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.