“I am a Vancouver realtor, and here are a few facts:
1. Yes, a couple of specific areas such as Vancouver’s West Side and West Vancouver have enjoyed the effects of an infux of Chinese money and property values in those areas have risen dramatically in the past year or so. Is this sustainable? I don’t know but time will tell..
2. These localized surges in value are not representative of values in the overall Greater Vancouver real estate market.
3. According to the board, the Housing Price Index for all residential properties in Greater Vancouver shows an increase in value of 7.5%. I would characterize this as a modest gain when compared to recent gains in the areas listed in above [Vancouver East detached YOY +16.2% , Vancouver West detached YOY +23.4%].
4. The benchmark price of apartment (condo) properties – generally the type of properties that speculators buy – has risen 3.2% from Oct 2010. Again, quite a modest number compared with the numbers quoted above.
5. Listing a $4MM condo at $8MM or increasing a list price 78% after not selling does not make a bubble. It means the sellers and their realtors are idiots but it does not mean Vancouver is in a bubble.
6. Some areas of Vancouver’s real estate market are not just locally driven and local incomes are not the sole determinant of affordability. Like it or not, Vancouver is somewhat of a resort city to the world.
Vancouver’s real estate market may well follow global trends if the influx of Chinese buyers slows, or even reverses and if/when global economics deteriorate further. Only time will tell. However, the fact is Canada, and indeed Vancouver, is viewed as a relative safe haven by many international real estate buyers. Given European turmoil and USA economics vis-a-vis debt etc, I seems entirely possible that the Vancouver real estate market will continue to do relatively well. Where would you rather leave your money? Iran, China, or Vancouver? Not a tough choice.”
– local Vancouver realtor Shaun Kimmins, commenting on the article “House Won’t Sell? No Problem, Simply Raise the Price by 78%; It’s Different in Bizarro World”, at Mike Shedlock’s ‘Global Economic Trend Analysis’ blog, Nov 2011
1. People have been conditioned to believe that 7.5% per annum gains in local RE are ‘relatively modest’.
2. There are alternatives to keeping your assets in “Iran, China, or Vancouver”.
3. What does it take for a “safe haven” to suddenly seem “unsafe”? Will off-shore investors keep buying, or sell, into falling prices?
4. “It means the sellers and their realtors are idiots but it does not mean Vancouver is in a bubble.” No, but it doesn’t mean that Vancouver is not in a bubble, either. Is that behaviour characteristic of typical market periods?