As a native Vancouverite I have seen this city change the most since 2010 when we hosted the Olympics and since the Canada Line (rapid transit) came about. The city is changing even more in the past year or two. Houses are being torn down and made into condos and townhouses, sky scrapers are going up in residential neighbourhoods. People and families are leaving the city because they can’t afford to live here. Public elementary schools are at risk of shutting down because of low enrolment.
I don’t mean to exaggerate here but amidst the beautiful skyline view of Vancouver and the cherry blossoms flowering on the trees, it kind of has a post-apocalyptic feel to it (haha maybe that’s just my crazy imagination). The pictures below are houses being torn down for townhouses or condos.
Millennials are Fleeing
The ‘brain drain’ is alive and well. Millennials are leaving the city because they can’t afford to live here. Either that or people are moving into townhouses. Are we going to become like major cities such as London, Paris, Hong Kong, and Singapore, where families of four live in 1-2 bedroom condos? This is fine with me and my minimalist mentality but I think it will still be an adjustment.
According to Financial Post, the price of a typical Vancouver detached home rose 21% from 2015 to 2016 in January (and I think went up even more since January). There are very few detached houses in Vancouver West under $2,000,000 now and for that price it can get you a 50+ year old home in need of much TLC.
30% of homes are being bought by foreign investors who can afford to pay millions of dollars for a home. I have a feeling this is even more. I mean, who really can afford to live in a $1,000,000 and up home?
People are paying for inspections in North Vancouver just for LOOKING so that bids are made without any subjects. Financing is already approved and ready for people who are looking right now. That’s $500 just to look and put an offer on a place you hope to get and that you might not get because you will be outbid by others.
People are Being Approved for Crazy High Mortgages Without Checks and Balances
My friends were visiting from out of town and they originally are from Vancouver but are living elsewhere. They were looking around on this trip back home and went to the bank to inquire. They were approved for 70% of the home’s value without any inquiry of their income or their jobs, and were offered another approval for even more if they were thinking of tearing down a house and building new.
People are Flipping the Market Like They are Trading Stocks
A “tear me down” house was listed on the market for under $2 million, in a few days (or was it a few hours?) the house was sold. The realtor stated that the buyer was interested in selling it again and will be listing it again. Surely in a few weeks, the house was listed again for $400,000 more than the previous listing without doing a thing to the house, no renovations, nothing. Same pictures used as the first listing. Did this buyer call it his or her primary residence to avoid paying taxes? And will they sell it for a $400,000 profit? Real estate agents are profiting from the commissions two times over.
Recently, Christy Clark (B.C.’s Premier) made an announcement to deter shadow flipping of real estate.
Realtors are Making a Killing
Enrolment in British Columbia’s realtor licensing course has increased 34% as of October 2015 according to The Province. Everyone and their kitchen sink wants to get in on this realtor action. When you think about buying and selling realtors in Vancouver cashing in on 7% of the first $100,000 and the balance of 3.5%, that’s a lot of cash. Of course they have to pay their own fees to the realtor company they work with, but still! The top 1% in Vancouver are making well into the 6 digits.
Okay, I’ve ranted enough for today! Yeah, it’s kind of scary what’s happening to Vancouver. Like everyone is in a real estate frenzy or people are acting out of fear. Maybe The Big Short is going to happen to Vancouver’s real estate.
Readers, what are your thoughts? Are these growing pains the byproducts of a growing city?