“It’s massive,” said veteran North Shore realtor Mike Lane. He’s talking about the influx of mainland Chinese buyers in the West Vancouver market, a trend that is rippling through other areas of the Lower Mainland.
“The numbers are staggering. Just today, a property at 1130 Crestline that sold in July 2013 for $2.4 million went for $4.1 million. We see this every day. A new house in the 2500-block Lawson recently sold at $4.75 million. That’s $1.5 million over what sales in that neighbourhood were a year ago.
“The influx of foreign money has definitely changed the landscape here.”
Lane had been working for a small-scale developer friend of mine, trying to find a property suitable for development on the North Shore. It was a frustrating project.
By Lane’s estimate, 75% to 80% of new homebuyers in his market are from mainland China. “Another 10% are builders for the Chinese market. As little as 10% are local buyers.”
Our region has long been enriched by people from other countries moving here, but there are indications that some of this real estate investing is about moving money here, not people.
“Many of these buyers are buying several properties, not just one,” said Lane.
Although some of the newly purchased homes sit empty and some are rented out or leased back, Lane pointed out that buying multimillion-dollar homes for rental income doesn’t make financial sense.
“Buyers are gambling on capital appreciation.”
Or they want to protect their capital in a stable country.
There is much to like about this buying spree. My friends who are selling are over the moon. Realtors, builders and some bankers are flying high. Everyone who owns real estate in the Lower Mainland is riding the lift.
But there’s also a downside, whether buyers parking money are from China, New York, Iran or Fort McMurray or whether they’re Canadians investing in Phoenix. Local people who have to depend on their working income to buy a home are being pushed out of the neighbourhoods they want to live in.
The effect is that businesses may have to hire a lot of younger, inexperienced people without children who don’t mind renting or older empty-nesters who will settle for a small living space. People at the prime of their careers – even with high-earning spouses – who want to own a home within reasonable commuting distance can’t afford to come here.
Local workers get the squeeze. Absentee owners get the welcome mat.
Peter Ladner ([email protected]) is a co-founder of Business in Vancouver. He is a former Vancouver city councillor and former fellow at the SFU Centre for Dialogue. He is the author of The Urban Food Revolution.
