Luxury Market Stumbles as Asian Buyers dry up – Greater Vancouver Real Estate News July 2012
Midway through 2012, BC’s luxury market is showing signs of cooling down. Through the first 6 months of 2012, 243 homes priced at over $3 million have sold compared to 466 through the first 6 months of 2011. While this may seem like a significant drop, 2012 is still far ahead of 2010, when 375 $3 million homes sold over the year, 169 in the first half.
Prices have been going up so much the past few years that we’re now seeing a combination of buyer fatigue and seller intrigue. Buyers are looking at prices and don’t believe they can go up much more in the near term, so they’re taking their time. Conversely, sellers are seeing these sky high prices and have finally decided to cash out.
UBC real estate professor Tsur Sommerville has argued that because luxury real estate tends to be bought with existing wealth rather than incomes, it is much more unpredictable than the entry-level market. Luxury real estate prices tend to be disconnected from economic fundamentals like income, and because of this, prices are much more driven by psychology and people’s belief in what future values will be. And with the faltering real estate market in China, the uncertainty in Europe, and current high prices, you’re seeing a more cautious buyer.
Or at least a more cautious Chinese buyer.
Most neighbourhoods that have been bought up by wealthy Chinese buyers over the past few years – Vancouver (Westside), Richmond, West Vancouver – are now in a Buyer’s market, or have high inventories with lower sales. Other, more affordable, markets – Vancouver (Eastside), North Vancouver – are still experiencing a seller’s market. This was predicted in a forecast put out in December 2011, which predicted that more expensive jurisdictions in BC would experience a flat or sagging market while cheaper alternatives continue their upward trajectory.
Most Expensive Homes Sold so far in 2012:
- 1) $19,800,000
- 2) $14,200,000
- 3) $12,388,000
Most Expensive Condos Sold so far in 2012:
- 1) $5,900,000
- 2) $5,250,000
- 3) $5,150,000
If you have any real estate questions or if you are thinking of buying or selling your home, please contact James Louie Chung, Metro Vancouver REALTOR® — Real Estate Agent at [email protected] or call / text ( 6 0 4 ) 7 1 9 — 6 3 2 8 today!