The Vancouver Sun has an interesting series of articles starting up on the myths of real estate which so far falls a little short of the promised “2 million reasons for the high price of Vancouver real estate” but has some interesting stats courtesy of the groundbreaking research out of the UBC Centre for Urban Economics and Real Estate.
“Depending where you draw the circle,” Somerville says, “70 per cent of the land isn’t developable. It’s mountains or water or the United States.”
Now I caution you all that this is preliminary data fleshed out with our best guess-work, but it’s ground breaking stuff to be sure. This new paradigm may be the difference we need to make the ‘running out of land’ meme have the holding strength that is hasn’t had in so many global real estate bubble markets before.
We suspect that this data may also come as a surprise to many of you who live on the north shore mountains, or who were under the impression that the “United States” was an entirely different country rather than a chunk of land to be considered in the development of the city of Vancouver. Some newcomers may also be surprised to see water mentioned as “undevelopable land” but most people who’ve been to Granville Island or Coal Harbor know it’s important to differentiate between water that is developable and water that is undevelopable.
In the end those are all just details. The important thing is the math:
“The higher the population of a city, the higher the house prices,” he says. “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.”
This simple equation makes determining the true value of a Vancouver house simple. Because of Mountain/Water/USA land, our prices should be much higher than a metropolitan area with a population of only 2 million and equal that of a population of 7 million. Chicago has close to 8 million people and a median listing price of $229,900.