Stanley Cup Finals and Vancouver Housing Prices

The 7th game of the Stanley Cup Finals comes to Vancouver this Wednesday, 15th June 2011. Boston Bruins and Vancouver Canucks tied at 3-3, obviously.

The behavioural economists may be interested in some of the parallels between Canuck play-off success and the housing markets. Apparently ‘jesse’ has already pointed out elsewhere [link anyone?] that the last two occasions the Canucks made the finals came close to peaks in Vancouver housing:
– June 1994 was at the top of the late 80′s/early 90′s bubble, followed by years of price declines.
– June 1982 was in the middle of the fastest and biggest RE bust Vancouver has seen since the 1930′s.

Now, before we all scoff at this as random chance association (which is a possible explanation, of course), consider the possibility that there may be a relationship between market strength and team performance:
1. Via psychological factors: thus: high housing prices -> wealth-effect -> over-the-top-enthusiastic-fans -> better team performance -> finals.
[I’m sure we’ve all been particularly impressed by the strength of home ice advantage in this series; the psychology of the fans appears to have a massive effect on team performance.]
2. Via economic factors: thus: fans flush with RE_ATM funds/wealth effect -> spend more money on tickets and trinkets -> team richer -> material benefits and psychological boost -> finals.
[Anybody care to do an analysis of ticket prices in Vancouver vs Boston? Could these numbers possibly correlate with local housing market strength? We wouldn’t be at all surprised if they do.
Rusty, in a post here at VREAA pointed out that he could have purchased a package to see games 3 and 4 in Boston, including hotel and flight, for $995. Here in Vancouver, single tickets for game 5 were trading online for $2K-$5K ask.]

All of this talk may sound bizarre but there is a whole school of analysis that looks at these relationships, namely socionomics.
Ever heard of ‘Skirt Length Theory’ and bull markets? Not the best market timing devices, to be sure, but, similarly, not to be discarded out of hand.

And, before you disregard the possibility of this relationship completely, consider that the fans in Boston have not been moved to produce signs alluding to housing finance. These fan signs from Game 2 here in Vancouver:
‘NUX TIX OR MORTGAGE PAYMENT?’ and ‘HOPE THEY DON’T TAKE THE HOUSE’ [For close ups and discussion, see VREAA post, 5 Jun 2011]:

23 responses to “Stanley Cup Finals and Vancouver Housing Prices

  1. I had this exact same conversation along the lines of, “when the Canucks win the cup, the RE bubble will burst”. Why? Becaase the post euphoric hangover did exactly the same thing after the Olympics.
    If Carney is bearish an Vancouver RE this Wednesday, it will be a double whammy. Add
    http://www.vancouversun.com/business/Household+debt+puts+Canadians+dire+situation+warns/4943502/story.html
    and you have your triple whammy..

  2. Sry, this is off topic for this post but.. Rent in Vancouver, highest in Canada.

    http://www.timescolonist.com/Vancouver+average+rent+most+expensive+Canada+CMHC/4942948/story.html

    Now I dont get that … if everyone is buying these condos as investment vehicles and are renting them out, should rent be below average (whatever that avg should be?????)??

    • Rent has always been high in Vancouver. The question you should be asking is whether rent has been increasing, flat or declining in the past couple years. I’ve been watching rent since last summer and it *looks* like rent is declining but I can’t say for sure. I’ve been watching Coal Harbour and the Main St. & Broadway area.

    • Rent is high but historically as matt mentioned they haven’t been running away from incomes in over a generation. There is simply enough supply of housing to meet demand. The “affordability” crises you hear in the news from activist groups and the municipalities is a lament that isn’t going away any time soon.

      To be frank, nobody deserves to live in Vancouver IMO. Yes. I am impersonating “Rusty” today. Have at ‘er. 🙂

      • always entertaining!

        i suppose rusty would call the first nations ‘squatters’

      • (Sarcasm on) Yes Pollyanna the First Nations people are squatters, same as the eagle I see outside my window in the tree that will be felled to make way for a new condo complex, or the bear that will be forcibly relocated because he is getting into my garbage. The eagle and bear don’t deserve to live where they do, why should we treat anyone else differently? (Sarcasm off) 😉

        Seriously though, the point I’m making is that, take London England as an example: the middle class generally cannot afford to live close to the City because the rents AND prices are high. They instead live outside the inner circle and commute (using a decent commuter infrastructure, mind) to their jobs in London proper. Though I do not follow the news closely, I do not hear much complaints from central Londoners complaining that lower-to-middle income families can no longer afford to live within walking distance of some centrally-located high street. Instead such families can move to lower income areas like the other several millions of Londoners do.

        But in Vancouver… some people continually rail against how the City has become a playground for the rich and working class families can no longer afford to live — rent or own — anywhere near the centre. Well sorry to say, if you cannot afford the rent or the mortgage, and there are those willing and able to pay the rent or the mortgage, why does the City owe you a place to live? There are cheaper places to rent in Surrey, New West, Coquitlam, Maple Ridge, and Mission. Yes, it’s a longer commute. But that’s the way it goes sometimes; as the city expands so too do the stresses on affording a cosmopolitan lifestyle.

        And, as mentioned, rents haven’t been increasing much more than inflation, if at all. There are many places to live in the city and the rents, though somewhat high, are not exorbitant for a lower-middle class small family, though the accommodation is a basement dwelling. And I know more than a few families who choose to live in basement suites to save money. They could afford to rent a larger place elsewhere but the commute would be longer. They have made their choice.

        Just opening it up for discussion, and reiterating the point that vreaa have made: is the City truly unaffordable to LIVE (not own) by world standards? I would say no.

        Put another way, if you don’t like the rents or the prices, move.

      • You haven’t heard a Londoner complain? What parallel universe is this? The same one where commuter trains run on-time and reliably? /snicker

      • all valid points,

        my concern is with the mechanism / process by which prices have increased – seems like seriously organized bullshit to me.

        i can afford the rent, but i never thought a sfh in the lml would become so far out of reach. i suppose i am hanging on to my white picket fence ideals, but i’d rather not try to raise my family in a basement suite, thanks. i don’t feel that’s any sense of entitlement, just awareness that this is a big country and there’s no reason for anyone to suffer or live like a pauper. do we not have the highest personal income taxes in history at the moment while simultaneously having the lowest corporate taxes in history at the moment? it used to be the opposite, and coincidentally, those were the days when a working man could raise his family on one income and own a home – on freehold land, imagine a country where a political party doesn’t own the land!

        i’d like my children to at least have the same quality of life my parents afforded us – on one income, no less – now why is that impossible these days? (that’s a rhetorical question)

        just because it’s true that ‘life isn’t fair’ doesn’t mean that we should continue to accept that or not work to improve it, or at least try to make an effort to understand why that view persists, and educate each other etc. etc. sounds like a hopeless world to live in, otherwise.

      • “i’d like my children to at least have the same quality of life my parents afforded us”

        There are two issues, one to afford owning a house, another to afford living in a house. There is a significant difference between the two. I don’t disagree it’s less desirable for most to rent with a family due to the instability (though some families love it) but we need to separate the “living affordability” issue from the “home ownership affordability”, the latter of which is the primary focus of this and other local real estate bear blogs.

        I have not seen much evidence that affording to live in a Vancouver SFH is any more expensive on an income-adjusted basis than it was 10-20 years ago. Maybe I’m just out of touch.

        This is a bit of a tangent but related to CH’s point, the City has focused efforts in improving rental affordability for lower and middle income families which in my view wrongheaded. Show me data that there aren’t any affordable accommodations for such families outside of Vancouver city right now. There is one thing to provide some subsidized housing for those who need to be close to social services for whatever reason like a disability. Fine, fund that, but to extend this to lower and lower middle class families in general, as the City is ostensibly attempting to do, is like shoveling back the tide — are they attempting to lower rents in real terms relative to 20 or even 30 years ago so even lower income families can afford to live in Vancouver? Because from all the data I’ve seen, rents in Vancouver have been falling in real terms for 30 years. The City is avoiding dealing with the major problem that IMO DOES need to be solved, that there is a “ownership affordability” issue, and secondarily that family-oriented accommodations are difficult to find without buying.

      • I guess im underestimating the demand for rentals in van city.
        I thought there should be a flood of rentals on the mkt b/c of all the speculation and investment property buying. So… maybe rents are lower than they should be here b/c there are too many apts on the market for rent.
        I wonder what the normal ratio is for a generic north american city between apts owned and apts for rent and what it is in vancouver?

      • jesse,

        i am perfectly content to rent a home to raise a family in for 20 years.

        obviously, i am concerned with rusty’s argument that i’d be throwing money away on rent that i could save as equity. however, we all know that market forces will dictate if this is a good strategy or not, it’s not set in stone.

        my concerns with renting involve my own experiences, we moved 4 times before i was 7, from the Yukon to Ontario to Alberta to BC, so i’d rather not put my kids through even one or two moves.

        my father told me several years ago that if i wanted to keep my money i’d have to avoid the following things – a house, a car, a wife and a family – good advice?

        regardless of subsidized housing for low-income earners in van proper, etc. the province did tear down the social housing beside queen e park on Ontario and 33rd – there was no reason to do that, other than to build more condos.

        it seems there is no incentive or inclination in this city to build affordable rental apartments, we’ve all been herded into condo canyons. i don’t blame anyone for balking at the idea of living in aggasiz.

  3. real estate prices related to Stanley Cup runs? You guys gotta get alife

  4. Hi
    I thought the opposite would be true..as per my RE buddy anyway
    If Canucks win then it feeds the delusion of “champion city” , “its different here”, we are better than anyone else, and hence the RE prices go up (likely short term)

    • Could happen. Impossible to predict.
      If it does go up in response to a burst of exuberance, that’ll just be more ‘nothing-but-fresh-air’ supporting it, and the bigger the ultimate (when? when?) fall.

      A bit like the China effect: If China goes belly-up (in the short and intermediate term; housing bubble pop etc), then foreign money inflows to BC will likely seize up a la 2008… BUT there is a remote and perverse chance that such a China collapse would (again temporarily) boost things here (global RE mania market narrowing; last darling; etc).

  5. Chaz -> RE is Centre Stage in this town.
    It relates to EVERYTHING.
    Get with the program.

  6. granite countertop

    I was thinking, what happens if we lose? What happens if we party like it’s 1994 tomorrow? Will they hear about it in China? “Safe, peaceful Vancouver maybe not so safe, peaceful”…? More importantly, will speculators think they heard about it in China, worry that their money might be safer elsewhere?
    The police really are smarter today than in 1994, not likely to get as bad as then, but the party will get ugly in places either way the game goes. Will that affect things?

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