‘Vancouver Rocks’, a poster who frequents the greaterfool.ca site, has previously been featured here as a proponent of the ‘overwhelming demand’ bullish argument for Vancouver RE. Here he presents the argument that culturally determined behaviours make Vancouver RE different this time. We at VREAA don’t buy this argument (either), but we archive it here for posterity. With an appended succinct refutation by ‘junius’. -vreaa
“Vancouver has the highest percentage of young adults by government definitions (18-30) living at home in Canada. Much of this is cultural, where members in certain communities (Asian, East Indian just like Greeks and Italians in Toronto) do not leave home until they are married as renting is a huge waste of money in their eyes. When you leave at home for a couple years, it is very easy to accumulate a large DP when you have no expenses (someone making 30k living at home is much better off than someone making 60K having to rent). Factor in that 40% of the city is made up of primarily two ethnic minorities, and that people are getting married later, you have a situation where FTBS come to the table with very very large DPS that more than offset the high cost of houses. The do not need massive salaries to afford their homes…
Many FTBs also have large DPs from “unconventional” living arrangements by “traditional” living standards. In many communities, houses are bought by groups of immigrants who live 3-4 families to a house. Once that house is paid off, they facilitate migration of other relatives to purchase the next home, and repeat the process. When you have 3 extended families living together, all of which are committed to paying off the house, “average 2 person family incomes” are meaningless. These types of living arrangements also are more absorptive of economic shocks, as they do not rely on a sole breadwinner.
It is not rocket science. Posters from other parts of the country fail to realize that cultural attitudes and practices play into the market, and that you cannot simply use deterministic economic models to assume a crash will happen. The era of leaving your nuclear family home when you are 18, renting for many years trying to save a DP, and buying a house when you are married and settled career wise is dead in this city. That era still exists in other parts of the country, but not in two key metro areas – Vancouver and Toronto. That is why there is some truth to the statement all RE is local, and why blanket statements of universal crash are coming are meaningless. Many of the experts fail to see this…if you live here then you would see this and you would adjust your expectations of an impending crash accordingly. Some Vancouverites will try to refute this, but they know that this is an accurate portrayal of the RE landscape.”
“These same factors exist in many other cities including US cities from New York to Miami to San Francisco and more affordable cities in Canada such as Montreal. They are not unique to Vancouver or Toronto and in no way support a continued affordability gap in the range that currently exists.”