Analysis of recent sales finds Vancouver's West Side homes are getting flipped like penny stocks

A Vancouver realtor has taken a look at the city’s West Side and come up with some pretty shocking evidence of housing speculation happening in that area.

In a June 15 blog post, Steve Saretsky wrote that he was curious about the extent to which people are flipping properties there.

According to the Real Estate Board of Greater Vancouver, the benchmark price for a single-family detached home on the West Side was $3.4 million in May, up 34.7 percent from one year earlier. And so it’s a good question.

Saretsky explains that he began by looking at 179 properties sold in May 2016, and then found that of those, 28 had been sold a previous time within the last 12 months.

That means that 15.6 percent of West Side homes sold last month—nearly one in six—had been previously purchased not so that they could be lived in, but so that they could be flipped for a profit. (See Saretsky’s post for notes on methodology.)

“I believe Vancouver real estate prices are heavily encouraged by massive amounts of speculation,” Saretsky writes. “People, not just investors are trading Vancouver real estate like it’s a cheap penny stock. Buying and flipping properties within a short period of time, sometimes as short as a month or two, cashing in on massive profits.”

To drive his point home, Saretsky looked at one house in South Vancouver that was sold four times in the last two years. The lot at 6712 Adera Street changed hands in January 2014 for $5.1 million, then again in November 2014 for $5.5 million, then in July 2015 for $6.4 million, and then again just last month for $7.6 million.

“These are staggering numbers,” he continues. “Over 15% of homes were flipped in the month of May, having been purchased within the last year for an average profit over $1 million.”

Saretsky even went and checked for evidence of renovations that might account for some of the increases in sales prices. He didn’t find any.

“I also made sure to go back and look through the listing photos of the past 28 sales to see if any substantial upgrades or renovations were done to these homes,” he writes. “As I had suspected, none of these homes appeared to have any noticeable upgrades. At least none that I could detect by comparing photos.”

Saretsky’s conclusion: “Based on the evidence, to dismiss Vancouver real estate speculation as not playing a key role in surging home values would be ignorant. There are certainly many factors influencing the Vancouver real estate market, speculation is definitely one of them.”

This might sound obvious, but one reason I think we’ve found some (flawed) evidence of foreign money in Vancouver real estate is because we’ve looked for it.

I’ve long wondered whether journalists and academics, applying the same scrutiny and persistence to other facets of the market, could find evidence of factors that have an effect on prices that’s equal to or greater than the effect of foreign money. (The Globe and Mail has done this with the shady practices of real-estate agents, finding, for example, that the abuse of contract assignments may be widespread enough to impact prices.)

Now, Saretsky has found evidence of speculation to quite a significant extent. I wonder what other factors we might find if only we really look for them.