Vancouver’s real estate boom: The rising price of ‘heaven’
Qiqi Hong walks past her sleek, blue-tiled hot tub and an infinity pool that seems to disappear like a waterfall into the chilly air above West Vancouver. She leans on the patio railing and breathes in the majestic ocean view that takes in the towering Douglas firs of Stanley Park, the skyscrapers of Vancouver, the Asia-bound freighters anchored in English Bay and – way off in the misty distance – the faint, rugged outline of Gabriola Island.
“We’re in heaven,” says Ms. Hong. “I can’t find any house that can compare to my house.”
The serene West Coast lifestyle did not come cheaply: Ms. Hong’s home cost $6-million. But it is an investment she can easily afford. The irrepressible businesswoman founded a successful lighting-design business in Beijing that thrived in China’s building boom. It now has more than 100 employees. But tired of Beijing’s hectic pace and foul air, she decided to come to Vancouver – after looking in Switzerland, Germany and the United States – on the Canadian government’s immigrant investor program in 2011. She now also owns three other houses on Vancouver’s west side, each valued in excess of $1.3-million, as well as a downtown condo she uses on weekends and lends to visiting friends.
Demand from wealthy migrants from mainland China such as Ms. Hong has helped make the Vancouver area the most expensive real estate market in Canada. The average price of a single-family detached home is $1.26-million, higher than any other Canadian city. The rising flow of foreign capital – stemming from a long tradition of transpacific migration and investment – has turned Vancouver into a truly global real estate market. One large real estate firm calculated that roughly one-third of the detached homes it sold within the City of Vancouver last year went to buyers from China. Vancouver developers and real estate firms have hit the jackpot, and some have rushed to set up offices in Shanghai and Beijing. Some now say Vancouver is a bedroom community for the world.
But Vancouver real estate prices have also become increasingly unhinged from local incomes, prompting concerns about affordability. It has led to middle– and even upper-middle class Vancouverites renting permanently or fleeing for cheaper suburbs such as Burnaby. There is a search for better data on foreign buyers, which is only haphazardly tracked. There is now a heated debate – that includes accusations of racism – about whether anything should be done to curb foreign buying, or if what is happening is simply an inevitable, and welcome, facet of globalization in a free market.
After all, the ebullient Ms. Hong hasn’t just bought houses here. She founded a charity with other wealthy migrants from China; the group just held a Thanksgiving lunch for 1,000 seniors and recently collected $250,000 for a local hospital and pet shelter. She has founded several businesses in Vancouver, including one in real estate, and drives to ESL classes. She’s learning English, and has even joined a protest, hitting the streets during the recent B.C. teachers’ strike. While she stays busy in Vancouver, her husband frequently flies to China to manage the firm.
“In my opinion, I think it’s good for the economy,” Ms. Hong says, noting that the number of Chinese residents on her street has soared in recent years and that the local businessman she bought her house from made a cool $1.5-million more than he originally paid. “In Vancouver,” Ms. Hong says, “the house prices are perfect.”
Vancouver’s housing boom has much to do with soaring demand for detached homes in tony neighbourhoods. Vancouver’s west and east sides, West Vancouver, Richmond and large pockets of Burnaby have most of the region’s top-tier properties. On Vancouver’s west side, detached home prices soared 51.5 per cent over the past five years to nearly $2.3-million for the benchmark index, which strips out the most expensive resale properties.
Dan Scarrow, who recently opened an office in Shanghai for Vancouver-based Macdonald Realty Ltd., one of the largest real estate firms in British Columbia, makes no apologies for courting prospective home buyers in China. He says 178 of the firm’s 531 sales of single-family detached homes within Vancouver’s city limits last year – or 33.5 per cent – went to buyers with ties to China.
“Vancouver has become a global resort city. The prices have decoupled from local wages,” says Mr. Scarrow, whose mother, Lynn Hsu, moved from Taiwan to Vancouver in 1979 and is now president and majority owner of Macdonald Realty.
As he pursues investors in Shanghai, he intends to steer buyers toward commercial properties if they have no interest in settling down in Vancouver. Some foreign buyers have purchased Vancouver real estate purely as an investment, without occupying the properties or renting them out, but that has triggered some resentment because it’s sometimes seen as detracting from the vitality of a neighbourhood.
But in general, Mr. Scarrow believes the positives of offshore money far outweigh negatives. Baby boomers can cash out at a profit and downsize with enough money left to help out their children. Selling houses also increases sales of appliances, furniture and home renovations. Vancouver’s housing market has become an important ecosystem unto itself, which explains why developers are anxious to keep foreign money flowing.
On the rise: Prices have climbed sharply for Greater Vancouver’s single-family detached homes
*Benchmark price: September home price index that strips out the most expensive detached resale properties sold on Multiple Listing Service.