A recent article in The Globe and Mail reported that, “Not even the pandemic slowed Vancouver real estate.”
Even as the virus was peaking, the housing market in Vancouver remained in the hard-to-believe category, with prices actually rising while Canada fought hard to win the battle against COVID-19.
In this article we’ll take a look at how the region’s rational approach to the pandemic is helping to keep Vancouver as one of the best places in the world to live, work, and invest.
Vancouver is Winning the Battle with COVID-19
As the world continues to watch in awe, Vancouver keeps crushing the curve. A recent statement from British Columbia (BC Gov News) on the province’s COVID-19 response notes that:
- No new COVID-19 related deaths
- No new health-care facility outbreaks
- No active community outbreaks
- Of the total COVID-19 cases, 16 people are hospitalized and four are in intensive care
Vancouver, British Columbia, and all of Canada avoided the draconian measures selected by other countries around the world, choosing to respect the rights of its citizens instead. Residents of Vancouver continue to remain vigilant by keeping the number of people seen to a minimum, practicing social distancing, and using a mask when needed.
The common-sense approach to the virus also appears to be creating an economic rebound.
For the first time since the pandemic hit, the unemployment rate in British Columbia has gone down, creating a cautious sense of optimism. According to CTV News Vancouver, over 118,000 people found jobs last month, while employment gains made in May and June recovered about 40% of the jobs lost since February.
Why International Buyers Keep Coming to Vancouver
Wealthy buyers from the U.S. and Hong Kong are flocking to Vancouver to buy real estate. Investors from both countries view Canada as a safe harbour in a global sea of uncertainty.
While the exodus from Hong Kong hasn’t yet begun, the Financial Post notes that interest in pre-sale property units in Canada is growing. Real estate agents in Vancouver who work primarily with clients from Hong Kong and the Mainland are bracing for a new wave of inquiries as China continues to increase its control over the former British colony.
Back in the U.S.A., unrestrained social justice movements, deepening political divides, and an extremely favorable exchange rate between the dollar and the loonie are just three of the many reasons why investors from the United States are buying real estate in Vancouver.
According to a recent article from Business in Vancouver, foreign direct investment in Canada was up the first quarter of 2020, due in large part to the country’s educated workforce and participation in global free trade agreements.
Vancouver Ranks #1 for Quality of Living
Of course, there’s more to Vancouver than just real estate investing.
American human resources consulting firm Mercer ranked Vancouver as the 3rd-best global city in the world and the highest ranked city in North America for quality of life, far ahead of other Canadian cities such as Toronto, Ottawa, and Montreal.
Top quality of living factors that was used to rank Vancouver #1 in North America include:
- Economic environment
- Public services and transport
- Political and social environment
- Socio-cultural environment
- Natural environment
- School and education
- Medical and health considerations
Immigrant-Friendly Vancouver is a Financial Safe Haven
Although the U.S. has traditionally been seen as an island of safety and security, the fact is that today that’s simply no longer the case. The Financial Post notes that as the wealthy flee Hong Kong, they are bypassing the U.S. and coming to Canada instead.
That’s because the U.S. is not seen as the most desirable option due to gun violence and anti-immigrant political rhetoric in the States. Not only is the price of visas surging, the U.S. Department of Homeland Security has seemingly halted the processing of paperwork, forcing immigrants to wait for years on end to learn if their application is approved or denied.
By contrast, last year Canada recorded its biggest influx of immigrants since 1913. The Global Skills Strategy program is just one example of how Canada is welcoming immigrants with temporary work permits approved in as little as two weeks.
Hong Kong is also home to one of the largest numbers of Canadian citizens, at least for the time being. As the turmoil in Hong Kong grows, the Canadian government is working on a plan to help the 300,000 Canadian citizens in Hong Kong who may want to return home, according to The Star Vancouver.
Vancouver Real Estate Demand Keeps Growing
The Vancouver Sun reported that back in May, real estate pundits predicted that home prices in Vancouver would decline as buyers and tenants faced job insecurity, income losses, and increasing debt. But in fact, the exact opposite has occurred.
According to the most recent report from the Real Estate Board of Greater Vancouver (REBGV), sales and listing activity in Metropolitan Vancouver has already returned to historically typical levels. The Chair of REBGV observes that the real estate market in Vancouver has seen minimal fluctuation over the last few months, with multiple offers becoming increasingly common-place.
Residential home sales for last month increased by 17.6% year-over-year, while home sales in June skyrocketed by 64.5% compared to May of this year.
Investors may be interested in knowing that real estate demand is driving sales volumes in Vancouver, not low pricing. In fact, the MLS Home Price Index for Metro Vancouver has increased by 3.5% over June 2019.
Ground-Up Development Investments in Vancouver
The Emerging Trends in Real Estate 2020 report from professional services firm PwC Canada notes that Vancouver (along with Toronto) continues to lead the Canadian cities in terms of investment and development prospects.
Affordable single-family housing and purpose-built rentals are two product types that are driving the demand for new residential real estate development in Vancouver.
According to PwC, many baby boomers are looking to downsize while millennials are looking for attractive alternatives to apartment living. Incorporating a condo into a new single-family development project helps to make the numbers work, with that single unit alone often paying for the cost of the land.
That’s why Tycon Capital focuses on developing multi-family residential projects in Vancouver. When purchased wisely and developed the right way, smaller land parcels can be acquired at a price per square foot that generates a very healthy rate of return compared to other investment options.
By using recently adopted city bylaws to develop new residential projects in Vancouver, Tycon Capital consistently provides solid investment returns while adding value to some of the most sought-after neighborhoods in Metro Vancouver.
Hold times are designed for the investor seeking a 1-3 year holding period, with historically healthy annual rates of return. Investment returns can also be risk-adjusted by rolling forward unrealized profits into new projects as additional sites are acquired.