Vancouver BC Area in a bubble?

Question

My wife and I are currently living and renting  in Edmonton AB, and looking to move to the greater Vancouver BC area to be closer to her family.  I have visited a couple of times in the last month.  The market is currently going to the moon.

The realtor I am working with has explained since about last November things have really started to take off.  For example pretty much everything listed during the week has an open house over the weekend and they take offers the following Monday and set a time like 5pm that the offers need to be submitted by.  For single family homes it is not uncommon to have over 100 buyers show up to an open house and have 20 offers submitted for the property.  Townhouses and condos/apartments were slower to see such demand but apparently over the last several months they have picked up as well.

When I went at the beginning of May we were looking at townhouses.  When I went back at the end of May the same type of places were were selling for 10% to 20% more in price. If a place is listed for say $450K it would not be unusual for it to sell at $550K (everything is selling for over listing).  Agents are telling me they are getting sight unseen multiple offers for properties the day they hitting the market.  It is also my understanding that inspections/conditions are pointless because the seller will just move on to another offer.

There is a lot of new construction going on as well but sales offices are all pretty much closed because they are sold out.  If a developer releases more townhouses they are sold out in a couple of days or less.

There are a few things that are running up prices.  People are leaving Alberta and moving to BC  because of job losses from the oil price decline.  Also, there is a lot of interest from Chinese buyers.  I heard that there is a waiting list of 40,000 Chinese people trying to move to Vancouver and each applicant has a minimum net worth of $3 million dollars.  Of course that does not count the Chinese that just want to buy a property and not move there.  Low interest rates help as well.  Something else interesting about Canada is they do not have fixed term mortgages like a 30 year fixed mortgage.  It gets confusing when you ask because they tell you "yeah we have fix term loans we can lock it in for 2 or even 5 years on at 25 year mortgage".

What I hear they do not have is a big increase of jobs and the job around there are not super high paying. It is more of just a lot of wealthy people moving on investing in the area.

Depending on the area and type of property prices are up 20-50% from last year and the number of listings is down 40% from a year ago.  This is not unique to Vancouver I think it is also happening in Toronto as well. I saw in the news a few weeks ago that the Toronto luxury home market is up 47% from last year and they called it the hottest market in the world right now.

It is also interesting that in the Edmonton market where we are now and seeing job losses the market has been pretty much flat.  I would have though we would have seen prices drop.

I am interested to see what others opinions are of the Vancouver market. Does this sounds like a bubble or could this be that the area is has been extremely undervalued and just moving up to where it should be?

Stanley Kong · Answer

I don't consider the Vancouver market to be a bubble. It is a beautiful place to live and everyone wants to come here for the fresh air.

I believe Vancouver is just on a really strong uptrend right now. There will be a point when we run out of buyers and the price corrects slightly. However there is no signs of it slowing down at all.

Account Closed · Answer

Great article @Jason Farr. Vancouver housing market high prices is causing ripple effect to most of large BC cities. My mom (lived in Vancouver for more than 30 years) she decided to retire, sold her 5 bedroom house (for $1.3 million) last year in November 2015. Then bought a house in Maple Ridge, BC (all cash, to be mortgage free) just 20-30 mins away from Vancouver. I was there when we saw the house & made an offer (I didn't know Biggerpockets yet, bummer hehe). Since it was almost winter time, there were few people who offered. We offered $5k more on the asking price, got the interest of the owner, did an inspection & negotiated $1k off from the selling price. She got the house. We've also been planning for years to move to BC (from Calgary) to be closer to family & a better weather (our toddler has winter induced asthma). Since I am on my maternity leave, my husband & I thought it'd the best timing to make a leap of faith (I finally convinced Ron that change is good). I just got a job offer in Abbotsford hospital & we're finally moving for good this September :) We're starting to learn about the housing there, since my mom would like to buy duplex/Fourplex. We'll be looking for local lawyers & local lenders that are investor friendly.

Kris Mcfarlane · Answer

Pawan J.

Great post and I love the enthusiasm. I couldn't agree more with what you said and you either jump right in or wished you had 5 years earlier.  My wife and I say that if we go belly up we can always liquidate our assets, move the Manitoba, buy cash and enjoy the sunsets and cold weather!

Jason Farr · Answer

@Kris Mcfarlane Whoops the last question I made about the cooling housing market was intended towards

@Pawan Johar I just misread the post.

Kris Mcfarlane · Answer

@Jason Farr

I just saw your message about the town house as well, not that I know the Surrey market well but I know it well enough what when I hear "town house and Surrey" I immediately   think this is what everyone is looking for, especially in that price range.

If your looking for a realtor the one I use, who is a very strong and well known agent , in Surrey PM me and I'll send you his contact info. He is the only real estate agent that I use on any property.

I was just talking to my coworker and have you thought about getting into replacing  structural member or doing an addition on a smaller house that may have a "unique" layout. That may be a great value add and thats where I see a lot of houses sit on the market in my area.

Stanley Kong · Answer

Here's an interesting article on the Vancouver market being flipped like penny stocks.

Kris Mcfarlane · Answer

@Jason Farr

I can't speak for the sfh in vancouver as im not directly involved in that market, although from what I hear if it's a competitive price 75 k over asking can easily happen.

The bit of a lull in the east abbotsford market, which is where I invest and concentrate on, if you want the "turn key" yes they can sell for over asking and realisticly will. If your looking for a value add there are deals. IF your looking 650 and up to 900 k yor above the competition and have more wiggle room.

I found a fsbo last week that was 30k under market value, turn key with a suite, for my brother.  We offered asking, quick possession date and it was accepted. A comparable house at 550 sold for 625 the same week, same style of house. We found that house just driving the neighbourhoods and asked the right questions.

Jason Farr · Answer

I put in my first offer today on a place to test the waters.  Townhouse in Surrey.  There were 12 offers on it.  We didn't get it.

@Kris Mcfarlane a cooling in the Vancouver single family housing market? What does that mean like 19 offers instead of 20 on a house?

Pawan J. · Answer

@Kris Mcfarlane you got to have a plan! Even condos are going nuts here as a ripple effect of houses which seem to now be cooling a little in Vancouver.

Vancouver BC Area in a bubble?

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