Thursday, July 15, 2010
Monday, June 7, 2010
Mainland Chinese buyers led luxury-home market recovery
Blog by James Wong
Mainland Chinese buyers led luxury-home market recovery
Canada seen as a safe storehouse for personal wealth
By Derrick Penner, Vancouver Sun February 6, 2010
It took a couple of months, but sales of luxury homes in 2009 caught up to the general real estate market driven largely by buyers from mainland China, one dealer in high-end homes has found.
The Real Estate Board of Greater Vancouver recorded 30 sales of homes more than $5 million through the Multiple Listing Service compared with 26 for 2008.
"But in 2009, all of those were after April," Dan Scarrow, an agent with Macdonald Realty in Vancouver said in an interview. "Nothing sold over $5 million between January and the end of April."
Scarrow said the pickup in sales lagged the recovery of sales in the general market, but once sellers at the lower end started moving up, luxury properties started to move as well.
"I think there was a delay of probably two or three months between the lowest and highest end starting to sell," Scarrow said.
Luxury properties took somewhat of a hit during the world financial crisis of 2008, a year in which high-end sales fell off their previous peak.
While 2008 saw Metro Vancouver set a record for top price for a home, at $28.2 million for 3330 Radcliffe Ave. in West Vancouver, overall MLS sales came in at 26 compared with 35 MLS sales in 2007.
At the time, agents viewed the situation as affluent buyers delaying decisions while uncertainty reigned in world financial markets.
Scarrow added that once Metro Vancouver's market thawed in the spring of 2009, "mainland Chinese buyers started getting on board as well."
Scarrow said foreign buyers are coming into Metro Vancouver from Australia, Europe and the United States, but they are being overshadowed by mainland Chinese purchasers who view Canada as a good country to provide a western education for their children and Canadian real estate as a safe storehouse for their wealth.
Scarrow added that the trend is similar to what Vancouver experienced with Taiwanese and Hong Kong immigration with the wealthiest business immigrants taking the vanguard and choosing Vancouver as a convenient location that offers them the attributes they are looking for while also being relatively close to their businesses back in Asia.
"So there was a wave of Taiwanese buyers that came in and buoyed the market," Scarrow said. "Then Hong Kong buyers came in and now mainland China buyers are coming, but there are 50 times as many of them, potentially, coming to the city."
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By Derrick Penner, Vancouver Sun February 6, 2010
It took a couple of months, but sales of luxury homes in 2009 caught up to the general real estate market driven largely by buyers from mainland China, one dealer in high-end homes has found.
The Real Estate Board of Greater Vancouver recorded 30 sales of homes more than $5 million through the Multiple Listing Service compared with 26 for 2008.
"But in 2009, all of those were after April," Dan Scarrow, an agent with Macdonald Realty in Vancouver said in an interview. "Nothing sold over $5 million between January and the end of April."
Scarrow said the pickup in sales lagged the recovery of sales in the general market, but once sellers at the lower end started moving up, luxury properties started to move as well.
"I think there was a delay of probably two or three months between the lowest and highest end starting to sell," Scarrow said.
Luxury properties took somewhat of a hit during the world financial crisis of 2008, a year in which high-end sales fell off their previous peak.
While 2008 saw Metro Vancouver set a record for top price for a home, at $28.2 million for 3330 Radcliffe Ave. in West Vancouver, overall MLS sales came in at 26 compared with 35 MLS sales in 2007.
At the time, agents viewed the situation as affluent buyers delaying decisions while uncertainty reigned in world financial markets.
Scarrow added that once Metro Vancouver's market thawed in the spring of 2009, "mainland Chinese buyers started getting on board as well."
Scarrow said foreign buyers are coming into Metro Vancouver from Australia, Europe and the United States, but they are being overshadowed by mainland Chinese purchasers who view Canada as a good country to provide a western education for their children and Canadian real estate as a safe storehouse for their wealth.
Scarrow added that the trend is similar to what Vancouver experienced with Taiwanese and Hong Kong immigration with the wealthiest business immigrants taking the vanguard and choosing Vancouver as a convenient location that offers them the attributes they are looking for while also being relatively close to their businesses back in Asia.
"So there was a wave of Taiwanese buyers that came in and buoyed the market," Scarrow said. "Then Hong Kong buyers came in and now mainland China buyers are coming, but there are 50 times as many of them, potentially, coming to the city."
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Sunday, April 18, 2010
Making Sense Of Canadian Real Estate Prices
Is there are direct relationship between Canadian real estate prices and money supply?
Real estate is subject to supply and demand like any other goods that are in demand by people. The increase in Canadian home prices when compared to the increase in the prices of crude oil and gold, showed a close relationship with the supply of money (both in Canada and the global supply of money).
The table below clearly show the gain in prices for real estate, crude oil and gold are directly related to the supply of money over a 20 years period.
| Time Period | Jan/1990 | Jan/2000 | Inc. 1st 10 Yr | Jan/2010 | Inc. 2nd 10 Yr | Inc. 20 Yr |
| Van SFH | $300K | $380K | 27% | $950K | 150% | 216% |
| Van Thse | $190K | $220K | 16% | $355K | 61% | 87% |
| Cdn $ Supply | $18 Billion | $33 Billion | 83% | $55 Billion | 67% | 205% |
| Global $ Supply | US$17 Trillion | US$26 Trillion | 52% | US$64 Trillion | 146% | 276% |
| Crude Oil/barrel | US$20 | US$27 | 35% | US$68 | 152% | 240% |
| Gold/oz | US$380 | US$280 | -27% | US$1100 | 293% | 189% |
First 10 years - 1990 to 2000
The gain in home prices for single family homes and townhomes in Greater Vancouver were 27% and 16% respectively. The increase in crude oil price and the supply of money were 2 to 3 times more. During this period, there was a rapid gain in home prices from 1990 to 1994, followed by 5 years of price decline when capitals were moved back from Canada to China. Immigrants from Hongkong and Taiwan sold their homes and move money out of Canada after the hand over of Hongkong to China.
Second 10 years period - 2000 to 2010
The rise in Vancouver single family home prices, crude oil and gold followed closely with the global supply of money. Although the Canadian money supply was increasing at half the rate of global money supply, money from around the world and China could have been recycled and invested in Canadian real estates. The rapid expansion in liquidity around the world resulted in real estate prices all over the world, making double digit gains.
New money fueling home sales
The rapid rise in home prices, easy money policy from CMHC and low interest rates all helped to fuel the real estate boom in Canada. Canadian banks were very liberal in granting “home equity lines of credit” to home owners whose homes had doubled in values. Home owners and investors made very handsome gains in their real estate purchases over the past 10 years.
Will real estate prices collapse?
After a huge run-up in prices since 2001, many are wondering when they will be a correction in home prices. There were time periods when the market appeared to crack and roll over. But, this has not happened.
The above data showed that real estate prices seemed to co-relate with the global supply of money. The Chinese economy over the past 10 years had grown at just over 10% a year, and the momentum appears to be able to be sustained for the foreseeable future.
Money from China has a direct and significant impact on Canadian real estate prices. Canada is a favoured country for immigration by mainland Chinese families and immigrants from around the world. British Columbia will continue to enjoy positive inflow of money and new immigrants. Rich Chinese immigrants are making an impact on home prices in Vancouver Westside. Overall, real estate in BC will benefit from the demand for housing by new immigrants.
Read other Metro Vancouver real estate news here.
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