Sellers are in the ascendant. April 2015 sales in the Metro Vancouver market were knocked out of the proverbial park. Particularly for detached properties. Those sales numbered 1,815 which is a 35.9% increase from 1,336 detached sales in April 2014 and a huge 70.6% increase from 1,064 detached sales in April 2013. The benchmark price for a detached property rose 12.5% from April 2014 to $1,078,900.
The $1,078,900 price point is a benchmark detached price for the entire region. Broken down into specific areas and neighbourhoods prices can go much higher. For example the benchmark detached price in Vancouver Westside in April 2015 was $2,490,600 followed closely by West Vancouver at $2,236,300.
Blue Hour False Creek Action by Kenny Louie
Some of the pressure is coming from a recent report from CMHC stating that the Vancouver market is not over valued and will not be undergoing a correction. Reasons given include population growth and increasing personal disposable income.
For the most part these detached prices represent lot value only. Older homes even when livable are usually taken down and a new infill home built. The outcry among Vancouver residents has been for the loss of lovely traditional homes on large lots with beautiful gardens. The change has occurred because of municipal zoning laws regarding site coverage. Most of these homes were comfortable but not gigantic and were built to the standards of the time. They did not use the maximum site coverage limitations.
The homes being built across the region today maximize every square inch allowed by the various municipal zoning regulations. Since the free for all of the late 1980s and 90s when builders who were speculating on a huge immigration influx started tearing down older homes and building great square stucco boxes the politicians have upgraded the design and construction requirements for new homes.
More affordable close in municipalities like the District of North Vancouver and Richmond have seen a surge in detached home sales. In North Van older homes in Edgemont Village/Canyon Heights neighbourhoods are selling quickly with many going over the list price. Some homes were built in the 1950s on 10,000+ s.f. lots and they are selling in multiple offers. Sales are mainly in the mid to high $1 million with existing newer homes going for close to $3 million. It's the same scenario in Richmond.
There are always different opinions on how growth and rising prices should be handled at the municipal zoning level. People want to move up into bigger homes in familiar neighbourhoods, newcomers want to buy in those same neighbourhoods with their established infrastructure of schools and recreation facilities. Those residents who have no immediate plans to move from their home and the neighbourhood they love want the new homes to be restricted in size. Residents who are downsizing or retiring want to maximize their tax free return on the sale of their property and protest retroactive zoning changes which will diminish their property value.
It all plays into the affordability discussion of whether immigration has pushed up Vancouver prices so that local residents can no longer afford to buy. Prices have always gone up whether buyers came from elsewhere or not. In 1966 a pretty Cape Cod style home on a 66'x130' lot in Dunbar/Southlands sold for $23,500. In 1974 the same house, now somewhat updated, sold for $115,000. The same house still stands on that large lot. According to current stats it will sell for about $2,500,000. If the same owners had resided there for the past 50 years they would have a tax free capital gain of approximately $2,475,000. Even in the days of $25k-$115k prices very few buyers could afford detached homes in desirable Westside neighbourhoods.
There will be local buyers who are established or who have family help able to purchase a detached home in Vancouver. There are other forms of housing available. Townhomes are popular as are detached homes in the suburbs. Condos are an alternative for entry level or downsizing buyers.
At this time there is a surge in the news media about entitlement to buy a detached home in Vancouver and whether foreign buyers should be restricted and taxed as they are in Singapore and Australia. In Canada the federal and provincial governments control immigration and a transfer tax on real estate. In Toronto the city added a value added tax on real estate sales on top of the provincial Land Transfer Tax. It is a burden to all buyers not just foreign or offshore investors. It has not slowed their market down at all. It is following Vancouver in sales and price increases.
At this time the City of Vancouver is planning to create a database of vacant properties to determine whether they contribute to the affordability crisis. The problem they are running into is whether the property is truly vacant. Are the owners vacationers, snowbirds or renovating or living in a nursing home? The danger is that this exercise can encourage xenophobia and possibly increase intolerance of some new immigrants as well as long time visible minority citizens. The Charter applies to everyone standing on Canadian soil as does the right to move freely in Canada. Canada has always sought investment from other countries and respected those who come here legally.
With climate change plus permanent war going on in half the world destinations of calm, tolerance, a temperate climate, the rule of law and economic opportunity such as Canada and specifically Metro Vancouver are sought by many. Change is the inevitable outcome.