Saturday, March 23, 2013

Downtown Vancouver condos left empty by foreign owners

Nearly a quarter of all condos in some parts of downtown Vancouver area are empty or occupied only part of the year by non-residents, according to data from the 2011 census data.
In Coal Harbour, about one in four condos are “non-resident occupied”, said Andy Yan, a senior researcher with BTAworks, the research division of Bing Thom Architects.

Yan has been trying to quantify the impact of foreign investment on real estate in Vancouver for years. But the data doesn't allow him to separate units occupied by foreigners from those sitting empty.
"We live in a globalized capital market and we need to adapt to that new realty and ensure that those that want to live here, can grow here."
Yan was speaking at a SFU Woodward's talk about "foreign investment in Vancouver real estate" on Wednesday night.

Experts say the city benefits from the property taxes paid by condo owners, whether they live here or not.
"They pay lots of money in taxes and use very few city services,” said Tsur Somerville, an associate professor at the UBC Centre for Urban Economics and Real Estate.

But there is a downside to having so many vacant units.
“From a city revenue standpoint these units are wonderful. On the other hand, most of us don't want to live in a ghost town,” Somerville added.

The high vacancy rate means less business for neighbourhood shops and and restaurants in Coal Harbour. While some local businesses struggle to stay afloat, others say they do well, even without year-round residents.
"They spend more money when they're here than some people who live here all the time would spend in a year," said Douglas Lloyd Somerville of Lloyd Bruce Home Collections, a high-end furniture store.

Nonetheless, Yan said some Vancouver neighbourhoods may appear to be very dense, but actually are not.
“Hopefully, this will be part of a larger discussion about housing affordability and economic and physical development” in Vancouver, he said in a statement.

Friday, March 15, 2013

Home Sales Continue at Modest Pace: Pent-Up Demand Growing

Vancouver, BC – March 14, 2013.  The British Columbia Real Estate Association (BCREA) reports that a total of 4,501 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during February, down 23.6 per cent compared to February 2012. Total sales dollar volume was down 29.9 per cent to $2.39 million. The average MLS® residential price in the province was $514,134, up 3.1 per cent from January, but down 8.1 per cent from a year ago.
"BC home sales continued at a modest pace in February,” said Cameron Muir, BCREA Chief Economist. “Despite improved affordability, many potential buyers and sellers remain in a holding pattern. With pent up demand now becoming latent in the market, it’s not a matter of if, but when home sales rise above their current pace."
“An unusual spike in the average MLS® residential price in February 2012 is largely responsible for the year-over-year percentage change,” added Muir. “Most BC markets have experienced relatively stable price levels during the first two months of the year.”
Year-to-date, BC residential sales dollar volume declined 24.6 per cent to $4.1 billion, compared to the same period last year. Residential unit sales dipped 19.6 per cent to 7,911 units, while the average MLS® residential price was down 6.2 per cent at $523,117.

Friday, March 8, 2013

China’s housing crackdown may drive cash to Canada’s condo market

by Garry Marr

Foreign buyers are trying to move their money to a safer spot for capital preservation. They are looking for hard assets and the condo sector has a track record of increasing prices. The bad news for China’s real estate market could be good news for Canada’s condominium market.

A crackdown on real estate ownership in the world’s most populous county might translate into Chinese citizens looking to move more of their money abroad, with Canada a leading destination. “Absolutely it will have a positive impact [on the condo sector],” said Benjamin Tal, deputy chief economist with CIBC World Markets. “If it’s softening now, it will soften less rapidly than otherwise. This is a positive move because some of the money will find its way to Canada.”

The Shanghai Stock Exchange Property Index was off as much as 9.3% following news of the crackdown Monday, which will include increasing down payment requirements on second-home mortgages and tougher implementation of a 20% capital gains tax on property sales.

The country’s two largest condo markets — Vancouver and Toronto — can probably use a boost. RealNet Canada Inc. reported last month that new home high-rise sales across the Greater Toronto Area dropped to 686 in January from 744 a year earlier and 1099 in 2011. There has been less pressure on values with the group’s index showing only a 2% increases in condo prices from a year ago on a square foot basis.

In Vancouver, the real estate board for the metro area said Monday that sales for existing apartment properties were down 25.5% in February from a year earlier. Prices were also down 3% in that asset class from a year ago. Ben Myers, vice-president of Urbanation Inc., which does research on the condo sector in Toronto, said the impact of foreign investors remains unclear.

“A lot of foreign investment comes through a subsidiary so there is no way to figure it exactly out,” said Mr. Myers. By his firm’s estimates, only about 10% to 15% of investors come from abroad and only about 5% of those people have their name on the direct purchase of sale.

“It’s a small amount,” said Mr. Myers about the number of people who might come from China to invest. Even at a small amount, those people would be welcome in the condo sector, given sales are not quite as robust as past years. Realtor and developer Brad Lamb says every time there is a crackdown abroad, it’s good for the Canadian market.

“Foreign buyers are trying to move their money to a safer spot for capital preservation. We see that a lot from more politically risky countries,” said Mr. Lamb. “They are looking for hard assets and the condo sector has a track record of increasing prices.”

While Mr. Myers speculated that tighter rules out of China could be bad for the Canadian real estate market if the Chinese government restricts money leaving the country, Mr. Lamb said that might mean foreign buyers are unlikely to sell here.

“There is no way in the world they are going to bring the money back,” said Mr. Lamb. “They’ve done that as a safe haven. You have money in Toronto, you leave it here.” He said one of the methods of bringing cash into Canada via real estate is to have a student going to school here. Other times, the money is transferred to relatives.

“What makes it attractive is the scale here. We are talking $300,000 to $400,000 condos. There are few places in world you can buy that in that price range and have someone run it,” said Mr. Lamb. “It’s much harder to bring money into other countries. We have a very easy and open pipeline of Chinese money.”