A new report takes an opposite view to mounting concerns about the white-hot real estate market in Metro Vancouver.
A number of economists and observers have said that the market is overheating, with high demand and rising prices going beyond historical norms.
However, a report by Dexter Realty claims that the market has more to give yet.
“Wild as the current Metro Vancouver market is right now, it may be the calm before the storm,” states the report written by the Vancouver firm’s partner and chief economist Kevin Skipworth.
That storm could be generated by the return of foreign buyers and the full resumption of immigration to Canada.
“We believe there is one wild card yet to be played and it could shift the housing market into hyperdrive later this year,” Skipworth wrote.
Skipworth said that this card is the “potential rebound of international buyers and immigration, which were credited for sparking high home sales in the mid-1980s and in 2016-18”.
The influx of foreign buyers and arrival of new immigrants “could do so again in 2021”.
“We believe pent-up demand and a war chest is building and it could be unleashed on the Vancouver-area housing market later this year,” Skipworth stated.
On March 14, 2021, the Straight reported that the share of foreigners in the fair market value of homes in B.C. dropped to almost zero in 2020, the year when the COVID-19 pandemic started.
Brendon Ogmundson, chief economist with the B.C. Real Estate Association, said in that report that foreigners accounted for 0.56 percent of the value of homes bought last year.
Ogmundson used official B.C. government data on property transfer taxes to come up with the figure.
In addition, the BCREA economist said that foreign buyers accounted for 1.4 percent of homes sold in the province in 2020.
Meanwhile, local buyers pushed the real estate market to record highs, assisted by a number of domestic factors like low interest rates and increased household savings.
Also, the real estate boards of Greater Vancouver and Fraser Valley have reported that March 2021 sales were the highest month counts ever in their respective regions.
Dexter Realty is not alone in saying that international buyers may yet add more energy to the active real estate market.
On March 30 this year, Sotheby’s International Realty Canada released a report indicating that foreign buyers of luxury or high-end properties are waiting for pandemic restrictions to ease.
Sotheby’s reported an “upswing in the volume of international enquiries on luxury property listings in Toronto, Montreal and Vancouver in the preliminary months of 2021”.
“Canadian real estate continues to be well-positioned as a destination for foreign investment and asset diversification for high and ultra-high net worth investors worldwide,” Sotheby’s stated.
The company noted that “underlying demand” by foreigners for Canadian property has “not dissipated”.
In its report April 6, Dexter Realty pointed to one source of the “war chest” for the anticipated foreign purchases this year.
The Vancouver company noted that the Financial Transactions and Reports Analysis Centre of Canada has reported that $43.6 billion were transferred from Hong Kong to Canada in 2020.
Morever, and again based on what FINTRAC has said, this amount does “not include transfers via cryptocurrencies, between financial institutions, or transfer under $10,000”.