COVER

When the bubble pops

JENNIFER HUNTER April 27 1998
COVER

When the bubble pops

JENNIFER HUNTER April 27 1998

When the bubble pops

COVER

JENNIFER HUNTER

Those and more than 400 homes like them are catalogued in the Multiple Listing Service book of the Real Estate Board of Greater Vancouver. All million-dollar-plus, all in the prestigious west side of Vancouver. Four years ago, they would have sold within days or, at worst, months. Now they languish on Vancouver’s deflated property market. Prices in some neighborhoods have fallen by 30 per cent over the past year. In March, usually a spirited sales month, only 35 west-side detached properties changed hands—out of an inventory of 1,400. Vancouver’s housing boom has fizzled. “My pager is the biggest indicator of how the market has changed,” says real estate agent Alix Brown.

► For sale: New house in exclusive Shaughnessy district. Swimming pool. Six bedrooms with ensuite bathrooms. $4.28 million. Has been on the market 62 weeks.

► For sale: Point Grey four-bedroom house with spectacular view of English Bay and mountains. Renovated 1982. $3.9 million. On the market 48 weeks.

► For sale: Three-bedroom house on 60-foot lot in choice South Granville. $1.03 million. On the market 69 weeks.

Why listings are lingering in Vancouver

“I don’t need to look at graphs or charts. Two years ago, I was getting 60 calls a day. Then a year and a half ago, it started to drop off and I knew we were in for a bit of a fall.” Now, she logs 20 calls a day.

And the slump is not restricted to the priciest homes. Janet Douglas and her husband, Eric Wallace, want to sell their two-storey, threebedroom home on the periphery of the desirable Kerrisdale neighborhood. At $499,000, the house is a bargain by past Vancouver standards. But it has been on the market since August. ‘We’ve had a lot of people looking at the house,” says real estate agent Carole Lieberman, “but buyers are sitting on the fence.” Three years ago, Douglas and Wallace did sell the house—for close to their $549,000 asking price, in just three days. But they pulled the plug on the deal and took the house off the market when they were unable to find a suitable, affordable place in the same neighborhood. “We can’t figure out why this house isn’t selling now,” says Douglas. “Is it the headlines saying we are hitting a recession? Or are people waiting for the market to continue to decrease?”

In fact, Vancouver real estate will always be relatively pricey because land is scarce in a city hemmed in by mountains and ocean. At $283,810, the average sale price so far this year still exceeds the level of five years ago, and is well above the $160,376 of 1988. But the special factors that sent property values soaring in the early 1990s—an increasing population, a healthy economy, low unemployment and Asian investment—are vanishing. In 1992, net mi-

gration to British Columbia from other provinces was 40,000. By 1997, movement from other parts of Canada dropped to a net of 7,000 people, and economists expect the trend to continue.

At the same time, there is less Asian money in search of a Vancouver property haven since the handover of Hong Kong to China last July and the more recent meltdown of several Asian economies. Among other factors at play, says real estate agent Rosanne Dohm, is Ottawa’s proposal to require Canadian residents to disclose their foreign assets—a prospect that alarms some wealthy Asians. “It has created an atmosphere of mistrust,” Dohm says.

In the resulting vacuum, the real estate business is experimenting with innovative ways to move properties. Agent Manyee Lui recently engineered a house swap in Shaughnessy. One family had been trying for eight months to sell a seven-bedroom, 765-square-metre home for $2.6 million, and wanted to downsize. The second family had been trying for two months to move into something larger than their three-bedroom home, listed at $1.3 million. Lui worked out a trade that had the second family pay a premium on the larger home. “It sounds easy, but there were a few nights when I didn’t get any sleep,” she says. “Doing a deal like this requires a lot of patience.”

Still, the market is not dead, as one of Brown’s clients can testify. Her Shaughnessy house—bought for $250,000 11 years ago and renovated with another $300,000—recently sold for $1.17 million, in five days. “My husband worked for five months to ensure that everything in the house was perfect,” says the client. The couple planted flowers, put up new railings, painted the basement floor. “If you don’t make extra efforts you won’t get the buyers,” advises Brown. What a difference a few years can make.