Peter Katevatis - Nov 01, 2018
In Vancouver we are passionate about the Weather, the Canucks, and Housing prices. We can stay optimistic about the sky and the hockey but there is one factor that drives housing prices more than anything else.
There are three topics that dominate most conversations in Vancouver:
- Weather – too hot, too cold, or too wet
- Canucks – will they win a Stanley Cup in my lifetime?!?
- Housing – are housing prices going up or down
Weather is something that effects everyone on the planet. I would recommend not trusting any forecast over 3 days as the variables create too much ambiguity. The Vancouver Canucks are officially in the rebuilding phase of the post-Sedin era. I look forward to watching the talented youth develop and yet I cringe in fear that the Canucks make a long term signing of Joe Thornton or some other aging NHLer.
Housing is a lightning rod for any Vancouver dinner party or water cooler conversation. The range of real estate topics go from interesting renovation ideas, municipal densities, to money laundering and sleazy realtor practices. Everyone agrees that prices have risen dramatically but many people differ on what it means for our society.
Vancouver is a beautiful city and people want to live here. Our topography and lifestyle are very highly coveted by most people worldwide since wide natural expanses can rarely be found so close to an urban setting. Work & Play are so tightly intermixed that local residents take so many features our city has to offer for granted. As Vancouver has hosted global events from Expo 86 to the 2010 Winter Olympics the world has been reminded about what our city has to offer.
The key to any housing market is migration. If people are moving to a city, prices are stable or strong. If people are leaving a city, prices are weak. This has been particularly evident in Calgary over the past 5 years during the declining oil market but also in Detroit following the auto industry pains of 2009. This also happened in Vancouver in the early 1990s with a new provincial government which caused Canadian Airlines (and others) to move their head offices out of the province. Migration is the single biggest driver of real estate prices so it should carry the most weight for any conversation.
As people have moved to Vancouver to buy homes it has driven housing prices quite high especially when compared to the national average. An average home in a nice part of the city can easily cost $3 million. For the historical homeowners it has been a tax-free windfall which has allowed the older population to fund their retirement and allow for inter-generational wealth transfer much higher than any previous financial plans. The flip side is that it has made home ownership unattainable for anyone starting out without any home equity to back them up.
We have seen new mortgage rules with strict income verification make it harder for the average Canadian to qualify for a mortgage. Also, adding a foreign buyers tax has added an extra cost for those looking to purchase real estate, especially in the luxury end of the market.
We have no idea what will happen to real estate prices in the short term, but if migration stays positive the status quo should be maintained.
Lastly, with Elias Pettersson, Bo Horvat, Brock Boeser, & more… a Stanley Cup is coming!