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High end of Vancouver west-side real estate shows signs of weakening

May 7th, 2012 · 43 Comments

The party’s over. That’s what some realtors are quietly telling their west-side clients who were rosily dreaming of selling their shacks for $5 million.

There’s been a slowdown in the higher end of real estate on the west side and, I suspect, a few other pockets as well that were attractive to a select group of well-heeled buyers, either investing or looking at moving here as immigrants.

That group has primarily been viewed as mainland Chinese buyers in stories of the last two years that have breathlessly talked about how they’re buying up Vancouver and driving real-estate prices sky high, to the dismay of more nuanced thinkers who noted that those stories 1. made no distinction between immigrants and offshore investors 2. never tried to parse out exactly how big or small this pool was 3. never clearly explained that whatever impact this small group was having was fairly localized.

We still don’t have any real statistics on this, but whatever they are, the anecdotal evidence coming from west-side realtors is that that trend has slowed. As people in my story today note, there are many reasons why: restrictions on capital being allowed out of China, new demands from bank for proof of income and assets even in what are called “equity loans” (loans where the buyer puts in a substantial downpayment and the bank can be assured of recouping its money no matter what happens), some over-supply as sellers jumped into the market thinking they would cash in on the easy money, immigrants and investors slowing down as they realize the market is over-priced and there’s actually lots of supply, and more.

This is all in the context of a general slow-down in the market with, as many have noted, a lot of inventory piling up and a low number of sales — the lowest since 2001 — being recorded in these early months of 2012.

Will that be enough to slow the speculative fever in Vancouver? I doubt it. Seems to me it would take several years of downward pressure on prices to convince everyone — both locals who stampede into the market fearing they’ll be left behind if they don’t, and investors here and elsewhere — that real estate is not magic money.

 

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