The article ‘There are two million reasons for high prices in Vancouver’, Vancouver Sun, 21 Aug 2010, largely rehashes the very well known ‘overwhelming demand’ argument for ever increasing RE prices in our city. But kudos to the author, Don Cayo, nonetheless, for taking the trouble to look for some words of dissent. The article ends with a mix of anecdote and opinion from Andy Yan, a planner and researcher with Bing Thom Architects -
“Vancouver is going through a very destructive real estate market. High housing costs have a great way of killing innovation and creativity. Can the next Facebook or the next Apple computer really come from Vancouver if you’re too busy trying to pay the rent?” … A lot of young Vancouverites, especially those who have an artistic bent and who thrive on the energy of a vibrant city core, are packing up to leave for Montreal or Toronto simply because it’s cheaper to live there and pursue creative goals. … “That’s serious. You’ve got to think about what’s down the road. They’re not going to be here to support us, to pay for our social infrastructure and all of that.”
[We have long agreed. Speculative bubbles have many destructive social consequences. -vreaa]
Absolute BS, I would love to see stats backing this up as I’d love to see stats backing up 95% of the BS on this blog.
GaryF (aka ‘Chad‘, aka ‘MH‘, aka ‘jiming‘) ->
Firstly: It’d be hard to come up with ‘stats’ for the number of people leaving or avoiding Vancouver because of overpriced RE. We’d really like to know the actual numbers, but how would we gather that information? That’s one of the reasons for considering anecdotes. Yes, they are of limited statistical value, as we have discussed elsewhere. But, these stories may indicate what people are doing. They definitely indicate what some people are doing. We archive them here knowing that most readers are fully cognisant of the limitations. If only a minority of the dozens of anecdotes in the ‘Avoiding Vancouver‘ category are true, it’d still be of relevance to our society’s health.
Secondly: With regard to the content of this anecdote/opinion: Don’t you think that at least some people are leaving or avoiding Vancouver because they can own RE elsewhere at a fraction of the price? Don’t you not know of any such examples yourself? I do.
Thirdly: What’s with all the handles?
I have no stats, but I recently lost a great young employee from my office here for the sole reason that he was offered a job in the US where he has since purchased a house for around one-fifth of the cost here (which includes not a rental suite but and entire separate rental HOUSE on the grounds). I didn’t believe that people would leave town for this reason myself either until I saw it first hand. Thinking about it, I can completely see his reasons.
Economically speaking, Vancouver is “Minneapolis by the sea” with Manhattan house prices. Something’s gotta give.
The fact that some people are even arguing about this in 2010 is pathetic and, frankly, sad.
Great blog by the way.
Nick->
Agree that the denial is sad.
And thanks for the kind words regarding VREAA.
I can attest to the phenomenon of the mass exodus of young talent leaving Vancouver. I’m a late-twenties engineer (as is my spouse) and most of our friends in our personal and professional networks have a timeline for leaving Vancouver.
In the last two years, we’ve already lost several close friends to Ontario, Alberta, the US and even China. They left for better opportunities or to raise families in smaller communities. These people represent a huge amount of human capital that Vancouver has lost.
Most recently, a friend of ours who is a surgeon, just accepted a position in Regina instead of Vancouver citing the cost of living as the reason (specifically housing.. he said “I’m not buying a dump for 750K”). This speaks volumes about what Vancouver’s social landscape may look like in 5-10 years. (BTW- my timeline for leaving Van is 5 years.. regardless of the state of housing at this time.. it’s a city with an expiry date for most.)
I have been in Vancouver for the last 3 years came here to do a project, found a girlfriend, got married and have young son. My is German and she loves the outdoors here as do I. I am 33 years old. There is no way we will stay in Vancouver if the real estate market does not correct itself.
I have been a consultant for past several years in the software industry and do about 120K to 220K in business per year depending on the economic environment. 98% of my work is EAST or in the USA.
I find it depressing that in Vancouver I can’t afford to buy a house I don’t think raising a son in a 800 sqf condo in a good idea. I recently calculated that if we moved out of Vancouver we could save about $6000 to $8000 per year on rent, and that can translate into a few nice vacations per year. I was going mad getting really upset about the prospect of never owning a home to raise my son in Vancouver and started talking to real estate agent and mortgage broker to see what it would take.
I am happy I discovered this blog talking about the social impact of the housing bubble. Because of this blog I finally put in the time doing some serious research building spreadsheet model for mortgage doing what if scenarios with interest rates, accounting for full cost of ownership, property taxes, maintenance, land transfer taxes … etc and have seen that owning would be financial foolishness.
For all those people who think it is different in Vancouver, I only recommend you read a book called “This time is different” by Reinhart and Rogoff this book covers 800 years worth of financial folly and bubbles, it is never different different in the long run.
When I was renting in Kits close to Waterloo and 2nd the old man across the street complained me that all his kids were in Eastern Canada because they could not afford to buy real estate in Vancouver. He bought his house in the 1950s and has been living there since, and he can’t believe that it’s worth more than a million dollars.
Sounds like a great book, thanks for the recommendation! I think we will soon see that here in Vancouver, this time is NOT different. Then we can all stop being so depressed about not being able to afford real estate in Vancouver. It’s true, there are A LOT of REALLY ugly houses that routinely sell for $700k-1 million. Soon we’ll see them for what they are. Ugly pieces of crap.
We are Vancouverites who left for 8 years and lived in Hong Kong and returned 2 years ago. Housing was expensive there too, but we were still able to buy a 1300 sq. foot flat with sea views and 25 minutes from the central business district. Even with the downpayment that we have, which is pretty significant, I can’t do the same here. If I was to buy the house I rent in West Vancouver, I would need everything we have and then take a mortgage for the remaining 40%. My mortgage payment would still be double what I pay for rent. Considering our income is in the top income bracket in Canada, that is a clear statement that housing prices in Vancouver are completely out of whack with what people earn and cannot be sustained.
I’m a professional making 150k a year. Live like a caged rat in a condo. RE has killed my love for the west coast. As well as the greed. People are pompous calling down other parts of Canada. I’m really tired of this BS$&t marketing about the best place on earth. I’m outta here for good in the next 3 months. I’ll live like a king in a smaller Canadian or US city. The average Canadian is royally f$&@ed trying to live here. Goodbye finally!
I moved in Vancouver from Europe 4 years ago to attend university. I initially intended to move back there after my Master, but I found a decent job here right after graduation. I make $95k, not great but still above the average. I live in downtown and pay $1,450 for a nice 660 sqft condo (a bit expensive, but I can swallow it).
I recently got married and we have a baby on the way. We considered buying a place (we have enough savings for a 10% down payment), but after doing a bit of research, we just realized that we’ll never be able to afford a house in Vancouver without compromising our quality of life.
For anybody that has lived outside Vancouver before, real estate prices in Vancouver are just insane. You get absolutely no value for your money and I still have a hard time to understand people who commit on a $500K mortgage for a shoe-box in Downtown or $800K for a shack in Vancouver west. This is even more surprising for me as the local economy is far from being dynamic (where are the Microsoft or Boeing in Vancouver?) and the average income is pretty low.
With the baby on the way, we then considered moving to a 2BR apartment in the same neighborhood… The cost differential for us would be $500 to $600 per month… (btw, I was paying less for a 2BR when I was in Paris!). We could afford it, but do we really want to pay $2000 per month for decent condo, even if it would cost twice that amount per month if we were to buy it? No…
Vancouver is a great place to live in. It’s great for outdoors, but it’s a cultural desert (the Zombie walk does is not considered, in my opinion, as a cultural event…). There are so many other cities that have as much or even more to offer than Vancouver, especially in Europe.
So, after many discussions with my wife, we have finally decided to leave Vancouver. We have already started to look for jobs and once the right opportunity appears, we’ll be gone for good.
Real Estate prices, along with general prices of goods and services here (why everything has to be more expensive here?), are the things that turns us off, and that’s the reason why we are leaving . Vancouver is just too expensive for what it is.
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My wife and I, both early-career finance professionals, got sick of watching prices climb based on emotion, hype, and speculation and being pressured by peers to “buy before you miss the market — you don’t want to RENT forever, do you?” When we were finally in the financial position to buy a home, we were looking at leveraging ourselves beyond common sense — something all but one of our friends has gleefully done in the last 3 years. Too many people relied on what mortgage brokers and realtors told them they could afford, not what common sense should have told them. The one other holdout in my peer group is an investment banker who could easily buy a home but quietly told me that he thought it was financially irresponsible.
We packed up and left Vancouver 8 months ago. Hopefully not forever, but we make no promises. We “officially” decided to move to the far north for career reasons, but really we were sick of Vancouver, the constant RE talk, the endless bland dinner parties or outings for drinks, the self-importance… we wanted out fast and went where we could quickly.
The best part is that our friends and colleagues here talk about how expensive the cost of living is in the north and don’t believe me when I say we noticed barely any difference in the price of most goods. Availability of products in the north can suck, but prices of what you can get are on par with Vancouver. Most of our friends are from other parts of Canada, and they say prices in the north are very high. I tell them they are in for a shock if they ever visit Vancouver.
Bubbles are destructive to society. The chance at easy money diverts attention away from innovation and real economic development. Everyone becomes a speculator or broker. Discourse becomes focused on the asset and the wealth that can be made from it. So many anecdotes abound as to how “Vancouverites’ favourite topic is real estate.” I remember when the topic du jour was always the weather.
I moved here 3 years ago from Toronto with the wife. We really like Vancouver but it’s too damn expensive for us. If salaries kept pace with the cost of living it wouldn’t be such a burden, but I can make a lot more back in Toronto (I work in media) and enjoy a lower cost of living. I’m not looking forward to the bitter cold or the humidity, but at least I won’t have to live in a rotting basement suite for $1200/month.
If other places in Canada enjoyed the same temperate climate as the GVRD, Vancouver wouldn’t be such a hot commodity.
I’ve enjoyed your blog so far. Kept it up.
Just one add to this thread. I have a startup in Gastown with three excellent gigs. Not one response from Vancouver workers. I did manage to literally trip over a guy who was all pumped to hear about the starting wages and benefits and when I said Gastown his face fell. He said he didn’t want to have to commute from Mission, because that is where he could afford a home. Vancouver is a jerkwater, folks. We are on the edge of the world. This place is going to crash and burn and take a lot of infrastructure with it. We are in tax trouble too. Just wait till they ask you to pay for those crappy Olympic Condos. I have been through them and they look like they are finished by a high school shop class. The remedial one.
Yesterday CBC radio re-ran a doc on the women working construction on the Olympic Village. It featured a 20 yr old lass working as a glazier on the project who complained of all of the injuries she’d sustained trying to get those damn windows into place.