From the New York Times by Joanne Blain:
VANCOUVER — For first-time buyers in Vancouver’s hot real-estate market, the facts are sobering, if not depressing.
A typical single-family home anywhere in the city or its suburbs costs more than 750,000 Canadian dollars, or $774,00. Even a fixer-upper on the city’s desirable west side can top a million dollars- well out of reach of most Vancouverites who do not already have a toehold in the market.
And there is little relief in sight.
While many American and central Canadian cities have seen slowing sales and falling prices in the past year, the most pessimistic thing any real estate expert can say is that Vancouver housing prices are not expected to rise quite as steeply this year as they did in 2006 and 2007.
“What we’re expecting is a bit of moderation,” said Robyn Adamache, senior market analyst with the Canada Mortgage and Housing Corporation. “Prices are going to continue to increase, but at a slower pace than we’ve seen over the past couple of years.”
The corporation, Canada’s national housing agency, is projecting an 8 percent rise in metropolitan Vancouver housing prices during 2008, compared with 11 percent last year.
“Keep in mind that we’re coming off near-record-high levels of sales and new home starts,” Adamache said.
“Between 2001 and 2007, the price of single detached homes going through the MLS system was up about 120 percent,” Adamache said, referring to the Multiple Listing Service.
While Vancouver will be a co-host of the 2010 Winter Olympics, along with the ski-resort town of Whistler, British Columbia, few real estate watchers consider that of much importance in the continued strength of the city’s housing market. Instead, they see a strong western Canadian economy, low unemployment and a steady stream of people moving to Vancouver from around the world as the key factors.
In addition to Vancouver’s economic strength, many people are drawn to the city by its moderate climate – similar to Seattle, with winters rainy rather than snowy – its stunning backdrop of mountains and sea, and its multicultural vibe. According to the latest Canadian census data, more than 40 percent of metropolitan Vancouver residents are nonwhite, or what the Canadian government classifies as “visible minority.”
“Generally, we can count on about 30,000 people migrating to the greater Vancouver region every year,” Adamache said. Vancouver, which is about 140 miles, or 225 kilometers, north of Seattle, now has a population of about 2.2 million.
“We’re in what I see as a very unique market,” said Malcolm Hasman, a Vancouver real estate agent who specializes in luxury houses and condominiums. “Fifty percent of all buyers are new immigrants moving into Vancouver.”
Many of those immigrants – especially those from mainland China, Hong Kong, Korea and parts of Europe – arrive with more than enough money to buy homes at the top end of the market, from $2.5 million up. They are keeping Hasman busy.
“January, February and March, statistically, were my three busiest months in 25 years of selling real estate,” he said.
His first sale of the year was a 6.5 million dollar penthouse in Yaletown, a trendy former warehouse district on the outskirts of downtown. And just before Christmas he closed a 30 million dollar deal for a waterfront home in West Vancouver, a high-end community just north of downtown.
Hasman’s current listings include a 25 million dollar house on more than an acre in Vancouver’s tony Shaughnessy neighborhood and a 12 million dollar waterfront home in West Vancouver (prominently featured in a 2005 Al Pacino film). His biggest problem is finding enough high-end properties, especially waterfront homes, to meet the demand.
There also is no shortage of buyers for high-end condominiums. Four luxury hotel-condominium towers now under construction in downtown Vancouver – the Ritz-Carlton, Shangri-La, Fairmont Pacific Rim and Hotel Georgia – are shattering sales expectations and commanding prices of more than 3,000 dollars per square foot, compared with an average for downtown condos of 725 dollars per square foot.
Even the record 18 million dollars paid this year for a 48th-floor unit at Residences at the Hotel Georgia pales in comparison to the 28.8 million dollar asking price for a 7,400-square-foot, or 687-square-meter, penthouse at Residences at the Ritz-Carlton, being sold by Bob Rennie of Rennie Marketing Systems.
That project won’t break ground until June for occupancy in 2011, but buyers are snapping units up.
“The projections were that we would be half sold by the end of this year, and we’re already at 60 percent,” said Rennie, whose company sold about 1.4 billion dollars worth of condominiums in the city last year. Most multiple-unit buildings in Vancouver are 75 to 100 percent sold before construction is completed, he said.
Both Rennie and Hasman say they have seen a significant drop in the number of U.S. investors buying into the Vancouver market, largely because of the strength of the Canadian dollar. But Asian and European buyers are taking their place, they say. “There is an enormous high-net-worth market in Vancouver, just like in any major city in the world,” Hasman said.
Well-heeled international investors are focusing less on price and more on the rapid pace of residential development and on what Vancouver has to offer as a city, said Rennie.
In Vancouver, “downtown is looked at by the world as a resort, and now this resort has very little land left,” he said.
But in the resale market, some sellers have been forced to cut prices in recent months. “A lot of prices have been reduced to some degree,” Hasman said. “But the truth is, they were overly inflated to start with.”
He points to a waterfront condo in the downtown Coal Harbour neighborhood as a case in point. Originally it was listed at 3.7 million dollars, but the owners were forced to reduce the price twice before it sold.
“You could look at that and say ‘Whoa, they took 500,000 dollars below what they were listed at,’ ” Hasman said. “But they only paid 1.4 million dollars for it 48 months ago.”