Comments on: What makes Vancouver Real estate so expensive?

By: BC Lower Mainland Real Estate liquidity drying up - Divestor

BC Lower Mainland Real Estate liquidity drying up - Divestor — Thu, 05 Aug 2010 16:41:09 +0000

[...] real estate is by far and away an expensive option. I’ve already explained some other intangible components to the valuation, but one major pillar of real estate has been its “safety” perception [...]

By: Vancouver Real Estate – Cultural Factors - Divestor

Vancouver Real Estate – Cultural Factors - Divestor — Sun, 14 Mar 2010 22:26:10 +0000

[...] referred to the “Cultural Factor” as being a relevant determinant in terms of the expensive Vancouver real estate [...]

By: Declan

Declan — Wed, 09 Dec 2009 02:17:35 +0000

I agree with the general point that there’s lots to consider, and the fact that we can only build in one direction might make a difference, but maybe one direction is enough (combined with building upwards and infill)? You’d have to check starts vs. other locations to see if its really making a big difference or if there is a shortage of new housing in Vancouver.

By: Sacha Peter

Sacha Peter — Tue, 08 Dec 2009 07:55:08 +0000

Declan; when looking at Calgary or Edmonton (or pretty much any other prairie town), their ability to sprawl in all four directions allows great amount of supply in the market. Our spawl can only go east. The difference between White Rock and Blaine property is incredible.

It would be an interesting exercise if one could accurately model what would happen if the ALR vanished. My guess is that you would have about X years of flat pricing and then it would continue upwards if population continues to rise and occupy the new supply. The new supply could even be snapped up by speculators, just like how ALR land currently is somewhat inflated due to pricing in some expectation that ALR land will get rezoned eventually.

I guess the point of this post was that conventional thinking (cash flow modelling) is very inadequate to describe current valuations of real estate in the Vancouver area.

By: Declan

Declan — Tue, 08 Dec 2009 02:11:50 +0000

So what you’re saying is, it’s a bubble (people buying on momentum rather than fundamentals)? If so, I agree.

Simply pointing out the geographic constraints isn’t really enough to make that case. You need to show that this has actually reduced the supply of new housing – I’m not sure it has (unlike in England or Australia, say).

Also, there is immigration to Vancouver, but is it really higher than immigration to say Calgary or Toronto (or many of the U.S. cities like Miami and San Diego that crashed hard). Net immigration in the last decade to Vancouver has been low compared to the previous decade – a period when prices were pretty flat.

I do agree that prices will generally be higher in Vancouver than elsewhere in Canada, but I think that’s mostly just because it’s nicer here. Oceans, mountains, better weather, it adds up.

Finally, I’m not sure lower ownership rates in Europe are entirely due to higher prices there. When I was in Germany a few years ago, prices were definitely lower than they were in B.C. (and these were nice areas, Munich, the Alps, etc.)

By: The best places? « Anthny

The best places? « Anthny — Mon, 07 Dec 2009 07:32:36 +0000

[...] post on Vancouver real estate here got me thinking about places to [...]

By: Anthony

Anthony — Mon, 07 Dec 2009 03:11:11 +0000

“Due to the subsequent demand from more people via migration, the net result is an increased price for housing.”

Right, which means native-born are being displaced or if they don’t move reducing the # of children they have (for economic reasons – can’t afford a bigger home) due to immigration.