China's Real Estate Spree in Vancouver

Frank O'Hara

| July 1, 2011

Image by: Graham Roumieu

Visions of inflated offers filled Frank and Cynthia's heads after receiving an "I would like to buy your house" Post-it note.

It all started with a  Post-it note from a Chinese investor: one Vancouver  couple’s roller-coaster  ride through a real estate  market gone mad.

 The note, one of those yellow stickies from 3M, was stuck on the door of our west side Vancouver home late one Tuesday night in March. My wife, Cynthia, found it early Wednesday morning while letting our dog out and called to me upstairs: “Baby, you’ve got to come down here.” 

In clear, studied script it read, “I would like to buy your house. I am not a realtor. Please call me.” It listed a local phone number and was signed “David” in block lettering. We looked at each other, both resisting the urge to cackle with glee and dance around the room with our winning lottery ticket. Barely resisting.

 Like just about every other homeowner, non-homeowner or potential homeowner in the Lower Mainland, I was aware that property values had soared in recent years. I also knew that this was largely due to overseas buyers – and that “overseas buyers” was a euphemism for several strata of mainland Chinese buyers, some of whom are visiting the region on property-buying trips, some of whom live here already (or have family who do) and some who, so sure are they of the wisdom of investing in Vancouver, buy sight unseen from China.

However, there are property value increases – and then there is the uncontrolled feeding frenzy around select parts of Vancouver that began in January 2011. According to the Real Estate Board of Greater Vancouver, in March 2011 the benchmark price of a detached house on Vancouver’s west side – a disparate area that encompasses everything from one-acre parcels in stately Shaughnessy to the smaller but desirable view lots in West Point Grey to the less-than-grand neighbourhoods that nestle in the big-box shadows of Southwest Marine Drive – was $1,914,693, a 15.5 per cent increase over 2010 and up 32.2 per cent since 2008. During the same three-year period, the S&P/TSX Composite Index – normally a bastion of stability and, more importantly, where the money came from to buy our house – had increased by less than one per cent.  

Until David’s Post-it note showed up, the figures and stories were just that: cocktail-party fare that seemed largely divorced from our day-to-day lives. In theory, people who had purchased their homes long ago were now presented with the opportunity to make exponential gains over their initial purchase price. We were in a less rarefied group since we had bought our house only three years ago: a large lot in what we euphemistically called South Kerrisdale, an area realtors call South West Marine that’s frequently called Marpole by our friends. We had paid what had seemed an ungodly sum: $1,875,000, which was, everybody told us, “definitely” the peak of the market. But now, three years later, the stories circulating around town telling of impossible windfalls made our “peak of the market” purchase look as if we’d merely hit the base camp of Mount Everest. And the sudden presence of a suitor opened our eyes to the reality that the mere act of overpaying for a house three years ago might have been the smartest financial decision we had ever made. 

But the figures, while crazy, don’t tell the whole story of the madness that has gripped the market. The real estate board doesn’t keep figures for specific neighbourhoods, but that doesn’t mean there aren’t benchmarks from which to gather intelligence. There are the stories, passed on through friends, retold at Caffè Artigianos. A realtor friend told me about one particular house in Quilchena, and within two weeks I must have heard the same story a half-dozen times.  

The Greek Church House, as it came to be known, sits on a moderately quiet street, Maple, behind Saint George’s Greek Orthodox Cathedral. After hearing the tale, I decided to drive by and check it out. It was a nice enough house: a one-level rancher, the type of place you’d be proud to show your parents if you didn’t have to tell them how much you’d paid for it. It had last changed hands in 2006 for $1.5 million; in 2010 it had been assessed at $2.3 million; and then, amid a flurry of missives on the late-March “offer day,” it was sold to an overseas buyer for $4.3 million. Its listing sheet cooed about its Sub-Zero appliances and walk-in closets (you can see the listing at julialau.ca), but its 12,482-foot lot was the real kicker: it meant that the next house to be built there could conceivably be almost 8,000 square feet. 