Under-the-table transactions between developers, speculators, and a secretive faction of real estate professionals are playing a major role in the continuous upward pressure on condo prices in Vancouver, according to an investigation by The Globe and Mail.
In the six new high-rise developments investigated (with three still being built), The Globe and Mail found that at least 24 realtors were among the speculators who purchased units early. Meanwhile, 20 others were listed under the names of local real estate professionals, but stated their occupations as “businessperson” in violation of regulations compelling them to indicate their interest in a property to others involved in the sale.
An alarming 56 speculators were listed with either foreign addresses or no Canadian addresses altogether.
The investigation found that such insiders get first access to buy the cream of the crop, the most desirable units which get snapped up almost immediately and then flipped for outrageous prices – drying up Vancouver’s already scarce supply in the process.
Read more: B.C. clamps down on condo flipping and tax evasion
“It’s turned into insider trading,” according to real estate professional Shali Tark, who was not a member of the clique. Buyers with exclusive access purchase “not just one or two – some are buying lots. It’s all behind closed doors, and there is no regulation of who is getting what.”
The Globe and Mail also found that 56 flips (out of a total of 173) in three of the buildings investigated were by insiders and speculators apparently funded by foreign capital. These flippers earned an average profit of $145,759, with some getting as much as $513,200 per transaction.
Allan Ross, who has spent nearly 2 years looking for a high-rise condo under construction, said that he threw in the towel and settled for renting a home for his family in the meantime after learning that developers offer price lists exclusively for agents and select clients (almost always foreigners).
“The whole process is so unfair. It’s about greed and profits. It absolutely is manipulated before you even get a shot at it,” Ross stated. “It’s not a free market. There are different rules for different people.”