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Sellers are losing the upper hand in Vancouver housing market

A large house on Vancouver’s west side didn’t attract buyers at the asking price, but was still sold at almost 40-per-cent higher than assessed value.

Call it a markdown, Vancouver-style.

A high-end property with an asking price of $38.8-million in mid-January saw a price cut of several million dollars but still didn't sell after six months. The listing expired in mid-July, before the B.C. government implemented its 15-per-cent tax on foreign home buyers in the Vancouver region, effective Aug. 2.

While it is unclear what date the property finally sold, B.C. land-title records for registrations in September show the mansion on a large lot along Vancouver's prestigious Belmont Avenue changed hands privately for $29.48-million. That amount is much lower than the asking price, but still 39-per-cent higher than the assessed value of $21.18-million in July, 2015.

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The transaction is an example of how sellers who list roughly 40 per cent or more above assessed values are no longer able to attract eager buyers lining up during the slowdown in Vancouver's real estate market, whether it be for luxury or entry-level sales, industry experts say.

Bidding wars seem a distant memory as the housing psychology undergoes a shift away from a seller's market, though not yet into the territory of a buyer's market. Standoffs are a common theme today, with sellers refusing to budge much from what they see as their now-reasonable asking prices while buyers are in no rush to bid because they sense little competition either locally or from abroad, agents say.

From February through June, some prospective buyers scrambled to have home inspections completed even before sellers began accepting offers because making a bid with strings attached meant being at a competitive disadvantage when stacked up against clean bids without conditions.

"Before, I saw four or five inspectors on the same property. It was so frustrating for buyers because they would spend money on an inspection and not even get the home," said Dan Morrison, president of the Real Estate Board of Greater Vancouver. "Realtors can now write in subject conditions for inspections and financing."

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Sales volume has been cooling month over month since peaking at a record high in March, well before the new B.C. tax on foreign buyers kicked in. Benchmark prices – which the industry says are representations of typical properties – have levelled off recently, and there are forecasts of outright price declines.

The benchmark price for detached homes sold last month hit a record $1.58-million in Greater Vancouver, up 0.1 per cent from August and a 33.7-per-cent gain from a year earlier.

Helmut Pastrick, the chief economist at Central 1 Credit Union, forecasts that benchmark prices in the Vancouver region could drop five to 10 per cent from current levels within the next nine months. "I don't view that as a crash, and the market will grind ahead in 2018 after this mild correction," Mr. Pastrick said.

New data from the Teranet-National Bank House Price Index show that September marked the 21st consecutive time that the index has climbed month over month in the Vancouver region. The index for the Vancouver area showed large monthly jumps from February to August, but advanced a modest 0.2 per cent in September, compared with August, said National Bank senior economist Marc Pinsonneault. The year-over-year gain was 24 per cent for the region's index, which is derived from land-title registrations.

Jonathan Cooper, Macdonald Realty Group's vice-president of operations, said the impasse between buyers and sellers is reflected in reduced sales activity.

"At the very least as a seller, if you perceive there to be a high percentage of new immigrant buyers in your market, you would set the price higher and be stickier on the price," Mr. Cooper said. "It comes down to supply and demand. Foreign investment is a factor, but the vast majority of those buyers are in some phase of the immigration process. You have this new immigrant money, low interest rates, limited land supply and zoning constraints on new supply. It's a constellation of factors."

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Back at 4726 Belmont Ave. on Vancouver's coveted west side, no one answered when a reporter buzzed the intercom. The seller, former Spence Diamonds chief executive officer Sean Jones, sold to Bi Xia Dong, who describes herself as a housewife in documents that she filed as the new registered owner.

Mr. Jones reduced the list price of $38.8-million to $33.8-million at one point. The number eight, deemed lucky in Chinese culture, is a common sight in Vancouver in real estate pricing for listings and sales.

The still-lofty sales price of $29.48-million is a statistical outlier, so wasn't included as part of the Teranet-National Bank index.

The Belmont Avenue property's history underscores the huge spikes in Vancouver housing values over the decades. The mansion, built in 2012, isn't on the waterfront but there is a grand view of the mountains. The property sold effectively for land value in 2009 for $10-million, compared with selling for $3.6-million in 2001 and $750,000 in 1985.

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