy second or third houses for their wives and children while continuing to live in China for work, said Norman Chow, a fourth-generation Canadian engineer who lives near Quilchena Park on the Westside.
“You see a lot of these satellite families,” said Chow. He said it’s not unusual to see college-age kids of wealthy Chinese parents driving Bentleys, Maseratis and Porsches around the Westside. “The kids seem pretty nice,” he said.
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Overseas homebuyers can act much more quickly on a purchase since their offers often aren’t contingent on the sale of another residence, said Gradecak, the Westside realtor.
“It’s definitely for real,” Gradecak said. “How long it’s going to last, that’s an unknown. I get asked the same question every single day.”
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