Teardowns and Shadow-Flipping: Living Inside the Insane Vancouver Housing Bubble

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Here’s what’s happening in my neighborhood.

By Angela Johnson, Vancouver, Canada:

June was another banner month – in a long series of banners months – for housing in Vancouver, with the most sales for any June on record. The MLS Home Price Index benchmark price for all residential properties in the Metro Vancouver market soared 32.1% year-over-year to C$917,800, the Real Estate Board of Greater Vancouver reported today. The benchmark price for apartments jumped 25.3% to C$501,100. The benchmark price for detached houses skyrocketed 38.7% to C$1.56 million.

Another day, another real estate-related headline. Whether chronicling the outcry of frustration and angst felt by locals left out of the Vancouver house-trading frenzy or the shenanigans of unscrupulous realtors, the housing issue is constantly at the forefront.

From shadow-flipping, unoccupied homes acting as bolt holes or safes for ill gotten cash, to unpopular land-assembly deals, we hear opinions, anecdotes, and reports on every side. If you can forget about housing, or if you’re lucky or smart enough to join the ranks of euphoric profit-takers, Vancouver is a very enjoyable place. But you’re not likely to forget about housing without blinders on or without a sustained effort.

Every other day, our mailbox holds a flyer or two, like these. Note the hundreds, not tens, of thousands of dollars over asking price. Also “Sold in x days” where x is less than 7:


Priced out renters may find the tag line in the ad above ironic.

More irony in the ad below. This company has only existed for 6 months. What does it mean when they say their active listings have a high return? Is something lost in translation. Or is everyone expected to flip these properties? Also note at the top the line, “Immigrant Service by licensed elite teams,” addressed to Chinese buyers:


And here’s another one from my mailbox…


In the current real estate landscape, offering without conditions is the modus operandi. Bidding wars are the norm. Home inspections take time and that’s a luxury buyers don’t have. Until curtailed by the province just this week, realtors enjoyed dual agency, acting for both buyer and seller in this game. Shadow flipping was also addressed. And Mayor Gregor Robertson “will aggressively advocate” for measures he believes will “help create a level playing field in the Vancouver housing market.”

Are these recent developments on the scene more than lip service by the powers that be who profit from the status quo? We’ll find out.

When Will Dunning of Mortgage Professionals Canada was asked, his unequivocal reply was that “housing bubbles do not exist in Canada”.  (This calls Upton Sinclair to mind: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”)

“There’s no evidence of housing bubble,” says the report from the Mortgage Professionals. “Price growth in Canada, even in Vancouver and Toronto, is still consistent with the economic fundamental of interest rates and affordability.”

Housing bears enjoyed snark and sarcasm at “Vancouver Price Drop” blog until it was abandoned two years ago. In 2016, bears are in hibernation, and a blog titled “Vancouver Price Jump” seems more appropriate. According to the Real Estate Board, the average price of a single-family detached home in the Greater Vancouver area has increased as much in the past five months as it did from 1981 to 2005.

Let’s get personal now. My own East side neighborhood was settled last century largely by a stream of Italian, Greek, Vietnamese, and Hong Kong immigrants, who now are mostly of retirement age and keep busy with bocce ball games or mornings of mah jong. While not stunningly beautiful like many West side areas, Hastings-Sunrise is a pleasant place to be. A typical resident on my street is in his late seventies, an Italian retired from a blue collar job. He purchased his family home in the late 1960s for around C$20,000.

Consider this 2016 RE sample, on 2816 East 4th:


2816 East 4th

In early April, 2816 East 4th Ave. fetched C$1.168 million. This “Vancouver Special” (a ubiquitous type of house) was built last year and boasts seven bedrooms and four bathrooms, with a gorgeous mountain view. Oh, and the springtime cherry blossoms on this street are very appealing. In case you missed it, seven bedrooms means a main three bedroom suite with two mortgage-helper suites for you to act as part-time landlord.

Fast forward three months to today, and this gem on 1515 Renfrew St. is ripe for tearing down. It is only a few blocks away from the above Vancouver Special, close to the busy intersection of 1st Ave. and Renfrew. Will anyone actually live in the existing 73-year-old drab, box-like house with two bedrooms, one bath? Listed for C$1,188,000? Unlikely:


1515 Renfrew St.

But C$1.188 million is only the listing price. How quickly it sells and at what price remains to be seen. Three weeks on the market already is not encouraging.

It feels like an eerie echo of a certain Dutch phenomenon involving tulip bulbs. Still, we won’t hear any calls of a top until the last capitulated bear passes his real estate licensing exam to finally get in the game. By Angela Johnson, Vancouver, Canada.

Some cities are ahead of Vancouver. In Manhattan, sales of apartments in the second quarter dropped 10% year over year, to the lowest since crisis-year 2009. And in a new twist, and until recently a bastion of strength: sales of “lower priced” apartments – that sold for less than $1 million – plunged 20%. Read… It Gets Real: Manhattan Apartment Sales Plunge

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  28 comments for “Teardowns and Shadow-Flipping: Living Inside the Insane Vancouver Housing Bubble

  1. Play it again Sam
    July 5, 2016 at 6:45 pm

    This sounds a lot like the US 20+ years ago when Japanese were buying up everything in site. Now Chinese are, and currently their population demographics are now like what Japans demographics looked like 20 + years ago. It will burst, sooner or later, but it will burst.
    My house in the San Francisco south Bay Area, according to Zillow, just doubled from when I bought it in Feb 2009. Great, but I do not want to sell, so it is just temporary paper profits.
    A friend who is a commercial real estate broker, mentioned that apartment rents are plateauing, and more units are coming on the market. He wants another 8 unit apartment to buy for himself. He is going to wait for the next down turn, before he pulls the trigger, smart guy!

    • d'Cynic
      July 5, 2016 at 9:18 pm

      I disagree, I believe the Japanese were for the most part not laundering money in the US housing market. A typical money launderer in it’s heyday, when cash was king, could take a big loss and that is no different today. That why money is almost no object in the Vancouver housing market. Apples and oranges.
      You get no help from corrupt politicians only promises – because of looming elections. All you can do is grind you teeth and hope for some Caxit.

      • Hank
        July 5, 2016 at 11:25 pm

        We’re in the European Union?

      • illumined
        July 6, 2016 at 10:00 am

        They were focused mostly on commercial properties, but it is still a similar phenomenon: bubbles metastasizing into other areas to either create completely new bubbles or add onto existing local bubbles.

      • Robert Phillips
        July 6, 2016 at 5:16 pm

        d’Cynic, I agree about the money laundering point, and so they will go further than the Japanese to protect their money.
        My point is, info from Harry Dent, he says this generation of Chinese buyer is larger than the next one. So the demand going forward will be less, independent if you are a investor or a gambler/launder.
        As the Chinese economy deflate’s, pressure have/will increase on home prices in the developed nations, but just like fireworks, prices will go straight up like crazy, and then blow up into another spectacular bust!
        I agree with Harry Dent, I have lived in Silicon Valley all my life and have seen these bubble/busts several times already. In the big scheme “This time is not different!” Only the players have changed.

        • July 10, 2016 at 8:44 am

          The only difference is this time, people will think it’s different.

  2. Chip Javert
    July 5, 2016 at 9:16 pm

    I remember taking an Alaska cruise, departing Vancouver, in 2009 and hearing about the real estate market as I drove in from the airport. The general assumption (since proven incorrect) was things might calm down after the 2010 Olympics.

    Real estate bubbles remind me of Wile E. Coyote and his ability to run straight off the edge of a massive cliff for a brief, gravity-defying moment.

  3. TCG
    July 5, 2016 at 9:36 pm

    Sounds similar to the San Francisco market. We have the overseas money, too, though not quite to the same extent, and probably more tech money instead.

    As for the second house not selling right away, I wouldn’t count on it being a sign the bubble is definitely bursting just yet, though eventually it will. Maybe it is a sign that things are now priced high enough that people don’t want to pay that much for a tear down, rebuild and flip or the sellers mis-priced that tiny, and probably undesirable house. Sure, the land is worth something, but it’s a lot of cost and red tape to rebuild or modify a home.

    We were house hunting here in the fall and saw similar cursed houses that had been on the market for a long time. For example one that had every space but the kitchen and bathroom turned into a bedroom, or one that sloped heavily toward the back and was sliding off the hill. While the bubble makes people unreasonable, they still recognize obvious problems or houses that need so much work that they’re not worth bothering with unless the price is much lower than the competition.

    The method here when we looked was for sellers to price things quite a bit lower than they intended to sell them, get as many people to look as possible, and then wait for the hopefuls (sometimes 20 or 30 offers) to desperately outdo each other on price and drive it up. Just like there, a couple hundreds of thousands above the listing price isn’t uncommon.

    Prices have started to plateau here (is my sense) and have even dipped a little from their high in some less desirable neighborhoods.

  4. July 5, 2016 at 10:51 pm

    I live just north of Seattle and when I miss a few of my weekly trips to town I’m amazed at all of the new holes that are popping up all over the city.. The U District has single family homes all marked for demolition to be replaced by 7 story high-rises with 60 apts. plus retail. This on a single house lot. It isn’t just West coast either. Lewiston-Auburn, Maine, where I’m from, is having an influx of rich Chinese who are building a hospital with housing for recovering patients. Manhattan and SF seems to be cracking but other places are taking up any slack. At some point you’d expect reality to catch up these investors unless they really are fleeing China which has to make us wonder; what do they know that we don’t?

  5. NotSoSure
    July 6, 2016 at 12:06 am

    My USD CNY bet is creeping up super slowly.

  6. Agnes
    July 6, 2016 at 2:29 am

    The Chinese have to spend dollars somewhere. This is a link to an article about Luo Ping’ s comment when we increased the rise-to-run of the parabolic increase in coupon printing, “We hate you guys”.


  7. Uncle Frank
    July 6, 2016 at 8:01 am

    There is no such thing as a home priced too high when it comes to the Chinese sending their wealth overseas to invest in North American properties. It beats the possible alternatives of leaving their funds where they are now.

    • July 10, 2016 at 8:45 am

      While I do think Vancouver is a bubble, white people in China have been calling the top for 20 years, not understanding either the ill-gotten gains of some officials, or the Chinese approach to real estate and to global diversification.

  8. July 6, 2016 at 8:37 am

    Instead of the lineup of agent pictures on these ads, they should just use avatars of panthers. This sounds like a massively predatory environment. $300K over list. Unbelievable.

  9. Paulo
    July 6, 2016 at 8:51 am

    It is a bubble, an insane bubble. Last night on our local Vancouver news, a story portrayed a young couple (a financial advisor no less) who paid well over one million for a shack. The buying process was so heated that he ‘skipped’ a home inspection. Apparently, any ‘subjects to’ will now quash your deal. Even a simple inspection.

    Now, most home inspectors don’t know their ass from a hole in the ground, (and I know this being a carpenter for 40 years and occasionally inspect homes for friends), nevertheless, they have taken a course in inspecting, have worked under more experienced inspectors, and do follow a checklist. In this case, no inspection was done, the house is a shack, is rife with mould, and the electrical service is dangerous. The man started to cry on tv. Here is the kicker, when asked if he would do it again he replied, “Yes, he would. This is for my daughter. ”

    I sold our home in 2007 and moved to a rural area where I could afford riverfront. I worked on the house for weeks, and finally after renovating it 20 years I went through the crawl-space and brought the plumbing and electrical up to code. The only code deficiency in the home was one door opened into a hallway due to space limitations (cheater bathroom for teens). This sale was also during a housing bubble. My agent told me that when he met with the buyers agent and clients they hade made an emotional decision and obviously wanted the home right now. (It was a pretty nice place). They tried to haggle but being a good agent he said “No, the price is fair and that is what is expected”. They paid full price, BUT, hired a home inspector. The inspector missed the door swing, an obvious code violation, and did not even go into the crawl space for a looksee.

    What will be interesting will be the upcoming news stories after the bubble blows. The local buyers stampeded into the housing rush are even more guilty than the foreign money launderers, as far as I’m concerned. They should no better. This has happend 3X in Vancouver in my lifetime, and the zeros keep on growing; zeros doing the buying and zeros on the price tag.

    • Paulo
      July 6, 2016 at 8:56 am

      Sorry, they should ‘know’ better, not ‘no better’. Although, ‘no better’ seems to fit somehow. At least the word no does.

  10. Shawn
    July 6, 2016 at 12:00 pm

    ‘Tech’ is a joke in Vancouver. There are no other occupations here https://en.wikipedia.org/wiki/Economy_of_Vancouver that can support a 1.56 million dollar mortgage. There are a few universities but profs don’t get payed much either. And even a million dollar condo would be risky for salaried people.

    The vast majority of detached home buyer are now ‘all cash’ Chinese usually list their occupations as students or housewives. About 73% on the west side. As China devalues furthers, hundreds of millions of more dollars flow out of the country. I expect detached home to reach 2-2.5 million by next year.

  11. lurker
    July 6, 2016 at 2:00 pm

    “I expect detached home to reach 2-2.5 million by next year”

    so the Chinese are going to print Yuan like a drunken sailor and run around the 1st world and buy it up?

    this is going to end so fucking badly and your post might just be the one that truly signals the end……..$2 fucking million, give me a break.

    It’s a new paradigm, and everybody who doesn’t buy, now, will be priced out forever.
    Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.
    Renters, and anybody born in a future generation, will not be able to afford a $15,000,000 starter home in 15 years. They will live in tent cities, and Hondas.
    This asset bubble is different than all of the others – it will never slow down, or pop. The gains are permanent.

  12. John G
    July 6, 2016 at 3:07 pm

    There is no bubble. My local Canadian chinese real estate agent told me that 50% of his clients are laundering their money from China and that everyone knows whats going on, including the bank.

    My neighbour just sold his home in one day to Chinese of course.
    The offer was done on Monday and they showed up at the bank on Friday with shoebox containing $929K. True story.

    By the way, the bank told him that was not how it was done in Canada but took his money anyway.

    Agent said they are all lining up to hide their money here. It will never stop. You are naive if you think that there are controls etc.

    Everyone’s on the take and that’s how it is…….

    Good for us middle agers, not so good for anyone working under 40.
    They are doomed to never own a house, not in the city anyway

    • d'Cynic
      July 6, 2016 at 3:41 pm

      Maybe in post gay parade season, our sun king will try to do his job and look around what’s happening in his own country. One can always hope.

  13. Paulo
    July 6, 2016 at 4:46 pm

    We’ll see. Bubbles are bubbles and Chinese buying on the top will one day discover they just realized 50 cents on every dollar invested. Of course losing 50% in Canada is worth more than being stuck in China, I suppose. Apparently.

    When the going toughens up in China and the ‘worker’ mobs begin to riot I would not be surprised the see the authorities invoke the 30 cent solution for money crimes simply to try and calm the hordes. Offenders will be told to kneel down in front of a wall and will be shot in the head.

    Those that say, “This time is different”, can they honestly believe it? It’s different for awhile, but eventually all bubbles pop. If it continues there will be protests in Vancouver which will make the Stanley Cup riots look like a warm-up. look for more city taxes on absentee owners, restrictions on demolitions, and more changes to the real estate industry with a change in Govt. For starters.

    I remember back several decades when my Dad talked my Aunts into buying a house on 4th and Sasamat. He even co-signed their mortgage. It was a lovely old bungalow with a beautiful view of the harbour and mountains. A bubble began to grow and my Aunts watched their $27,000 house climb in value and they decided to sell at the top and move to White Rock. They were holding out for $250,000. For awhile they could have got just over 200. The bubble poped and they ended up getting $175,000 for it. Of course a lawyer bought it and tore it down to build a monstrous shoe box.

    This has happened 3 X more since then, and every time the bubble popped under some folks who either waited for the top to sell, or bought near the top. In today’s dollars the same dollar my aunts received would have been worth $6.75. That would mean $1,200,000.00 for the same lot if all things were equal. I suppose that same lot would fetch 1.5-2 million, not too far off from what they were trying to hold out for.

    It certainly rhymes.

    • Shawn
      July 6, 2016 at 5:26 pm

      I don’t think the rich Chinese give a shit whether they are buying at the top or the bottom. For the most part its not their money anyways. Apparently in China you can get multi million dollar loans, launder it through Macau or bitcoin and then just skip the country and never bother to pay it back. The banks dont give a shit as well, its also not their money, the PBC will just write off all these bad loans in time.

      It is a testament to how corrupt the municipal and provincial governments are in BC. But when RE is the only game in town within an economy that is a one trick pony, then it all make sense why nothing is done.

      • d'Cynic
        July 6, 2016 at 6:18 pm

        As the saying goes; never attribute to malice what you can easily explain by stupidity. They keep us all guessing.

  14. Nicko
    July 6, 2016 at 5:24 pm

    Frankly, I see no problem in bubbles. We all know this is just corrupt money looking for a safe haven; that happens to be Canadian real estate. Hey, we’re a polite people, with well regulated banks. We welcome money from anywhere. IMHO, this is just another facet of globalization in action. I’m benefiting by living/working in a rising Africa. I see no problem with Nouveau riche Chinese businessmen laundering their millions (and billions) to western shores. It all cycles into the tax system eventually. Profit if you can, keep your head down for when the bubble bursts. In the post-global age, we all need a safe haven. It’s a beautiful thing.

  15. SteveeL
    July 7, 2016 at 4:33 am

    Just got one to say……I live in WV and I haven’t seen a Chinese home buyer since I left Portland Oregon. In 2 1/2 years of living her I have purchased 5 homes including the one I live in and not one of them over 75k. A duplex I just recently purchased with the renters already part of the deal for 47.5 k ,and each unit rents for 550.00 a month and I pay WSG. How could a Chinese person go wrong on that deal. They could open up a take out and offer chicken and mambo sauce to the locals and launder even more money…..

    • Nicko
      July 7, 2016 at 8:35 am

      RE is all about location, location, location. Oh, and ocean frontage helps too.

  16. Boatwright
    July 7, 2016 at 10:40 am

    I can find you a house like the one pictured @ 1515 Renfrew in Traverse City, Michigan beautiful resort area on the shores of pristine Lake Michigan for $25,000.

    “But this time it’s different”………….. idiots!

Comments are closed.