What really happened in the Vancouver Real Estate Market in 2014
House prices climbed to record levels; a high percentage of the West Side buyers are still from off shore. The Main, Fraser, Mount Pleasant and Grandview sub areas are proving to be the new Kitsilano in both desirability and higher prices. Well located character houses in these areas are almost on par with those in Kitsilano. The attached condo/townhouse market increased in activity but prices only rose slightly in comparison to that of the single family detached market.
The West Side emergence has been fairly well publicized but there is another story that many property owners are not aware of. Prior to the last Mayoral Election and as a response to the widespread public opposition to the tearing down of West Side homes and the detrimental effect on neighbourhoods a new Vancouver City by-law was put in place to calm the local residents. A new by-law known as “Character Merit” was introduced, it states, in summary: any pre-1940 building that is deemed to have character cannot simply be torn down and replaced with a similar FSR (Floor Space Ratio) building, in fact, the new regulations require a smaller FSR on the new home (which could result in 1000 square foot smaller FSR than a home next door on a same sized lot).
This is affecting some local owners’ property values in a negative way. Some houses in the RS category, built prior to 1940 are being evaluated by City Hall; if a house is deemed to have character, the option to tear down will cost the Buyer substantially. This therefore reduces the subjects’ property value. Two neighbours may attempt to sell similar houses on the exact same lot; one may be valued at 2.5 million as it is not deemed to have ‘Character” and the second property is deemed to have “Character” it may have a value of 2 million. I have witnessed some strong negative emotions toward this new by-law. The biggest drawback has been that off-shore buyers may wait to purchase a property for sale without “Character Merit” and then leave it empty for months or knock it down and build a new large house. Vacant properties remain a problem.
On the East Side of Vancouver the “Character Merit” by-law is creating a negative ripple effect to local families to all RT zoned areas. These include Main, Fraser, Mount Pleasant and Grandview. As solid, well located, detached houses are selling for over 1.5 million, there are few alternatives for affordable well located properties. The answer for many has been the ½ duplex, however, with many lot value properties being deemed to have “Character Merit” it is simply not possible to build a duplex affordably. In my opinion, this issue is going to make the ½ duplex market in the months to come, a rare affordable option.
I am very interested to see what transpires over the months to come with the highly sought after half duplex market on the East Side.
The off shore buyers still seemed to be making the news on a weekly basis on how they are buying up the West Side and West Vancouver properties at record percentages and prices. But off shore buyers are not just buying up single detached houses on the West Side and West Vancouver. Large parcels of land are being bought up in Gibson’s, Sechelt, Pender Harbour, Port Moody and multi-million dollar commercial properties in downtown Vancouver.
The off-shore buyer is attracted to BC for its lifestyle. With the Canadian dollar dropping and China easing its offshore-investment regulations I am told multi-millions of dollars are going to continue to flow into BC.
With the recent interest rate cut by the Bank of Canada and a continuing active local real estate market I believe we are in for a busy year for 2015 in the real estate industry.