Maclean’s – “Call it the Vancouver Virus. The culprit is real estate. Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed.”


‘This little 3 bedroom, 1 bathroom bungalow in Vancouver is priced at $1.5 million. The listing suggests buyers just tear it down and build a new home.’

Excerpts from ‘The real problem with Vancouver’s outrageous house prices’, by Jason Kirby, macleans.ca 1 June 2011

The international media have finally clued in to the wackiness on Canada’s west coast, otherwise known as the Vancouver real estate market. Last month Bloomberg noted that when compared to median household incomes Vancouver homes are more expensive than even New York. The story linked soaring prices to the influx of wealthy buyers from mainland China. Today the Wall Street Journal retraces the exact same material. The warning in both pieces is clear: Vancouver’s housing market has become disconnected from reality and is primed to crash.” …
“Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong. I still think prices here in Vancouver are nuts, but each day as I walk to work past the high-end coffee shops and panhandlers I see more “For Sale” signs going up, along with plenty of “Sold” stickers, too.”

“The real threat to Vancouver isn’t that the housing market might crash. … Far more insidious is the impact housing unaffordability is having on employers and the broader economy. You hear stories of smart, young people leaving for jobs elsewhere. At the same time smart, young people from elsewhere aren’t coming here for jobs. The price of real estate and cost of living are too high, while pay is simply too low relative to other parts of the country.”

“Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed. As Vancouver develops a reputation as a place where only the uber-rich can afford to buy property, it could seriously undermine the economy. Fewer workers living here and earning good pay means a weaker income tax base for the province (though the city is benefiting from property taxes) not to mention less people with the means to shop, eat out and support local businesses and the arts. In addition, if you don’t have a vibrant and enterprising population, chances are new companies won’t get started. Coupled with the scarcity and high-costs of commercial real estate, more companies are likely to move their head offices away. Earlier this month mining giant BHP Billiton shifted its Canadian head offices from Vancouver, a self-proclaimed global mining capital, to Saskatchewan. Who knows how many businesses decided not to come in the first place.

If the economy is left weakened by departing head offices and a scarcity of talented workers, it will leave Vancouver even more vulnerable to that housing crash when it eventually comes. In economics Dutch Disease refers to countries that are overly dependent on their natural resources at the expense of other industries. Only here the culprit is real estate. Call it the Vancouver Virus.


Bingo! -ed.

32 responses to “Maclean’s – “Call it the Vancouver Virus. The culprit is real estate. Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed.”

  1. The Vancouver Virus is like the economic version of Dutch Disease… Resource dollars crowd out manufacturing… Except in Vancouver, Asian money crowds out economic viability, to the exclusion of real estate transactions. As many have observed, an economy cannot consist of people selling other people things and services. That’s the pure definition of a Ponzi scheme and I fear we will see similar results.

  2. “if you don’t have a vibrant and enterprising population, chances are new companies won’t get started.”
    ———————————————–
    “Vibrant” and “enterprising” in this city means “criminal” and “tax-evader”

  3. Lots of media exposure these last few days. If BC legislature didn’t just go on holiday, I wonder if there would be some harsh questions? Or a quick media war … once hockey is done.

    Or are they all too worried about losing the RE owner votes (and their own property equity)?

  4. Completely agree. I’ve been working in various companies in the software industry and I’m seeing that there is a difference in what I’d get paid here versus elsewhere. The disconnect between income and housing prices is insane, and this is speaking as someone born in the interior whose seen the prices go to crazy levels there (Clearwater BC, house going at $200k circa ’00 to lower mainland). I feel like someone whose in there eighties saying “in my day….” and I’m only in my mid thirties. I remember when the coal harbour condos were just going up and seeing the sell prices at $150 – 200K and the prices they go for now is insane.

    I’m resolve to pretty well never buy a home, probably stay as a renter or take whatever inheritance I get from my parents (god I don’t want to be that ghoul) or move elsewhere and not buy there as well, prices across this country just seem delusional and out of touch with common sense.

  5. “Bingo!” – VREAA

    ‘opus citatum est’…

    ‘Nem’ is currently&unexpectedly ‘embedded in the ‘Heart of Darkness’…. If the ‘LightGetsRight’… ;)

  6. Ralph Kramden

    Doesn’t this sound just like what my Company went through?

    I couldn’t get anyone to work here, that we could afford, that meant moving to Eastern Canada, and we were swamped with great applicants.

    Increasingly I talk to people who are wistful about what Vancouver was – it is now a grotty money grubbing pit, full of house flippers and con men, BMW driving paupers and money launderers and half the Triads in China playing break leg at the Casinos.

    Meanwhile we have a Mayor who is more interested in Bike lanes, than the future of this once quite lovely city.

    Two weeks and a day – and I leave, my Family has already gone.

    I was born on the West Coast and will always keep a small part of my heart for BC – but I will never come back.

    I have grown to detest this place with a passion.

    Good luck to all you folks from China, or wherever, trying to sell your dump to another sucker.

    Nobody else will be living in the Bed Bug Capitol of the World.

    • Ok Ralph, what’s your solution to all this? I’m sure most people would love to set up a succesful business in a city that’s ranked highly by the EIU but let’s face it, I can’t think of a single EIU top 10 city where you can set up a call center and make money.

      And if you really want, please explain to me how this spiral of unaffordability is unique to Vancouver. How could this not happen in say, Zurich? Or Melbourne? Or Vienna?

  7. if you want your first home to be a detached property then yes, you’ll have to move to make that happen. Thankfully, there are a lot of skilled and talented young people who know how to navigate high Vancouver house prices. It’s the property ladder stupid. Trying to step from the ground to the top rung will land you in, god help you, Toronto

    • Rusty;
      Ralph has a keen read on the situation. Within at most 2–3 years it will become plainly apparent to all levels of government and business that there has been a shockingly large number of young professionals and cutting-edge companies that have left this city. This new twist will make the front page of Mclean’s.

    • The concept of the “property ladder” exists primarily to enrich the real estate agencies/agents, moving companies and the provincial government (through property transfer fees).

      • there’s medication you can take that’ll help your paranoia

      • There are also medications for intractable irritability…

      • …alternatively, one can simply remove the source of irritation.

        For instance, say there is a weekly group at your local community centre where folks get together to discuss, say, painting in the 1920s. Even though you like paintings in general, you have no interest in that era. Why show up every week?.. one can simply avoid those meetings and spending time doing that which one enjoys.
        Voila, end of irritation!

        Alternatively, if one wanted to genuinely and sincerely interest oneself in the painting’s of the 1920’s, I’m sure that the group would welcome your thoughts, even though your opinions would at times differ.

      • The older you get, the more you see “marketing concepts” disguised as advice or aphorisms. “Property Ladder” is one of the best examples of such a marketing concept. Other notables:
        “Pay yourself first”
        “They’re not making any more land”
        “Diamonds are forever”
        “You’re richer than you think”
        “REALTORS Care®”

        [“Buy and Hold” -ed.]

      • why not take out an RBC HELOC to help you reach your dreams??

  8. Ralph, I hear you and we are doing the same. I have a special place in my heart for Vancouver and all that it USED to be, but sadly we realize that there is little future here for our daughter. What’s is there here for her? Finish university and then have to leave anyway to get a decent entry level postion to build a career like we did? And then what, come back and be told, sorry you don’t have recent experience in Canada? That’s what happened to us even though my husband has banking experience from Toronto, London and Hong Kong. And as a gemologist myself, I was told “sorry, no Canadian experience”. Really, last time I checked a diamond was a diamond! So three years later, we are packing it in and going back overseas. And by the way, I can afford to pay cash for a house here but refuse to invest in a market that is clearly bouyed by speculation and no industry to support talent and good salaries. Rusty: Take a reality pill.

    • I keep in touch with many friends that have left Vancouver over the years I’ve been here. Every single one of them regrets leaving.
      If you can afford to pay cash for a house here then that’s what you do. Clearly you cannot and are forced to leave.
      And as for your daughter…you should have investment property for her that will be free and clear title when she’s old enough to move into it. You obviously lack foresight

      • rusty -> Serious request: Please let us hear a bit more about people who have left Vancouver over the years and regret leaving. Sketch out a story or two.. (you could disguise points that make them too identifiable, but keep main salient points). We don’t get too many of those kinds of stories, and we’d like to headline them if you relay a few.
        Why did they leave in the first place?
        Where to?
        Why do they regret leaving?

  9. vreaa,
    Yes, if my comments irritate you delete them, or ignore them i.e. don’t show up every week to view my 1920’s art

    • rusty -> You’ll note that we have never deleted one of your comments.
      What I meant with the analogy was that you are showing up here frequently even though you seem to find the place irritating. You don’t have to agree with the bear case. If you genuinely engage in discussion, folks will respond in kind. If you just snipe at people (eg skeptic re ‘property ladder’ being called ‘paranoid’), people will respond in kind.
      [See above for request for you to tell us some stories of friends who’ve left and regret it.]

    • Way to completely miss the point.

      You gotta be doing this intentionally, right? Right?

  10. I find this site amusing, not irritating. Stop making assumptions

  11. one anecode for your vreaa. A buddy of mine and his wife moved here in 1994. He’s in sales and wife is a nurse. When they decided to start a family they moved back to Alberta to be close to family. One of the key reasons my friend gave was that housing was too expensive here – this was in 1998!!! Now he regrets leaving here and states that he can’t wait for his kids to reach adulthood so he can move back (divorced now and can’t move here due to custody). The funny part about this is, if they’d bought a home here in 1998 they’d be set for life. I’m sure that 10 years from now we’ll hear stories about folks who left Vancouver in 2011 and pine desperately for this city. Ralph, DM? [attempt to identify DM personally edited out. -ed.]

  12. Moved back to AB in 2003 because of the high cost of housing in Van. Would have required a mortgage approaching half million to buy on the west side. Despite being unbelievably bank approved for that amount, decided to borrow half this amount to buy two houses in Calgary within 30 min walking distance of downtown. Rent for one house and bsmt suite resulted in cash flow after mortgage, taxes, insurance of 400$ per month. Paid mortgages off easily in 5 years with well paying employment opportunities. Assming RE prices stayed flat since 2003, I’d still be carrying about 300K mortgage if I’d stayed in Vancouver: instead I have no debt and clear $2000 per month from renting to excellent tenants who have almost all managed to save enough over several years to buy their own homes. Given the actual increase in RE prices that have occured, I’d probably have built more paper wealth had I’d stayed in Vancouver but I would be forced to sell my home in the current market to generate the same cash wealth generated by leaving back in 2003. Now with the home price discrepancy for comparable homes between the two cities at well over a million, it’s an even more obviouis choice to leave Vancouver if you have to work for a living. In fact, the only couples originally from AB that I know that haven’t left Vancouver yet are either independently wealthy or live about 1 to 2 hours commute from Vancouver (which isn’t really living in Vancouver is it?) I don’t know of a single person who pines to return to the city – even among those that moved further east to Ontario and Nova Scotia. In fact, leaving Vancouver allowed me and many of my friends to just get on with life and enjoy – something that’s increasingly difficult to do in Vancouver for most these days.

    • if you bought on the west side in 2003 you’d be a millionaire today, and you wouldn’t have to live with amongst all the Alberta meatheads (unless you are one too).

  13. Interesting article. Though I am extremely bearish on Vancouver Real Estate, I like to keep facts straight. The price of Vancouver has absolutely nothing to do with BHP’s decision to move to Saskatchewan, but everything to do with the fact that their largest upcoming mine in Canada just happens to be in Saskatchewan and their only other mine is in NWT. BHP has no reason to be in Vancouver anymore.

  14. Pingback: “I’m in my mid-30s but I feel like someone who is in their 80s saying “in my day…”. The disconnect between income and housing prices is insane.” | Vancouver Real Estate Anecdote Archive

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