Sellers are still in the driver's seat in real estate sales for May 2015. Especially in the Vancouver and Toronto marketplaces. These are the two hot markets in Canada. In Vancouver the rise in demand of 18.6% from May 2014 for detached homes in particular is due to the small geographic footprint of the Lower Mainland resulting in a lack of land available for building and the international investment money pouring into the city to which is added the local demand for homes. In Toronto the rise is attributed to immigration to Canada's largest city and economy. For comparison purposes the MLS sales reported in the Greater Toronto Area for May 2015 were in excess of 11,000 properties while in Vancouver the MLS sales were 4000 plus.
Sunlit Downtown Vancouver by Alex Costin
The main impetus to the rising number of multiple offers on every well-priced, well-situated property is the dearth of available listings. A drop of 23.2% compared with May 2014. There are many more buyers than there are homes to buy. In Vancouver this has brought protests against the rising tide of unaffordability and a demand for a speculation and an absentee owner tax. This is never as simple as it sounds. Historically detached homes in Vancouver have been unaffordable for most buyers and in earlier days Richmond, North Vancouver, Burnaby and New Westminster were considered to be far flung suburbs where young families could buy a home. New taxes and rules to control the marketplace almost always trigger the Law of Unintended Consequences. In the meantime the provincial government is looking into the matter of affordability and a possible speculation tax and will report back.
In the City of Vancouver residents look for creative zoning to allow young families to buy or rent in the City. So far it is not forthcoming. The Mayor has announced that they have met their goal of approving 4000 rental units since 2010 much of it targeted to social housing with only 500 affordable family units in the mix. Developers have responded well to initiatives offering density bonuses or land tradeoffs for their condo projects if they build rental units. Jubilee House, the big social housing project at Helmcken and Richards Streets in Yaletown which is being built by a private developer who traded his smaller parcel for a larger more valuable city owned parcel in a land deal not disclosed in public hearings. This questionable City action was stopped by the BC Supreme Court, appealed by the City and overturned by the BC Court of Appeal. Jubilee House is replacing the social needs offices and rental units which will then be replaced by a market driven condo project exceeding Official Plan height and coverage and taking over land adjoining Emery Barnes Park.
Bob Rennie a well known project marketer and real estate expert recently addressed the Urban Development Institute on the issues of the day: rezoning for more affordable housing and foreign ownership which he says is overstated and is mainly confined to the very high-end of the market. His theme was that the City should get serious about re-zoning large single family areas to townhomes. He hired a Washington DC research firm to discover the buying patterns among Millennials and Boomers. It showed that most young families don't want to live in a 3 bedroom condo and would rather spend the $750k price point on a detached home further away. For example the city of Squamish on the Sea to Sky Highway near Whistler is attracting families for its natural setting, recreation opportunities and quality of life. The concern for families leaving the city circles around the loss of a generation of economic life, the empty schools and the vibrant society of younger people.
USA Today reported on the money flowing into the most popular international cities of London, New York, Miami, Vancouver and Sydney. Russian, Eastern European & Middle Eastern money targets London and New York. Miami is a hit with the wealthy of Latin and South America while Vancouver and Sydney enjoy East Asian patronage. The newspaper remarked on realty offices in Vancouver displaying the lucky number 8.
The detached home market is attracting the headlines but all sectors are enjoying a boom. As buyers realize the million dollar plus price point precludes them from owning a detached home the multiple offer scenario is being played out in the townhome market in Vancouver, North Van and Richmond. The increase of 34% for sales of attached properties compared with May 2014 encompasses Metro Vancouver as does the 24.4% increase in condo sales.