Detached Sales in Vancouver Plummet to Record Lows in January
There’s nothing I love more than debating the impact of foreign capital distorting the Vancouver real estate market. Not that more evidence was needed, but recent changes in the Vancouver real estate market highlight some eye opening January stats.
Recently China implemented new capital controls forbidding citizens from exporting cash to purchase international real estate. (The Chokehold). The timing could not have come at a worse time as sales were already slowing from a 15% foreign buyers tax.
So what happens when you turn off the tap?
In January, Richmond detached sales fell 66% year over year, Vancouver West fell 72%, while West Vancouver sales fell 74%. For Vancouver West and West Vancouver it was the worst January on record. It was the second worst January for Richmond sales, trailing only January 2009 (Financial crisis).
Make no mistake this is not a return to normal from a hot 2016. As seen in the chart above, Vancouver West detached sales fell 61% below the 10 year average, West Vancouver fell 51% below the 10 year average, and Richmond dropped 46%.
With the benchmark price of homes in these areas so incredibly high (Richmond $1,581,100, Vancouver West $3,443,100, and West Vancouver $2,948,200) it’s no wonder locals have not been able to pick up the slack.
As sales falter, inventory continues to pile up, adding further downwards pressure on prices. Zolo Realty has the average price dropping 28% in Vancouver. However, averages can be volatile and from what I see it’s about 20% in these areas.
One has to think Christy Clark will reverse the foreign buyers tax if she’s re elected and perhaps this weeks announcement was just the start.