After listening to a group of international real estate experts chat about their respective markets, it became clear to me that in terms of house prices, Vancouver has nothing on London, New York, Moscow, Palm Beach or L.A. Compared to those cities, Vancouver real estate is the bargain bin.
Last night I attended the first REDTalk speakers event, sponsored by development company Wesgroup, and held at the Playhouse Theatre. The place was at capacity, with about 700 industry types in attendance, and the star attraction was clearly Josh Flagg, real estate agent extraordinaire, and star of Million Dollar Listing Los Angeles. Flagg — clearly an L.A. mover and shaker, dressed in capri pants and loafers without socks — currently has a listing with a price tag of $150 million (the former home of Sonny & Cher, among others). When the subject of Vancouver property prices was raised, Flagg couldn’t help but derisively laugh. “It’s totally under valued here,” he said. And he went on to say that we have everything that all the world-class cities have to offer, but at bargain basement prices. That would explain why so much of the Mainland Chinese market is snapping up properties around West Vancouver and the west side of the city. Those same properties would be three or four times the price in a place like London or L.A.
But here’s the thing: those other cities have a job market. We don’t. And the jobs we do have are low paying, as illustrated by statistics junkie Andy Yan, from Bing Thom Architects. Andy gave me this chart: PerCapitaIncome. It shows that Vancouverites make just a little more than $40,000 a year. It also shows we are hovering around the same incomes per capita as depressed American cities like Reno and Nashville.
It’s not about the high cost of real estate — our problem is affordability. We are being priced out of our own town. We can barely afford our $4 lattes. No wonder we gripe about the $1 million houses. Moderator Cam Good of Key Marketing did point this sad state of affairs, to which Flagg responded: “I don’t know anything about your incomes. I don’t live here.” And he couldn’t relate, either. Flagg made $200 million in sales revenue off real estate in the last year.
It was an interesting discussion, much of it about the global impact of the rich Chinese market. The other panelists included Alan Child, chair of real estate consultants Knight Frank Hong Kong, Stephen Hurford, of Hurford Salvi Carr, who has 287 projects in and around London, and Brendon Desimone, a New York real estate agent and blogger with a following of 70 million visitors a month. They echoed Flagg’s opinion of Vancouver’s cheap properties. Child said that in London, many developers sell directly overseas. It’s a practice frowned upon in Vancouver, because it’s felt that locals should get first dibs on their own market. And locals feel resentful that they’re being pushed out of the market by foreign owners who may not even occupy the houses. And it doesn’t work both ways. Canadians can’t find a sweet deal in Hong Kong’s property market. Hurford said if a Canadian were to buy a property in Hong Kong, they’d be looking at a whopping 24 per cent stamp tax. That drew a few gasps from the crowd.
So, we may gripe, but in terms of high prices, we haven’t seen anything yet. Desimone pointed out that in New York, a not-so-special condo sells for around $3 million. Flagg said L.A. doesn’t have a condo market to speak of, because everybody wants a single-family house. So we’re nothing like L.A. in that regard. Desimone and Child spoke about the problem of corrupt money behind foreign real estate purchases made under the guise of numbered companies. We don’t know yet if Vancouver real estate has corruption behind it, mostly because nobody is keeping track of where the purchasers are coming from. That’s a problem.
There was a hilarious moment near the end of the talk, when the forthright Flagg was asked about his opinion of Vancouver’s new Trump Tower. He didn’t hold back. “I’m unimpressed,” he said, and went on to slag the quality of the building as “cheap.” He also said he’d never buy anything with the Trump name attached. No doubt, any Trump Tower marketers in the room were slumping in their seats at those comments. Flagg then followed with, “Maybe I shouldn’t have said that.” Too late.