Amid the craziest buying spree in Vancouver’s recent history, the assessment value of east side family houses out-paced even the high-end west side of the city.
New analysis shows that average house values in the east-side neighbourhoods of Hastings-Sunrise, Renfrew-Collingwood and Victoria-Fraserview increased by 26 per cent, year over year. Kensington-Cedar Cottage house prices shot up an average of 24 per cent. On the city’s west side, in Kerrisdale and Arbutus Ridge, the average house increased by 19 per cent, in Dunbar-Southlands, Oakridge and West Point Grey 20 per cent, Fairview and Shaughnessy 16 per cent, Kitsilano 24 per cent, Marpole 22 per cent and South Cambie 21 per cent.
Simon Fraser University City Program director Andy Yan, who used data based from B.C. Assessments, says such increases in traditionally working-class neighbourhoods are worrisome for the city.
“These are historically more affordable family-oriented neighbourhoods, and seeing that type of growth and increase one begins to question whether these are prices based upon local income. I don’t know how many people saw a 25-per-cent increase in their pay cheques over a one-year period. What are the jobs that propel these property prices, such as in Hastings Sunrise, where I grew up? It brings into question, moving forward as the city develops, how can people see a future in the City of Vancouver, in the shadow of these types of costs? It speaks to the livability question – livable for who?”
In dollar terms, west-side detached houses still far exceed the east side. In terms of equity, owning a single-family house in Hastings Sunrise generates an average of $692 a day. In Kerrisdale, it’s $1,400 a day.
“Apparently, the single-family homeowner is one of the highest paper-wealth vocations in the City of Vancouver,” Mr. Yan says.
Mr. Yan’s analysis included multifamily dwellings and commercial properties on the east side, which also had higher percentage increases. His findings are based on the 2016 property assessments, the latest available until the next batch is released next year. Nobody has ever before parcelled the data by neighbourhood, which shows the areas hardest hit by prices.
The data covers a period of rapid change in the Vancouver real estate market. B.C. Assessments has issued a courtesy warning that homeowners in Metro Vancouver and Squamish can expect 30- to 50-per-cent assessment increases for 2017.
Most condos throughout the city only increased at a rate of around 10 per cent. But the biggest gains in condo values were in Renfrew-Collingwood and Hastings-Sunrise, about double the citywide average.
“The east side detached market has been crazy for the last year and a half,” real estate analyst Nancy Beaton says.
Ms. Beaton is a licensed realtor who created SnapStats, an analysis company that provides monthly data based on the Multiple Listings Service to fellow realtors. Wanting a more accurate picture, in 2010, she started compiling the data for herself. She soon found demand for her services, so she founded subscription-based SnapStats. It’s more granular than data provided by the Real Estate Board of Greater Vancouver. For example, she includes sales-to-active-listing ratios, which is how fast properties are selling. The west-side sales rate for November is 14 per cent, which makes it a buyer’s market. Last November, it was 34 per cent, which made it a seller’s market. The east-side sales rate was at 51 per cent but has dropped to 12 per cent.
Long-time west-side realtor Stuart Bonner says several west-side agents are now selling in the east-side market.
“The east side had such a lift last year,” he says. “Outside of the people who have unlimited buying ability – and there are lots of people in the world who have that – if you are local, you go to live on the other side of Main and you’re still close enough to downtown. A lot of the areas there are gentrifying dramatically.”
As to what the future holds for Lower Mainland housing markets is another matter. There are those such as Mr. Bonner, who believe the recent drop in prices makes it a good time to buy. The Vancouver market has eventually climbed back from every drop, and it’s such a difficult market to get into that buyers should seize any opportunity.
Realtor Steve Saretsky, who specializes in downtown condos, tells a different story than most realtors. He believes we’re seeing the start of a serious correction that could hurt a lot of recent buyers. He says you know something is wrong when condo prices in Abbotsford go up 40 per cent in the last year and a half. In Langley, detached-house prices climbed 50 per cent, even though from 2010 to 2015 they had barely budged. In the last three years, the prices of Richmond’s house market climbed 80 per cent. Now, Richmond is undergoing the most dramatic correction in the region, with detached inventory up 106 per cent year over year, and a 65-per-cent drop in sales.
In Greater Vancouver, sales have dropped 51 per cent. On Vancouver’s west side, year over year sales are down 57 per cent on and 46 per cent on the east side.
Mr. Saretsky looks to the Fraser Valley as where we’ll see the first signs of a serious correction.
“I think any time you have something like what we’re seeing in the Fraser Valley where there have been 31-per-cent price gains in eight months, you’re going to have some consequences. The biggest concern is for all locals with local incomes who got pushed out of affordable areas. For Mission to take off, it means that people were going anywhere for a house. And yeah, I think they are over extended in the Fraser Valley and there are those who are going to get smoked.”
Others see the market in a state of limbo, with tighter mortgage regulations and predictions of higher interest rates adding to the uncertainty. It feels like 2009, when people wanted to jump back into the market but feared it could drop further.
Whatever is happening, most agree the foreign-buyer tax hasn’t had the major impact that was predicted.
“It’s more of a speed bump,” Mr. Yan says.
Mr. Bonner, who’s been selling west side real estate for almost 38 years, says the new 15 per cent tax isn’t having any impact. The market, he says, was already rapidly dropping by the time the tax came along in early August.
“[Foreign buyers] will continue to buy because it may look expensive to us, but it doesn’t look expensive to them.”
As well, there’s enough existing foreign capital already in the market to keep prices high.
“I have Chinese clients with permanent resident cards, and their kids go to school here, their money is from China, and that’s where they generate their income. They don’t want to live there because pollution is off the scales. But they can’t make the money here that they make in China. And they’re not paying the 15 per cent tax because they’re permanent residents.”
He estimates there’s been an overall drop of about 20 per cent in detached-house prices on the west side.
“I can feel the market has slowed down – there’s no doubt about it. Instead of 164 sales last November we had 68 sales this November. You can’t not notice that. But in terms of my personal business, it hasn’t really slowed down for me. It’s pretty steady.”
West-side houses continue to sell for big money. A house at 4620 Langara, on a 65-by-110-foot lot, was recently listed for $6.388-million. It got 13 offers and sold for $8.8-million, after four days on the market. Another house at 2495 W. 6th Ave. sold for $4.73-million after 31 days on the market, $50,000 below asking.
Developer Sanjiv Sandhu, a single-family home builder for 17 years, says the high-end market is still active. West-side inventory is low, but demand is still there.
“If people are buying on the west side they aren’t getting it at a fire sale price,” he says. “They are paying maybe a 10 per cent price reduction from July.”
Ms. Beaton believes if the foreign-buyer tax hadn’t come along, west side prices would have probably climbed higher by now, especially with so little inventory. But the detached-house market remains out of bounds for the average Vancouver resident.
“Prices are not crashing. Nothing is crashing,” she says. “What is affordable? Look at the average income. Detached homes are never going to be affordable to that [income] ever.”