Lots of excitement, speculation and prognostication in the real estate market these days. In Vancouver and Toronto prices are up and listings are down according to the published February 2015 statistics. In the previously hot market of Calgary buyers are holding their breath. Listings are up there, sales are down, prices are just starting to dip.
Yaletown by Casey Yee
The precipitous fall of world oil prices has hit Alberta hard but BC and Ontario are forecast to lead the economic growth in 2015 because they are not oil dependent. The rise of the US economy and currency against all other world currencies is a boon to manufacturers/exporters in Ontario and Quebec as well as natural resources industries in BC.
The Bank of Canada has lowered its rate to try to balance revenues lost in the oil price decline and this has lowered mortgage rates and encouraged buyers. This in turn has raised the total debt load of Canadian households. For investors whose currencies are pegged to the $US the lower Loonie creates a windfall in the housing market. The Chinese Yuan Renminbi is one of those currencies.
When the Canadian government terminated the Immigrant Investor program in 2012 they set up a multiple entry 10 year visa program that allows unlimited travel to Canada and facilitates home ownership here. Unlike Australia and other popular destinations Canada has no restrictions or rules for foreign ownership of real estate.
In Vancouver the detached segment of the market continues to rise in price and demand compared with other forms of housing. The benchmark sale price for detached in the Vancouver region hit $1,026,300 in February 2015 bolstered by a benchmark price in Vancouver Westside of $2,403,900. This is a price increase of 9.7% compared to February 2014. Richmond, Burnaby and North Vancouver have detached benchmark prices over $1 million.
Detached homes are sought after by builders and offshore investors who plan to raze the smaller existing home on these larger lots and redevelop to the maximum square footage allowed. There is an outcry against the destruction of the attractive homes and gardens that were typical of old Vancouver but owners of these homes are against any zoning or architectural restrictions because they want to sell their homes for top dollar often to downsize or retire.
Recently there was a contentious public meeting held by the municipal council in West Vancouver to address monster homes being built on larger pieces of property to the detriment of the views and scale of the rest of the neighbourhood. Again the owners who want to sell to realize maximum returns were in conflict with those owners who want to maintain the green space in their neighbourhoods. West Vancouver detached benchmark price at $2,096,400 is second only to Vancouver Westside.
Last month we referenced an anecdotal home sale of $50 million+ in Point Grey. Recently the details were published in the National Post. The 4787 Drummond Drive home in Point Grey owned by the founder of Electronic Arts is 25,000 s.f. built on 3 lots with a 10 car garage. It sold in December 2014 for $51.8 million to a mainland Chinese investor through his Vancouver holding company.
Another startling sale occurred at 1383 West 32nd Ave in Shaughnessy near Granville Street. The property was listed at $5.99 million and sold for $8.01 million. This was a Tudor style home built in 1937 on a 100'x164' lot.
FYI: On every transfer of title in a real estate transaction in BC the Property Transfer Tax (PTT) must be paid on the fair market value sale price to the BC government. The formula is one per cent on the first $200,000 of the sale price and two per cent on the balance of the sale price. The total PTT due on these high home sale prices compares with JP Morgan's response to a question about the cost of owning a yacht..."if you have to ask the price you can't afford it."
There is always a concern about affordability in all parts of the Lower Mainland. In further suburbs there is land available for development and zoning that allows construction of freehold townhouses as well as more affordable detached homes. Townhomes are a highly desirable form of home ownership in these communities.
Unfortunately in Greater Vancouver townhouses are not a major part of the housing mix. There is no comparable form of home ownership here to the ubiquitous semi-detached homes of Toronto. A semi-detached is usually on a narrower lot and joined to its neighbour on one wall. Each home is freehold. In Vancouver these homes are called a half-duplex. They are stratified and own their lot in common with their neighbour.
There is still ongoing conflict with the City of Vancouver Council and members of the public over disclosure of development plans, special deals with developers in return for social housing etc. Jubilee House, a major development at the NW corner of Richards and Helmcken Streets in Yaletown was stopped half-built by an order of the BC Supreme Court due to lack of public consultation and backroom land swaps. The City is in the process of appealing this decision. They have stated that they need to facilitate the construction of social housing without any annoying input from the citizenry.
The face of the city is changing as young families whose parents lived on the Westside and newcomers alike have relocated to the more affordable Eastside which is morphing into the cool part of town. Downtown condos are full of children of hip parents and the kindergarten classes in neighbourhood schools are bursting at the seams while many Westside schools are half full.
Definitely a new world here on the West Coast.