An article entitled “4m teardown sells for $1m over asking price, throwing more fuel on housing debate fire,” by Jane Seyd about a recent sale at 4130 Burkehill Place in West Vancouver appeared on June 10, 2015 in the North Shore News, and June 12 in Business in Vancouver. We have taken excerpts and bolded key words, as this case crystalizes many of the factors and forces driving the current housing market: bidding war, tear-down, crazy market, safe haven, property flipping, empty houses, affordability crisis, market exploded, investment versus home, offshore buyers.
[CityHallWatch Note: On June 30, we were informed via the Vancouver Sun, which carried a separate article (West Vancouver home sparks bidding war, sells for $1.1 million above asking) on this property sale, had made a correction to its original article. It had “included comments concerning the purchaser’s place of residence and his possible intentions for the house. According to the purchaser’s lawyer, those statements were inaccurate. Though we were quoting a different article, we have removed references to the purchaser’s place of residence and his possible intentions for the house.]
Is this case a symptom of “government failure” due to “regulatory capture,” preventing our politicians from serving the public properly over the past ten years (see regulatory capture and Fukushima nuclear disaster)? Has government inaction on these issues failed society? Is it too late for remedies, as suggested by this recent academic paper (see “Booms, busts…“)? If so, now what?
One thing is clear. Our politicians are being extremely irresponsible for dragging their feet on getting the required data to develop policy. Why didn’t they have systems in place a decade ago? How could any politician have claimed to be a champion of affordable housing if they didn’t even have the data. And data is exactly the theme of the “Give Us The Data!” rally by #donthave1million planned for June 24, 2015. Excerpts of Jane Seyd’s article follow.
4m teardown sells for $1m over asking price, throwing more fuel on housing debate fire:
Issues like foreign buyers and real estate flipping are at the forefront after a “teardown” home listed for…
By Jane Seyd, North Shore News, June 12, 2015 (Excerpts only. See original articles for full text)
- Issues like foreign buyers and real estate flipping are at the forefront after a “teardown” home listed for $2.98 million in the Bayridge area of West Vancouver prompted a bidding war and eventually sold for $4.1 million to a buyer from mainland China.
- … “It’s basically a teardown,” she [the realtor] said. “The value is in the lot.”
- Harvey said at $2.98 million, the property was “sharply priced.” …
- … Nine offers were made on the property — the lowest among them for the full asking price.
- … “It’s a market on steroids,” said Harvey. “The market has gone a little crazy.” … Increasingly the West Vancouver real estate market is attracting offshore buyers… “With things escalating in the world, there’s a real need for people to put their money in a safe haven,” said Harvey. “Our dollar is so low that Canada is really on sale.”
- Just how much real estate is being sold to foreign buyers isn’t clear, because it’s not well tracked by government statistics. Harvey estimates about 15% of her business comes from overseas buyers.
- Allan Angell of Angell Hasman, a West Vancouver real estate company that caters to the high end of the market, puts that figure higher. “I’m selling 80% of my high-end houses to Chinese,” he said.
- Most see investment in real estate as a good way to bring money into the country, he said.
- Others are making money by quickly flipping properties — sometimes assigning their contract of sale to a third party for a premium.
- … Houses that sit empty until they are flipped is another issue garnering attention.
- That can contribute to the problem of housing affordability by putting pressure on housing supply, said David Wachsmuth, an urban geographer at the University of British Columbia. “It exacerbates the whole affordability crisis the city faces,” he said.
- It can also lead to problems because people who leave their homes empty aren’t participating in the community, he said.
- … Angell said if it wanted to preserve affordability, the government should have brought in those kinds of measures before the market exploded.
- “The housing market’s a weird thing,” he [David Wachsmuth, an urban geographer at the University of British Columbia] said. “Houses are simultaneously a possible investment and a human necessity. Because they are both of these things at the same time, you can get some really tough situations. Vancouver’s in the face of one of those right now.”