Foreign buyers disappear
The latest property transfer data from the B.C. Ministry of Finance, released at the end of July, indicates that foreign buyers have all but disappeared from the Lower Mainland.
The numbers show that just 1% of all real estate transactions in Metro Vancouver and the Fraser Valley Regional District during the first six months of this year involved foreign nationals, down from 3% in the same period a year ago.
Burnaby, Coquitlam and Richmond were the top destinations for foreigners buying property in the first half of 2018, with 3% of transactions in Burnaby and 2% in each of the other two municipalities involving foreign nationals. The sole municipality to see an increase in the proportion of foreign nationals making purchases was the city of North Vancouver, where foreign buyers were involved in 1% of deals in the first six months of 2018.
Those concerned about foreign nationals purchasing agricultural properties will be reassured to know that foreign buyers of Lower Mainland rural properties have fallen from 14% of the total in the first six months of 2017 to zilch in the first half of this year.
Nevertheless, a recent Insights West poll found foreign homebuyers are the most commonly identified contributor to the region’s housing crisis, with 84% of Metro Vancouver residents naming them – more than the proportion that identified population growth or that other bête noire, shadow flipping.
While foreign buyers are the favourite scapegoat for the housing crisis, lower foreign participation in local real estate markets this year has barely budged housing prices in the Real Estate Board of Greater Vancouver’s jurisdiction.
Sales statistics from the board through the end of June pegged the benchmark price for a residential property in Greater Vancouver at $1,093,600, or 10% higher than a year earlier. The board’s latest statistics through the end of July indicate a flattening in prices with the benchmark price now $6,100 lower than a month ago.
So, what’s a first-time buyer trying to scrape together a down payment to do?
Writing this column in JJ Bean at Woodward’s, it’s hard not to recall condo marketer Bob Rennie’s advice to Woodward’s buyers a dozen years ago: “Be bold or move to suburbia.”
With sky-high housing prices this side of the Port Mann, many have chosen the latter option. According to B.C. Ministry of Finance data, Surrey registered 498 first-time home purchases in the first six months of 2018. Abbotsford was the second most popular choice, attracting 148 first-time homebuyers. Perhaps even more remarkable, sales in the far eastern reaches of the Fraser Valley accelerated, with Chilliwack attracting 121 first-time buyers. This positions it to overtake Richmond as the third most popular destination for first-time homebuyers. Richmond had 123 first-time buyers in the first half of 2018, but Chilliwack has outsold it in each of the past four months.
Regardless of where prices land, there’s a clear yet consistent pullback in sales activity. Total residential sales in Metro Vancouver fell by 25% in the first six months of this year compared with sales during the same period a year earlier. Real Estate Board of Greater Vancouver commentary attempted to put July’s decline into perspective by saying housing sales “reached their lowest levels for that month since the year 2000.” While this point of fact was sobering, RBC Economics offered a more balanced perspective a couple of weeks earlier by saying that there was a greater balance between supply and demand in B.C. as policies within the province and at the Bank of Canada – read interest rates – were working to cool “persistently strong markets.”
Having forecast in March that house prices in the province would rise by 6% this year, the BC Real Estate Association took a more cautious stance in its latest prognostication, simply anticipating “less upward pressure on home prices.”