Is foreign ownership impacting Vancouver House Prices?

Is foreign ownership impacting Vancouver House Prices?

February 26, 2013 in Vancouver Real Estate News

With the latest PR disaster by MAC Marketing Solutions where by it’s staff were falsely depicted as foreign buyers of a new development in Vancouver, the debate about the extent of foreign ownership of our Vancouver Real Estate has once again been surfaced.

We all routinely hear of those anecdotes from the real estate observers that foreign ownership is pushing up our prices here in the city, and making our neighbourhood appear haunted with empty properties all over the place.

So do these overseas purchasers invest and leave these homes and condos empty, or are they integrating and becoming new members of the community?

The truth is, we have no concrete statistics. In Canada, we don’t tally the amount of overseas owners or investors.

We do have a couple of sources of information and data that have been compiled by various groups

During 2012, the City of Vancouver started an academic working group which was created under the Mayor’s ‘Task Force on Housing Affordability’. Their task was to determine if Councillor Raymond Louie, who holds the position of the task force’s liaison’s statement that this was “a persistant theme that has been advanced by some”.

The report concluded that considerable investigation and resources would be required for a comprehensive study on the matter, but some interesting things turned up…

Andrew Yan of Bing Thom Architects undertook research pertaining to the energy usage of a selection of Downtown Condos. They assumed that if a condo is empty, then it will consume less electricity than one that is occupied. A refrigerator uses roughly 75 kwh, if a condo is using less than this, we can assume it’s empty. They concluded that 5.5% of the sample was empty for any given month.

They raised the threshold for the power consumption and experienced a change in the results. If they used a 100kwh threshold, then the % of empty condos rose to 8.5%, increasing again to 150kwh brought a potential vacancy rate of 17%.

In conclusion the City’s working group noted that we would need to cross reference data from several different stakeholders, BC Hydro, BC Assessment, provincial home-owner grants and census data. Only then would we be able to build a clearer picture, however the costs associated with doing so would prove probative as it would require a huge level of co-operation between various levels of government organisations to produce the data which may not even be meaningful or relevant.

Landcor Data Corporation figures for 2012 reveal that only 0.2% of people who purchased properties in the Metro Vancouver area last year.

As realtors we often find that many purchasers who are coming from overseas are actually residing in the properties, and building lives here for their families in the same way people who were born in Vancouver do. They are not only paying property taxes here, but they are out in the community, shopping at the grocery stories, buying clothes at the mall, and purchasing cars and other items. This results in more revenue for the province and the government in the forms of taxes, but also supporting the local economy with jobs and other spin off revenues.

Do you think that overseas purchasers are pushing up our prices here in Vancouver? Leave your comment below.

Andrew Yan, City of Vancouver, Foreign Ownership, MAC Marketing

1 CommentAdd yours

  • Jay Burnaby - March 3, 2013 Reply

    “Is foreign ownership impacting Vancouver House prices?”

    Yes – without any question. I don’t know about you, but I don’t know anyone in the lower mainland who can afford a single family home – at least nobody that makes their living in Vancouver. I’m not talking about people working at Subway either. I’m talking about professional married couples with no children and dual income – doctors, professors etc. The best they can do is a 2 bedroom apartment away from downtown.

    “As realtors we often find that many purchasers who are coming from overseas are actually residing in the properties, and building lives here for their families in the same way people who were born in Vancouver do.”

    I have not seen or heard anything that would support this claim. And when you say MANY, what percentage is that? 50%, 60%, 70? There’s no way to know how many actually stay and live in Vancouver. For many that do stay, it’s only temporary to put the kids through school so they can go back to China with an educational advantage. I can guarantee you that breadwinner of the family won’t be staying in Vancouver – there’s no chance in hell they can earn that kid of money here. None of them are setting up businesses here, that’s for sure.

    Have a walk through the neighbourhoods of North Burnaby, and you’ll see houses that stay dormant for months. The house next door to me is occupied about 2 days every 3 months. There are about 5 houses on my block like this. I can’t speak for all of the lower mainland, but I’ve heard similar stories all across Vancouver and Burnaby.

    If prices keep going up, this city will become a ghost town within one generation. Even if prices stay the same or drop less than 20%, a huge portion of young people are going to be looking for greener pastures. There’s already an exodus of skill, talent and creativity, and it will only get worse if it remains this unaffordable.

    If the Chinese buyers disappear, the market will sink like a stone. I know this, you know this, most everyone including the government knows this.

    Either way this turns out, Vancouver’s in for some very difficult times.

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