Editorial: Residential real estate takes a dive

It may be coincidental that sales of detached homes in Metro Vancouver dropped by as much as 86 per cent from Aug. 1 to Aug. 15 over the year-earlier period at the same time as the foreign buyers tax came into effect. After all, how many times have we heard that correlation does not imply causation?

The B.C. government says it is too soon to conclude how the real estate market has responded to the 15-per-cent tax introduced Aug. 2. Some analysts say the market peaked in February and has been self-correcting, down 30 per cent in most areas since May, as reported by Business In Vancouver, and heading for a soft landing.

So, there must be other explanations for the market suddenly falling off a cliff. Perhaps all homebuyers took the first two weeks of August off for vacation. Or perhaps the foreign buyers said to be driving the market all ran out of money at the same time. Or maybe market demand was sated on July 31 and everyone who wanted to buy a house had one. Or could it be that word of mouth got out that Vancouver isn’t so great?

Given that areas not subject to the tax did not experience the same dramatic declines — detached home sales in Squamish this month, for example, matched the number last year — we’re speculating that the new tax had something to do with it. And let’s go out on a limb here, some price erosion is likely to follow. Indeed, there is some evidence that benchmark prices are either falling or stagnant after a rapid run-up in previous months.

As Postmedia reporter Sam Cooper wrote on Friday, a house on West 15th Avenue listed at $4 million sold this month for $3.8 million. Last August, a similar house nearby listed at $4 million sold for $5.86 million.

Zolo Realty BC Inc., cited in the Business In Vancouver report, says that as of Aug. 22 the average home price in Vancouver dropped 17.1 per cent from July 25 to $1.1 million.

With sales of detached homes in West Vancouver dropping from 59 during the first half of August last year to just nine this year, and on the West Side 72 to 15, and in Richmond 89 to 12, the concerns of the real estate industry are understandable.

But the public wanted the government to cool the market. For now at least, it appears the Christy Clark government put it into the deep freeze

Editorial: Residential real estate takes a dive

Remember The Famous Vancouver Teardown Shack that Sold For $2.5 Million, $80,000 Over Asking

For those that missed it….

Three weeks ago, when observing the ongoing lunacy in the Vancouver housing market, we mentioned the case of Canadian Bill Ring, head of operations for a property management company who, as Bloomberg quotes, said  “I don’t want to invest in stocks because they’re crazy and real estate is a solid, safe investment.”

Much to our chagrin we mocked Bill’s zest, adding that “if the housing market in Canada were overheating, you wouldn’t be able to get “bargains” like the listing shown below from Vancouver.”

 

http://www.zerohedge.com/news/2016-02-19/remember-vancouver-teardown-shack-it-just-sold-25-million-80000-over-asking

Local real estate board issues “call to action” against foreign buyers tax

SURREY (NEWS 1130) – The Fraser Valley Real Estate Board has added its voice to the growing number of organizations angry with the new 15 per cent tax targeting foreign buyers. The group is calling on its members to put the pressure on the provincial government to get rid of the levy.

The board, which represents realtors in places like Surrey, Delta, White Rock and Langley as well as communities farther east, has issued a “call to action” in an e-mail to its 3,000 members.

Board President Charles Wiebe says the tax which was implemented at the beginning of the month has hurt clients and the housing market. Wiebe adds it has also created what he calls an “unfair ripple effect.”

The board wants the provincial government to take another look at the tax and to change it. The e-mail says the number of failed deals in the region has doubled since the levy kicked in.

The Real Estate Board of Greater Vancouver has said up to 427 sales could fall through because of the tax. Earlier this month, the board released numbers which showed last month home sales in Vancouver fell to their lowest level since January.

 

Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month – “The Market Is Devastated”

Three weeks ago, when we looked at the long-overdue sudden change in the Vancouver housing market, long a receptacle for Chinese hot and laundered money, we found that as a result of the implementation of the 15% property tax implemented by British Columbia (something we recommended over a month earlier), that the Vancouver housing bubble has burst.

http://www.zerohedge.com/news/2016-08-18/vancouver-housing-market-implodes-average-home-price-plunges-20-1-month-market-devas

Vancouver Real Estate Mania

On January 29th, 2016, Vancouver went crazy.

The story of a humble 86-year-old home in Vancouver’s Point Grey neighbourhood was widely circulated by national media outlets and became a lightning rod for local frustration with skyrocketing property values.

The “knockdown”, with its rotting walls and $2.4 million asking price, perfectly underscored how crazy the region’s overheated housing market had gotten.

http://www.zerohedge.com/news/2016-06-03/vancouver-real-estate-mania

My Daddy’s Rich And My Lamborghini’s Good-Looking”: Meet The Rich Chinese Kids Of Vancouver

By now, the only people in the world who are not aware that Vancouver has been overrun by Chinese “hot money-parking” oligarchs, who rush to buy any and

Vancouver Home Prices
Vancouver Home Prices

 

http://www.zerohedge.com/news/2016-04-12/my-daddy%E2%80%99s-rich-and-my-lamborghini%E2%80%99s-good-looking-meet-rich-chinese-kids-vancouver

The Crackdown Begins: Chinese Bank Sues To Seize Vancouver Real Estate Assets

From the very beginning of Vancouver’s housing boom episode courtesy of an invasion of shady Chinese hot-money laundering home buyers, which has now officially driven the average list price of Vancouver single homes above $4 million…

authorities which apparently have no problem with a soaring housing bubble in their midst, finally crack down on these flagrant violators of China’s capital controls, whose children have been so openly flaunting their parent’s illicit wealth as

http://www.zerohedge.com/news/2016-06-28/crackdown-begins-chinese-bank-sues-seize-vancouver-real-estate-assets

Meanwhile In Canada, A Real Estate Bargain Emerges…

We’ve long known that Canada, like Sweden and Denmark, is sitting on a giant housing bubble.

Indeed we took a close look at the issue back in March of last year and have revisited in on several occasions since. Put simply, the divergence between crude prices and the country’s housing market simply isn’t sustainable a you can see from the following chart:

Canada Home Price Index
Canada Home Price Index

 

http://www.zerohedge.com/news/2016-01-29/meanwhile-canada-real-estate-bargain-emerges

Vancouver Real Estate Goes Full-Retard; Average Home Price Now $1.8 Million

Last week we identified a “bargain” in Canadian real estate.

As you might recall, the Canadian economy is in a bit of a tailspin, and that goes double for the country’s dying oil patch. Indeed, we’ve documented Alberta’s painful experience with slumping crude exhaustively, noting that the steep decline in oil prices has triggered job losses (which hit their highest level in 34 years in 2015), depression, suicides, soaring food bank usage, and a marked uptick in property crime.

Through it all, parts of the real estate market in Canada remain red hot. In stark contrast to the millions of square feet of office space sitting vacant in beleaguered Calgary, Toronto and Vancouver are on fire.

Housing sales in the Toronto area rose 8.2% last month from a year earlier. The average selling price: $631,092.

http://www.zerohedge.com/news/2016-02-03/vancouver-real-estate-goes-full-retard-average-home-price-now-18-million