This house on Maple Street in Vancouver sold recently for $2.9 million, $1 million over the asking price.
Photograph by: Ric Ernst , VANCOUVER SUN
A Maple Street home in Kits Point, with an asking price of $1.9 million, fetched $2.9 million last week — $1 million over the asking price. The bidder, one of 17, was a local buyer.
Across the way, on Chancellor Blvd. near UBC, realtor Andrew Hasman sold a home two weeks ago for $5.3 million — nearly $600,000 over asking. The sale followed a six-party bidding war won by a 22-year-old university grad whose parents live in China.
Is housing just another commodity in a free-market system? Or ist it a social necessity, requiring a degree of government regulation? A new Insights West poll certainly suggests people here favour some government intervention.
When the typical price for all residential properties across the region — including condos — reaches $736,000, up 15.3 per cent from a year earlier, and bidding wars drive up prices, it surely is time to ask that question.
The price for a typical detached home in Metro Vancouver, at nearly $1.2 million, jumped more than 20 per cent in the past year.
Now, it is true that the region’s economy is performing well at the moment, probably better than any other metropolitan area in Canada. But few Vancouver-area residents got 15- or 20-per-cent pay raises in the past year.
Median family income in Vancouver in 2013, according to Statistics Canada, was $73,390. An income of about $150,000 is required for mortgage payments on an $800,000 Vancouver home.
Where are the nurses, teachers and firefighters supposed to live?
And it is worth noting that the housing stock already was unaffordable last year. With one-year price increases of 15 to 20 per cent, it’s no stretch to say the property market has grown too costly for those the region’s housing is primarily meant for — inhabitants who live and work here.
At least part of the problem is obvious. Many who do not live in the area, but have greater means than those who do, have discovered the glories of Canada’s west coast and flooded into the market, taking advantage of low interest rates and a weak dollar.
Their numbers will fluctuate in coming years, depending on economic factors. But foreign buying is likely to continue playing a role in Vancouver.
These buyers inevitably boost competition for local housing, forcing prices up, at both the top and bottom ends of the market, due to a trickle-down effect.
Prices have climbed to the point where those who might consider selling do not, for fear of not having affordable alternative housing to turn to.
Thus, Vancouver has a shortage of homes for sale. In the existing seller’s market, some buyers bid wild sums for existing property, putting upward pressure on prices.
It so happens the buyers from abroad happen to have a relatively uniform ethnicity, at least at the top end of the market, prompting talk about racism against Chinese people. This is a diversion.
People here aren’t worried by Chinese buyers; locals worry about being priced out of their own community by foreign money.
This worry is not unfounded. It has been the case for years now, people with average incomes are hard-pressed to afford local housing.
The evidence has gone beyond the anecdotal. Real estate companies freely acknowledge that the top end of the market is dominated by foreign buyers. To a lesser but still significant extent, the mid-range of the market also is affected.
That this affordability crisis has gone unaddressed reflects the fact that an overheated market serves the interests of the real estate industry, loving those commissions, and government, raking in property-related tax revenues.
Runaway pricing also works in favour of owners with home equity. It is regrettable that fetters are needed on what, ideally, should be a free and open property market. But with housing out of reach for too many in the region, it is time for government intervention.