As far as anecdotes go, it's pretty damning: A pizza delivery boy knocks on the door of one of Vancouver's best known money managers and tells him that he should sell his house to a property hungry Chinese investor.
And he doesn't stop there -- apparently the well connected pizza boy has contacts in China and has even seen Chinese buyers show up at the very houses he delivers pizzas to with briefcases stuffed full of money.
The story comes from the latest research note from Odlum Brown Ltd.'s Murray Leith. While the pizza boy's connections may be questionable, it is an interesting snapshot into the way real estate has taken over the city's psychology.
"With Chinese money flooding into the city, the pizza guy offering to broker homes, and people approaching homeowners with suit cases full of money, it is fair to say that the situation is getting a little crazy," Mr. Leith says.
Prices in the city have exploded over the last two years, now taking 11-times the typical family's average annual income to buy a home. That's double the national average, and have many fearing what happens next.
The city has seen four corrections in the last 30 years -- in 1981-82 (-30 per cent), 1990-91 (-14 per cent), 1995-96 (-20 per cent) and 2008-09 (-21 per cent). Even so, the average house has gained 21 per cent in the last year, or a whopping 188 per cent in the last decade and was worth $815,000 at the end of April.
Chinese investors have been credited - or blamed - with driving the gains, although there is little hard evidence because Canada doesn't directly track foreign investment in residential housing. While there's no doubt Chinese buyers are part of the market - estimates of their influence vary wildly.
Indeed, in a recent survey of real estate agents done each month by the Greater Vancouver Real Estate Board respondents said foreign buyers accounted for only 3.5 per cent of their transactions. Yet brokers such as Bob Rennie insist Chinese buyers are most active in the higher price ranges, snapping up as much as 90 per cent of the inventory over $2-million.
Mr. Leith suggests that tightening credit in China could curtail its citizens' investing activities abroad. And with Canadian household debt at all time highs, he said prices could soon moderate or start to decline.
That sounds a lot like calling the market's peak, but that doesn't mean he's going to sell at the top. Even if the pizza boy thinks it's a good idea.
"To take advantage of the high prices, someone fortunate enough to own a home has to downsize, relocate to a region with lower real estate prices, or rent," he said. "Those options do not appeal to my family."