There’s Cause for Optimism in Vancouver and the Rest of BC
The BC economy is expected to expand nicely at 2.9% to 3.1% next year. BC exports are growing as new liberal international trade deals are increased and as our loonie keeps falling to .75US.
CMHC believes there will be 30,000 more households in BC next year, and that will support sales of rising new homes being built. Mortgage and borrowing rates will stay low, energy prices will stay low so it’s a superb business situation for BC companies who need the investment money.
BC’s latest jobs report is pretty good too. BC is leading the country with 12,400 jobs added, while the rest of Canada lost jobs. And 2016 has a nice look to it — supporting a healthy real estate sector.
The big controversy is the influx of Chinese investment money into the BC commercial and residential real estate sector. If the Asian markets continue sliding, more rich Chinese will be seeking to park their money in Vancouver, Kelowna, Calgary, and Toronto property. This is a short term financial anomaly that won’t continue so why bother trying to kill it?
A Better way to Manage the Influx of Billions
There are those who want to end the infusion of investment from Chinese property buyers.
Rather than making these investors use devious ways to buy property here, we could make it easier for them to buy in the Okanagan, Calgary, Edmonton, Regina and Toronto tax-free, since this investment money could go elsewhere instead. We could lose it all.
If Asian buyers can’t buy here, they will choose the US to park their cash. San Diego, Los Angeles, Seattle, Miami and New York are very attractive too. But Vancouver’s better.
A report in the Globe and Mail states:
Dan Scarrow, vice-president of corporate strategy at Macdonald Realty Ltd., estimates that 16 per cent of his firm’s 1,500 sales of detached houses, condos and townhouses within the city of Vancouver last year went to buyers from China. Of his firm’s 544 sales of detached homes in Vancouver proper last year, 150 of the purchasers were from China, or 27.5 per cent.
Another Globe and mail report suggests Chinese sales are aided by a tax loophole that allows them to avoid tax by listing the purchase in the name of a relative. 33% of all these purchases are bought under these circumstances. If this loophole is closed, it could send a shockwave through the real estate market.
Big Sales but fewer Homeowners are Selling
The G&M report also revealed that number of listings in Vancouver has dropped 27% from last year.
In Vancouver, housing starts are expected to grow from 9500 in 2015 to 9600 next year. Resale home sales will rise from $820,000 in 2015 to $835,000 in 2016. According the BC real estate association, the average price of a single detached home will rise from $885,000 currently to $920,000 next year. That’s up more than $100k from 2014.
The GVREB HPI index price for a detached property rose to nearly $1.41 million in Sept 2015, up 11.5% from last September.