Photo: Nicu Buculei/Flickr
Home flipping in the City of Vancouver is on the rise this year, despite a foreign-buyer tax introduced last year to curb speculation.
In Vancouver, so far this year 4.36 per cent of homes have been bought and sold within one year compared to 4.13 per cent in 2016 and 1.95 per cent in 2015, according to data gathered by Vancouver realtor Steve Saretsky, who published his findings in a blog post on Saturday.
“I think that we were expecting the numbers to be a little bit higher, but it still points that the trend has been up over the last couple of years which is surprising,” Saretsky tells BuzzBuzzNews.
Saretsky along with University of British Columbia economist Tom Davidoff compiled MLS data to determine the amount of homes flipped in the city this year. Properties studied include detached homes, townhomes and condos.
In his blog post, Saretsky defines speculation as occurring when one invests in property with the hope of prospering but faces the risk of loss. He then says house flipping is a “symptom of speculation,” where a buyer purchases and sells a home within the span of one year.
Even though overall, more Vancouver homes were flipped this year compared to 2016, detached house flipping was almost cut in half.
This year 2.29 per cent of detached homes were flipped within a one-year period compared to 4.46 per cent last year.
In an effort to cool Greater Vancouver’s scorching market last summer, the provincial government introduced a 15 per cent foreign-buyer tax for the region.
Saretsky says the drop in detached homes flipped this year may be a result of the government’s levy.
“It’s almost a 50 per cent drop, so I would say it correlates with house prices basically cooling in the detached higher-end market,” says Saretsky.
Alternatively, townhouses saw the highest turnover out of all property types in Vancouver.
This year 5.81 per cent of townhomes were flipped compared to roughly 5 per cent last year.
But Saretsky says this finding might not paint a perfect picture as there are fewer townhomes in the city compared to other property types.
“I think it’s just because of the lower volume, in Vancouver we don’t really have that many townhouses compared to condos and detached houses,” says Saretsky.
In the condo segment, more condos were purchased and sold within one year compared to 2016.
Roughly 5 per cent of condos were flipped this year compared to 3.33 per cent last year.
Even though house flipping is on the rise in Vancouver, activity doesn’t come close to record levels seen in 2007 when 7.24 per cent of homes were flipped.
As for how speculation will unfold in Vancouver for the rest of 2017, Saretsky says he’ll be keeping a close eye on market activity.
“Speculation numbers tend to rise as the market’s going up so it will be interesting to watch over the next, I guess, six months or so,” says Saretsky.