Wow! Have you been following the string of unbelievable real estate sales occurring in Vancouver lately? Typical single-family detached homes and luxury mansions alike are being snapped up faster than ever before, and for unpredictably large sums.
For the second time in a month, a single-family home on the city’s sought-after West Side was sold for seven figures over its asking price; the deal firmed up for $4.19M, which is a cool $1 million more than the home’s original $3.188M list price.
The 3,100 square foot 4-bedroom bungalow joins an ever-growing list of properties that have garnered incredible ‘oh-my-gosh-that-cant-be-right’ prices, framed by what is already a record-smashing real estate market for Vancouver. Outside of its ‘in-demand’ location, this slice of prime property boasts an extraordinary quality that elevates it above similar, but less noteworthy, homes: a truly killer view! As you can see from the photos below, the 1945-built home is a far cry from the luxe living of, say, a $51M Point Grey mansion, but views of the ocean, North Shore mountains, and downtown core proved to be an extremely compelling selling feature for this tidy bungalow.
Images courtesy of Elementom
What’s unclear is whether the property will remain a single-family home: the selling agent says the 44-foot lot would be ideal for the buyer to “hold and build,” replacing the long-standing 1945-built residence (MLS). If the buyer does decide to rebuild, they may face resistance; controversy has been brewing for months surrounding the ‘teardown’ trend that has been sweeping the city. Vancouver Counselor Adriane Carr protested the teardown of a $7 million mansion in the Shaughnessy neighbourhood, stating that it was a “perfectly good home”, less than 20 years old, and demolishing it down would go against the city’s efforts to be greener (CTV).
Also stirring up similar opposition to the wrecking ball is a 95-year-old English Tudor residence in Shaughnessey. While The Vancouver Heritage Foundation, and its sympathizers, have loudly protested the destruction of such a rich piece of Vancouver’s history, the fate of the building is still undecided. (Tour some of Vancouver’s Heritage Homes here!)
The backdrop to these record-breaking transactions is, of course, a red-hot Vancouver real estate market, where climbing home prices show no signs of slowing down, and nobody is forecasting a meltdown any time soon. A senior economist at BMO Nesbitt Burns, Robert Kavcic, recently wrote: “Odds are that if this kind of price growth continues, it will end badly – but that still looks to be some time down the road,” (CTV News).
So, just how expensive (and problematic) has the market become? The benchmark price in Greater Vancouver for detached houses in March reached a new high of $1.34M, which translates to a gain of 27.4 per cent from a year earlier. Pundits seem to agree that the steady ascent of home prices is being supported and propelled by three major factors: historically low interest rates, a boom in foreign investment (from August 2014 to February 2015 about 70 per cent of all detached homes sold on Vancouver’s west side were purchased by Mainland China buyers, representing $525M in sales [The Province]), and a lack of freehold housing stock in an area hemmed in by mountains (there were only 7,358 residential listings of all housing types last month, down from a worrisome 40.5 per cent from a year earlier). (Globe)
Even Vancouver’s pricey ‘luxury’ sector has not escaped the effects of the frenzied pace and skyrocketing prices. Historically, it has been a less-active, slower-moving niche market that operates by a slightly different set of market dynamics, but in the past year, we’ve seen a spike in the number of transactions; ‘elite-end’ homes made up the bulk of Vancouver’s real estate transactions in March, contributing to the highest number of sales ever recorded for any month in Greater Vancouver. Also, according to real estate experts, luxury properties that would typically take at least four months, or more, to find a buyer are now being snapped up in half the time (for millions of dollars above their assessed value!)
Image courtesy of the Vancouver Sun
Case in point: One Belmont Avenue property in the prestigious Point Grey neighbourhood sold in just 20 days for $31.1-million ($5.51-million above its assessed value for July 1, 2015). A property in Vancouver’s Shaughnessy area neighbourhood fetched $27-million in March, going for $6.34-million over its assessed value, while another Shaughnessy mansion sold for $22.3-million, $4.8-million over its assessed value (Globe).
To complicate matters, there is growing concern that rising house prices are significantly inflated, due to a controversial practice that is currently plaguing Vancouver real estate: ‘shadow flipping’. Essentially, the practice involves brokers reselling a property multiple times before a deal closes and profiting from each transfer using the assignment clause in sales contracts. Here is a great read that breaks down the practice and its consequences.
There does not seem to be an equilibrium in sight, distressing many Torontonians and Vancouverites alike (especially first-time buyers trying to break into the market) and keeping us on our toes. But on the bright side, the phenomenon of the Toronto and Vancouver real estate markets is providing real estate pundits with fascinating new information, insights, and ideas. After all, these markets are precedent-setting, having broken every record, and tossed many familiar formulas out the window.
What an exciting time it is for real estate, unless you’re a Buyer!
If you’re a lover of real estate consider checking out my Toronto blog at Urbaneer.com for more real estate insight and information, as well as valuable content on housing, culture and design!
~ Steven Fudge, the purveyor of canadianrealestatehousingandhome.ca and proprietor of urbaneer.com, a division of Bosley Real Estate Ltd., Brokerage.
