With Vancouver’s real estate squeeze driving condo prices to new highs, one Vancouver realtor says speculation is heating up.
Steve Saretsky with Sutton West Coast Realty teamed up with UBC economist Tom Davidoff to crunch the numbers and found nearly five per cent of condos sold in 2017 had been flipped after less than a year of ownership.
That’s up from 3.3 per cent the year before.
Nearly 11 per cent had been flipped within two years of purchase.
Saretsky, who posted the findings on his blog Vancity Condo Guide, said it’s a product of detached home prices cooling at the end of 2016, while the condo market is catching fire.
Flipping in the detached house market has dropped by nearly half to 4.46 per cent from 8.1 per cent according to Saretsky’s data.
“Just to give you an example, in Vancouver condo prices in 2017 have been rising at 2.2 per cent a month. Anytime you have kind of price movement, it sort of just encourages people to jump in and speculate on the market, and I think that’s part of the reason for the uptick.”
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Business in the condo market has been brisk this year, with the most recent report from the Real Estate Board of Greater Vancouver finding nearly 95 per cent of condos listed in May sold.
With condo flipping activity increasing, Saretsky said it is only serving to drive prices higher and attracting more potential flippers.
“Any time you have speculation in the market, it’s prone to driving prices up because people will just think prices can only go one way and so it just encourages more and more people. It’s sort of a positive feedback loop.”
Saretsky said he expects the trend to continue upward, but added on balance, Vancouver’s situation isn’t so bad.
Toronto’s market has about a seven per cent speculation rate, while the national average is about six per cent, he said.
And flipping hasn’t come close to highs in Vancouver’s own recent history.
“It’s still below 2000 levels which to me is quite shocking,” he said, considering the current heated state of the market.
According to his data, condo flipping rates in Vancouver hit highs of nearly 10 per cent in 2005 and 2007.
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