Richmond—once a semi-rural municipality—has now become a city of over 200,000

with a global demographic unlike any other place in the world. More than 62% of

permanent residents are born outside the country, drawing documentary film crews

from Asia and Europe to uncover this unprecedented phenomenon. Geographers

call Richmond one of the most “hyper-diverse” cities on the planet, measured by

proportion of immigrants.

The 2.4 million population of Metro Vancouver has been growing by more than

30,000 each year, and 9/10 of those are immigrants. Demographers consider

Richmond an “ethnoburb” of Metro Vancouver. This is compared to 44% in

Vancouver proper, and other ethnoburbs like Burnaby (50%), Coquitlam (42%),

Surrey (41%), West Vancouver (41%), and North Vancouver (37%).

In the rest of Canada, Ontario cities come close to Richmond’s levels of foreign

residents—Toronto (46%), Markham (58%) and Richmond Hill (55%).

Compare this to other global cities with a reputation of being flooded with

foreigners, like London in the United Kingdom, which has a foreign demographic of

about 37%. Canada’s population has the second highest proportion of immigrants at

21%, after Australia’s 26%.

Based on ethnicity, Richmond’s demographics are 47% Chinese, 29% white, 8%

South Asian, 7% Filipino, 2% Japanese, and 7% other, according to the 2011 General

Household Survey.

Attractive features of Richmond

Richmond residents enjoy a more relaxed city feel than Vancouver and other cities

with less diversified demographics in Asia. Different ethnic groups coexist

harmoniously in the city’s parks, waterfronts, public schools and shopping malls.

Vancouver International Airport has become a hub within Richmond. Number 5

Road leading up to the airport is nicknamed the “Highway to Heaven” because it is

lined with enormous Christian churches, and colossal Sikh, Muslim, Hindu, and

Buddhist temples.

However, some tensions exist over language differences and skyrocketing housing

prices. Giant “McMansions” are popping up where previously smaller bungalows

took place. This is a result of the rapidly growing ethic population, and areas like the

intersection at Number 3 Road and Westminister highway form what is now called

the “Golden Triangle”. Urban geographer David Chenyuan Lai has counted more

than 50 bustling Asian-themed malls and outlets in this centre.

Richmond’s popularity among Chinese

Many factors have drawn Chinese immigrants to Richmond. Chinese-language

media have reported Richmond as having auspicious “feng-shui” energy. The

Vancouver International Airport is said to appear like a pearl in the mouth of a

dragon. Even the name “Rich-mond” has an attractive homonymic power associated

with financial success.

The airport location is convenient for the many wealthy immigrants who need to

travel regularly. As more Chinese flock to these areas, newcomers follow the

communities with similar ethno-cultural identities. Cultural geographers describe

the three diaspora communities of Chinese, south Asian and Filipino as having

reached a critical mass in Richmond.

Living in Richmond

Young residents of the ethnoburb are caught in a balancing act between protecting

their cultural identity and sharing with the mainstream culture. While the city’s

ethnic groups are expanding, some residents feel that there is very little helping

them to interconnect.

There are also concerns about the big, empty houses owned by people who spend

little time in Canada. They view Canadian real estate as a good investment due to the

low mortgage rates, but return to their homelands for work. This causes Richmond’s

sense of community to feel fractured. However, Richmond is still known as a

friendly city with some of the best restaurants in Metro Vancouver.

Immigrant Integration

Greg Halsey-Brandt, who represented Richmond as mayor, councillor or BC Liberal

cabinet minister for 23 years, thinks the demographic changes over the past three

decades have been fascinating, but “not particularly good”. “The volume of

immigration was too large over too short a time period. The host community of

Richmond and Metro Vancouver in many instances did not have time to adjust, nor

did many of the immigrants have time to adjust to us.”

Halsey-Brandt believes this influx has caused stress on the city’s cultural

relationships, jobs, traffic, education, health care and communication amongst

citizens. Nonetheless, integration is a two-way street and requires residents to

continue to work with immigrants to reshape library collection with more foreign-

language content, balance hospital staff, firehouses and police forces to reflect the

city’s ethnic makeup and engage as many residents as possible democratically.

Seller’s Market

According to a new survey by the Bank of Montreal, British Columbians believe right now it’s a seller’s market. The survey of 2,000 Canadians showed that 45% of British Columbians think it is a good time to buy now, whereas 55% are willing to wait until next year. Of these respondents, 27% intend to buy a home within the next 2 years, compared to 22% last year.

Why Buy

Some buyers are driven by a fear of missing out on the low interest rates, which the Bank of Canada dropped to 0.75% in January, and potential increase in prices. 46% of British Columbians believe house prices will increase next year, compared to 39% of Canadians. Additionally, buyers have faith that their investment will continue to appreciate.

Record Demand

The Real Estate Board of Greater Vancouver statistics show that the buyer demand in May was the highest in 3 years. As homes are being snatched up, the prices have increased 11.5% for detached homes, 5% for townhomes, and 4% for apartments over last year. This May, the benchmark price in Greater Vancouver for a detached home was $966,500; for a townhouse was $469,100; and for an apartment was $377,500.

Compounding Factors Continue to Drive Up Real Estate Prices

The question on everyone’s mind: When will the bubble pop?

The Bank of Canada warned on Wednesday about the risk of correction in Vancouver, Toronto and Calgary property markets. Yet, the Greater Vancouver Real Estate Board reported at the beginning of May that bidding wars are more frequent than ever. Property sales this March are the strongest seen in BC since 2007 according to the BC Real Estate Association. Property sales in the entire province jumped 37.6% over last year, and 53.2% in Greater Vancouver alone.

Contributing Causes

Low interest rates, a diminished Canadian dollar, attractively temperate BC weather, scarcity of vacancy, and fear of price hikes have driven buyers to flock into bidding wars. All types—first-time homeowners, growing families, and foreign purchasers—are buying.

There has been a 13.8% decline in listings compounded by an increased demand. On top of that, the sales dollar volume increased from last year by 57.1%, surpassing the overall rate of inflation. The average sale price for all types of homes this past March was $891,000 from $801,000 last year.

Left Out

These prices resultantly create a housing barrier affecting both low-income and middle class households. Those excluded from the local property market suspect that offshore buyers are hiking up real estate prices, making the property ladder inaccessible to the average homebuyer.

Record Land Prices Driven by Potential Higher Density

Unprecedented Value

Land has become the dominant real estate sector in Metro Vancouver. This will likely dictate future property values and lease rates. Developers are driven by the potential of density increases, resulting in bids reaching unprecedented levels.

In November, CM Bay Properties paid $15.8 million for 15, 714 square foot old gas station site on the Cambie corridor, setting a new price-per-buildable-square-foot record at $402 according to Colliers International. CM Bay plans to develop a 12-storey condo and retail complex near the Oakridge-41^st Canada line station.

Last year, the dollar volume in land exceeded $3 billion, constituting more money spent on commercial real estate in the Lower Mainland than office, buildings, shopping malls, industrial buildings, and multi-family rental property sales combined.

From 2013 to 2014, the dollar value in Greater Vancouver Area increased by 35.9% according to the Commercial Edge report. The average price per site was $4.7 million, but many were traded for much more.

Driving Factors

Other indications that developers are drawn by potential density growth is the increase in purchase of land for residential projects, representing half of all Lower Mainland land sales, up from a third in 2013. According to Colliers, developers are focusing on low-rise wood frame condominiums and townhouses.

City plans encouraging a shift towards multi-family development has spurred land speculation along Kingsway Avenue south of King Edward Avenue. This has resulted in a land price increase of an average $46 per square foot over the past year.

Avison Young principal Bal Atwal says that “underlying land values have outpaced income values on properties along or near virtually every major commercial corridor in Metro Vancouver where land is designated for higher density uses.”

Vancouver home prices the highest in monthly gain for February

Home prices in Vancouver went up in February according to data from the Teranet-National Bank Composite House Price Index (HPI), which calculates price changes for repeated home sales. Only three out of the eleven large city markets surveyed increased month-to-month, with Vancouver at the highest across Canada (1.5%), followed by Victoria (0.5%), and Hamilton (0.3%). This resulted in a national monthly HPI increase of 0.1%.

The year-over-year figures placed Vancouver’s gain at third highest (5.7%) after Hamilton (8%) and Toronto (7.3%). The national yearly HPI increase was 4.4% in February, which is a decrease from 4.7% in January.

Decelerating Home Growth

Economic analyst at TD Economics, Admir Kolaj, stated that this is the fourth consecutive month of decelerating home price growth. He also pointed out that there is a growing regional divide between the oil producing and non-oil producing regions. The HPI decrease in Calgary (0.3%) and Edmonton (0.8%) was higher than that in Toronto (0.1%).

Kolaj predicts that home price growth will remain more favourable elsewhere in Canada due to the low Canadian dollar and lower-for-longer interest rates.

Predicted Trend of Migration into B.C.

There may be a migration influx into Vancouver in 2015, especially due to the dip in oil prices in Alberta. In the past, there has been a net loss of residents from B.C. to Alberta and other parts of Canada, but the tides turned towards the end of 2014.

The drop in the Canadian dollar along with low interest rates will continue to attract overseas buyers. Newcomers to B.C. usually end up in Greater Vancouver or the Fraser Valley due to the affordability of the suburbs. However, the Business Council of B.C. expects that the housing market will continue to flourish in Metro Vancouver.

January Real Estate Activity

The Real Estate Board of Greater Vancouver reported there has been 8.7% increase in real estate transactions in January 2015 compared to 2014, and 14.9% increase above the 10-year average for January sales volume. In the suburb of Surrey, residential sales have increased by 10.5% over last January.

The real estate industry uses the home price index (HPI) to assess the market because it excludes the most expensive properties. The HPI benchmark in Greater Vancouver for detached homes hit a record $1.01 million this January. This is an 8.4% increase over the same month last year. New HPI records were made in January in both the west and east sides of Vancouver.

The suburbs offer more affordable options. The January HPI increased 3.5% over last year in the Fraser Valley for detached homes, and 2.5% over last year in Coquitlam for condos.

The federal government has launched a new pilot program that started this month in aiming for fewer but richer immigrants.   The Canadian government will give permanent resident status to 50 experienced millionaire investors with high net-worth in their aim to continue economic growth and prosperity.  Under this pilot program, each investor will be required to have a net worth of $10 million and make a non-guaranteed investment of $2 million over 15 years.  The said funds will be invested in innovative Canadian -based-start-ups with high growth potential.  Applicants should prove proficiency in English or French, with post secondary education, demonstrate the net worth of at least $10 million was obtained from lawful profit-making business.  Minister James Moore mentioned that the pilot program is part of Canada's efforts to attract experienced business leaders to Canada while leveraging their business expertise and personal investments.

The previous immigrant investor program required applicants a minimum of $1.6 million to loan Canada $800,000 5 years interest free. This program revealed that the net gain to Canada averaged to only $20,000 per applicant as it was invested in a low-yield stock bonds.  A total of 36,973 investor immigrants flocked in BC from 2005-2012 under this program and two-thirds of these applicants were mainland Chinese who said they planned to live in British Columbia.

Homes worth over $1 million have been selling at an increased rate in a year-over-year report by Sotheby’s. Growth in Vancouver (25%) and Toronto (38%) is expected to continue into 2015, whereas growth in Calgary (16%) and Montreal (21%) is expected to be balanced. Sotheby’s is closely watching Calgary and how the severe drop in oil prices will impact its luxury homes market. Calgary may experience a slow down in purchases, as seen in the tail end of 2014, because buyers are being more cautious. Despite a recent CHMC report stating low foreign ownership numbers in Vancouver and Toronto, Sotheby’s said that half of homes worth $5 million or more are owned by foreign investors. This discrepancy is because foreign purchases are transacted through Canadian subcompanies, however Sotheby’s is unable to give hard numbers. CMHC data wouldn’t capture these corporate transactions, whereas Sotheby’s familiarity in the luxury homes market places it in a better position to gauge the level of foreign ownership. Some critic mentioned concern about the stability of this market, in case these foreign owners suddenly selloff their high-value properties, causing a crash in Canada’s real estate market. However, Sotheby’s says that historically low mortgage rates and high levels of immigration continue to make Canadian real estate attractive overseas.

Canadian housing market crash not in the cards 

Contradictory to what the central bank said that the Canadian housing market could be overvalued by as much as 10 to 30 percent, Governor Stephen Poloz said on Thursday that the Bank of Canada does not foresee any sharp rise of unemployment and mortgage rates that might trigger a major housing market correction.  Speaking in New York, Mr Poloz said that the probability of such a big drop in prices is low.  

" The risk comes when some catalyst sets off the vulnerability", he said.  " In this case it would be, let's say, a rise in unemployment, a significant rapid rise in mortgage rates, neither of which we're expecting"

He also told an Economic Club of New York business audience that he doesnt think of the Canadian housing in "Bubble" or in any "Bubbly-type" way.  He also said that a return to sustainable economic growth which Canada is estimated about two years away, would require continued financial innovation.  He pointed a need for expansion and innovation in terms of bond financing; securitization to create new high-quality, low-risk products; peer to peer lending; and public-private partnerships.

Stats Can reported on November 13, 2014, that new homes sales cost less in September of this year than a year ago in Vancouver.  There was no change in August but the New housing fell 1.2% compared with last year September 2013.  While across Canada, there was an increased of 1.6% year over year for new housing.

Calgary is the most increased in new home pricing compared to other areas in Canada, it jumped 4X more than the average in 12 months,  The cost of new apartments or condos are not included in this calculation, according to Stats Canada.

Metro Vancouver's high end housing market have surged 35% higher defying the predictions of a slowdown after Ottawa close down the immigrant investor program in February.  

572 Properties in Metro Vancouver with at least a price tag of $3M and more range  were sold in the first 8 months, this includes 135 homes in the $5 Million and more according to Macdonald Realty Group statistics, compare to 422 properties ($3M or higher range) in the first 8 months of 2013 and including 112 homes that were in the $5 Million range.

$3 MIllion is the new $1 Million now in the real estate cirlcles on the West Coast since 55% of detached homes are now in the $1 Million or greater based on their assessment by the city of Vancouver Andrew Yan.  About 37,800 properties made it to the Million-dollar club last year.

Transaction of at least $3 Million homes are headed towards a new annual high as per Dan Scarrow of Macdonald Realty, which contrary to expectations that some rich Chinese immigrants would avoid investing here due to scrapping of the federal immigrant investor program.  " There is confidence in the Vancouver real estate market.  Peole within the market itself are trading and there is also money flowing from the outside" Mr Scarrow said in the interview.