So far the 15% Foreign Buyer Tax applicable for the Greater Vancouver area (defined up to Maple Ridge/Langley borders to the East and Lions Bay to the West/North) has had the desired effect on the top end of the market with a dramatic fall in price and number of units sold. Dramatic in my terms at least. If my house went down in value of $1M in a matter of a month I wouldn’t be very calm!
For example, in one case I’m aware of the ‘market value’ pre-tax was estimated to be around $10 million for a lovely Westside UEL property. They listed mere days before the tax was announced. After the tax and fall in calls, they dropped to $8.5M and sold in the low $7M after a month of hard negotiations. So buyers remain but sellers are taking the hit at the top end.
However in another case a $500,000 Vancouver condo sold for over asking price with multiple offers at the end of September. The problem as I see it with the tax is that from an affordability perspective the tax hits the high end and not really the ‘average’ person’s range.
With that, my tear down house on a premium lot in Coquitlam that traditionally is a ‘family’ neighbourhood was in the range of $1.3M up from $1M a year ago. Most of the buyers in these price ranges have been off-shore based on the Realtors I have spoken with. In one case from early summer on a street near mine the difference between the top bit and 2nd bid was $100,000. It was another $60,000 to the 3rd bid and then the next 5 bids, all local types were within a $40,000 price range on a $1.2M list price.
So while we might see some relief from the rate of price increases, a good property in a good location is still very much in demand. For ‘average’ suburban folks like myself the dream of moving up is all but lost. Not that I couldn’t afford it. But the price difference from when I bought to move up 10 years ago would have resulted in a $500/mo increase in payment. That same move up now is closer to $1500/mo for the same house! I now the market has been hot and all but I can’t justify spending an extra $1000/mo for a little bit better house especially when we are near mortgage free!
The one thing I have learned over the years is this: The rate at which prices increase is far faster than the rate they drop. So I’m not holding my breath that prices will drop any time soon.
For more details view the government provided details here.