What would you have done if your modest Vancouver bungalow could suddenly make you a millionaire? Take the cash and run?
That’s exactly what a number of Vancouver homeowners started doing at the end of 2015. Feeling as though they won the lottery, these homeowners cashed out and got out of the mind-blowing―or mindboggling, depending on how you see it―Vancouver real estate market. But where did they go?
There’s a good chance that you’ve met some of them here on Salt Spring Island. Many of those who cashed out sold to foreign buyers and moved to other locations on the BC coast and the Okanagan with the goal of buying down―that is, buying homes that sell for less than what their Vancouver home sold for. Salt Spring has an attractive infrastructure for former city folks, and when they come here to buy down, that means they’re purchasing homes under $750,000.
These buyers are different than buyers who have previously bought on Salt Spring; they’re not from the United States or Alberta, and they’re not in the secondary home market. They’re primarily former Vancouver residents who have spent some time investigating their options on this side of the Georgia Strait. When they do buy, it’s because they’re looking to become permanent residents of that community.
Much of this activity happened in the spring and early summer of 2016. Since then, you may have heard that our island is experiencing low inventory in the entry-level residential market. You can trace this all the way back to the investment buying and rising prices of Vancouver.
In August, the provincial government brought in the 15% purchase tax for foreign buyers to help address the affordability issue in Vancouver.
Immediately after the tax was implemented, real estate activity―for the most part―halted. This happened not only in Vancouver but also in the regions where people choose to live for lifestyle reasons, such as the Sunshine Coast or Salt Spring Island.
Li Read, a local realtor, commented that everybody following the markets held their breath and tried to predict how long it would take for people to digest the change. She said the “post-tax pause” appeared to last for 6 to 8 weeks. The sales pattern in secondary home markets now appears to be slowly improving again.
Affordability, both in the residential real estate market and in the residential rental market, continues to be an issue everywhere. There has been speculation about whether the 15% tax would cool the market in Vancouver and elsewhere. Many say that it won’t, there or elsewhere in Canada, and that the level of demand won’t change.
What does that mean for homeowners wishing to sell on Salt Spring in the coming months or year? If you own a home under $700,000, you’ll be entering a seller’s market. If you’re buying, Li Read assured that there are always good options regardless of the market trend at play.
Photos courtesy of Li Read.