Canada's Housing Bubble

Jun 28, 2010 Whispers WhispersFromTheEdgeOfTheRainForest

Interesting question raised by SethM on a real estate chatboard: what's wrong with this picture?

On the shores of False Creek, located directly across from the downtown core of the City of Vancouver is the luxury real estate development of Millennium Water aka the Olympic Village. Sales of units are stalled at 36 with none having sold after the first 2 days (it's been on the market now for 5 weeks). Worse, 11 pre-sale purchasures are trying to let out of their legal obligation to proceed with their purchase.

Dim lights

Meanwhile, about 15km south is a proposed real estate development known as River Green. Located in the Vancouver suburb of Richmond, the development is across the Fraser River from the Vancouver Airport (with the accompanying views of the airport and the airport noise). The development is touted as the biggest ever single development in the City of Richmond and is the start of what the City hopes will be a reorientation of its downtown out to the Fraser River waterfront.

The first phase of that development, 458 luxury-oriented units in six buildings with completion expected some time in 2012, set condo sales records as 'HAM' money flowed in.

Dim lights

So what gives?

The consensus is that the River Green development pre-sales are driven by Chinese buyers whose intention is to sell when it's complete. In this development a 2 bedroom typically sold for $900,000 + HST. The Olympic Village is already complete... so no speculative potential there.

Thus we have a current, completed set of luxury condos on the highly desirable False Creek perimeter located directly across from downtown and Yaletown... and those condos go wanting for buyers.

But condos which won't be ready for 2 years in a highly speculative venture across from a busy international airport are snapped up instantly by speculators!

Naw... this doesn't scream 'housing bubble' at all.