$802,000 over asking? New high for unaffordability
March 29, 2016
An 80-year-old home in Dunbar recently sold for a whopping $802,000 above the asking price, reprinting a new high for unaffordability in the Vancouver housing market. Located on West 21st Avenue, the four-bedroom home has a two-bedroom basement suite, and second-storey views.
The property was listed at $2.788 million in late September and ignited a bidding war with a winning bid of $3.6 million.
The listing was clearly geared toward purchasers who would be interested in tearing down the existing home to build a new structure, as it mentioned that the lot has “no large problematic trees” and that “a new home will sit higher on the street, with even better views.”
The realtor responsible for the sale immediately sent promotional letters to neighbours, indicating that they, too, might sell their properties for above asking price.
Although property holders who are ready to sell may be happy to see such inflation in their homes’ equity, neighbours who plan to sit put are less that pleased that prices have escalated to such a degree that few locals can afford them and they are tired of seeing neighbourhood homes torn down.
This sale of this Dunbar home is just another indicator of a market whose inflation apparently shows no bounds and it highlights the anxiety that many Vancouverites feel in relation to housing affordability…and foreign investment. All 12 of those who bid on the property were described as “immigrant” buyers, adding to the somewhat xenophobic concerns of local homeowners and home seekers.
There may be some reason for worry, though, given that research has shown that some foreign buyers are managing to avoid paying Canadian taxes, while local homeowners taxes skyrocket due to rising assessment values.
The Real Estate Board of Greater Vancouver (REBGV) indicates that a typical detached home in Metro Vancouver has gone up almost 20 per cent between September 2014 and September 2015, and is now valued at $1.18 million. The average price for all property types was $722,300 this September, with prices for attached properties and apartments climbing close to 10 per cent over the past year.
This rate of increase is unheard of in other Canadian markets, and it’s happening because supply simply cannot keep up with demand in the Lower Mainland: there are 27 per cent less properties listed for sale in the region than last year at this time, but September’s sales are about 30 per cent higher than the 10-year average for the month. Not only is the region’s population growing rapidly, but many homeowners are also reticent about selling, because they don’t see affordable options to relocate to.
Meanwhile, politicians seem at a loss for how to deal with the current unaffordability crisis. B.C. Finance Minister Mike de Jong has hinted that an increase in the Property Transfer Tax may be on the way, but such a move would have little effect on wealthy foreign investors who escape paying their dues in income and capital gains taxes.