Bidding wars add to hot house prices
West Vancouver real estate market out of step with rest of Lower Mainland
When real estate agent Mike Oxley held an open house on Haywood Avenue last month, he knew that the flat Ambleside view property was going to be a popular item.
He didn't know how popular, however.
By the end of a weekend that saw an estimated 500 prospective buyers view the home, the owners had received 26 offers. The house, which as a structure had little value, ultimately sold for $1.57 million -- more than $300,000 over the asking price.
"It was absolutely unbelievable," he said.
Oxley's story is one of numerous similar anecdotes to emerge from West Vancouver in recent months in which prospective owners have entered bidding wars over a property and driven the purchase price to well above the listed figure. It points to a frenzy of buying at the high end of the market that appears out of keeping with most of the Lower Mainland.
A home next door to the Haywood house received 10 offers a short while after that first sale and eventually went for $1.65 million -- $360,000 above asking, said Oxley. Another in the 2300-block of Ottawa Avenue recently received eight bids and sold for $2.3 million, again for about $300,000 above the listed price.
"As soon as the quote-unquote spring market came into effect, it's just been a firestorm of activity," said Oxley.
In March, the community saw 189 sales, according to the Real Estate Board of Greater Vancouver, an all-time record for the municipality. In April, home sales hit 176, a 57 per cent increase over last year. The average price of a home has also been on the upswing, with the benchmark price for a detached house hitting $1.67 million in April, well up from the $1.4 million-to-$1.5 million range where it has hovered for the past three years.
While North Vancouver has also seen a surge in activity in recent months, it doesn't appear to be on the same scale. April sales were down about 10 per cent from last year, and the benchmark price of a detached home, $980,000, is only about six per cent above its high before the 2008 market collapse.
An agent with North Vancouver's Remax Crest Realty, said she has seen good times in her market, moving 25 properties in three months -- and one of those, on Croydon Place, went for $60,000 above the listed price -- but that North Vancouver has not seen anything like the frenzy that appears to have arisen in the neighbouring municipality.
"In West Vancouver, some of them are selling for $500,000 over asking," she said, pointing to one home on Crestline Road as an example. "West Van is absolutely crazy."
The phenomenon appears to be part of a wider trend in high-end home sales in the region driven in large part by buyers from mainland China, according to some analysts.
A report on the Canadian real estate market released last week by RE/MAX pointed to a surge in the sales of luxury homes across the country, with overseas investment being a driving factor in the West. A May 19 report by Landcor Data Corporation, a company that specializes in B.C. real estate statistics, similarly pointed to China as the major force behind the Lower Mainland's market.
But Tsur Somerville, a professor with UBC's Centre for Urban Economics and Real Estate, cautioned against drawing such conclusions.
"Who knows?" he said. "It becomes very problematic sorting things out."
Somerville did concede, however, that it was a plausible explanation.
"There is grounds for it in the sense that mainland China is the largest source of immigrants (to the Lower Mainland) right now," he said. "Immigrants coming from China are disproportionately in the entrepreneur and investor categories; they're coming in with wealth."
Why it might suddenly be happening now, however, was hard to say, he noted. Somerville scoffed at the notion, floated by Landcor in an interview with the North Shore News last month, that it could be attributed to the Olympics, or to Canada's recent designation as an approved destination by the Chinese government. "I would be very shocked," said Somerville. "The approval by China affects tourism here; that's not the same thing."
One thing is for certain about the flurry of purchases, however, he said: "It's not sustainable."
This entry was posted on May 26th, 2011 | Posted in General