Chinese investment surge hits Metro Vancouver housing market
Stable Canadian economy and good quality of life is luring 'planeloads' of overseas buyers eager to invest
When real estate entrepreneur Cam Good hosted a group of predominantly mainland Chinese investors this Wednesday at a White Rock condo showing, he was tapping into a market that's surging across much of Metro Vancouver.
Good, president of The Key, a Vancouver-based sales and marketing firm that's focusing on a new wave of Chinese buyers, figures he's sold more than 500 homes to mainland Chinese investors and immigrants in January and February in Vancouver and Toronto.
He's also opened an office in Beijing's business district -The Key China -where Chinese buyers can purchase Canadian condos from a presentation centre and view videos that showcase various condo developments and the virtues of Canada.
"[Chinese investors] have really picked up a lot of steam in the last two or three months," Good said in an interview. "And I believe this is just the tip of the iceberg. There's an über-wealthy upper class forming and there's a strong middle class growing in China. This massive middle class is now getting to a point where they can afford international real estate. And Canada is viewed by the Chinese as a very stable place to put their money.
"There are literally planeloads of Chinese coming here to buy real estate."
Wednesday's attraction was Avra, a 17-storey condominium tower that's slated to be built over the next two years, and Good took along a busload of investors -some from China and some already living here -and their agents to view the plans.
But it's not just condos that are attracting Chinese buyers, with single-family homes and large lots topping the list.
Across the Lower Mainland, especially Richmond and Vancouver's west side, mainland Chinese buyers and immigrants are becoming a major part of the market, in some cases competing with each other through multiple offers.
But the phenomenon is starting to spread to other areas including Burnaby, West Vancouver, White Rock and beyond.
"We predict that this will be a dominant trend for a long time," Scott Brown, senior vicepresident, Western Canada for Colliers International residential marketing, said in an interview. "Some of the most expensive [Vancouver] real estate is only being marketed to Chinese buyers. And Vancouver and Toronto are very popular."
According to a report on new multi-family home sales in the Lower Mainland by Colliers, which recently opened a dedicated office in Shanghai to deal with the increasing demand, a total of 2,711 new multi-family units were sold in the region in the fourth quarter of 2010, making it the most active quarter of the past year.
"As in each quarter in 2010, the health of the market is expected to continue to be positively impacted by increasing Asian immigrant and investment demand," the report, prepared by Colliers and Urban Analytics, concluded.
Scott said the expected offshore demand will continue to be "the dominant story in 2011 that it was in every quarter of 2010 especially in Vancouver-west, Metrotown and Richmond."
The demand for Vancouver properties appears to be fuelled by many factors -including, ironically, a crackdown on property purchases in mainland China that may be moving much of that investment overseas, particularly to Canada.
Local real estate companies are tapping into the demand, which realtors say is also partly fuelled by an easing of travel restrictions by China with the granting of approved destination status to Canada.
As well, local Vancouver area Chinese-language newspapers are being used by realtors and agents to specifically target mainland Chinese buyers, citing Canada and Vancouver's stability and strong local real estate returns.
A recent report in the China Daily, a state-run publication based in Beijing, said Canada was "the most...
OTTAWA, February 8, 2011 — The seasonally adjusted annual rate1 of housing starts was 170,400 units in January, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 169,000 units in December 2010. According to final figures, actual housing starts for 2010 totalled 189,930 units, with activity moderating towards demographic fundamentals by the final quarter of 2010.
“Housing starts moved slightly higher in January because of an increase in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Single-detached and multiple starts showed a moderate decline.”
The seasonally adjusted annual rate of urban starts decreased by 1.7 per cent to 146,900 units in January. Urban multiple starts moderated by 1.5 per cent in January to 82,900 units, while single urban starts moved lower by 2.0 per cent to 64,000 units.
January’s seasonally adjusted annual rate of urban starts decreased by 19.0 per cent in the Prairie Region, by 7.9 per cent in British Columbia, and by 1.0 per cent in Québec. Urban starts increased by 13.3 per cent in Atlantic Canada and by 10.3 per cent in Ontario.
Rural starts2 were estimated at a seasonally adjusted annual rate of 23,500 units in January.
As Canada's national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.
Greater Victoria single-family house assessments are expected to climb from 1.3 per cent in Langford to 12.6 per cent in Sidney, says a company that crunches B.C. real estate data.
The predicted numbers were calculated by Landcor Data Corp. of New Westminster. B.C. Assessment will release official figures on Dec. 31.
B.C.'s real estate market is "still pretty stable," Rudy Nielsen, Landcor president, said Friday. "I predict sales of $48 billion for B.C. this year. Last year, we were at about the same. B.C. is holding its own. Best year we have ever seen was 2007 with $64 billion."
Many factors can influence assessments. If a large number of similar new housing units is developed, particularly over a number of years, that tends to balance out percentage increases, Landcor said. In Langford, for example, builders have been busy in recent years putting together large small-lot subdivisions.
Compare that to long-established and smaller Sidney which has not seen the same boom in housing construction.
Like B.C. Assessment, Landcor numbers refer to assessed values of properties as of July 1, so they do not necessarily reflect a property's current market value. The percentage difference compares 2010 with 2009.
To determine values, a range of criteria is used such as location, nearby sales, a home's age, quality, condition, recent improvements, finish and more.
In Greater Victoria, the average sale price for a single-family house was $636,634 in November, with a median of $530,000.
Landcor forecasts that the city of Victoria will see assessments rise by 12 per cent for single-family homes, and by 2.4 per cent for condominiums.
If a community has a high number of condos available for sale, that would tend to limit percentage changes, Landcor said. The capital region experienced a boom in multi-family construction before the recession hit in the fall of 2008.
Lake Cowichan's assessments are predicted to drop the most on the Island, by 28.5 per cent. That community has lacked a major employer since the Youbou mill closed in 2001.
Around B.C., upscale West Vancouver will likely have the largest percentage increase for detached houses, at 27.7 per cent, Landcor predicts.
John Barry, B.C. Assessment's communications manager, said assessments covering 1.9 million properties, will be mailed Dec. 31. People who signed up for electronic delivery could receive notices that day.
B.C. Assessment's website (bcassessment.bc.ca) will start showing assessments Jan. 1 to 3, allowing property owners to see basic information, he said.
Assessment notices include a personal access number allowing property owners to go online to obtain detailed information on up to eight properties. A wide range of information relating to the latest assessments will also be posted on the website.
MLS® stats show more sales, fewer property listings in November
Greater Vancouver residential home sales improved in November compared to the previous four months, with the number of sales posted on the Multiple Listing Service® (MLS®) coming in slightly higher than the 10-year average for that month.
The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 2,509 in November 2010. This represents a 7.4 per cent increase compared to October 2010 and an 18.6 per cent decline from the 3,083 sales in November 2009.
Looking back further, last month’s residential sales represent a 187.1 per cent increase over the 874 residential sales in November 2008, a 13 per cent decline compared to November 2007’s 2,883 sales, and a 6.4 per cent increase compared to the 2,358 sales in November 2006.
“Housing sales numbers were fairly typical for a November and indicate a fairly balanced market. Activity on the buyer side has been stable, with slight increases, over the last few months while the number of homes listed for sale in our region has declined each month since we reached a peak in June,” Jake Moldowan, REBGV president said.
Total active residential property listings in Greater Vancouver currently sit at 12,384, a 12.1 per cent decline from last month and a 12 per cent increase from November 2009. New listings for detached, attached and apartment properties declined 17.1 per cent to 3,030 in November 2010 compared to November 2009 when 3,653 new units were listed.
“Home values have been relatively stable over the last five months compared to the summer period when we were seeing some downward pressure on prices,” Moldowan said. “It’s the homes priced accurately for today’s market that are receiving a lot of attention and selling right now.”
The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 4.1 per cent to $580,080 in November 2010 from $557,384 in November 2009. This price has remained virtually unchanged since June of this year.
Sales of detached properties on the MLS® in November 2010 reached 1,050, a decrease of 9.8 per cent from the 1,164 detached sales recorded in November 2009, and a 226.1 per cent increase from the 322 units sold in November 2008. The benchmark price for detached properties increased 5.6 per cent from November 2009 to $799,312.
Sales of apartment properties reached 1,052 in November 2010, a decline of 24.6 per cent compared to the 1,396 sales in November 2009, and an increase of 156.6 per cent compared to the 410 sales in November 2008.The benchmark price of an apartment property increased 1.9 per cent from November 2009 to $389,168.
Attached property sales in November 2010 totalled 407, a decline of 22.2 per cent compared to the 523 sales in November 2009, and a 186.6 per cent increase from the 142 attached properties sold in November 2008. The benchmark price of an attached unit increased 4.1 per cent between November 2009 and 2010 to $488,733.
The financial problems with the are taking the troubled project in a new direction, as the owners go into receivership. “This agreement gives us stability,” said Vancouver city councillor Geoff Meggs.
“Now, the milestone payments don’t have to become a recurring crisis. If (the developer) lacks the capacity to pay each time, the damage to the asset will be greater, compared to an orderly approach.”
The City of Vancouver has negotiated an agreement with the owners of the Millennium Water development to put the project into receivership and hand over management to accounting firm Ernst and Young.
Millennium recently failed to make a scheduled loan payment, which raised serious concerns about how the company will pay back its loans on the $1 billion project.
In August, Millennium was supposed to make a $200-million payment, but the city received $192 million and by Sept. 20, a total of $197 had been received. The next payment of $75 million was due from Millennium in January.
“They were facing another deadline in 60 days, which was problematic,” said Meggs. “We always had the option to force them into receivership, but we decided to negotiate an agreement for consensual receivership.”
The owners of Millennium Southeast False Creek Properties, Shahram and Peter Malek, agreed to go into receivership to avoid pending legal action.
The city was preparing to go to the B.C. Supreme Court to petition Millennium into receivership. Receivership is a form of bankruptcy in which a company can avoid liquidation by reorganizing with the help of a court-appointed trustee.
There are a total of 1,108 units in the Millennium Water project. The marketing company hired by Millennium has managed to just sell 259 units out of 737 market sales units, about 35 per cent of the total. This number includes 223 pre-sales units that were sold last year.
The agreement allows the receiver to make immediate decisions about a new marketing strategy and is designed to secure the payment of about $740 million dollars that is still owed by Millennium to the City. The loan for construction represents about $560 million.
“First, we will sit down and produce a marketing plan that makes adjustments to price,” said Meggs “As part of the agreement, Millennium has pledged other types of security that will be used to close the gaps in the repayment program.”
According to Meggs, cutting prices could reduce the amount of revenue that was anticipated from the sale of the units and create a payment gap.
Almost half of the unsold units left on the market are priced at less than $1 million, but another 24 per cent of these units are priced between $1 million and $2 million. Twenty eight per cent cost more than $2 million. About 60 per cent of the 119 market rental units have been rented out.
The city is working with a non-profit housing operator to manage 252 social housing units.
New York-based Fortress Investment Group, which was the developer’s original lender, stopped financing the project.
This move forced the city to buy out the building loan to better control costs and finish in time for the 2010 Winter Games.
VANCOUVER-- A new report suggests that low mortgage rates combined with a growing population and an improving economy bode well for Metro Vancouver home sales for the rest of 2010 and 2011.
“For the next year, we’re looking at favourable mortgage rates, a steady flow of migrants to the Lower Mainland, and a growing job market,” Canada Mortgage and Housing Corp. senior market analyst Robyn Adamache said in an interview about the federal agency’s housing market report that concluded sales will remain stable until mid-2011 before trending higher. “We’re looking at about 33,000 sales for Greater Vancouver [in 2011]. We’re looking at 31,000 this year. The 10-year average is about 34,000.
“Balanced market conditions that have been established in recent months will continue over the next nine to 12 months.”
The B.C. Real Estate Association also predicted in its fall housing forecast last week that B.C. housing sales, while declining 12 per cent this year to 74,950 units, will increase six per cent to 79,700 in 2011.
Adamache said that fewer new listings coming onto the market due to modest price growth, and a steady pace of sales will continue to gradually draw down the inventory of resale homes for sale.
The CMHC report predicted that the average home price in Metro Vancouver will increase 12 per cent in 2010 to $665,000, with most of the increase already having taken place. Prices are forecast to increase by three per cent next year to $685,000.
As well, new home construction in Vancouver will increase in 2011, approaching the 10-year average level as demand for new housing strengthens. “Homebuilding will increase modestly next year as developers seek to add to the stock of housing to accommodate approximately 16,000-18,000 new households each year,” said Adamache.
CMHC noted that housing starts across the province will also hold steady this year before gradually rising in 2011.
“Builders are expected to begin construction on more new homes next year in response to steady housing demand,” CMHC’s B.C. regional economist Carol Frketich said about the forecast of just under 26,000 total starts for 201, slightly below the 10-year average.
Nationally, CMHC said home construction is expected to continue easing in the final quarter of this year before stabilizing in 2011.
The BCREA reported Monday that residential sales in B.C. declined 36 per cent to 5,507 units in October compared to the same month last year. The average price climbed six per cent to $521,859 in October compared to the same month last year.
“B.C. home sales have posted moderate gains since the summer months,” added BCREA chief economist Cameron Muir in a statement.
Year-to-date, B.C. residential sales dollar volume declined two per cent to $32.5 billion, compared to the same period last year. Residential unit sales declined 10 per cent to 64,735 year-to-date.
The report stated that the average residential price in B.C. is forecast to climb seven per cent to $498,500 this year and decline by one per cent to $495,600 in 2011.
Meanwhile, the City of Richmond is reporting that after a sluggish 2009, a record has been set in 2010 for total building permits issued in a year.
The city reported that at the end of October it has processed 1,511 building permits with a construction value of over $769 million, greatly exceeding the $163 million value in 2009 and beating Richmond’s previous record of $658 million in 2006.
“While the sheer number of projects is impressive, the city has taken a sustainable approach to development that was well thought out in our City Centre Area Plan,” Mayor Malcolm Brodie said in a statement.
Sales levels in Lower Mainland real estate markets remain somewhere between the highs of 2009’s market rebound and the lows of 2008’s sales collapse, reports from the region’s major real estate boards show.
In Metro Vancouver, realtors recorded some 2,337 sales in October through the realtor-controlled Multiple Listing Service, which was down almost 37 per cent from the frenetic pace of the same month a year ago, the Real Estate Board of Greater Vancouver reported Tuesday.
However, October’s 2,337 sales were some 71 per cent higher than the recessionary October of 2008, and board president Jake Moldowan said agents have “seen a lot more consistency and less volatility” in sales levels and pricing over the past few months.
“As we enter the final two months of the year, buyer demand is in closer alignment with supply than we’ve seen for most of 2010,” Moldowan said. “Those buying today recognize that they
still have a chance to enter the market with near-record-low interest rates, while gradual reductions in inventory have eased downward pressure on prices.”
In the Fraser Valley, realtors made 1,014 MLS sales in October, down 40 per cent from the same month a year ago, but 32 per cent higher than the doldrums of October 2008.
“With help from near-record-low mortgage rates and a steady decrease in the supply of homes, we’re getting back to what I call a ‘normal,’ balanced market,” Deanna Horn, president of the Fraser Valley Real Estate Board said in a news release.
In the area of Metro Vancouver covered by the Real Estate Board of Greater Vancouver, the benchmark price (an average of typical homes sold) for detached homes hit $796,833, which was up 6.3 per cent from the same month a year ago.
For townhouses, the benchmark price hit $487,530 in October, up four per cent from the same month a year ago.
For condominiums, the benchmark price reached $390,074 in October, up 2.4 per cent from the same month a year ago.
In the Fraser Valley’s board area, which includes Surrey, the benchmark price for detached homes hit $505,759 in October, up three per cent from October 2009, but down 0.3 per cent compared with September of this year.
For townhouses, the $319,058 benchmark was up 2.2 per cent compared with the same month a year ago, but down 0.9 per cent compared with September.
The benchmark for Fraser Valley condominiums reached $240,542 in October, up 0.2 per cent from a year ago and was 0.4 per cent higher than September of this year.
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