Ben Chimes Vancouver Real Estate Market Update
Ben Chimes Vancouver Real Estate Market Update
This was a great interview on CKNW about Vancouver's Housing Market with Tsur Sommerville. It's a real economist's impartial point of view. Have a listen, it's only 6 minutes long. If you have any firther questions about the Real Estate Market, please don't hesittate to contact me: firstname.lastname@example.org
There is lots of talk regarding Real Estate in Canada (and Worldwide) as the Market is going through a shift. Prices are down compared to the same quarter last year, and demand is slightly lower. Experts expect the Market to flatten for the rest of 2012. Though some good news is Canada is on the better end of the Worldwide Real Estate Market.
Read the full article from the Vancouver Sun here:
I am a proud recipient of a 2011 Medallion Award, for the second year in a row! This award is given by the Real Estate Board of Greater Vancouver to recognize the accomplishments of top producers, meaning the winners are in the top 10% and excel in combined MLS Listings, sales and dollar volume.
I am also a RE/MAX Platinum Club Member, which is the second higher sales award level that RE/MAX awards it's associates.
Here's hoping for continued success in 2012!
Good news for all of you who are eligible for an HST New Housing Rebate! The cap level has been increased from $525,000 to $850,000, meaning a higher maximum rebate of $42,500 (from $26,250). Pending approval by the BC Legislature, these changes will be effective from April 1 2012 to March 31 2013 (when HST is transitioned back to PST/GST).
Today, the Provincial Government announced a temporary one-time refundable personal income tax credit worth up to $10,000 for First Time New Home Buyers. Details are can be found here , and are summarized below.
From the BC Budget website:
Subject to Approval and effective February 21, 2012 to March 31, 2013, this First Time New Home Buyers' Bonus is a one-time refundable personal income tax credit worth up to $10,000. To qualify as a first time new home buyer:
-You purchase or build an eligible new home in BC
-You (and your spouse/common law partner) have never previously owned a primary residence
-You file a 2011 BC resident personal income tax return, or if you moved to BC after December 31, 2011, you file a 2012 BC resident personal income tax return (you will not be eligible if you move to BC after December 31, 2012)
-You are eligible for the BC HST New Housing Rebate
-You intend to live in the home as your primary residence
An eligible new home includes new homes (i.e. newly constructed or substantially renovated) that are purchased from a builder and that are owner built.
The bonus will be available in respect of new homes purchased from a builder where:
-A written agreement of purchase and sale is entered into on or after February 21, 2012
-HST is payable on the home
-No one else has claimed a bonus in respect of the home
The bonus will be available in respect of owner built homes where:
-A written agreement of purchase and sale is entered into on or after February 21, 2012
-Construction of the home is complete or the home is occupied before April 1, 2013
-No one else has claimed a bonus in respect of the home
A substantially renovated home is one where all or substantially all (generally 90%) of the interior of a building has been removed or replaced.
Amount of the Bonus:
The bonus is equal to 5% of the purchase price of the home (or in the case of owner built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000. The bonus will be reduced based on an individual's/couple's net income (see website for the formula).
Individuals must apply for the bonus through the BC Government (forms will be posted later this year). Applicants will be required to submit documentation demonstrating eligibility for the bonus.
For more information:
INCOME TAXATION BRANCH
Ministry of Finance
Province of British Columbia
(T) 250-387-3332 or 1-877-387-3332
Friday, September 2, 2011 - News release from the Greater Vancouver Real Estate Board
VANCOUVER, BC – August marked the third consecutive month that home sale activity in Greater Vancouver was below the 10-year average for the month. In contrast, home listing activity in the region has exceeded the 10-year norm every month since the beginning of the year.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) reached 2,378 in August. This total represents an eight per cent increase compared to the 2,202 sales in August 2010, but also ranks as the third lowest total for August in the last 10 years.
“MLS® statistics continue to indicate that we’re in a balanced market,” Rosario Setticasi, REBGV president said. “However, with a sales-to-actives listings ratio of 15 per cent, Greater Vancouver is in the lower end of a balanced market and has been trending toward a buyers’ market over the past three months.”
New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,685 in August. This represents a 24.9 per cent increase compared to August 2010 when 3,750 properties were listed for sale on the MLS® and an eight per cent decline compared to the 5,097 new listings reported in July 2011. Last month’s new listing total was the highest volume recorded for August in 16 years.
At 15,437, the total number of residential property listings on the MLS® increased 1.4 per cent in August compared to July 2011 and rose 0.1 per cent compared to this time last year.
The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 8.5 per cent to $625,578 in August 2011 from $576,597 in August 2010.
“Year over year, prices are up. However, in the detached home category, benchmark prices have come down slightly in each of the past two months,” Setticasi said. “It’s important for people entering the market to understand that activity can differ significantly depending on the area and property type.”
Sales of detached properties on the MLS® in August 2011 reached 1,020, an increase of 14.2 per cent from the 893 detached sales recorded in August 2010, and a 25.4 per cent decrease from the 1,367 units sold in August 2009. The benchmark price for detached properties increased 11.7 per cent from August 2010 to $888,243.
Sales of apartment properties reached 955 in August 2011, a 2.1 per cent increase compared to the 935 sales in August 2010, and a decrease of 34.8 per cent compared to the 1,464 sales in August 2009. The benchmark price of an apartment property increased 5.6 per cent from August 2010 to $407,457.
Attached property sales in August 2011 totalled 403, a 7.8 per cent increase compared to the 374 sales in August 2010, and a 33.9 per cent decrease from the 610 attached properties sold in August 2009. The benchmark price of an attached unit increased 4.5 per cent between August 2010 and 2011 to $511,433.
The real estate industry is a key economic driver in British Columbia. In 2010, 30,595 homes changed ownership in the Board's area, generating $1.28 billion in spin-off activity and 8,567 jobs. The total dollar value of residential sales transacted through the MLS® system in Greater Vancouver totalled $21 billion in 2010. The Real Estate Board of Greater Vancouver is an association representing more than 10,400 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR®.
Climbing home prices and tighter mortgage rules are closing doors to the real estate market for some new homebuyers, contributing to a near 15 per cent year-over-year decline last month in Canadian home sales.
The national average home price rose by eight per cent in April even as housing sales fell by 14.7 per cent from the year before, according to data released Tuesday by the Canadian Real Estate Association.
"Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers," said Gregory Klump, CREA's chief economist.
Those changes, which actually took effect midway through March, cut the longest possible amortization period to 30 years from 35 years, an effort to curb high-risk borrowing. However, it also forced some potential buyers out of the market who couldn't afford the higher monthly payments for the shorter period.
The new rules had already left a mark on existing home sales during the previous quarter as home sales surged to their highest level in a year as buyers rushed in to beat the tougher restrictions, said Leslie Preston, an economic analyst at TD Economics.
"We don't expect the first quarter's pace to be sustained (through the rest of the year) and April's reading sets the stage for an expected softening," she said.
Meanwhile, similar government moves last spring that made it harder to qualify for a mortgage, and that gave sales a boost last April that amplified the year-over-year decline even further.
"Last April, several transitory factors artificially boosted sales. This included the impending tightening of mortgage rules, speculation about higher interest rates and the looming introduction of the HST in some provinces," said Klump.
He said that additional measures to tighten mortgage rules and other factors made it difficult to compare the latest results to a year earlier and reliably gauge the impact of the mortgage rule changes.
Further adding to pressure on buyers, the national average home prices rose by eight per cent to $372,544 compared to last April -- the third consecutive month in which the national average price rose by eight per cent from year ago levels.
A boom in sales of multi-million dollar properties, largely in the Greater Vancouver area, has been skewing the average home price upward in recent months. Average home prices in British Columbia were up 16 per cent, double the national average -- sending the country-wide average higher.
"Higher end home sales in Greater Vancouver and Toronto had their best April ever," Klump said.
In Vancouver, average home prices were $879,039 last month. In Toronto, they were up to $477,407. Excluding Toronto and Vancouver, seasonally-adjusted prices dipped 0.5 per cent to $367,600, said BMO Capital Markets economist Robert Kavcic.
While demand for high-end properties fell in April compared to March, so did sales of lower-priced properties, helping to keep average home prices high.
The number of newly listed homes edged up 1.3 per cent in April from March, but remained well below levels in January and February, when the coming mortgage rule changes were announced.
"New listings are down a hefty 15 per cent year-over-year, one big reason why prices remain lofty despite moderating sales activity. This is especially true in pricier markets like Toronto (-29.9 per cent year-over-year) and Vancouver (-23.4 per cent year-over-year)," Kavcic said.
The total number of homes sold on CREA's Multiple Listing Service in April fell to 16,525 from 17,937 a year ago. On a seasonally adjusted basis, sales were down 4.4. per cent from March of this year.
Declines were largest in some of Canada's most expensive and active markets, including Toronto, Vancouver and British Columbia's Fraser Valley. Still, sales activity in April was up from last year in a number of local markets, the association said.
Year-over-year comparisons should become less pronounced in the coming months, as last year sales dipped 17 per cent in May and June, Kavcic said.
"Canada's housing market appears well balanced overall, with the ratio of sales to new listings bang on its long-run average, though some local markets are clearly hotter than others," he said.
"Higher mortgage rates and now stricter mortgage rules should keep sales and prices well behaved in the year ahead."
CREA said that the increases in newly-listed homes combined with fewer sales in April helped push more than two-thirds of local markets considered balanced.
The national sales-to-new listings ratio, a measure of market balance, stood at 52.5 per cent in April, down from 55.7 in March.
The number of months it would take to sell all of the listings on the MLS, another measure of supply and demand, was up to six months in April, up from 5.7 months in March.
Housing starts -- another key indicator of demand for homes -- were slower than expected in April, largely due to a decline in construction on multi-unit buildings such as apartments and condos. That was much weaker than economists had been expecting, as construction activity usually picks up in the spring.
A drop in housing starts and sales of previously occupied homes had been widely anticipated. However, the expected drop in home sales across Canada this year will be less than previously forecast because of stronger sales of mega-homes in British Columbia in the first quarter, the Canadian Real Estate Association said earlier this month.
CREA now expects that unit sales for 2011 will dip 1.3 per cent to 441,100, less than the 1.6 per cent decline it forecast in February.
National sales activity of homes sold on CREA's Multiple Listing Services should rebound by 2.6 per cent to 452,000 units in 2012, it added. That's in line with the previous forecast and the 10-year average for annual activity.
The national average home price is forecast to rise four per cent in 2011 to $352,500 and by 0.9 per cent to $355,800 in 2012. If that prediction is to hold true, prices will have to fall nearly six per cent in coming months from the $372,544 average price reported in April.
Article via CTV News - www.ctvbc.ctv.ca
News release from the Real Estate Board of Greater Vancouver
Vancouver, BC - The Greater Vancouver housing market remained in balanced market conditions in January, although higher levels of buyer demand were seen in some of the region’s largest communities.
The number of properties listed for sale and those sold on the Multiple Listing Service® (MLS®) last month outpaced the 10-year average in both categories for January.
“There was a healthy balance between the number of home buyers and sellers in our market in January, but there’s always variation in activity from region to region,” said Jake Moldowan, president of the Real Estate Board of Greater Vancouver (REBGV). "We’re seeing strong sellers’ market conditions in areas like Richmond and the west side of Vancouver.”
Over the last 12 months, the MLSLink® Housing Price Index (HPI) benchmark price of detached homes increased 22.6 per cent in Richmond and 12.2 per cent in Vancouver West. In comparison, detached home prices across the region increased 2.7 per cent over the same period.
“When you’re looking to buy or sell a home, it’s important to familiarize yourself with the wider trends in the market. It’s equally important to seek out knowledge of your local area so you understand current market conditions in your neighbourhood,” Moldowan said.
Looking across the region, the REBGV reports that residential property sales in Greater Vancouver reached 1,819 on the MLS® in January 2011. This represents a 4.2 per cent decline compared to the 1,899 sales recorded in December 2010, a decrease of 5.4 per cent compared to the 1,923 sales in January 2010 and a 138.7 per cent increase from the 762 home sales in January 2009.
From a historical perspective, January’s 1,819 homes sales slightly surpassed the 1,790 home sale average recorded in the region over the last ten years.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,801 in January 2011. This represents a 6.7 per cent decrease compared to January 2010 when 5,147 properties were listed, and a 182 per cent increase compared to December 2010 when 1,699 homes were added to the MLS® in Greater Vancouver.
At 10,438, the total number of residential property listings on the MLS® increased 5.8 per cent in January compared to last month and increased 2.2 per cent from this time last year.
Sales of detached properties on the MLS® in January 2011 reached 793, an increase of 12.5 per cent from the 705 detached sales recorded in January 2010, and a 171.6 per cent increase from the 292 units sold in January 2009. The benchmark price for detached properties increased 2.7 per cent from January 2010 to $810,045.
Sales of apartment properties reached 713 in January 2011, a decline of 20.8 per cent compared to the 891 sales in January 2010, and an increase of 97.5 per cent compared to the 361 sales in January 2009.The benchmark price of an apartment property increased 1.4 per cent from January 2010 to $390,935.
Attached property sales in January 2011 totalled 313, a decline of 4.3 per cent compared to the 327 sales in January 2010, and a 187.2 per cent increase from the 109 attached properties sold in January 2009. The benchmark price of an attached unit increased 2.6 per cent between January 2010 and 2011 to $495,140.
The real estate industry is a key economic driver in British Columbia. In 2009, 35,669 homes changed ownership in the Board's area, generating $1.49 billion in spin-off activity. The total dollar volume of residential sales transacted through the MLS® system in Greater Vancouver totalled $21.19 billion in 2009. The Real Estate Board of Greater Vancouver is an association representing more than 10,000 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®.
The house Manyee Lui is showing today is listed at $2.2 million. Although the lot is only 33 feet wide and the house is nothing more than a blandly handsome two-storey, Lui expects it to sell quickly, even though the market’s turned a little tepid. With 2,900 square feet, the place is big enough for four bedrooms and an additional self-contained suite. All things considered, she says, “It’s not so expensive.”
Lui is simply telling it like it is: This house in the Dunbar neighbourhood may not be anyone’s idea of a dream home, but it delivers respectable accommodation for a reasonable price, at least by the standards of Vancouver’s west side. With a standard city lot trading hands for around $1.4 million and construction costs running at least $200 a square foot, it doesn’t take much of a house to hit the $2-million mark. And this summer and fall, as real estate markets wilted in most of the country, vertigo-inducing prices for properties on Vancouver’s west side held steady or even edged a little higher.
The question a lot of people were asking is, Who on Earth is buying them?
Lui explains why she’s so confident the home will sell: “It will appeal to a buyer from China.” She allows there was a time when Chinese buyers’ architectural preferences differed significantly from the local norm, but over the last 10 years their tastes have widened and become more westernized. Now long-term Vancouverites and incoming Chinese are seeking almost exactly the same thing—except, Lui says with a laugh, “we can’t afford it.”
True. When Lui says “we,” she’s talking about the locals, people who make their living in Vancouver. Now that the forestry industry has been eclipsed and the place has a median household income that is only average by Canadian standards, Vancouver is a city with no visible means of support. The affordability ratio has rocketed upward so quickly that it is now the steepest on the continent: more than double the Canadian average and more onerous than in places like New York and San Francisco. No wonder Vancouver is at the top of the media’s suddenly urgent bubble watch, not just in Canada but also in the United States; outlets ranging from Reuters to Businessweek have reported on a housing market they suspect is ripe for the kind of downfall the Americans are only too familiar with.
If “buyers from China” answers the “who” question about Vancouver’s unique real-estate market, the follow-up question—“Where is this leading?”—is harder to answer. The torrid affair between eastern Asia and Vancouver real estate, now in its third decade, is actually a love triangle from which each party derives very different things. When wealthy Chinese immigrants buy property in Vancouver—and they utterly dominate the top end of the market—they’re actually buying a form of insurance. What the federal and provincial governments get out of these newly minted Canadians turns out to be a modern form of the infamous head tax that was imposed on Chinese migrants in the 19th century. And what Vancouver gets is an economy that boasts a lot of froth, and not much substance. From all three angles, it feels like a relationship that is built not so much on Commitment as on enjoying the good times while they last.
In 2003, renowned Vancouver architect Bing Thom remarked that his city was becoming “the Switzerland of the Pacific.” The Hong Kong-born Thom was referring to the way the city offered a safe and comfortable harbour to elites from around the Pacific Rim in search of fresh air, good schools and geopolitical peace of mind. About the same time, Andrea Eng heard a Korean billionaire refer to the city as “the Geneva of the Pacific.” Eng, who has spent most of the past two decades brokering deals on both sides of the Pacific for Li Ka-Shing—the world’s wealthiest Chinese businessman—picked up on the phrase and began to use it on her website. By 2009, the concept had received academic validation, after University of British Columbia historian Henry Yu invoked it in a journal article about the network of Asian-born and -descended Canadians who link this country to the world’s newly dominant economic zone—a place that will increasingly determine Canada’s own prosperity. “Vancouver, in particular, is an incredibly sought-after location,” he says.
Yu is careful to add a caveat, though. Vancouver is popular as a lifestyle destination for those who can afford it—not as a place to make a living. More ambitious immigrants, Asian and otherwise, are more likely to choose Toronto. In fact, British Columbia (which essentially means Greater Vancouver) receives about 15% of all Canadian immigrants, which, given its population, is only slightly more than its proportional share. On the other hand, it gets about half of the annual 10,000 or so people who can prove they are already wealthy and therefore eligible for easier, if more expensive, rides in the entrepreneur and investor classes. And the rest of Vancouver’s 15% share fits a distinctly different profile than do immigrants to places like Toronto and Montreal: more skilled and better educated, and much less likely to arrive as refugees.
A couple of kilometres east of Dunbar, in the old-money Shaughnessy neighbourhood, Lui is showing another home—a 1920 Georgian listed at a hair under $5 million. Here the seller is an immigrant from China who’s building a larger home. The buyer will likely be from China as well: Lui estimates that up to 80% of recent sales in this price range have been going to buyers from mainland China.
Moving a little downmarket, the proportions are lower but still significant. At Wesbrook, a high-rise development on the University of British Columbia campus where units typically run $1.5 million to $2 million, some 40% to 50% of buyers are from mainland China, according to George Wong of Magnum Projects, which markets condos for Wesbrook’s builder, Aspac Developments. Another 30% of units go to longer-term Canadians of Chinese descent. Across the Fraser River in Richmond, at a massive new development called River Green (average condo price: $930,000), the proportions are roughly the same.
UBC geographer David Ley has attempted to address the question of “Who’s buying these places?” in a different way, checking sales data for Vancouver neighbourhoods against variables like interest rates, unemployment levels and house construction—none of which correlated well. Instead, the strongest indicators of price movement were related to international investment and immigration. The arrival of other Canadians from elsewhere in the country actually dampened prices. The same effect showed up when Ley widened his lens to Greater Vancouver: The highest values occurred in areas with high immigrant populations and a predominant Chinese ethnicity. So Vancouver may be the first North American city where the phrase “there goes the neighbourhood” should be uttered when a Caucasian moves in next door.
The data used in Ley’s study are more than a decade old, but the same conclusion springs from the relationship between Vancouver’s west side—home to neighbourhoods like Dunbar and Shaughnessy, as well as the downtown peninsula—and the City of West Vancouver, which is just across the Lions Gate Bridge and boasts a beautiful mountainside setting right on the ocean. The two areas have always contained the region’s highest-priced real estate, with West Vancouver’s bigger houses on bigger lots historically 10% or 20% more expensive. However, West Vancouver is less appealing to Chinese immigrants and, at least partly as a consequence, homes on the west side of Vancouver proper have been appreciating much more quickly—by 66% in the last five years compared to West Vancouver’s 23%, according to the Real Estate Board of Greater Vancouver’s benchmark index.
Price increases of that sort are irresistible to smaller-scale residential renovators and developers, who have been transforming the west side and other Asian-preferred areas such as Vancouver’s east side and suburban Richmond at breakneck speed. On some blocks in Dunbar, virtually the entire stock of mid-sized homes from the 1920s through to the 1950s has been replaced by 3,500- and 4,000-square-foot open-plan designs with exteriors dressed up to look like bank managers’ manses from the turn of the 20th century. Houses like these, which executives or energy traders might pay $1.5 million for in Toronto or Calgary, and engineers and educators might pick up for $800,000 or $900,000 in Winnipeg, sell for $2.5 million to $3 million each.
Back in the late 1980s, before Tiananmen Square kicked off the great Vancouver land rush, it would have taken a particularly prescient forecaster to pluck Dunbar from among the west side’s also-ran neighbourhoods and anoint it as a contender. The area is largely deficient in the mountain and ocean views that can add several hundred thousand dollars—millions at the high end—to the value of a home. But it does benefit from another feature that most Asian immigrants view as more important: its proximity to the region’s best schools. UBC is handy, several of Vancouver’s best private schools are located in the area, and even its public schools score near the top of the Fraser Institute’s annual ranking of B.C. schools.
A common scenario for an investor immigrant from mainland China unfolds like this, explains immigration lawyer Steven Meurrens: One member of the household qualifies under a category of the Business Immigration Program and posts a $120,000 bond in lieu of making the $400,000 investment stipulated under the program. (Some qualify instead as “provincial nominees,” and follow a somewhat different scenario involving an actual investment.) Portions of the money are divvied out to various immigration advisers and service providers, while the interest accrues to the federal government, which in turn spreads it around to provincial governments—about a half billion dollars annually of late. Essentially, the money is treated as the cost of Canadian entry—although in a further wrinkle, many breadwinners never move to Canada, instead retaining their offshore jobs or businesses as well as Chinese citizenship, to maintain their income stream and taxpayer status in China, which helps shelter income from higher Canadian taxes.
Researching places to live in Vancouver is simple enough: There’s a vast network of expats to survey, and Chinese-based websites discuss favoured neighbourhoods in considerable detail, with special attention paid to schools. Typically, one of the parents, usually the wife, moves to Canada with the children while the husband stays in Asia, coming for visits when he can.
This arrangement is a rational response to the reception immigrants typically receive: High-status entrepreneurs or executives back home, they are rarely given an opportunity to duplicate that success here, and instead are often relegated to work in retail, in restaurants or even delivering newspapers. The syndrome was outlined in a 2007 Statistics Canada report indicating that new immigrants’ incomes have recently been dropping compared to previous eras. “There was unanimous sentiment among all respondents that economic success in Canada, even limited success, was extremely difficult to achieve,” confirmed UBC’s David Ley, after conducting dozens of interviews and focus groups for his 2010 book on Vancouver’s Chinese phenomenon, Migrant Millionaires.
The children, meanwhile, are enrolled in private or public schools, quickly picking up English—complete with the Canadian accent, which is preferred to British- or Australian-sounding speech or regional American accents. When they have graduated from high school or, more likely, university, the sons and daughters may return to Asia to take over the family business from their father. At that point, the couple may retire to Vancouver—a place that women in particular grow to appreciate—or the entire family may return to Asia, ending the cycle, which, as Ley points out, could more accurately be termed one of “migration” rather than “immigration.”
The scenario is a generalization, of course, and every story is different. Take the experience of Fang Chen. A litigation lawyer back in China, Chen arrived two years ago, while her husband stayed behind to manage a successful business, visiting when he can. Their son, now 6, arrived in Canada to start school this year. Chen is boning up on the Canadian legal system, but has no plans to join the bar here, because, she says, “it would be almost impossible for me to break in.”
The couple bought a house in Port Coquitlam, a middle-income bedroom suburb nearly an hour’s drive east of central Vancouver. To the free-thinking Chen, the place holds an advantage: The proportion of Chinese is among the lowest in Greater Vancouver. “I want my son to know more about Canadian culture,” she says. “I didn’t want a neighbourhood where most of the children are Chinese.” If all goes according to plan, Chen and her son will rejoin her husband back in China in about two years, after the son has become fluent in English and has gained a jump-start from an education system that Chen views as more enlightened than China’s. Joint Chinese-Canadian citizens, the family may well return at another stage of his education—another common trait of Chinese parents, who often see an advantage in blending the rigorous but also rigid system back home and Canada’s more liberal approach.
Historian Yu, who is descended from families who were kept apart by Canada’s discriminatory Head Tax, views the growth of Canada’s Asian population not as a new phenomenon but as a renewal of North America’s Pacific ties. At the turn of the 20th century, B.C.’s population was about 10% Chinese—a proportion that was only regained around the beginning of the 21st century. The largely Chinese-constructed CPR was not so much an act of nation-building, Yu says, but rather a gamble by investors who hoped to cut transportation time to Europe for precious Asian goods like silk and tea. For most of the 20th century, Canada looked east toward Europe, the source of most immigrants and non-U.S. trade. But today more than half of all immigrants are from the Asia-Pacific region (more than 90% in B.C.), and trade across the Pacific easily exceeds its Atlantic equivalent.
Yu is optimistic that the resentment that bubbled up in B.C. during the late 1980s, when Hong Kongers and Taiwanese first began to arrive in large numbers, has subsided considerably. That animosity was a function of Canada’s legacy of white supremacy, he believes; of so many middle-income people—“accountants of empire”—having had it so good for so long. Vancouverites, especially younger ones, now see the real estate situation for what it is, a simple case of market economics, he thinks. “Almost no one under 40 cares,” he says, suggesting that Vancouver’s rapid transformation has been relatively painless, all things considered. Even in the wake of the arrival of a ship carrying Tamil asylum seekers, British Columbians remained more favourable to immigration than any other Canadians, according to a September Angus Reid Public Opinion poll. “In B.C. there’s a sense of a gain from immigration,” confirms Reid.
Still, it’s undeniable that there has been a downside to the influx of wealthy people; Bing Thom, whose firm has given Vancouver some of its most iconic buildings, expresses a common view when he laments how real estate prices have banished young families from close-in neighbourhoods, except for the increasing number who choose high-rise condos over houses. He also worries about the city losing the bohemian air that has always contributed to the Lotus Land effect: Where will all the chefs and designers live, let alone the artists and musicians? “We are emptying our city,” he says. “A lot of young people are forced to leave.”
At the same time, there’s a vein of thought that Vancouver’s recent focus on rezoning land to provide places to live—especially a downtown condo forest that has become the city’s defining feature—has left it with a dearth of office buildings and factory sites where all those new residents might actually be able to find work.
Still, if Vancouver must be on guard against some of the changes wrought by the influx, a city with an economy disproportionately dependent on the real estate industry must also be wary of the day the arrivals lounge empties. This past summer, when the pace of sales eased right across the country, the soul-searching in Vancouver was particularly intense, even though local prices did not decline. If a real estate slump were a mere reflection of Canadian circumstances, that would be one thing; but if a breakdown in the Asian relationship, that’s quite another.
Lynn Hsu owns Macdonald Realty Group, home base to Manyee Lui and almost a thousand other agents; since buying a single office in 1990, Hsu has turned the company into Western Canada’s largest realty operation, and she is well aware that Vancouver is vulnerable to changes in Asian investment and immigration. After 1996, when immigrants from Hong Kong stopped arriving and many in fact returned to Asia, real estate swooned, reviving only around 2002, when economic conditions improved and immigration from mainland China began to surge. Hsu says there is little agreement about what would happen to the market if China itself experienced a real estate meltdown of some sort. “One view is that it may have a negative effect,” due to the depletion of fortunes built on real estate and development (the primary contributor of wealthy migrants, alongside manufacturing and mining, she says). “But the other view,” she says, “is that Vancouver will look more appealing as people look for ways to get their money out of China.”
Hsu cites another factor that has the real estate industry on tenterhooks: the imminent doubling of requirements for investor and entrepreneur immigrant programs, raising minimum net worth to $1.6 million and minimum investment to $800,000. What will this change do to the supply of wealthy immigrants? “That’s the question everyone is asking,” says Steven Meurrens, the immigration lawyer.
Some 80% of immigrant investors are from Asia; at Immigration Canada offices in cities such as Beijing and Hong Kong, there are three-year backlogs of applicants who qualify under the old rules. Thus it will likely be years before the number of people arriving under the investor program dwindles. And as long as wealthy immigrants continue to arrive, pretty much everyone believes they’ll continue to buy homes here, rather than, say, invest in American cities where property is now much cheaper. “They’re here, not there,” says Hsu flatly. “They need a place to live.”
There’s also general agreement that a large proportion of Chinese immigrants won’t opt to rent instead of buying, even if the economics make more sense. “People in China always feel very insecure if they do not own their own house,” says Fang Chen. “Even those with a very low income will spend their savings to buy.” It’s a trait common to any country with an agricultural heritage and limited land, explains Tsur Somerville, an associate professor at the UBC Centre for Urban Economics and Real Estate. “There are some countries where the only collateral has been real estate.” Historian Yu even compares Vancouver real estate to a Swiss bank account—not for its secrecy, but for its rock-solid value and political peace of mind. The icing on the cake: Capital gains on a primary residence are tax-free in Canada.
So there’s a consensus of sorts: Vancouver real estate prices are unlikely to rise in the near future and may or may not fall. But if they do fall, the primary reason will not be a dearth of wealthy immigrants. That still leaves the bigger question: Is Canada’s third-largest city forever doomed to make its living selling condos, or will its connections and favoured geographic position translate into something new and significant? In other words, will it be New York, or will it be Halifax—a place haunted by a heyday it failed to exploit and can never recapture?
Most of those near the centre of the Vancouver/Asia nexus are inclined toward the more prosperous scenario. “Hong Kong was the entrepôt to China. Now that Hong Kong is part of China, Vancouver is the next stop, the Asian gateway,” says Thom. In a world connected primarily by air and electronics, the city’s isolation is no longer an issue, he says; second homes are being purchased and offices established because a place once seen as remote is now becoming central. Andrea Eng adds a classic Left Coast wrinkle to the same argument: “This is the best time zone in the world,” she says. “I get up at 3 or 4 in the morning and do all my Europe, Asia and East Coast e-mails, and then I go to yoga.”
Eng believes that the obsession with real estate is merely a phase for the adolescent city. True, she says, Asians get their first look at Canada’s huge expanse and say, “Let’s urbanize it!” But that impulse will pale compared to the continent’s appetite for Canadian resources, which is rapidly becoming the next chapter in this story. As ownership regulations loosen and Asian companies rush to secure their necessary shares, Vancouver, their North American toehold, will be in a position to wrestle away some of the action from places like Toronto and Calgary, not to mention Houston and London. Or so the theory goes. The desire to live here is certainly strong enough, Eng believes. A generation ago, many Asian immigrants landed in Canada as a consolation prize because the U.S. had lower quotas and stricter entry requirements. Opinions differ, but Eng thinks Canada is now a first choice, not a fallback. “It’s definitely preferable to the U.S.,” she says. “By miles.”
Meanwhile, there’s a sense that the rivets joining local and Asian economies are finally being hammered down. “The notion that there are limited business opportunities connecting Vancouver and Asia is an increasingly outdated one,” says Yuen Pau Woo, CEO of Vancouver-based Asia Pacific Foundation of Canada, a think tank charged with analyzing and supporting those links. He points out that many national and international legal and accounting firms are beefing up their Vancouver offices to serve the Asian market. In September, Vancouver mayor Gregor Robertson sought to capitalize on the China connections on an 11-day Chinese mission, with green technology the primary focus.
Even the apparent failure of many immigrant families to take root may be advantageous, thinks Woo. The foundation estimates there are as many as 600,000 Canadians living in Asia—an instant network in waiting. Given that there is arguably more human interaction between Canada and China than between any other OECD countries, there is nothing “heritage” about Vancouver’s Asia-Pacific status, unlike a city like San Francisco, the original would-be Geneva of the Pacific. Woo cites the recent spread of British Columbia’s White Spot hamburger chain in Asia as a case of “taste transfer” of a sort that will only accelerate as Asian and North American cultures become more intertwined.
At the same time, he says, “the opportunity to tap into Vancouver’s Asian knowledge and networks is grossly underutilized.” Asians and non-Asians alike often still see Vancouver chiefly as a retirement or lifestyle destination. “But the raw material to be a hub is already in place,” Woo argues. It’s a matter of “mobilizing, energizing and creating a critical mass of business, networking, and intellectual activity.”
Angus Reid the businessman has a slightly different take on Vancouver’s position than Angus Reid the sociologist. From the latter perspective, the city’s multiculturalism is paramount. But as CEO of Web polling firm Vision Critical, which is expanding rapidly around the globe, he seconds the views of Thom and Eng about Vancouver’s privileged position. “It is as mundane as time zones,” he says, “but Vancouver is also a really good source of talent.”
And maybe that’s a start: a high-end workforce if not yet a lot of high-end jobs. What Vancouver needs now is a hundred more enterprises like Reid’s that bubble up from within to capitalize on the talents of the multilingual and multicultural children of the multimillionaire immigrants, the folks who are now bussing tables and delivering papers. When that happens, maybe Vancouver will have finally found a way to parlay its Asian connections into an economy that’s capable of supporting its Swiss-watch lifestyle.
Article via The Globe and Mail