Macleans: The real problem with Vancouver’s outrageous house prices

Macleans has a post up on Vancouver’s real estate:

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.

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.

This is a well worn theme for many Canadian reporters. 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.

But here’s the thing. The real threat to Vancouver isn’t that the housing market might crash. That’s happened here before. It undoubtedly will happen again. Such is the boom & bust nature of real estate in Lotusland.

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.

I don’t know… Granville Island was pretty busy yesterday, hardly a sign of a floundering business climate! Maybe the problem with “outrageous prices” is that the earnings stink.

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Noname
Noname
8 years ago

The people who are buying equity here can afford it and the American bubble was created by those living outside their means so its apples and oranges and when it comes to any economist then do and think the opposite of what they will tell you. Starbucks whats that? don’t buy that stock in 1980 for 3 cents a share as who drinks coffee outside their home anyways. Well if you did buy that crazy stock you’d be a millionaire and as long as china continues to terrorize their citizens and makes them live in squalor then our housing market in Vancouver will continue to be attractive at any price.

Noname
Noname
8 years ago

The reason real estate prices soar in Vancouver is because China is a such a terror to live in so many fear for their lives and come to live in Vancouver in a home that could never exist in china and would be 10 times the price. The irony is that these same ppl that fear for their lives in asia are the same individuals who live of the misery of others and have made fortunes in the manufacturing industry which their government allows and promotes. If it wasnt for manufacturing then none of these Asians would have a penny to their name as not one of them seems like they can even tie their own shoes let alone walk a strait line. So it really is an opportunity for many of us to sell our homes at outrageous prices… Read more »

Season McIntyre
8 years ago

The price of real estate has definitely got a little out of control. Ten years ago when i first immigrated to Vancouver you could buy a studio downtown for $180,000-$200,000 then after 5 years those prices shot up by 100k. But i guess that’s the price you have to pay for living in the worlds most desirable City.

Van guy
Van guy
8 years ago

@DEFAULT NAME: What's his status? Loser?

Van guy
Van guy
8 years ago

Does anyone know who moderates RET? I think it's Ozzie Jerkoff?

Van guy
Van guy
8 years ago

ETB over at RET is a loser. That forum is such a bull site. I've posted many times to argue ETB's comments, and it never made it to the boards. His individual sales threads are so cherry picked. He doesn't know about the Americans that bought in 2006 by outbidding each other to their death. By this time next year, he will be off the computer and will be crying "why, why"?

Meh
Meh
8 years ago

@DEFAULT NAME: Is he ok? Hope he gets well soon.

Anonymous
Anonymous
8 years ago

whoever the hell this VMD is, i feel sorry for his parents.

Anonymous
Anonymous
8 years ago

all the loser bears are jealous of ETB's status.

fixie guy
fixie guy
8 years ago

123 Makaya: liesthebye has been shown Sauder data demonstrating Vancouver rents haven't even kept pace with caps too times to recall. Ever time LTB returns with the same distortions after a suitable 'memory hole' wait. You'll do better to preface all LTB posts with 'not'.

patriotz
8 years ago

@Makaya:

Arizona doesn't have any rent controls. How did the rent/price gap close there? Ditto Nevada, Florida, etc.

Alberta doesn't have any rent controls. How is the rent/price gap closing there?

Haven't cared to put on my hip waders and go to RET for a long time but I have to say ETB rates as one of my all time favourite ignoramuses.

But it's one thing for some idiot on the net to blame moot "rent controls" for the rent/price gap, it's another to hear it in the media from "experts" as you sometimes do.

Anonymous
Anonymous
8 years ago

@Makaya:

Thanks for posting the drivel here. Next time just respond on RET if you chose.

trackback

[…] “I’m ecstatic. My boomer parents called today to say they’ve finally sold our long-time house in cow town. Assessed was approx 490k, listed last fall at 560k, no bite after 3 months so took off market; re-listed at $490k last week, sold at $480k. According to the realtor (who only charged $3.5k in fees), these days most sales in the city (even near university / good high schools) are sold below-assessed value. They’ve heeded my advice and already signed a 1 year lease in a newly renovated 1200 s.f. 3BR upper floor of duplex in a convenient area in GVA at $1275/m (after a $125/m reduction due to them being desirable tenants). It’s complete with new stainless steel appliances, granite counter top, and brand new carpet/cabinets. The owner is an elderly gentleman who just moved into a nursing home,… Read more »

Makaya
Makaya
8 years ago

@Re-diculous: I never go to RET forum, but since you guys talked about it, I just went to have a look. And I found this gem from eyesthebye: "Large # of secondary suites in most major cities in Europe. Well, as I said in a previous post, I've only been in Vancouver for 6 years and spent the rest of my life in Europe. I can only say that this is BS. The number of houses with secondary suites in Europe is actually limited there, except maybe in the UK. In continental Europe, this is very uncommon and you wouldn't find any houses valued at $1.8m with a secondary suite. Thank your lucky stars there are these secondary suites and rent controls vanpro. Without them you be homeless. Well, she should know that most of the rents don't increase up… Read more »

Anonymous
Anonymous
8 years ago

@thetamax: "Is anyone else sick of that “eyesthebye” guy on RET?"

Why would anyone bother looking at RET? If you don't like irritating unsophisticated people who like to brag about real estate then don't go there. That is what the forum is set up for. The site owner is Ozzie Jurock and that is his target market. He peddles his courses, news letters and ghost town condos to people like this. Kind of like complaining about racists posting on the KKK blog.

Anonymous
Anonymous
8 years ago

"Vancouver ranked 37th most expensive city in the world which is very bearish for real estate."

What people need to realize is Vancouver is not the only place around the world still in a bubble. NYC has not corrected very much and is still expensive. No, not nearly as expensive as Vancouver all things considered but still in bubble territory and we will no doubt see values decline there in the coming years. Remember Wall Street is the only sector in the US not hurt (yet) by the latest economic troubles as the US government has pumped money into it and the stock market. Its time will come as will Vancouvers.

Re-diculous
Re-diculous
8 years ago

@thetamax

Couldn't agree with you more! I seldom do over to RET, but when I do, its comments by eyesthebye (a she by the way) that make me want to throttle her and want the market to crash just to wipe the smugness off her face.

ReadyToPop
ReadyToPop
8 years ago

………has launched a new round of control measures against the real estate market, featuring curbing speculation, restricting mortgage loans and accelerating construction of affordable homes.

Firm Hold:Housing market control will not loosen in 2012

Not in Canada, you say? Pity!

thetamax
thetamax
8 years ago

Is anyone else sick of that "eyesthebye" guy on RET?

I mean, it's one thing to have made paper profits on a home purchase during a credit-infused boom; but quite another to constantly be such a smug-ass acting like they're the best RE investor of all time…

I sorta want the market to crash not for anyone else, but only for that dumbass to lose asset value

RippedtoShit
RippedtoShit
8 years ago

It's like someone farted on the Westside, no one wants to go out and check out all the Open Houses, it's like a curse was cast or something.

Hopefully we an uptick in listings this month on that part of town, let's put fear into the Chinese neveau riche.

vangrl
vangrl
8 years ago

"Look how pathetic these fucking realtors are, they just can't stand the thought of a local market for local people and spend their days dreaming of Chinese buyers to come and fill their pockets with commissions. They're absolutely sickening."

totally with you…

jumpin in
jumpin in
8 years ago

>>What are these dirtbags going to do when the crack cocaine of foreign money dries up?<<

Find themselves another job… selling cars may be?

I am, too, seek of the greed and the whoring.

Anonymouse
Anonymouse
8 years ago

@Guy Smiley: "Terribly written article overall. They mention that 5 australian cities were in the top 20 and cite their increased purchasing power as an underlying cause. Once again, bravo Vancouver Sun, bravo."

Hey, consider yourself lucky the article actually came with words. Most of their stories these days seem to be "Top 10" lists in photos.

Fullfrontalabotomy
Fullfrontalabotomy
8 years ago

Hulkmania hits the 'couv? http://kiddynamitesworld.com/sp-500-completing-a-

Money quote: "The Hulkamania formation can continue for longer than you can remain solvent."

Tee hee. Looks like the 2008-Present RE formation.