“Toto, I have a feeling we’re not in Kansas anymore.”
That line by Dorothy in the Wizard of Oz comes to my mind as we see real estate sales and the average price of homes sold in little ol’ Chilliwack.
If you’ve been here for the last decade, you know what I mean. Last month, the average price of a home sold in the Chilliwack and District Real Estate Board (CADREB) area was $632,494. That’s an increase of 130 per cent over the last decade from $279,109 in 2012, and a jump of more than 100 per cent in just the last five years.
Lori Gilbert has a nice home on a beautiful property in a desirable neighbourhood. She is also looking to downsize but is apprehensive to sell before buying given the shortage of listings on the market.
The 474 local listings at month’s end was the second lowest inventory level ever recorded.
When a Realtor from VancouverRealEstateInvestments.com dropped off a personalized note encouraging her to take part in his investment plan to create bidding wars to drive up the price of her home, she was shocked.
“We have just sold five homes to investors and developers from the Vancouver direction,” Realtor Bill Coughlin’s letter starts. “They have outbid the local Chilliwack buyers setting many top price sales records!”
Coughlin said his team brought in 511 buyers/investors leading to 142 offers on five Chilliwack homes leading to homes selling way over asking price.
“You may ask: ‘Bill, where do if I go, if I am sold?” the letter asks rhetorically. “No problem, just rent your own home back!”
Gilbert said she is put off by the practice, which may be pushing local people out of the market and possibly out of town.
“I’m offended at the ‘if you have nowhere to go’ part of the letter,” she said. “People who live here in Chilliwack don’t stand a chance of purchasing up against a Vancouver investor. I’m appalled at this and I do understand the real estate market is fair game. But is this ethically right? It isn’t from where I sit.”
While this is not an uncommon practice, according to a Realtor I know, it certainly would not work for most people, and might be dangerous in the current economic climate, according to CADREB executive officer Steve Lerigny.
“The strategy that Mr. Coughlin lays out most likely is not a strategy for very many people,” Lerigny said. “The key piece in his flyer is the hope that you would bank the cash and wait for the market to change. Given that supply is as low as it is, and interest rates remaining at current levels, it will be quite some time before this could be a reality. If you had to move or did not get along with the landlord, or change your mind, the equity loss could be significant and you could be outpaced by the market.”
If, however, someone were downsizing to a smaller home, the strategy might work.
Coughlin brags in his flyer that he sold 10097 Killarney on Fairfield Island for $57,600 over list price, 45645 Lewis for $100,500 over list, and 8415 Cessna for a staggering $200,600 over list.
Make no mistake, people from Metro Vancouver are moving to Chilliwack, the last bastion of affordability in the Lower Mainland.
“There are many buyers coming from the west,” Lerigny explained. “If you look at Chilliwack’s growth numbers you can see we are a very attractive place to live. In the COVID economy, work paradigms have shifted to allow more of the work force to work from home. This allows people to move into areas that are more suiting to their lifestyle rather than needing to be closer to work.”
Lerigny added that they have not seen anyone else using Coughlin’s strategy in the CADREB area, including the rent-back plans.
Look closer, and it’s clear the scheme points less to buyers from the west (Vancouver) and more to investors from the east (China).
(*Editor’s note: Lerigny pointed out that he made no connection between recent CADREB home sales and Chinese investors.)
The website Coughlin is quite obviously aimed at Chinese investors.
“Vancouver is a truly 21st century city,” the site says. “It’s a place where east meets west, where tourism meets commerce. The closest Western World Destination from Hong Kong. Vancouver’s new multicultural component is mostly from Asia.”
(Coughlin did not respond to an emailed request to comment on his real estate strategy.)
Yes, all this is true, and it’s illustrative of how Chilliwack, too, is changing from a quaint rural community, a sort of city in the country like Abbotsford.
The forward and upward momentum of growth and construction and rising home prices is all but inevitable now.
“Our little Chilliwack is growing and faces the issues that any growing community would,” Lerigny said.
We really aren’t in Kansas anymore.
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