Tsur Sommerville, of the UBC Centre for Urban Economics and Real Estate, shows long term bullish insistence, largely based on the ‘ongoing overwhelming demand’ argument. It emerged most recently in the following statement [Vancouver Sun, 21 Aug 2010] -
“Depending where you draw the circle, 70 per cent of the land isn’t developable. It’s mountains or water or the United States. The higher the population of a city, the higher the house prices. If we lose 70 per cent of the land, our metropolitan area of two million will have the same house prices as a seven-million metropolitan area. Because people have to commute the same distance.”
[The argument is bizarre, and fallacious. Let's extend this: If we lose 90%, a population of 700K; if we lose 99%, a population of 70K; etc... By this reasoning, the smallest community perched on the minutest piece of the most undevelopable terrain in the world should also have the land prices of a large metropolitan area. But who'd want to live there? If you do buy the argument that geographical restrictions limit the growth of a young city (in this case, Vancouver), and it thus never develops the industry, the activities, or the appeal of the larger metropolitan area, why should its land prices rise to those of the metropolitan area? -vreaa]
Our density is still half NYC. Sure, we have a 10th of the landmass: but there’s still lots of room to densify.
More importantly, there’s the rents of the area compared to the prices. Friends have recently moved: we learned we could afford a property in Queens that we couldn’t afford in Killarney, on our current Vancouver salaries – but rents would be about the same.
… ‘If you can make it there, you’ll make it anywhere’ doesn’t have a caveat for comparatively small metros with constrained land mass. *g*
Oh yeah that niggling “rent” issue. Explain why prices are so far detached from rents given Vancouver’s anaemic salary and rent growth. That’s right you can’t.
Still, I can’t help but think Dr. Sommerville is being taken somewhat out of context. Some of the acerbic comments on other local blogs are a bit uncalled for. They should try actually talking to the man before being so ill mannered. He has an office and an email address.
Tsur is just using colorful language when he says land is water. I like colorful language–it’s his arguments that are absurd.
Metro Toronto is 5.6 million population, which is about 2.5 x that of Vancouver, but Toronto’s land is 50% water, so taking it all together they should have higher property values. But they don’t.
Of course, and as mentioned above, the killer blow to the Tsur’s idea is rents.