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By Tyler Durden

“Housing in Vancouver is insane — it was insane when I left and it’s more insane now.”

That’s from 33-year-old Kevin Oke, co-founder of LlamaZoo Interactive who

(a representative listing from Point Grey)

We’ve spilled quite a bit of digital ink documenting the “three-alarm fire” (to quote Bank of Montreal chief economist Doug Porter) that’s burning in British Columbia’s housing market. Here, for those who missed it, are some informative posts:

• Vancouver Real Estate Goes Full-Retard; Average Home Price Now $1.8 Million
• How Vancouver Is Being Sold To The Chinese: The Illegal Dark Side Behind The Real Estate Bubble
• Meanwhile In Canada, A Real Estate Bargain Emerges…
• Calgary’s Housing Market Collapses While “Three-Alarm Blaze” Burns Next Door In Vancouver

According to the Greater Vancouver Real Estate Board, residential property sales in Greater Vancouver rose 31.7% in January, 46% above the 10-year sales average for the first month of the year and the second highest January ever. The benchmark price for a detached home in Vancouver: $1,293,700. The benchmark price for an apartment: $456,600. The latest data from the Canadian Real Estate Association shows the average price of a home in Canada rose an astonishing 16% Y/Y last month to more than $500,000. Underscoring the extent to which British Columbia and Ontario are driving the market, stripping out those two provinces pulls the national average down to under $300,000.

Prices in Vancouver surged 26% in February.

So what’s behind the inexorable rise? How is it possible that “fixer uppers” like the residence shown above go for $2,500,000? It’s very simple. Chinese worried about continued market turmoil and a weaker RMB, are moving money out of the country. As CAD slid against USD, Chinese “investors” found Canadian real estate to be comparably priced vis-a-vis US real estate in USD terms. Wealthy Chinese funneled their dollars into the Canadian market, driving up prices. In short: capital flight from China has created a massive housing bubble in cities like Toronto and Vancouver. Throw in the fact that some of these locales – like Waterloo, Ontario – are becoming tech hubs, and you have the recipe for overheating markets.

Just how prevalent is Chinese buying, you ask? Well according to National Bank’s Peter Routledge who did some “back of the envelope” calculations, fully one-third of all Vancouver real estate purchased in Vancouver last year was bought by Chinese investors.

“Chinese investors spent about C$12.7 billion ($9.6 billion) on real estate in the western Canadian city in 2015, or 33 percent of its C$38.5 billion in total sales,” Bloomberg writes, citing Routledge and analysts Parham Fini and Paul Poon who “extrapolated from a Financial Times survey of 77 high-end buyers and data from the U.S. National Association of Realtors.” Here’s a bit more from The Globe And Mail:

Without any Canadian-specific data on foreign investors to …read more

Source: Chinese Take Over Canada’s Real Estate Market, Buy One-Third Of All Vancouver Homes Sold In 2015

    

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Posted March 24th, 2016 in Uncategorized.