On a chilly morning on Burnaby Mountain, real estate agent Jerry Liu points at the Highland House condo tower under construction as he declares his pride in personally selling half of the 104 units.
The south-facing condos, which will get more sunlight than others in the 12-storey building that is slated to open by late 2013, were the first to attract buyers last October. Having no problems with feng shui, the ancient Chinese art of creating harmony, other units steadily sold until March at prices ranging from $209,900 for a studio to $389,900 for a two-bedroom unit. Mr. Liu's purchasers have been either immigrant investors or international students born in Asia who received a big helping hand from their parents for down payments.
But starting in April, Mr. Liu noticed a slowdown that lingers through today, affecting the remainder of units being marketed at Highland House and also raising concerns for other projects on the 64-hectare (160-acre) "UniverCity" neighbourhood on Simon Fraser University's Burnaby campus. Highland House is now five-storeys tall in the construction phase and 80 per cent of the project's units have been snapped up, but Mr. Liu believes it would have been easily sold out by now were it not for a number of factors that have sprung up to disrupt the Metro Vancouver housing market.
The slump in the number of condos, townhouses and single-family detached homes sold across the Vancouver region can be explained by a variety of factors. There have been tighter rules on mortgage borrowing, consumer jitters due to economic uncertainty and restrictions on Ottawa's immigrant investor program – all contributing to the chill in the broader real estate market, said Mr. Liu, a 28-year-old agent at Sutton Centre Realty who speaks Mandarin and English.
Industry experts have estimated the proportion of foreign buyers in the Vancouver region's housing market at 1 to 3 per cent, said Cameron Muir, chief economist at the B.C. Real Estate Association. The perception of offshore money pouring into the area to acquire properties without foreigners even visiting them has been overstated, Mr. Muir said Tuesday, adding that many investors arrived in Canada several years ago. Here is one case in point. Mr. Liu's father, Kevin, immigrated to Canada from China in 1999 and has been a Canadian citizen for the past decade. In 2007, the elder Mr. Liu bought three condos at the seven-storey Hub residential and retail development on the UniverCity site and he has agreed to purchase three units at Highland House.
Cam Good, president of The Key, a real estate marketing and brokerage company, said his firm isn't active at UniverCity, but does specialize in pitching condos in other Vancouver-area neighbourhoods to buyers with roots in China. "It is not as hot as it was one year ago. The sales volume has been reduced, but the prices are stable," he said.
Jerry Liu, who sold 17 of the Hub's 146 units, said that in a housing downturn, the suburbs tend to feel the pain early, especially when projects cater to immigrant investors who prefer to buy on the upswing. "They're worried that if the market drops, they will lose money," he said.
A spokesman for the University of British Columbia said the "UTown@UBC" neighbourhood on campus has experienced a slowing pace of sales, but UBC is faring well in the housing storm. UBC welcomes investor purchases of condos on Vancouver's west side, and so far, most investor-owned units have been placed into a rental market with strong demand from students.
At SFU's UniverCity, Mr. Liu forecasts that 70 per cent of Highland House will be occupied by renters, with two-thirds of those from China and the rest from Japan, South Korea, Taiwan and the United States. It makes financial sense to buy a condo for $300,000 and collect rent of $1,300 a month, he said. But in a sign of nervous times in real estate, Mr. Liu cautions that a modest rise in mortgage rates has been enough to scare off some prospective buyers.