Not a day passes without the Vancouver real estate market succeeding to amaze us all over again.
Just over a month ago we were amazed to learn that, in confirmation of the local buying frenzy, the Vancouver home shown on the photo below sold for $735,000 above asking.
As Vancity Buzz wrote, “The house at 3555 West 1st Avenue was built in 1912, is 3,400 square feet and sits on a standard 33 x 120 foot lot without a view. The selling price of $4.23 million is about $1.6 million above the lot’s assessed property value.”
For his part, real estate agent Brandan Price is incredulous. “For it to go over $4 million is remarkable. I had five offers,” he said. “These were local buyers just looking to make a shift who wanted to move into this area.”
“They were willing to sacrifice lot size to move into this area.” Maybe, but things seem to be getting out of hand and part of the “problem” may indeed be demand from investors attempting to find a home for capital they’ve moved out of China. As Thomas Davidoff with UBC’s Sauder School of Business told Vancity Buzz: “These prices are getting pretty freaking nuts in my opinion.”
Which led us to observe that in Canada, an interesting paradox is visible. On the one hand, the country’s oil patch in Alberta is mired in a painful depression, where the worst 12 months for job losses in 34 years is contributing to rising property crime, higher food bank usage, and a rash of unsold condos and empty office space in Calgary.
On the other hand, if simply looking at real estate in Vancouver and Ontario you’d think you were looking at home prices for an economy that is thriving. In fact, prices in Vancouver have reached nosebleed levels. In January for instance, the average selling price of detached homes was an astronomical $1.82 million.
According to a recent report by Knight Frank, prime residential property prices in Vancouver increased by 25% in 2015 “due to lack of supply, foreign demand and weaker Canadian dollar.” But mostly foreign demand as Chinese buyers scramble to launder their money in this Canadian city.
Vancouver’s soaring home prices posted nearly double the growth rate of the next few residential markets of Syndey (14.8% Y/Y), Shanghai (14.1%), Istanbul (13.0%) and Munich (12.0%).
And while there has been some speculation the government may crackdown on this runaway home price inflation, this has yet to happen. In the meantime, the horror stories of Vancouver’s houing market persist.
According to the National Post, another west side Vancouver home has sold for more than $1 million above the asking price. The Dunbar area bungalow was listed for $3.188 million and sold earlier this week for $4.19 million.
SunThis Dunbar area house sold for $1 million over the asking price this week.
This is the second time in just one month when a Vancouver home sells more than $1 million above asking. Just over a month ago, a Point Grey home with a view sold for $1.172 million more than the asking price. The sale price for the house on Bellevue Drive was more than $9 million and the new owner planned to rent it out then tear it down and rebuild in a couple of years, according to the realtor. The house had not been updated.
SunThe house has a new roof, updated bathrooms and a gourmet kitchen.
But the 71-year-old Dunbar house has been fully renovated, according to the MLS listing. It sits on a 44 by 122-foot lot and has a view from the back of the North Shore mountains. The house has a new roof, updated bathrooms and a gourmet kitchen as well as a one-bedroom basement suite.
“Perfect for families,” says the listing. Or, “hold and build.”
SunThe bungalow was listed for $3.188 million and sold for $4.19 million
University of B.C. real estate professor Tsur Somerville said the Dunbar home may have been listed low. “That is one third more than the asking price,” he said. “It looks a whole lot like a realtor playing games.”
That or the panic buying frenzy is getting bigger by the day.
Getting the right listing price for a property in Metro Vancouver’s overheated market is difficult, Somerville acknowledged.
“Because prices are going up so rapidly, so out of control, it’s hard to know what the price is,” he said. “The rate of price increases is reaching hysteria levels. It’s not sustainable.”
This is what is known as a bubble, and while everyone admits it, the frenzy goes on.
SunThe house sits on a 44 by 122-foot lot and has a view from the back of the North Shore mountains.
Homes sales in Metro Vancouver surpassed 5,000 last month, making it a record-breaking month according to statistics from the Real Estate Board of Greater Vancouver. The benchmark price for detached properties in the region increased 27.4 per cent to $1,342,500 in March 2016 compared to the same month last year.
Something else everyone can agree on: the Vancouver housing bubble will eventually burst. The question is when, and how much longer will the government ignore this ridiculous surge in prices while pretending everything is perfectly normal. Naturally, when it does burst leading to a collapse in the local economy and crushed living standards for everyone, the excuse will be a well-known one: “nobody could have seen it coming.“
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