Let your situation — and not the signs — direct real estate decisions | Vancouver Sun

With Lunar New Year beginning on Friday, Vancouver realtor Grace Kwok smiles and notes that this year’s zodiac figure — it’s the Year of the Dog — carries with it advice that she would follow year in and year out in the world of real estate: Consider your needs first before consulting the stars.

Under Chinese zodiac lore, if you were born in a Year of the Dog, one of the 12-year cycle of signs, you possess the best traits of human nature. According to the website, www.yourchineseastrology.com, you are honest, friendly, faithful, loyal, smart, straightforward, and you have a strong sense of responsibility.

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Government housing market measures hurting, not helping first-time buyers, says Macdonald Realty | Vancouver Sun

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A one-bedroom condo at 1565 W 6th Avenue in Vancouver listed for $698,000. The overheated entry-level home buying market is being caused by conflicting initiatives from various levels of government, says Dan Scarrow. SUPPLIED

The federal government’s tougher mortgage lending rules and the British Columbia government’s affordable housing measures are working against each other. Ultimately, these moves will hurt first-time buyers the most, says a senior real estate executive with a leading Vancouver-based firm.

Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, says it wants to reduce the risk of mortgage defaults due to high levels of household debt. But applying stricter lending guidelines is making it more difficult for home buyers to access mortgage funds, says Dan Scarrow, vice-president at Macdonald Realty.

Last year, the former Liberal provincial government offered first-time home buyers help in covering the cost of a mortgage down payment with an interest-free loan of up to $37,500 that is payment-free for the first five years, Scarrow said, adding the new NDP government says it wants to continue the program for the time being.

These initiatives, on top of government intervention with the 15 per cent foreign buyers’ tax introduced last year and two interest rate hikes this year, are causing major market distortions, such as overheated entry-level home buying and a cooling of the higher priced homes in Vancouver, he said.

Over the past year, MLS statistics show that the benchmark price for a single-family home in greater Vancouver rose only 2.9% to $1,617,300 while condo prices soared 21.7% to a benchmark price of $635,800.

In the end, all these initiatives are hurting the very people that various levels of government are trying to help, says Bill Dick, managing broker for Macdonald Realty.

“Since many of the government reforms have been implemented, the top end of the market has softened while the entry level has performed extremely well,” he said.

While Macdonald Realty realizes there is a place for some government intervention in the housing market, it is against the mortgage regulation changes that it sees as unnecessary, especially considering that Canadian banks have long been recognized globally for managing their business well.

“The regulators have arbitrarily insisted that buyers undergo stress testing that artificially limits the amount that they can borrow, making it harder for first-time buyers to compete with already wealthy landowners,” Scarrow says. “The banks have their own risk assessment and they have made the determination that these are acceptable risks and returns that they are willing to take.”

Macdonald Real Estate Group employs more than 1,000 people in over a dozen real estate offices across British Columbia. Last year, sales volume exceeded $8.9 billion while assets under management grew to over $5 billion.


This story was created by Content Works, Postmedia’s commercial content division, on behalf of Macdonald Realty. The article was originally posted on vancouversun.com November 6, 2017. Written by Michael Bernard.

Election result provides no easy answers to housing issues | Vancouver Sun

At least one major Vancouver real estate firm believes that the election results mean that housing policy in the province will remain uncertain for the foreseeable future.

“The one thing you want the government to provide is certainty in policy,” said Dan Scarrow, vice-president of Macdonald Realty, which has almost 1,000 staff and agents throughout B.C.  “This election result means that housing policy in the province will be up for negotiation between the three major parties.”

Scarrow said many believe that government holds the solution to issues like affordable housing.  He said the reality, however, is that governments’ power, particularly the power of provincial governments that do not control either immigration or interest rate policies, is limited because there are so many forces that impact the real estate market.

“People have already forgotten that when the 15-per-cent foreign buyer tax came in, it was a shock to the system,” he said. “At the time, even the most vocal critics of foreign investment in Vancouver acknowledged that this was a far bigger move than anyone could have anticipated. And now, less than a year later, it has had no discernible impact on demand.”

Scarrow points to examples all over the world of cities struggling with affordability. “The one commonality seems to be that governments are incapable of stopping demand. Draconian policies to restrict demand have been tried in Hong Kong, Singapore, Sydney and many first-tier cities in China with limited to no effect. Vancouver can now be added to this list,” he said.

In fact, some argue that local governments often make things worse by artificially restricting supply. The 13th Annual Demographia International Housing Affordability Survey: 2017, which ranked Vancouver as the world’s third-least affordable market, states: “The affordability of housing is overwhelmingly a function of just one thing: the extent to which governments place artificial restrictions on the supply of residential land.”

Scarrow said that affordable housing is a complex problem for which there is no easy solution. “Everyone’s definition of affordability is different,” he says. “So if no one’s defined the end goal, we just end up building a highway to nowhere.”

Ultimately, regardless of what policies are eventually introduced, the issue of affordability will likely remain. Says Scarrow: “I expect to see this as a major election issue in 2021. And 2025.”

 

 


The article was originally printed in The Province newspaper on May 11th, 2017 and posted on vancouversun.com May 12, 2017. Written by Michael Bernard.

Macdonald Realty: A Giant Tree from a Tiny Acorn

Vision and hard work – that sums up how Lynn Hsu grew a real estate company from one office to 20 offices and 1,000-plus employees, making it Western Canada’s largest full-service brokerage firm

  • luxury-home-listed-by-macdonald-realty
    Luxury home listed by Macdonald Realty

  • lynn-hsu-and-dan-scarrow-of-macdonald-realty
    Macdonald Realty's leaders: Lynn Hsu, owner and CEO, and Dan Scarrow, managing broker

  • the-wade-in-victoria-marketed-by-macdonald-realty-platinum-project-marketing
    The Wade in Victoria, marketed by Macdonald Realty's new-home marketing division Platinum Project Marketing

As seen in… Profiles of Excellence 2017

Originally from Taiwan, Hsu immigrated to Canada in the late 1970s – alone, with no family or friends, no job prospects and speaking little English. Today, she has turned Macdonald Realty into Western Canada’s largest full-service brokerage firm.

From the moment Hsu purchased that single boutique residential firm, she had a vision.

“The real estate industry has two distinct businesses – one creation, the other servicing. On the servicing side, almost all the companies in BC were a single-purpose company, i.e. residential or commercial brokerage, property management or project marketing firms,” says Hsu. “I wanted to create a company that could provide our clients all-encompassing real estate solutions under one roof –from guiding a home buyer through the biggest investment of their lives, helping an investor manage and add value to their properties, to assembling ground intelligence to assist developers to create the right products for the marketplace.”

Today, the company’s interests encompass residential sales, commercial sales and leasing, property management, strata management, development and project management, project marketing and mortgage brokering and lending. It now includes the Macdonald Commercial and Macdonald Realty Platinum Project Marketing divisions.

Dan Scarrow, vice-president, says it’s Hsu’s ability to hire the right people that also helped propel her to the top of the industry. “Lynn has always understood how important it is to empower employees. She is a leader who inspires people through a shared vision and she has created an environment where people feel valued and fulfilled,” says Scarrow. “Her strongest point is that she has never wavered from her commitment to serve and protect our customers.”

Hsu believes that a business model based on a fundamental principle of upholding the highest standard of excellence, coupled with a strong conviction that every problem has a creative solution, would allow Macdonald Realty to grow organically. “When you have the belief and knowledge that you are doing your best to adhere to your core values, problems, rather than deflating you, energize you to action,” adds Hsu.

Hsu went on to explain: “Professionalism and integrity mean a great deal to me and my entire team. They are our company’s core values.”

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BC Real Estate is Front and Centre in Shanghai | BCBusiness with Dan Scarrow

Beyond Borders
Macdonald Realty’s Shanghai office is meeting the needs of its clients and bearing fruitful results

As seen in BCBusiness July 2015 issue.

As the demands of the BC real estate market change, realtors and their respective real estate agencies must react accordingly to stay in the game. For one agency, this meant thinking outside of the box and stepping out of its time zone.

When Macdonald Realty opened its office in Shanghai, China, last year, it was branded as “The Canadian Real Estate Investment Centre.” But Dan Scarrow, who manages the Shanghai office, says that his Chinese clients had their own words to describe it. Impressed with the office’s scope, they say that it covers “an entire dragon of services.”

Those services include residential resale, commercial sales and leasing, new development project marketing and property management. While American, Australian, New Zealand and European real estate companies had established offices in China, Macdonald Realty was the first company in China with a sole focus on Canadian real estate. The company decided to open the office as a response to their clients’ desire for better access to the Chinese market.

Scarrow is uniquely qualified to run the office. He has been working with Macdonald Realty for nearly 10 years, and has worked as an executive assistant for the CEO, and as a residential and a commercial agent. He is a born-and-bred Vancouverite, but he is half Taiwanese. “The upshot is that Mainland Chinese see me as a white Canadian, but I’m also able to communicate with them in Mandarin,” he says. “I guess you could say that, in China, I am an authoritative foreign curiosity and hence memorable.”

His company, says Scarrow, has several competitive advantages. “Our intimate knowledge of the market is what makes us uniquely valuable to investors here,” he says. “We are small enough to be agile, but big enough to provide a full range of brokerage, management and advisory services.”

Scarrow works with Chinese clients who are in the process of immigrating to Canada, with new Canadians and with pure investors. Those interested only in investment tend to look at new condos and commercial properties. “What resonates with investors in China is the perception of Canada as a safe and secure investment climate, in contrast with China’s robust, but volatile, environment,” says Scarrow.

In order to stand out in today’s highly competitive real estate market, Macdonald Realty has undertaken several innovative marketing strategies. As technology has made property information widely available to the public, Scarrow notes that the role of the real estate agent has shifted: from gatekeeper of information to interpreter and negotiator. To meet the demands of those roles, Macdonald Realty has been working with an outside training organization to offer all agents the exclusive Certified Negotiation Expert (CNE) designation. Macdonald Realty has also launched its own magazine called Macdonald Realty Luxury Homes, to help market its luxury home listings in Canada and in China. Produced by the company’s own in-house creative marketing team, the magazine has proven to be a hit.

But from his own experience, Scarrow says that the most important way for an agent to get ahead is to be a competent professional first. “Doing a fantastic job with one client will generate more long-term business than even the most successful email campaign,” he says. “Start with the people who know and trust you, do an unbelievable job for them and continue learning about how to be a professional from the good agents and managers around you.” Dan Scarrow manages Macdonald Realty’s Shanghai office sults just come a lot easier.”

This article was originally posted on BCBusiness, June 12th, 2015. 

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Vancouver firm offers a one-stop real estate shop for Chinese investors in B.C. | The Vancouver Sun


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When Vancouver-based Macdonald Realty dispatched Dan Scarrow, the agency’s vice-president of corporate strategy, to China last March to investigate the feasibility of launching a branch office in Shanghai, the assignment was initially only going to be for four months.

A year later, Scarrow, a second-generation Chinese Canadian who is fluent in Mandarin, is still there. The Vancouver Sun reached Scarrow in Shanghai by phone last week to discuss his progress, objectives and challenges in building a bridge for residential and commercial real estate investment between China and British Columbia as the new managing director of Macdonald Realty’s Canadian Real Estate Investment Centre in Shanghai.

Q When you first were dispatched to Shanghai at this time last year, it was for a four-month assignment to investigate opening up a Macdonald Realty branch in China. Why are you still there?

A We actually have ended up opening up an office here. We have a representative office over here in Shanghai now doing project marketing and commercial and residential prospecting for our Vancouver and British Columbia offices. We’ve branded it as the Canadian Real Estate Investment Centre, so it’s offering a one-stop shop for Chinese investors looking toward anything to do with Canadian real estate, specifically B.C.

Q Why did Macdonald Realty want a presence in China?

A It was sort of two-fold. The first one is that Chinese investors are becoming a bigger and bigger part of our market — both on the residential side and the commercial side. And after our investigation over here we found that there are no other Canadian [real estate] companies over here in China that actively do this, so we would be the first one.

Q What’s been the biggest adjustment living in China for you personally?

A Shanghai is a pretty easy city for an expat to get used to. I think that the rest of China would be a much more difficult adjustment, but Shanghai itself is a pretty cosmopolitan city with a pretty global outlook and a pretty robust expat community. So it’s not as difficult. The challenge, I guess, that everyone talks about is the pollution aspect. They talk about it here the same way Vancouverites talk about the rain.

Q What’s your mandate in terms of building links between commercial real estate in B.C. and the Chinese market?

A Our main mandate is to promote B.C. commercial properties over here in China. I think we all acknowledge that China has been growing. It has created the fastest-growing wealthy and middle class in human history, so tapping into that market I think is going to be increasingly important for Canada and Canadian companies over the next decades.

Q What’s the most common question you hear from Chinese clients interested in investing in British Columbia’s commercial real estate?

A The most common question actually isn’t about real estate. It’s with what is happening in immigration. The biggest question is what is Canada’s current immigration policy and what will it be moving forward, just because there have been so many changes to Canada’s immigration policy in the last few years, and I think everyone is a little bit confused as to what it will be moving forward.

Q Any unwelcome surprises or challenges doing real estate business in China?

A Not really. It’s been interesting in the last year because there were the big changes to the immigration program — the investor immigrant program in the middle of last year and continuing until today. And also with the collapse of oil prices and the subsequent drop in the Canadian dollar. That’s been another thing we’ve had to deal with, but more in a positive sense from our investors’ point of view because now Canada’s real estate market is seen as even cheaper than it was prior to that change.

Q In a blog post last year you wrote that wealthy clients in China are more interested in placing their children and a portion of their wealth outside of China than they are in immigrating themselves. Why do you think that’s the case, if it still is the case?

A It still is the case. If you’re a wealthy Chinese individual it’s likely because you have a large business still in China. China does not recognize dual citizenship and it’s just more difficult for you to actively operate your business without Chinese citizenship. So a lot of people, they’re not willing to give up their business so they’re not willing to give up their Chinese passport either.

Q Which areas of Vancouver’s commercial real estate market are your Chinese clients eager to get involved in?

A For a lot of our clients it’s hotels. But it’s an education process as well, letting them know which asset classes are involved or available in B.C. Hotel investment is more of an active business, so while we have a lot of hotel operator clients who are interested in buying hotels, if they don’t have that kind of experience we like to talk to them about some of the other opportunities that might be available. Some of the hotter ones would be street-front retail with redevelopment potential. That goes very quickly for us. We probably have 15 very serious-type buyers that would snap up products like that immediately, but we can’t find enough product for them. It’s a lot of investment-type product that has income right now but has development potential in five to 10 years.

Q What’s the next step for your operations in China?

A Right now we’re working with a couple of developers to promote their projects over here [in China] and so we’re doing project marketing and then also working with our residential agents to make sure the listings that we have are exposed to the widest possible audience. And finally — obviously — exposure of the commercial real estate realm. I think that’s really the big push right now. A lot of investors have already bought a home for themselves in Vancouver and they’re looking for ways to diversify their investment portfolio in Canada, and really the promotion of the commercial real estate, and the education of those buyers, is our next step.

 

This article was originally posted on The Vancouver Sun, February 24th, 2015.  Written by Evan Duggan.

BC assessments show strong appreciation in Vancouver single-family home values | The Vancouver Sun with Dan Scarrow

Metro Vancouver homeowners have grown accustomed to healthy increases on their annual BC Assessment notices, which are now landing in mailboxes.

What’s new this year is that condo values are also rising in the region, after a few flat years that saw condo construction outpace homebuyer demand.

“Condominiums, that’s apartments and townhouses, up until 2014 had been relatively flat over three years,” said Cameron Muir, chief economist of the B.C. Real Estate Association.

Over 2014, however, Muir said condo sale prices have risen in step with inflation. Condo prices in Vancouver and its nearer suburbs were up about two per cent as of July, when B.C. Assessment sets its values for the next year’s assessment roll.

Single-family home values were up a more substantial 6.5 per cent, Muir said, but some of the condo valuations were a departure from the previous year.

“We’re probably looking, in Vancouver, at sales (increases) of 16 to 17 per cent in 2014,” Muir said, “so, there’s much stronger demand, and we’re also seeing inventory levels steadily decline.”

B.C. Assessment doesn’t produce average assessment values for property types in Lower Mainland markets but does highlight representative examples.

In Vancouver, a typical east-side two-bedroom apartment increased 4.7 per cent to $381,000, from $364,000 a year earlier.

On Vancouver’s west side, values for a typical two-bedroom apartment rose 7.5 per cent (to $616,000), in line with the growth in value of a detached home on a 33-foot lot (up 7.5 per cent to $1.575 million).

In its real estate assessments a year ago, B.C. Assessment had highlighted decreasing condominium values in the range of four to five per cent — the second consecutive year that condo prices declined or offered minimal increases.

“Changes within a plus or minus five per cent range, that’s what we categorize as stable,” said Dharmesh Sisodraker, B.C. Assessment’s deputy assessor for the Vancouver Sea to Sky region, which takes in Vancouver and the North Shore all the way to Whistler.

Assessments, which are used by municipalities to set property taxes, tend to lag the overall market by the time they are released.

In east Vancouver, a typical detached house on a 33-foot lot saw an increase of 11.3 per cent, to $993,000.

In Vancouver Heights, typical detached home prices rose five per cent to $955,000.

“(Condominium) prices are still under pressure versus detached homes, mostly because there is so much (condominium) product on the market,” explained Ray Harris, president of the Real Estate Board of Greater Vancouver, and the increases in condo prices are “sporadic.”

In Metro Vancouver, demand for new condos has been in high-growth areas linked to rapid transit, such as the Marine Gateway development at Cambie and Marine in Vancouver or the Metrotown and Brentwood town centres in Burnaby.

“If a complex is in demand and there are not a lot of units in the market, you can get more of a lift,” Harris said.

Suburbs such as Burnaby, Coquitlam and Port Moody — communities either on SkyTrain, or where SkyTrain is being built — are among those that have seen modest increases in the range of two to three per cent.

However, the gains weren’t shared equally and some spots still showed decreasing assessment values. B.C. Assessment cited an example at Simon Fraser University’s UniverCity development, where the assessed value of a two-bedroom highrise unit declined 2.5 per cent from 2014.

“There are a few pockets where values decreased slightly,” said Zina Weston, a deputy assessor for B.C. Assessment in its North Fraser region, which takes in the eastern suburbs closest to Vancouver.

“If there is a lot of building that comes on in a short period of time in a finite area, there might be some (downward) pressure on pricing,” Weston said.

Harris added that condo owners trying to re-sell are having a tougher time because developers are selling new units at lower prices than they would be if the market were stronger.

Condo values also declined in Fraser Valley suburbs from Langley to Chilliwack, where single-family home prices are in the reach of more buyers.

Dan Scarrow, a vice-president at Macdonald Realty in Vancouver, added that some municipalities are more encouraging to condo developers and “as a result of that, maybe some areas tend to get overbuilt.”

“Then, in some municipalities, say Vancouver, it is more difficult to get a project off the ground, but demand is actually quite high,” Scarrow added.

Markets that rely on recreational property sales — such as Whistler, the Okanagan and Kootenays, where sales collapsed and values declined following the 2008 recession — also took part in some of the rebound in 2015 assessments.

B.C. Assessment cited examples in Kelowna where assessments were up from four to seven per cent. In Whistler, a typical home in the White Gold area increased in value 7.4 per cent, to $1.06 million.

 

Homeowners can look up their assessments on the B.C. Assessment website.

This article was originally posted on The Vancouver Sun, January 3, 2015.  Written by Derrik Penner.

Macdonald Realty looks for luxury buyers in China | The Globe and Mail

Sales of high-end properties are on the upswing in the Vancouver region, spurring one of British Columbia’s leading real estate firms to search for wealthy buyers by setting up shop in China.

Dan Scarrow, vice-president of corporate strategy at Macdonald Realty Ltd., said he has heard enough anecdotal evidence of well-heeled home buyers with roots in China to make it worthwhile to invest in a Shanghai office.

In February, Mr. Scarrow will start the first of two three-month assignments in 2014 in Shanghai. After his fact-finding mission, he plans to hire Mandarin-speaking staff in China to keep the overseas branch office going.

While real estate experts have estimated the proportion of foreign buyers in the Vancouver region’s housing market at only 1 to 3 per cent, Mr. Scarrow said if the statistics were to include recent immigrants with origins in China, the influence of rich Chinese buyers would be greater, especially on single-family detached homes in pockets of Vancouver’s West Side.

Most high-end transactions occur on Vancouver’s West Side and the Municipality of West Vancouver. In the luxury market, there were 644 properties that sold for $3-million or higher in the Vancouver area last year, up 47 per cent from 439 homes that traded hands in 2012, according to data compiled by Macdonald Realty. Of homes that sold last year, there were 148 that fetched at least $5-million, compared with 107 sales in that category in 2012.

Mr. Scarrow said it is hard to determine how many of those elite sales went to recent immigrants from China, noting that the ripple effect due to an influx of new money can easily be exaggerated. Still, he believes the proportion was significantly higher than 3 per cent last year.

“There isn’t this wave of offshore investors with no ties to Canada who are coming in to buy, but the genesis of their wealth is from mainland China,” said Mr. Scarrow, a Canadian who speaks Mandarin fluently. “Most of these people land in Canada first as investor-class immigrants.”

He dismisses tales circulating of wealthy offshore buyers snapping up Vancouver properties sight unseen as false, emphasizing that he will instead seek to nurture a market in which China-Canada family ties are crucial.

The 30-year-old Mr. Scarrow said that as a product of a mixed-race marriage, he is acutely aware that the issue of foreign shoppers is a sensitive one in British Columbia. “The perception among some sellers is that mainland Chinese money is driving the luxury real estate market here,” he said.

But Mr. Scarrow cautions homeowners against hiring real estate agents based only on ethnicity, stressing that the best representatives know Vancouver’s neighbourhoods well, no matter what their race.

Mr. Scarrow’s mother, Lynn Hsu, moved in 1979 from Taiwan to Vancouver. Ms. Hsu is the president and majority owner of Macdonald Realty, which has more than 1,000 real estate agents and staff across British Columbia. Her ex-husband, Peter Scarrow, is a lawyer who has worked in Asia for the past dozen years, including advising wealthy Chinese on Canadian immigration and tax rules.

Dan Scarrow said there will be opportunities to tap into the Chinese market during his stay in Shanghai. Besides seeking contacts who are interested in single-family residential properties, he will be on the lookout for investors in Vancouver’s commercial real estate market and also new condo projects.

Benchmark index prices, which strip out the most expensive properties, have jumped 17.3 per cent to $2.1-million for single-family detached houses over the past three years on the city’s West Side, according to the Real Estate Board of Greater Vancouver. By contrast, West Side prices have risen only 4 per cent for townhouses and 3.5 per cent for condos over the same period.

This article was originally posted on The Globe and Mail, Jan 19, 2014.  Written by Brent Jang.

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BC luxury home sales above $3-million fell by a third in 2012 | The Vancouver Sun

“Based on a Macdonald Realty Luxury Report, this past year the sales number of luxury homes over $3 million has fallen one third since 2011. However, 2012 is only second to 2011 in sales. In a Vancouver Sun article, Dan Scarrow, Vice President of Macdonald Realty, commented on the impact immigrants buying patterns, investor sentiment and psychology has changed in the past year affecting the lower mainland’s luxury market.

“For the past few years, we’ve seen lots of new investor-class immigrants coming into the market,” Scarrow said. “ … They’re not just buying a house for themselves, but also three or four residential investment properties as well.”

This “exuberance” among immigrant buyers has slowed, Scarrow said, as the economy slowed in China and prices rose rapidly in Vancouver.

Macdonald Realty, REALTOR Will McKitka also commented in the article discussing his specialty of luxury penthouse homes, a segment of the market considered to be attracting buyers.

Read more www.vancouversun.com
Vancouver Sun article BC home sales above $3-million fell by a third in 2012 from March 1, 2013

Luxury real estate booming in Vancouver | Financial Post with Dan Scarrow and Matthew Lee

If you think Vancouver’s housing prices are overdue for a major price adjustment, tell that to the surging number of luxury home buyers.

According to MLS statistics provided by Macdonald Realty, a record 375 homes — including nearly 50 condos — sold for over $3-million in 2010, breaking the record of 209 set in 2009 and more than double the 167 sold in 2008.

Of those, 73 homes sold for over $5 million.

The sales were primarily, but not exclusively, on Vancouver’s west side, with the priciest home going for $17.5-million at 3489 Osler.

The second and third priciest homes — the second also on Osler and the third on Point Grey Road -both sold for about $11 million.

As well, Macdonald Realty says, if current patterns hold, the number of $3-million-plus homes is expected to reach 550 this year, raising the spectre that in some neighbourhoods a $3-million home may no longer be considered particularly exclusive.

In 2000, just 10 properties in Metro Vancouver sold for over $3-million, none of them condominiums.

The market for luxury homes is now “insanely hot,” with mainland Chinese buyers — who are also affecting the Richmond market in a big way — the primary purchasers, said Dan Scarrow, Macdonald Realty vice-president of corporate strategy.

“Ninety-per-cent (of the luxury home purchases) are on the west side, probably some in West Vancouver,” he said in an interview. “But it’s incredibly striking, when you think what the prices were 10 years ago.”

Scarrow said that while a $3-million house has always been categorized as “luxury,” he no longer knows if that’s the case in key West Side neighbourhoods, including Shaughnessy and Point Grey.

“We’re part of a global luxury market by the ultra-wealthy,” he said. “And from the buyers’ perspective, prices here are cheap for what you get.”

Tsur Somerville, director at the centre for urban economics and real estate, Sauder School of Business at the University of B.C., said in an interview that just because there are more homes selling for over $3-million doesn’t mean they’re not luxury homes.

“It’s pretty subjective,” he said. “But $3-million is an expensive home. And just because it’s on a small lot doesn’t mean it’s not a luxury house.

“And the fact that there’s a whole lot more ($3-million homes) than a decade ago, with the price increases, there’d better be.”

Mr. Somerville also said that China is a huge source of immigrants to B.C. and that mainland Chinese immigrants tend to be investors and entrepreneurs.

“Clearly, there’s a very targeted demand for higher-end properties that many associate with the mainland Chinese market.”

But he said there’s an absence of clear data on the specifics of those buyers, whether it’s primarily immigrants or investor money from China. As an indication of how the luxury condominium market has grown, Mr. Scarrow said that last year a total of 49 condos sold for over $3-million — including seven for over $5-million — with the top three closing in on $6-million each, the priciest at Two Harbour Green, 1139 West Cordova, in Coal Harbour, for $5.8-million and the other two at the Shangri-La in downtown Vancouver.

Scarrow said many more properties are crossing the $3-million threshold, which now buys a new or newer house in the 2,500-to 3,000-square-foot range on a smaller west side lot.

“Now, you see multiple $3-million-plus homes on every block. I’d say $5-million is now where you’re going for that luxury range.”

Alice Zhang, who moved from Hangzhou, China, to Vancouver two years ago, now lives in one of six properties that she and her husband have purchased in Vancouver since moving here.

Zhang, who has two children, is waiting to move into a new home they’re constructing on a Shaughnessy lot that they bought for about $3.1-million. The house is expected to cost another $3 million, which Zhang believes is a good deal.

“We moved from the most beautiful city in China to Vancouver, which we consider more beautiful,” said Zhang, whose family owns hotels and a real estate development company in China.

“I think that compared to other Canadian cities, Vancouver is expensive. But, China is more expensive (than Vancouver).

“And the air is very fresh here and it’s very green. You feel like you’re in a garden.”

Scarrow cited another client who purchased a 2,600-square-foot condo in Coal Harbour for about $1,600 a square foot.

“(She and her family) has homes all around the world. In Knightsbridge, London, a flat was sold to her for $8,000 (Cdn) per square foot. Their flat in London was 3,000 square feet and they paid $24 million for it.”

She also has two homes in Hong Kong, one in Lake Tahoe, one in San Francisco, one in New York and one in Madrid, Spain, Scarrow said. “They all say their Vancouver property is their favourite home. They think it’s the best value.”

Macdonald Realty sales manager Matthew Lee, whose firm sold the three most expensive homes in Vancouver in 2009 and two of the five most expensive homes in 2010, believes that it’s not just mainland Chinese who are fuelling the luxury market, “but buyers from Europe and the U.S. are willing to pay these prices as well. Globally, Vancouver is still seen as a relatively good bargain.”

While the west side of Vancouver had the largest number of luxury homes sold, other areas in B.C. have also seen some very expensive sales, including the Fraser Valley’s top three sales between $5.3-million and $6.1-million, the Okanagan, from $5.4-million to $10.7-million, and Victoria, from $3.9-million to $6.8-million.

And while Vancouver has seen some very expensive homes sold over the past decade, including one for $17.5 million in 2008 and one for $17-million as far back as 2004, it’s the sheer numbers that are striking. In 2000, just 10 homes sold for over $3-million, and 78 in 2005.

 

To view this article in Financial Post click here  By:  Brian Morton, Financial Post – Postmedia News

 

Chinese Love Affair with Canada continues | South China Morning Post with Dan Scarrow

Love can blind us to traits others may see as red flags. The Chinese love Canada and it seems even an uncertain performance in the property sector cannot dampen their ardour.

While Canada has fared better of late than its southern neighbour, the United States, its property market has not always reflected that. At times “red hot”, at others lacklustre, buyer activity has been up and down amid worries that external economic forces that could stunt the country’s growth. In its Emerging Trends in Real Estate 2011 survey, PricewaterhouseCoopers (PwC) notes that, even in Toronto, a city with an “impenetrable financial sector, diverse manufacturing industries and immigration flows supporting growth and intensifying tenant demand”, some investors still worry about flattening apartment rentals.

Vancouver’s office and condo markets remain “red hot”, fuelled by international visitors who bought after last year’s Winter Olympics. Yet the PwC report finds that despite the inherent attractions of the city, some investors are uneasy. Says one: “The market is artificially inflated: it’s been hot for too long.”

Market inconsistencies are also reflected in Canada’s Scotiabank Global Real Estate Trends report, which notes that Canada had one of the better performing housing markets among advanced nations last year, but also one of the most volatile.

An “unusually active” winter and spring were followed by an unusually soft summer. Pricing has mirrored demand, the market gaining 16.6 per cent year-in-year in the first quarter, and declining by 1.5 per cent in the third quarter. The bank hedges its bets on Canada, declaring it is “neither overtly optimistic nor pessimistic” in its outlook for this year. It expects interest rates will remain at historically low levels – an “extremely powerful inducement” for buyers. Demand will likely be tempered by more moderate employment and income growth as government restraint takes hold.

Scotiabank is projecting “a fairly lacklustre year” for residential housing. That doesn’t seem to worry the stream of buyers from the mainland and Hong Kong who call Canada their second home. Vancouver-based Dan Scarrow, vice-president of strategy at Macdonald Real Estate Group, says Chinese – mainly from the mainland – are the largest players in the luxury market, where they’re out-bidding the locals at “a ferocious rate”.

In the months before he moved out of sales to focus on management early last year, Scarrow sold 12 C$5 million-plus (HK$39.21 million) condos and multiple C$3 million-plus homes, mostly to mainlanders, but also to buyers from Taiwan, Hong Kong and local Canadians.

“The market in Vancouver for Chinese buyers is extremely hot,” says Scarrow, a Putonghua speaker who is half-Chinese. “It’s a top destination for wealthy mainlanders looking to emigrate from China and, when they land, many immediately look to purchase a principle residence.”

He says wealthy Chinese tend to be more comfortable with real estate as an investment. “Because of the language barrier, many of my clients are less comfortable with putting their investment dollars into financial products or services they do not understand, or know what the risks are. With real estate, they get to see something tangible.

“They are willing to put a greater weighting of their portfolio into real estate. In the wealthier areas, Chinese buyers are consistently out-competing locals for properties. Our research indicates that on the wealthier West Side of Vancouver, 78 per cent of homes of more than C$2 million were sold to Chinese buyers in 2010.” Scarrow says the Vancouver market continues to be strong. “Canada is in the strongest fiscal position of any country in the G8 and has an over-abundance of natural resources to feed its economy in the 21st century,” he says. “Vancouver may be the best-positioned city in the world.”

Stu Bell, of Prudential Sussex Realty West Vancouver, says: “Home buyers coming from [the] mainland and Hong Kong have intensified in the past six months and boosted home prices by up to 46 per cent in the past two years.”

They come because it’s “the best city in the world,” he says. “The buzz for Vancouver must be experienced firsthand to truly appreciate. In winter, gorgeous snow-capped mountains tower over the Northshore, and in summer the beaches and marinas are flooded with activity. Fine restaurants, excellent shopping, world-class outdoor activities, such as golf, skiing and boating and a thriving city centre filled with entertainment, keeps Vancouverites active.”

Bell agrees West Side is “the hottest real estate in Vancouver”, and one most popular among overseas Chinese. Buyers on property-hunting tours will often buy multiple properties with cash, Bell says. Here, the average price of a detached home is C$1.7 million, up 46 per cent from January 2009.

 

Source:  SOUTH CHINA MORNING POST, SPECIAL REPORT by Peta Tomlinson

What is a Flat Fee / Mere Posting?

With the recent CREA agreement with the competition bureau, there have been a number of questions about what Flat Fee models are and how they work.

Flat fee, or For Sale by Owner (FSBO), companies typically provide a kit to a seller that may include a sign and the ability to place a property on the MLS® system, now known as a “MERE POSTING”, for an up-front and non-refundable fee.

These companies allow a seller to “contract out” of other services provided by full-service agents. Of course, along with allowing sellers to contract out of these services, they also allow agents to contract out of their fiduciary responsibilities of disclosure, confidentiality, and agency. In addition, agents who merely post may not be able or willing to: qualify buyers, provide advice on the market, contracts, legal issues, questions about the house, or even how to deal with an offer. In these cases, sellers would be responsible for showing their own property, being knowledgeable about the market, understanding their legal responsibilities, and hiring a lawyer to draw up contracts, which can run thousands of dollars and are paid regardless of whether a transaction is completed. In addition, a seller, under this model, may not be covered by errors and omissions insurance, meaning that they would be fully liable for a litany of offences, many of which could potentially run hundreds of thousands of dollars.

This Flat Fee model and others such as discounted brokers, contrary to popular belief and media’s reports, have always been allowed to exist in the BC real estate industry. However, the rest of the country has historically placed barriers or restrictions on alternative business models trying to use the MLS® (multiple listing service) system as a selling tool. With the recent CREA agreement, the rest of Canada has adopted BC’s progressive stance, which may have the effect of lowering the rest of Canada’s commission rates (typically 5-6 % of the total selling price) to where they are now in BC. This is a good thing, and, as we can see from the BC example, will improve the industry’s competitiveness. That said, despite having alternative models available to consumers for decades in BC, they still only represent less than 10% of the market, in part because sellers typically understand the important role a competent agent plays in effecting the successful sale of the most important asset in most people’s lives.

 

The 2010 Olympics, the Luxury Market, and Asian Buyers | Square Foot Magazine (Hong Kong)

Vancouver’s property market bounces back and is poised to be stronger than ever

With the Pacific Ocean to one side and the Rocky Mountains to the other, Vancouver is one of the world’s most scenic and liveable cities — and anyone from Vancouver will tell you that. Urban without being overwhelming, Canada’s third largest metropolitan area has a laid back pace that belies its economic importance and has been attracting buyers from around the world — and Asia in particular — for years. Only moderately affected by the financial meltdown of 2008, Vancouver’s property market looks to be holding firm, and the immediate future is looking bright.  A bump from the 2010 Winter Olympic Games would be expected, but the rise in interest in Vancouver pre-dates the actual Games. “The Winter Olympics resulted in a bump in the real estate market prior to the event. Vancouver won the bid in 2003 and real estate prices have been on a relatively strongupward trajectory since that time,” explains Macdonald Real Estate Group’s Vice President of Corporate Strategy Dan Scarrow. “The [effects] on real estate prices post-Olympics has been more muted; however, the long-term effect of the Olympics on real estate activity in Vancouver will be positive.”

Few were spared the wrath of 2008’s global financial agony, but things could have been much worse than they were in Canada. The country’s mixed economy spared it from more considerable damage and, “Vancouver, in particular, fared very well through the turmoil,” in Scarrow’s view. Property prices were off 25 percent from their mid-2008 peak but rebounded strongly enough in mid-2009 to surpass their previous peak. “This indicates that the housing market in Vancouver was effected largely by psychology rather than market fundamentals,” theorises Scarrow.

So who is driving the market these days, and what kind of market exactly is Vancouver? Scarrow breaks down the three traditional buyer segments: “The lower end is still driven by local buyers. Before the financial crisis, investors played a large role in Vancouver’s real estate market, however, since then, the market has shifted more towards owner/occupiers as investors remain relatively skittish about the global economy.” Pure investment has been on a slow rise in the last few months, but it has yet to reach pre-2008 levels, as global economies are still in a recovery process.

It comes as no surprise to determine who’s driving Vancouver’s luxury market. “The higher-end of the real estate market (over CA$2 million) is being driven largely by Mainland Chinese buyers. That’s not to say they are the sole purchasers of these properties, but their presence has resulted in this price range being highly active over the pastseveralyears.” According to a February report in the  Vancouver Sun, 31 homes priced over CA$5 million were sold in Greater Vancouver in 2009. But as Scarrow pointed out, they’re not alone: Australians, Europeans and Americans are also getting on the Vancouver bandwagon. Properties in key locations like Shaughnessey, South Granville, urban Yaletown, and tony Coal Harbour, Point Grey and Dunbar (Vancouver’s most expensive location per square foot of land), even with a strong Canadian dollar, are also something of a bargain — with land — for Hong Kong and Mainland buyers.

Vancouver, and Canada in general, has the kind of government and social atmosphere that has made it an investment and immigration preference for decades. “Canada is in a unique fiscal position in the world with relatively low public debt and deficits and a quality of life that is second to none. Thispoliticalandeconomic stability is attractive to a whole host of people from around the world who see troubling times ahead. This, combined with Vancouver’s natural beauty, makes it a perfect place to raise a family,” Scarrow reasons. For Asian buyers, Canada is a strong choice for wealth protection and a good spot to send children for a Western-style education. In addition, Vancouver is, quite simply, relatively close to home.

The same luxury pattern evident in Hong Kong is slowing broadening in Vancouver. The high-end market has been strong for the last few years, including the recent recession, and the city’s burgeoning international image is attracting affluent buyers. “Vancouver’s famous Coal Harbour neighbourhood, overlooking the mountains, ocean, and Stanley Park, now sells at nearly $2,000 per square foot, where less than 10 years ago, it sold for less than $500,” states Scarrow. That’s a middle-class or entry-level price in Hong Kong, where space it at a premium. If Canada has one thing it’s land, and Vancouver has seen its share of shifting with the influx of overseas wealth. “There are two distinct markets in Vancouver, the luxury market and the local market. Like Hong Kong, Mainland Chinese buyers are the largest players in the luxury market and are bidding up prices at a ferocious rate,” admits Scarrow. “This includes former family neighbourhoods like Dunbar and Point Grey, which now boast ‘average’ prices well in excess of $2 million.” But unlike in Hong Kong, the local market can move, and has, “responded by moving east, with former low-end markets such as Main Street, and Commercial Drive gentrifying in order to accommodate local buyers,” who aren’t willing to leave town altogether. “Vancouver is a lifestyle city,” said Macdonald Realty’s Gregg Baker in a press release earlier this year. “It’s no secret that people like being here.”

 

From a 2010 edition of Hong Kong’s Square Foot Magazine.