Like you, I have often wondered, "Who can afford the housing prices in Vancouver?" According to The Globe and Mail, the answer is very simple - the Chinese! More than ever before, the Chinese are influencing the housing market in Vancouver. They are moving here in mass and they are buying up homes more quickly than every before.
A typical immigration scenario unfolds like this:
A high-status entrepreneur father will remain in China while the mother and children move to Vancouver. The father will support the family by earning his income abroad while the children enroll in private or public schools, quickly picking up the English language, complete with the Canadian accent. When they have graduated high school, and more than likely university, the sons and daughters may return to China to take over the family business. At this point, the mother and father may retire to Vancouver.
They are buying into the expensive neighborhouds in the Vancouver West area. This is partly a lifestyle decision and partly a decision based on the the well established school system in this location.
On some blocks in Dunbar, almost all of the mid-sized homes from the 1920's through 1950's have been replaced with typically large (~4,000 sq. ft.) homes. A newly built home like this might sell for $1.5 million in Toronto, but in Vancouver it sells for between $2.5 million and $3.0 million.
In some of these neighbourhoods, Chinese buyers are specifically seeking out tear-down homes. This may help them with the immigration process. A Chinese immigrant could create a business as a general contractor and re-build his family home under this business umbrella. In these situations, a tear-down home may sell at nearly the same price as a similar sized home in move-in condition on a similar lot.
Asian investment and immigration is nothing new to Vancouver. After 1996, when immigrants from Hong Kong stopped arriving and many returned to Asia, the real estate market slowed and didn't come back until 2002 when immigration from mainland China began to pick up.
What does the future hold? Will the Chinese keep comming? I believe they will. Right now there is a three-year backlog of applicants who qualify to move to Vancouver with a minimum investment of $400,000 (although this requirment may change to $800,000). It may be years before the number of people arriving under the investor program dwindles.
And ultimately, that is good news for those of us already invested in Vancouver real estate.