Issue 15 – July 2012

GREATER (METRO) VANCOUVER

JULY 2012 QTLY UPPER-TIER REAL ESTATE UPDATE

INVENTORY INCREASES, SALES ARE CONTRARIAN

A quick glance at the “numbers” area below will tell the actual story of a 2nd quarter that has softened further from the 1st quarter of this year and in combination is well below last year’s figures.

We addressed, in the last update, the philosophical discussion of worldwide economic conditions having a greater impact on our local market than our current (provincial and national) conditions might imply they should. It is, as we spoke of last quarter, the cyclical change we are encountering. The higher net worth group, representing the bulk of those active in this market, while usually less affected by the cycle change are clearly not oblivious nor immune to overall market psychology. Uncertainty must logically impact the making of decisions. The one thing that does factor here and will drive any return to former sales volumes will be the perception, of those with the capacity to undertake these purchases, that the properties offered for sale are at, or close enough to, the bottom of a value trough. Many of these players are more attuned to prices in other international cities and may, more readily, recognize “comparative” value. Indeed, the word ‘bargain’ has begun to resurface in the opinion pieces of local media/commentators.

We continue to believe that the most important way of looking at the change in conditions prevailing in any market is simple to consider the increase/decrease from one period to the successive period in numbers of sales and at what prices (demand) and the ebb and flow of the number of items for sale (supply). The eyes should not be distracted from this picture.

Now to the second quarter 2012 figures extracted from the REBGV database which we have used as the basis for our comments.

Detached homes sold [$2MM and above] 2012 – 293 listings sold vs. 2011 – 592sold (a decrease of 51%). Highest sale $12.03MM (’12) vs. $13MM (’11). This property – on Newton Wynd, UBC area sold in Apr ’12 after 31 days on the market, originally listed at $12.8MM. A 6 bed/5 bth home it is a unique 4,375 sq. ft. structure on a private 30,000 sq. ft. lot – with unobstructed views to Bowen Island and the North Shore mountains. Tax Assessed value stands at $8,605MM. With some refurbishing this will be a magnificent home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2012 – 74 units sold vs. 2011 – 90 sold (a decrease of 18%). Highest sale $2.598MM (’12) vs. $2.65MM (’11). This property at 2519 Highgrove which sold in May ’12 after 63 days on the market was listed and sold at $2.498MM. One of 18 impressive (2bd/3bth) Whitby Estates townhomes with panoramic city and harbour views and superior concrete construction. 3,379 sq. ft. of living space. When completed in 2013, this too will be an amazing example of an attached Home of Provenance.

Apartments [$1MM and above] 2012 – 122 units vs. 2011 – 158 sold (a decrease of 23%). Highest sale was $4.338MM (’12) vs. $5.6MM (’11). This Coal Harbour penthouse [Bayshore Gardens] is 3 bed/4 bth, 2,914 sq. ft., with astonishing views and supplied with a 3 car garage.
As alluded too in the BCREA press release, the exceptional activity 1st and 2nd Qtrs. 2011, was spurred on by high international demand. This is now certainly far more restrained. Economic factors, largely beyond our borders are delaying this sectors return to the former significant sales levels.

Here again are the current inventory (listings) figures:

Detached (>$2MM – 1,377) – (>$10MM – 45) Highest $37.9MM
[Waterfront, view West Van estate being marketed as a 3-way subdividable property]

Attached (>$1MM – 177) – (> $3MM – 14) Highest $8.96MM –
[8243 sq. ft. fully restored Shaughnessy half duplex – 3437 Osler St]

Apt (>$1MM – 436) – (> $5MM – 26) – (>$10MM – 6) Highest $21MM
[4015 sq. ft. /1 level – at Fairmont Pacific Rim]

Note: We do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest. It does underline the fact that unique properties are often challenging to price and that, in certain markets very few of these offerings are sold.

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 Tier 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

Issue 14 – April 2012

GREATER (METRO) VANCOUVER

APR 2012 QTLY UPPER-TIER REAL ESTATE UPDATE

LESS HOMES SELLING AND A GROWING INVENTORY

A quick glance at the “numbers” area below will tell the factual story of a 1st quarter that has not replicated the 1st quarter we experienced last year (2011).

A quote from a recent press release put out by the Economic department of the Real Estate provincial body, British Columbia Real Estate Association, puts this in perspective. Although their purview is BC in aggregate the reference to ‘high end home sales’ reflects largely the picture in Greater Vancouver.

“….the dollar volume of homes sold through Multiple Listing Service (MLS®) in BC declined 26.5 per cent to $3.8 billion in March compared to the same month last year. A total of 6,882 MLS® residential unit sales were recorded over the same period, a decline of 20 per cent. The average MLS® residential price was $545,959 in March, 8 per cent lower than March 2011.”

The spike in consumer demand recorded a year ago was not repeated last month, said Cameron Muir, BCREA Chief Economist. A marked increase in high-end home sales a year ago pushed up unit sales and skewed average prices higher, so it is no surprise to see fewer home sales and lower average prices in March of this year.”

The philosophical discussion considering the worldwide economic (or indeed that dwelling on the “tighter” local one) resurfaces whenever a cycle threatens to (or in fact gives evidence that it has undergone) change. Are those with higher net worth/income who represent the core players in this market, less affected by the cycle change? Does being a member of this “core” mean that one has been largely unaffected financially? Or does the overall market psychology have a dampening effect on this group’s outlook too? The certainty factor of ‘intuiting’ the return to an economic well-being by a majority must logically impact the making of decisions. We propose no mind-elevating solutions only some topics for consideration.

Another area for consideration at a future date is the presumptuous defining of just what the Upper Tier for, say, Greater Vancouver (or any other city or conurbation) is. We work loosely with a Detached Residence that is valued by the market place at in excess of $2 million and call that ‘upper tier’. Somewhat arbitrary, we do admit, as it can be easily criticized when, say, a half-acre lot with a modest sized (dated) home sells for $2.2 million. The clarification here comes with the consideration of lot value and that of the so called ‘improvements’ added to that lot. Concepts of “highest and best use” come into play as does the potential for further development as controlled by the local jurisdiction – (municipality) and too by physical attributes (e.g. watercourses, stability of the land, land use restrictions etc.) We shall discuss this further in upcoming updates.

When looking at stats, the most important message to consider is, which way is inventory trending and the same for number of sales in each market segment? Future quarters will reveal more and more relevant YTD statistics.
Now the first quarter 2012 figures extracted from the REBGV database upon which we have based these comments.

Detached homes sold [$2MM and above] 2012 – 354 listings sold vs. 2011 – 518 sold (a decrease of 32%). Highest sale $19.8MM (’12) vs. $16.8MM (’11). This property – Belmont Ave, Pt.Grey sold in Jan ’12 after 97 days on the market, originally listed at $25MM. 8 bed/8 bth it is a 10,734 sq ft structure on a serene, park-40,434 sq ft lot – majestic, Point Grey view mansion with a 50 ft indoor/outdoor pool w. hot-tub. Tax Ass $15.114MM. Indeed a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2012 – 77 units sold vs. 2011 – 103 sold (a decrease of 25%). Highest sale $3MM (’12) vs. $7.138MM (’11). This property at 1337 The Crescent which sold in Mar ’12 after 35 days on the market was listed at $3.288MM. An impressive Character (2bd/3bth) Shaughnessy townhome with views of the city and extra-large terrace. 4,278 sq ft of finished living space. Also an amazing Home of Provenance.

Apartments [$1MM and above] 2012 – 126 units vs. 2011 – 158 sold (a decrease of 20%). Highest sale was $5.9MM (’12) vs. $7.1MM (’11). This Coal Harbour property [Two Harbour Green] is 3 bed/4 bth, 3636 sq ft., on one level with a 3 car garage and astonishing views.

As alluded to in the earlier mentioned press release, the exceptional activity 1st Qtr 2011, was spurred on by high international demand. This has not in any way collapsed but is certainly more restrained. As 2012 progresses we will see whether this sector will see a return to those significant sales levels.

Here again are the current inventory (listings) figures:

Detached (>$2MM – 1211) –(>$10MM – 45) Highest $39.9MM
[3 separate homes on 5+ acre West Van estate (Chartwell)]

Attached (>$1MM – 180) – (> $3MM -10 at) Highest $8.96MM –
[8243 sq ft fully restored Shaughnessy half duplex 3437 Osler St]

Apt (>$1MM – 303) – (> $5MM –19) – (>$10MM -4) Highest $28.8MM
[6434 sq ft /2 level – Penthouse #1 Fairmont Pacific Rim]

Note: We do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest. It does underline the fact that unique properties are often challenging to price and that, in certain markets very few of these offerings are sold.

Again, visit the website to see and 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 Tier 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

Issue 13 – January 2012

GREATER (METRO) VANCOUVER

JAN 2012 QTLY UPPER-TIER REAL ESTATE UPDATE

ANOTHER YEAR OF INCREASES

The activity in this segment continues to increase year over year. And, yes, as we have seen in the recent press on inflating assessed values, the prices of the top properties sold in Metro Vancouver have risen at an impressive rate. We are seeing this in both number of sales and gross dollars expended. Those participating in this arena have been joined by a large number of immigrating buyers (investors?) primarily from the Far East (especially mainland China) and others from Europe. The first waves that Vancouver noted in the past 2 to 3 years have grown to be a significant force in this upper tier of residential real estate. For a major world city, repeatedly rated by non-Canadians as among the top places to live on this planet, many Vancouverites seem loath to accept that our current prices represent relatively good value for money to these foreign buyers. This coming year will be a telling one – is the evident slow down over the past month or so the foreshadowing of a downturn in this segment? We believe not just yet. The upcoming quarter to quarter analysis will certainly be something to follow with interest.

We penned a discussion of the Property Tax Assessment a few years ago and will repeat it here with some minor updating as it is the time of year that we again look at our new (2012) tax assessment. Does it mean much? How does that figure tie in with today’s value? Does it in fact bear comparison to current market value at all? Don’t forget that the assessment is for taxation purposes and is designed to provide an estimate for relative taxation equity. It does not claim infallibility. The B.C. Assessment Authority permits and does not discourage property owners from contesting the assessment if they disagree with it. More to the point – what is our real estate worth? (what is our net worth?) Depending on one’s age / planning horizon – how important is this 2011 valuation? It is the tax authority’s mid-year 2011estimate. Is it what decides the value of our homes or do we trust the market place to give us a fair price for our valued assets? All these figures can do is cause us to be charged a modicum more or less in property tax for the years we own the property but it has no say in what we sell our property for and what that ‘willing buyer’ will pay.
Now to some of the facts regarding the upper tier Vancouver market ’11 vs. ’10. Detached homes sold [$2MM and above] 2011 – 1687 listings sold vs 2010 – 870 sold (a rise of 94%). Highest sale $17,5MM (’11) vs. $15,2MM (’10). This property – Belmont Ave, Pt.Grey sold in Mar ’11 after 32 days on the market, originally listed at $19.8MM. 6 bed/8 bth it is a 9,785 sq ft structure on a serene, park-like lot – A splendid, Point Grey view mansion with a 741 sq ft courtyard. Again a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2011 – 318 listings sold vs 2010 – 233 sold (a rise of 36%). Highest sale $7.138MM (’11) vs. $7MM (’10). This property at 3838 Cypress St which sold in Jan ’11 after 24 days on the market was listed at $7.588MM. A spectacular and unique 5bd/7bth Shaughnessy townhome on the Heritage “A” list, formerly the estate of Eric Hamber, B.C. Lt. Governor, with 7530 sq ft of living space. An amazing home of provenance.

Apartments [$1MM and above] 2011 –541 listings sold vs. 2010 – 469 sold (a rise of 15%). Highest sale was $10.1MM (’11) vs. $5.8MM (’10). This is an ultimately luxurious 40th floor Shaw Tower (the entire floor – 7450 sq.ft.) 7 bed/7 bth apartment with panoramic 360 degree breathtaking views and 8 parking (incl 3 car private garage). Listed at $15.5MM, it sold in Sept ’11 after 123 days on the market. Its Tax Assessed value when sold was $12.345MM.

Here again are the current inventory (listings) figures:

Detached ($2MM and +, 778) – Highest $39.9MM * – 33 at $10MM +
Attached ($1MM and +, 102) – Highest $5.888MM** – 4 at $3MM +
Apt ($1MM and +, 303) – Highest $28.8MM – 4@ $10MM +/20@ $5MM *3 separate homes on 5+ acre West Van estate (Chartwell)
**2474 sq ft /2 level at the Erickson, Yaletown
***6434 sq ft /2 level – Penthouse #1 Fairmont Pacific Rim

Note: We do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest. It does underline the fact that unique properties are often challenging to price and that, in certain markets very few of these offerings are sold.

We extend our wishes for a Happy and Prosperous New Year – may 2012 be a good year for the return of some stability to our economic environment and a more peaceful community of nations. Goodwill to all persons.

Again, visit the Homes of Provenance website to see the new developments. We continue our commitment to keep you up to date in the upper tier market – the “go to” site for Metro Vancouver Real Estate analysis and jumping off point for market listing information in the higher range.

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

Issue 12 – October 2011

GREATER (METRO) VANCOUVER

OCT 2011 QTLY UPPER-TIER REAL ESTATE UPDATE

THE TREND CLEARLY CONTINUES

We began this year with a comment (headline) proposing that demand for our upper end real estate, from outside of Canada, was appearing to be significant. Reference was made to the evident presence of mainland Chinese buyers joining the traditional European and Middle Eastern group. While that European and Mid East presence is still here, Greater Vancouver must now acknowledge that the Chinese buyer currently outnumbers all others. The question has been asked, are these non-resident offshore investors or immigrating buyers? A good question and while we all have our opinions, difficult to categorically answer. To be more definitive, we will have to wait for some years (we feel at least five). One argument cites the Hong Kong buyers who sold and returned to Hong Kong after the hand back of the Island by the British on July 1, 1997. No, there was not a wholesale divestment at that time, or since, but clear evidence of some resale. This city, and especially areas such as Richmond, continues to show the significant impact of that in-migration and continuing investment. We are, and remain, a safe haven for investment from afar.

While the toughness of current economic times will undoubtedly reduce the overall number of real estate transactions, our belief is that this upper tier is less affected by that ‘shrinking’. Indeed, the percentage will likely be a fair bit less. We also see that the players at this end of the market are less constrained by the oft touted argument of affordability. This, of course, is a significant consideration when one talks of ‘first time buyers’ without much in the way of down payment and clearly no equity from the sale of a former residence. Demand at the upper end is usually backed by significant equity and often by substantial other financial assets and cash flow. The other contributor buoying this demand is the relatively low cost of borrowed money. Also consider that the “retired” group display a higher degree of urgency regarding these retirement/recreational needs than those younger folk embarking on acquiring starter and subsequent housing. Yes, demand is certainly evident in this more mature sector and patience less of a virtue.

Now the third quarter 2011 figures extracted from the REBGV database.

Detached homes sold [$2MM and above] 2011 – 312 listings sold vs. 2010 – 170 sold (an increase of 83%). Highest sale $10.3 MM (’11) vs. $8.2MM (’10). This property – on 31st St, Altamont (WV), sold in Aug ’11 after 80 days on the market, originally listed at $10.888MM, 6 bed/7 bth, it is a 6,898 sq ft structure on an 18,140 sq ft, gated, S facing property – A six year old waterfront mansion.  Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes, [$1MM and above] 2011 – 68 units sold vs. 2010 – 48 sold (an increase of 41 %). Highest sale $3.15MM (’11) vs. $2.85MM (’10). This property, at Aquarius Villa, in Yaletown, which sold in July ’11 after 55 days on the market, was originally listed at $3.288MM. A unit with unobstructed marina views, 3bd/3bth with 2,474 sq ft of living space. A spectacular semi-waterfront townhome – one of a kind.

Apartments [$1MM and above] 2011 – 127 units vs. 2010 – 96 sold (an increase of 32%). Highest sale $10.1MM (’11) vs. $4.35MM (’10). This is an ultimately luxurious 40th floor Shaw Tower (the entire floor – 7450 sq.ft.) 7 bed/7 bth apartment with panoramic 360 degree breathtaking views and 8 parking (incl 3 car private garage). Listed at $15.5MM, it sold in Sept ’11 after 123 days on the market. Note – larger than the detached sale above and all ‘on one floor’!

Here again are the current inventory (listings) figures:

Detached ($2MM and up) 1158 – Highest $25MM * – 38 at $10MM plus Attached   ($1MM and up) 143 – Highest $5.78MM – 7 at $3MM plus Apartments ($1MM and up) 434 – Highest $28.8MM** – 4 at $10MM plus

* Belmont (Pt Grey) 11,000 sf 8bd/8bth. Over 40,000 sf  “majestic” res  ** Penthouse 1 at Fairmont Pacific Rim 3bd/4bth, 2 lvl 6434 sq.ft.

Note: We do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest.  It does underline the fact that unique properties are often challenging to price and, that, in certain markets, very few of these offerings are sold. Note: the number of detached listings has risen by over 60% (year over year).

It will be of significant interest to see if sales activity in the upper tier is maintained during the final quarter of this year.

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 Tier 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

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

Issue 10 – April 2011

GREATER (METRO) VANCOUVER

APR 2011 QTLY UPPER-TIER REAL ESTATE UPDATE

IT SEEMS WE ARE IN A BULLISH MARKET

Once again we are seeing a real estate market where the upper tier is reflecting significant price increases. Considering the 2011, 1st quarter figures (below).

Many geographic segments within Greater Vancouver believe that they are witnessing a good time to sell. If this is true, does this automatically imply that now is therefore a bad time to buy? Only if one believes that market values are turning and will start moving down.  This will only happen if buyers collectively back off from making the decision to buy. Our belief is that the demand will not drop with any significance in the short term. Again, this belief is based on two factors. Firstly, the fact that a proportion of property seekers have pre-approved mortgages at rates below those seen now in the new “rate sheets” of the major lenders. These mortgages have to be drawn down before their terms expire – anything from 30 – 90 days.

Secondly the continuing existence of the HST. New construction in the upper end will continue to be impacted. HST on a $1mm unit is $43,750 higher [$70,000 – 26,250]; a $2mm unit $113,250 higher [$140,000 – 26,250]. Remember that the property developer (builder) can claim, as an input tax credit, all the 7% (PST portion of the HST) that they have paid in the construction of the property for sale and will thus have a lesser cost of construction equivalent from, say, 40% to 70% of the PST portion (7%) of the tax that they would formerly have passed on to the end purchaser. They now have the flexibility to pass on some or all of this saving in the way of a reduced unit price to the buyer. Who knows whether this will be voted down in the referendum? The “knee jerk” punishment of politicos may, sadly, overshadow any argument regarding intelligent tax reform.

The tax impact of this collecting of PST – 7% on hitherto exempt items, is, in the case of “new” real estate really a “wealth tax” (or in economic parlance a form of progressive taxation) impacting those who can afford the higher priced new dwellings harder than those not able to afford these luxury items.

Yes, we are seeing some build up of inventory. This is a statistical fact despite a significant year over year rise in the number of units sold so far this year vs. those sold in the same period last year. Talk of an impending “buyers’ market” in various geographical locations is prevalent and, yes, the “bubble” word is being used in national and some regional press discussion. Remember that real estate “performance” is regionally determined and all markets do not move in lock step. Just as we must resist aggregation on a city wide basis, it is more important to avoid doing so on a province wide and country wide basis if we are to come to grips with “what is happening here ?” and “how do we personally deal with it?” Dealing with it depends on the potential buyer or seller wanting or needing to deal with it now. By this we mean buying or selling a home. We stress the word home as the greater proportion of participants are those owning or contemplating acquisition. We must not, however, believe “growth cycle” to be synonymous with rocketing prices. “Growth” in number of transactions is a product of confidence from the demand side of the equation and may be coupled with realism in expectations by those wishing to sell their current homes. It seems that we have been trained to think of cycles only in terms of average price. A healthier approach would be to think in terms of activity and not price. Alas we are constrained by the inevitable questions – “are we paying more than we should?”  – and “are we receiving less than we could get?” How do we break free of this mind set or is it simply an inevitability in our monetarily controlled lives?

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

Detached homes sold [$2MM and above] 2011 – 518 listings sold vs. 2010 – 190 sold (an increase of 172%). Highest sale $16.8MM (’11) vs. $10.06MM (’10). This property – Belmont Ave, Pt.Grey sold in Mar ’11 after 32 days on the market, originally listed at $19.8MM. 6 bed/8 bth it is a 9,785 sq ft structure on a serene, park-like lot – A splendid, Point Grey view mansion with a 741 sq ft courtyard. Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2011 – 103 units sold vs. 2010 – 64 sold (an increase of 61%). Highest sale $7.138MM (’11) vs. $3.89MM (’10). This property at 3838 Cypress St which sold in Jan ’11 after 24 days on the market was listed at $7.588MM. A spectacular and unique 5bd/7bth Shaughnessy townhome on the Heritage “A” list, formerly the estate of Eric Hamber, B.C. Lt. Governor, with 7530 sq ft of living space. An amazing Home of Provenance.

Apartments [$1MM and above] 2011 – 158 units vs. 2010 – 112 sold (an increase of 41%). Highest sale was $7.1MM (’11) vs. $5.35MM (’10). This Yaletown property [1000 Beach Ave] is a 4 bed/6 bth, 6841 sq ft., 2 level penthouse with private elevator, 4 car garage and an unbelievable 360 degree outlook.

It will be interesting to see how things unfold in this segment of the market in the second quarter and if this strength persists.

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 Tier 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

Issue 9 – January 2011

GREATER (METRO) VANCOUVER

JAN 2011 QTLY UPPER-TIER REAL ESTATE UPDATE

THE BEGINNING OF A GROWING TREND?

We continue to live in interesting times. We again see ourselves comparing two years in which we have seen some ebb and flow in sales or to put it in economic terms “oscillating cycles”. Ah, yes, cycles again; we make no apologies for the discussion of the configuration of the road map resulting from the forces of supply and demand. The market is clearly experiencing resurgence as the upper end again shows a healthy year over year increase. We are seeing this in both number of sales and gross dollars expended. Those participating in this arena have been joined by a goodly number of immigrating buyers largely from the Far East (especially China) and also from Europe. It is our belief that we have as yet experienced only a small first wave of what will prove to be a continuing and significant force in this Upper Tier of residential real estate. For a major world city, repeatedly rated by non-Canadians as in the top places to live on this planet, many of our fellow Vancouverites seem to be the last to accept that our current prices represent excellent value for money to foreign buyers.

It is the time of year that we again look at our new (2011) tax assessment. Do they mean much? How does that figure relate to the current market value? Does this figure bear any comparison to current market value? Don’t forget that the assessment for tax purposes is designed to provide an estimate for relative taxation equity.  It does not claim infallibility. The B.C. Assessment Authority permits (encourages?) property owners to contest the assessment if they disagree with it. More to the point – what is our real estate worth? (what is our net worth?) Depending on one’s age / planning horizon – how important is this 2011 valuation?  Is it the Province’s estimate that decides the value of our homes or do we trust the market place to give us a fair price for our valued assets? All the tax authority can do is cause us to be charged a modicum more or less in property tax for the years we own that property but it has no say in what we sell our property for and what that ‘willing buyer’ will pay.

Now to some of the facts regarding the upper end Vancouver market ’10 vs. ’09.  Detached homes sold [$2MM and above] 2010 – 870 listings sold vs 2009 – 596 sold (a rise of 46%).  Highest sale $17,5MM (’10) vs. $15,2MM (’09). This property (on Osler Street, a Shaughnessy estate)  sold late Oct ’10 after 366 days on the market, listed at $22MM. 7 bed/8 bth a 18,633 sq ft home on 1.12 acres of park like property – exceptionally well appointed home with circular drive way, chef’s dream kitchen and enumerable lifestyle amenities. By renowned architect Ernest Collins this home also boasts a 2 bedroom nanny suite. Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2010 – 233 listings sold vs 2009 – 175 sold (a rise of 33%). Highest sale $7MM (’10) vs. $3.88MM (’09). This property (on Point Grey road – actually 2 blks from the previous year’s top selling attached home) is a highly desirable 3 bed/3 bathroom ½ duplex on the Golden Mile waterfront. Over 3400 sq ft with unobstructed waterfront views.

Apartments [$1MM and above] 2010 – 469 listings vs. 2009 – 371 sold (a rise of 26%). Highest sale were two units both $5.8MM (’10) vs. $6.5MM (’09)  the properties concerned are 25th floor in Two Harbour Green (W. Cordova St) – an impressive view dwelling (3 bed/4 bathroom) 3600 sq ft on Coal Harbour. A N/W corner highly luxurious unit with panoramic views. The other, a 51st floor Shangri La, 4470 sq ft, 2 level “estate”. 3 bed/ 4 bathroom plus office, mega unit with breathtaking views.

We extend our wishes for a Happy and Prosperous New Year – may we see lower tensions in the strife torn Middle East. Good will to all persons.

Again, visit the Homes of Provenance website to see the new developments.  We continue our commitment to keep you up to date in the “higher value” market – the “go to” site for Metro Vancouver Real Estate analysis and jumping off point for market listing information in the higher range.

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

Issue 8 – October 2010

GREATER (METRO) VANCOUVER

OCT 2010 QTLY UPPER-TIER REAL ESTATE UPDATE

YES, THE DEMAND IS STILL STRONG?

We are indebted to the most recent Re/Max report [Market Trends – Fall 2010] concerning “year-to-date” [YTD] (up to Aug/2010) comparison of numbers of sales in some 19 Canadian markets and sub-markets. They report thus on the Vancouver condition – “The market for high-end properties is also robust. So far this year, 1,356 sales occurred – priced in excess of $1.5 million- compared to 940 properties in 2009. Wealthy Chinese immigrants are driving luxury sales, bolstered by China’s strong economy, and this phenomenon is expected to continue into 2011”. They agree that the overall property market here has been ‘dampened’ by the introduction of the HST “and the confusion that followed”. The realization by purchasers that the HST applies only to new construction is proving “a boon to the resale market”. They conclude their report with this statement “…average price is poised to set a new record in the Greater Vancouver Area in 2010”.

In their database, they track too (using various unique ‘Upper End Price Point’ for 19 markets) the YTD change 2010 vs. 2009 across Canada. Not surprisingly, these ‘price points’ range from as low as $350,000 for Saint John up to $1,500,000 for Greater Vancouver. The number of actual sales YTD in all 19 cases have increased by a minimum of 20% [Montreal] to a high of 193% [Sudbury]. In comparison Gr. Toronto reflects 52.4% and Gr. Vancouver 44.3%. Remember that small markets need a relatively smaller number of sales to yield what appears as impressive growth e.g. Sudbury 15 (’09) and 44 (’10).  There is evidence too, that the majority of markets are seeing a drop in inventory in the higher end.

This brings us back to a favoured concept – supply and demand. In the upper tier, it appears that players are less constrained by the oft touted argument of affordability. This, of course, is a valid consideration when one talks of ‘first time buyers’ without much in the way of down payment and little or no equity from the sale of a former residence. Demand at the upper end is usually backed by significant equity and often by substantial other financial assets. The other contributor buoying this demand is the relatively low cost of borrowed money. Also consider that the “retired” group display a higher degree of urgency regarding these retirement/recreational needs than those younger folk embarking on acquiring starter and subsequent housing. Yes, demand is certainly evident in this more mature sector and patience less of a virtue.

Now the third quarter 2010 figures extracted from the REBGV database.

Detached homes sold [$2MM and above] 2010 – 170 listings sold vs. 2009 – 186 sold (a decrease of 5%). Highest sale $8.2 MM (’10) vs. $14.8MM (’09). This property – on Bellevue Av (WV), sold in Sep ’10 after 186 days on the market, originally listed at $11.995MM. 6 bed/7 bth, it is a 6,744 sq ft structure on a 14,564 sq ft, gated, S facing property – A four year old beachfront mansion.  Indeed a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2010 – 48 units sold vs. 2009 – 69 sold (a decrease of 30%). Highest sale $2.85MM (’10) vs. $3.389MM (’09). This property is on The Crescent, in Shaughnessy which sold in Sept ’10 after 146 days on the market was listed at $2.99MM (originally listed at $3.28MM). One of 4 units in this gated complex with a view, 4bd/4bth unit with 3,950 sq ft of living space.

Apartments [$1MM and above] 2010 – 96 units vs. 2009 – 114 sold (a decrease of 16%). Highest sale $4.35MM (’10) vs. $6.5MM (’09). This is an ultimately luxurious 2nd floor (the entire floor) 3 bed/4 bth apartment with floor to ceiling windows on the water’s edge. Listed at $4,589MM, it sold in July ’10 after 48 days on the market.

Here again are the current inventory (listings) figures:

Detached ($2MM and up 714) – Highest $39MM * – 20 at $10MM plus Attached   ($1MM and up143) – Highest $3.888MM – 4 at $3MM plus Apartments ($1MM and up 434) – Highest $12.888MM – 2 at $10MM plus *3 homes on 5+ acre West Van estate (Chartwell)

Note: We do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest.  It does underline the fact that unique properties are often challenging to price and, that, in certain markets very few of these offerings are sold. Note that number of listings all categories have dropped (from 3 to 10%).

It will be of significant interest to see if sales activity in the upper tier is maintained during the final quarter of this year.

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 Tier 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

Issue 7 – July 2010

GREATER (METRO) VANCOUVER

JULY 2010 QTLY UPPER-TIER REAL ESTATE UPDATE

ODD CYCLES BUT SEGMENT STRENGTH PERSISTS

We continue to believe that the real estate market can only be considered strong when the upper tier reflects price resilience. This remains the case at the moment in Greater Vancouver considering the 2010 second quarter figures (see below).

We start with a quote from the most recent RE/MAX report  – concerning predominantly the first quarter of this year. (Remember this is an aggregation of “13 major Canadian centers and 5 sub markets”.)  Their opening remark is as follows – “Luxury home sales soared in the 1st quarter of 2010 as affluent purchasers moved to take advantage of favourable market conditions across the country”.  They base this “serious upswing in sales” on “improved economic performance, increased personal wealth, immigration and foreign investment”. “Nine out of the 13 markets examined (69%) shattered existing records – setting new all-time highs for 1st quarter activity in the upper end”.

This rosy picture (nationally) is mimicked in Vancouver, however, the two year roller coaster we currently inhabit is troublesome. Steadily climbing or steadily declining graphs are far more readable and enlightening. So here goes. Late 2009 and early 2010 (with ‘time off’ for the February Olympics) were generally bullish. Then came the HST debacle coupled with international economic confusion (what we’ve heard called “the Greek Disconnection”).Where does that put us right now – this mid-year oasis? Well, inventory, homes on the market, has steadily risen since about the 3rd month of this year. A subtle change may well be occurring – early July numbers see a drop below the higher levels of May and June. This could well herald a more positive trend leading us closer toward a more balanced upper tier market.  There is some consensus that buyers will realize in the upcoming month or so that we are receding from the environment where the best (lower price) purchases could have been made. There may still be a window to negotiate strongly with the help of an experienced Realtor and, remember, mortgage rates are still at a reasonable level. The dire predictions of rapidly climbing rates have not materialized.

Now the second quarter 2010 figures extracted from the REBGV database upon which we have based these comments.

Detached homes sold [$2MM and above] 2010 – 226 listings sold vs. 2009 – 171 sold (an increase of 32%). Highest sale $11.08 MM (’10) vs. $11.3MM (’09). This property – on Osler St, sold in May ’10 after 98 days on the market, originally listed at $16.8MM. 7 bed/8 bth, it is a 15,260 sq ft structure on a 172 x 238 gated, W facing manicured property – An elegant Shaughnessy mansion. Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2010 – 76 units sold vs. 2009 – 49 sold (an increase of 55%). Highest sale $7MM (’10) vs. $3.345MM (’09). This property on Point Grey Rd which sold in Jun ’10 after 132 days on the market was listed at $7.998MM. A view, Kitsilano, 3bd/3bth ½ duplex with 3451 sq ft of living space.

Apartments [$1MM and above] 2010 – 132 units vs. 2009 – 99 sold (an increase of  33%). Highest sales were 2 @ $5.8MM (’10) vs. $5MM (’09). They are i) an ultimately luxurious 51st floor, 2 level, 20ft ceiling suite in Shangri-La. Listed at $6MM, it sold Apr 2010 after 5 days on the market and ii) a 25th floor, equally luxurious 3600 sq ft suite with panoramic views in Two Harbour Green. Listed at $6.3MM, sold May’10 after 44 days.

An enquiry has led to the inclusion of the following information. Current inventory (listings):     Detached ($2MM and up 804) – Highest $29.9MM  –  26 over $10MM     Attached   ($1MM and up169 ) – Highest $3.598MM – 4 over $3MM     Apartments ($1MM and up 486) – Highest $10.8MM – 3 over $10MM

We generally do not place too much store on “asking” prices, as the only true measure of a market is a “sale” price. These are however included because they are obviously of interest. It does underline the fact that unique properties are often challenging to price.

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 persists. Our feeling is that the upper tier will continue to be strong.

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 Tier 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

Issue 6 – April 2010

GREATER (METRO) VANCOUVER

APR 2010 QTLY UPPER-TIER REAL ESTATE UPDATE

ARE WE BACK TO A STRONG MARKET?

We have on a few occasions commented on the real estate market being considered strong only when the upper tier reflects price strength (or an increase). This would seem to be the case at the moment in Greater Vancouver considering the 2010 1st quarter figures (see below).

We have heard from many geographic segments within Greater Vancouver that this is a good time to sell (well, better than this time last year anyway). If this is true, does this automatically imply that now is therefore a bad time to buy? Only if one believes that market values are turning and will start moving down.  This will only happen if buyers collectively retreat from making the decision to buy. Our belief is that the demand for “re-housing” will not drop with any significance in the short term. This belief is based on a few factors. Firstly, the fact that numerous property seekers have pre-approved mortgages at rates below those seen in the new “rate sheets” of the major lenders. These mortgages have to be drawn down before their terms expire – anything from 30 – 90 days.

Secondly, a one-time phenomenon (until the next one-time phenomenon 😉 ) – that of the July 1st introduction of the HST. New construction in the upper end will be impacted. The rebate rules (for those who would like the text of the November 19, 2009 Ministry of Finance statement please visit http://www2.news.gov.bc.ca/news_releases_2009-2013/2009FIN0017-000647.pdf ) do lessen the “increased 7%”. HST on a $1mm unit would be $43,750 higher [$70,000 – 26,250]; a $2mm unit $113,250 higher [$140,000 – 26,250]. Remember that the property developer (builder) will now be claiming, as an input tax credit, all the 7% (PST portion of the HST) that they have paid in the construction of the property for sale and will thus have a lesser cost of construction equivalent from, say, 40% to 70% of the PST portion (7%) of the tax that they would formerly have passed on to the end purchaser. They now have the flexibility to pass on some or all of this saving in the way of a reduced unit price to the buyer.

Will this double whammy, tax and rate increase, mean the end of civilization as we know it? Again, an opinion – no. The “Chicken Little” reaction is not called for, although, obviously these incremental economic factors have, at least initially, some effect on prices and activity. Affordability does impact demand and will almost certainly put the brakes on the recent round of housing price inflation evident in the general (lower level) real estate market.

The tax impact of this collecting of PST – 7% on hitherto exempt items, is, in the case of “new” real estate really a “wealth tax” (or in economic parlance a form of progressive taxation) impacting those who can afford the higher priced new dwellings harder than those not able to afford these luxury items.

Now the first quarter 2010 figures extracted from the REBGV database upon which we have based these comments.

Detached homes sold [$2MM and above] 2010 – 190 listings sold vs. 2009 – 72 sold (an increase of 164%). Highest sale $10.06MM (’10) vs. $4.7MM (’09). This property – on West 2nd Avenue, sold in Feb ’10 after 535 days on the market, originally listed at $12.88MM. 7 bed/8 bth it is an 11,646 sq ft structure on a 100 x 338 mature park-like lot – An elegant 15 yr old Point Grey mansion. Truly a home of provenance.

Attached homes, those best described as townhomes and duplexes [$1MM and above] 2010 – 64 units sold vs. 2009 – 14 sold (an increase of 357%). Highest sale $3.89MM (’10) vs. $3.18MM (’09). This property on Homer Mews which sold in Mar ’10 after 14 days on the market was listed at $4.25MM. A luxury Arthur Ericksen designed [The Ericksen] view, waterfront home on False Creek. 3bd/3bth  townhome with 2500 sq ft of living space.

Apartments [$1MM and above] 2010 – 112 units vs. 2009 – 36 sold (an increase of 211%). Highest sale was $5.35MM (’10) vs. $5.4MM (’09). This West Cordova property [Two Harbour Green] is a 3 bed/3 bth Coal Harbour 2400 sq ft. unit with an unbelievable outlook.

Wither the direction of this “upper” market, post June? Let’s see how things unfold and if this strength persists.

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 Tier 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