Something sinister is going on in B.C.
A practice known as “shadow flipping” is helping to drive up real estate prices all over the province, and it may be partially responsible for why Vancouver homes have become so unaffordable.
You may already be familiar with the practice of “flipping” a house – where an investor purchases a property, renovates it and then sells it for a profit. Shadow flipping works differently in that no renovations are done, the property is simply purchased and then resold for a higher price. And we aren’t talking a few extra dollars here, sometimes the price increases stretch past one million.
On an individual basis, it wouldn’t seem like a huge deal. But now there is growing concern in the province that some companies and real estate agents, possibly aided by foreign investors, are now shadow flipping on a larger scale, driving up housing prices in entire cities and neighbourhoods. CTV News already investigated Dunbar (apparently one of the hottest neighbourhoods for the practice), and found that of the first dozen MLSE listings sold in 2015, half were back on the market by January of this year. Vancouver resident Jim Davis believes his house was among them.
“Well within a month [a real estate agent] signed it to someone else for $970,000,” Davis said. “He sold it for $100,000 more in just over a month”
The practice has led to the suspicion that some real estate agents could allegedly be misleading consumers on the actual price of a home in order to flip it. Although it’s worth noting that for now, shadow flipping remains perfectly legal. But that’s expected to change since the province has announced a review of the practice.
For more information on what shadow flipping is, check out the video above.