Metro Vancouver’s hot housing market is scorching when it comes to high-end sales.
Properties selling for $3-million or higher have surged 35 per cent in the Vancouver region, defying predictions of a slowdown after Ottawa shut down the federal immigrant investor program in February.
In the first eight months of this year, there were 572 properties in Metro Vancouver that sold for at least $3-million, including 135 homes for $5-million or more, according to Macdonald Realty Group’s compilation of statistics from local real estate boards. In contrast, there were 422 properties that changed hands for $3-million or higher in the first eight months of 2013, including 112 homes that sold for at least $5-million.
At the pace of sales volume so far this year, the luxury real estate market in the area will smash the record of 691 homes that sold for $3-million or higher in 2011.
To stand out in real estate circles on the West Coast, $3-million is the new $1-million. Having a million-dollar home will elicit yawns, not envy, because 55 per cent of detached properties in the City of Vancouver were assessed at $1-million or greater on July 1, 2013, according to research by Andrew Yan, an urban planner with Bing Thom Architects. About 37,800 properties made the cut for the million-dollar club last year.
There had been expectations in the industry that some rich immigrants from China would avoid investing in Metro Vancouver after the federal government scrapped the immigrant investor program, but transactions of at least $3-million are headed toward a new annual high, said Dan Scarrow, vice-president of corporate strategy at Macdonald Realty.
Single-family detached homes dominate posh sales, though there are also some condos and townhouses in the data.
“There is confidence in the Vancouver real estate market. People within the market itself are trading and there is also money flowing in from outside,” Mr. Scarrow said in an interview. “Real estate experts thought there was going to be a slowdown in sales, and I actually thought so as well, but we’ve been proven wrong.”
Macdonald Realty notes that 178 of the firm’s 531 sales of detached houses within the City of Vancouver last year, or 33.5 per cent, went to home buyers with ties to China.
Mr. Scarrow, who will be opening a Macdonald Realty office this fall in Shanghai, says the vast majority of buyers have family and/or business links to Vancouver and there are only a small number of strictly offshore investors engaged in speculation. He will spearhead efforts to find prospective buyers for residential properties and seek investors in Vancouver’s commercial real estate market and new condo projects.
In many instances, it would be prudent for foreign buyers to invest in commercial properties instead of entering the residential market, especially if houses are left empty, Mr. Scarrow added.
The Real Estate Board of Greater Vancouver calculates a benchmark home price index, which strips out the most expensive homes to give what the board views as a better indicator of pricing trends. Detached homes on Vancouver’s west side sold at an index price of $2,282,400 in August, up 9.7 per cent from the same month in 2013. The index price for detached houses in the municipality of West Vancouver has risen 8.4 per cent to $2,018,600 over the past year.
Greater Vancouver’s total sales for detached homes, condos and townhouses climbed to 2,771 in August, up 10.2 per cent from a year earlier. The Fraser Valley Real Estate Board handled 1,302 transactions last month, up 3.5 per cent from August, 2013.
The Greater Vancouver data include suburbs such as Richmond, Burnaby, Coquitlam and West Vancouver. The Fraser Valley statistics include the sprawling suburb of Surrey.