Monthly Archives: July 2011

Issue 11 – July 2011

GREATER (METRO) VANCOUVER

QUARTERLY UPPER-TIER REAL ESTATE UPDATE JULY 2011

GRAPHS, GIANTS, CYCLES AND SUSTAINABILITY

A press release of April 28th this year declared the Chinese population to be 1,339,724,852, as of November 1, 2010. An interesting trivia sidebar lauded “the painstaking efforts of about 10 million census workers”

The Real Estate Board of Greater Vancouver has, since 1977, been publishing a graph of the average selling prices of residential property and this is updated monthly. It is this object that has claimed our attention while trying to come to grips with what has been happening to our home prices in the past 34 years.

The easy part – couple inflation (the ‘everything costs more’ phenomenon) with the laws of  supply and demand  (‘everyone wants a piece of the desirable Vancouver pie and that pie isn’t terribly big’) and what do you get? Yes, prices go up and, depending on the intensity of that demand, prices go up even more. But, will this “more” continue ad infinitum? Clearly not – enter the existence of cycles. Cycles however are not synonymous with the action of teeter-totters or see-saws where amplitude down follows (and equals) amplitude up. The simple fact here is that a cycle, for example, in San Francisco is not in sync with a cycle in Beijing. Likewise, say, Paris and Vancouver. Consider the “detached home” price rise since 2008 to date and the US led worldwide economic crisis. Truly, no sane analyst would espouse a theory claiming that the 73 deg climb in the Vancouver detached graph since ’08 could be extrapolated for the coming 10 or 20 years. Clearly not…..or ….. maybe, why not?

Consider a modern ‘fairy tale’. A highly populated “superpower” sloughs off its ultra socialist beliefs and adopts some free enterprise beliefs which, over say 10 or 20 years, lead to the creation of a relatively small, emerging wealthy class of citizens. Let’s say this class is a mere one half of 1 % of the country’s citizenry, but, if that citizenry were a billion strong, or more, that ½% would be in excess of 5 million individuals with significant buying power. Now, bear with us on this part of the fable….. assume that a number of these folk, wishing to distinguish themselves from the other citizenry, wanted to own property in (or emigrate to) another country. Then consider that a prevalent idea among that group was that Canada (and specifically Vancouver) represented an accepting and desirable destination. For as long as that idea prevailed, that demand could have a significant impact on that target city…….just a thought.

Yes, we may be forced to question the concept of sustainability based largely on local incomes and a, possibly outdated, definition of something we used to call affordability.

Now the second quarter 2011 figures extracted from the REBGV database upon which we have based these comments.

Detached homes sold [$2MM and above] 2011 – 592 listings sold vs. 2010 – 226 sold (an increase of 162%). Highest sale $13 MM (’11) vs. $11.08MM (’10). This property – on Laurier Ave, sold in May ’11 after 13 days on the market, originally listed at $15.87MM. 6 bed/8 bth, it is an 11,256 sq ft structure on a 20,000 sq ft manicured property – An elegant 1 yr old, Shaughnessy mansion. Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2011 – 90 units sold vs. 2010 – 76 sold (an increase of 18%). Highest sale $2.65MM (’11) vs. $3.89MM (’10). This property at Two Harbour Green which sold in Jun ’11 after 4 days on the market was listed at $2.5MM. A spectacular and unique 2bd/3bth  townhome with guaranteed water and park views from all levels and 2178 sq ft of living space.

Apartments [$1MM and above] 2011 – 158 units vs. 2010 – 132 sold (an increase of 20%). Highest sale was $5.6MM (’11) vs. $5.35MM (’10). This Coal Harbour property [Two Harbour Green] is a 3 bed/4 bth, 3636 sq ft apartment with stunning views, 3 car pvt garage. A prestigious waterfront building.

The most interesting period will likely be the 2nd half of this year and we will indeed see how things unfold and if this strength continues. Our feeling is that the upper tier will hold its own.

Again, visit the website to see the new developments.  We continue our commitment to keep you up to date on Vancouver’s … www.HomesOfProvenance.com – the “go to” site for Upper End Real Estate analysis and jumping off point for market listing information.

To join the group getting the e-mail version of this “update” – send a request now to info@HomesOfProvenance.com and you’ll be assured receipt; phone us at (604) 626-2526 or visit www.HomesOfProvenance.com