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Vancouver Real Estate Market – A new form of Goldrush! There is gold in those hills!

April 11, 2011

Filed under: Comic Relief,Real Estate Market,Vancouver — Richard Morrison @ 9:12 am
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By Peter Ladner

This article originally appeared in

Of the many real estate flyers that arrive in my mailbox every week, this one really spelled it out (in English and Chinese): “Peter Saito can help make you a lot of money!! From 1993-2011, the average sales price of a detached home in vancouver has gone from $373,000 to $1.14 million, 3.05 times. Peter Saito’s clients’ average net equity holdings have gone up in the same period 30 times, from $150,000 to $4.5 million…We work with wealthy buyers waiting to invest in your neighbourhood!”

A friend who lives in Kerrisdale, one of vancouver’s wealthier west-side enclaves, said it feels like a real estate gold rush in his neighborhood. “I’ve had four real estate agents knock on my door in the last month and plead with me to sell my house,” he said. “They claim to have buyers lined up.”

In 2000, only 10 properties in Metro vancouver sold for more than $3 million. Last year, that number jumped to 375 properties, including 49 condominiums. Today, $3 million is not an unusual price for a new 2,500-3,000-square foot nice home on a smaller west-side lot in Shaughnessy, Kerrisdale, or Point Grey. The most expensive house in vancouver last year (in Shaughnessy) went for $17.5 million.

The result of this frenzy is that vancouver’s housing has priced its average citizens well out of the market. vancouver recently ranked — after Hong Kong and Sydney — as the third most unaffordable city in the world, with the average home costing 9.5 times the $63,100 median household income. A city is considered “unaffordable” if housing prices are more than three times median incomes. Kelowna (5.9x), Abbotsford (6.5x) and Victoria (7.1x) are also being swept up in vancouver’s real estate investment slipstream.

When housing prices are so far out of line with average incomes, it’s clear that new buyers are not dependent on paying mortgages from their monthly paychecks. The best explanations for our out-of-whack market have traditionally been that real estate buyers skew the market with inherited wealth, underground economy profits (think B.C. bud), or overseas wealth. Sure, land constraints, restrictive land use regulations, and a growing population are also powerful fuels for price jumps, but those occur in lots of other cities that are still affordable.

Today, most observers attribute the recent big surge to overseas investors, especially uber-rich mainland Chinese. One real estate executive describes the market for luxury homes from mainland Chinese buyers as “insanely hot.” A real estate sales person for one of vancouver’s biggest condo sellers told me 95 percent of her sales are to Chinese buyers. Some come here to live; some just want to park their money where it’s safe and growing. For the ridiculously wealthy, vancouver is still a bargain compared to London or Hong Kong. Apartment sales in Shanghai are up to $2,300 a square foot, higher than vancouver’s priciest offerings.

Metro vancouver is already home to 400,000 people of Chinese origin, three quarters of them born outside Canada, so it’s easy for Chinese newcomers to feel at home here. Mainland Chinese immigrants are moving to Metro vancouver at the rate of 10,000 a year, four times the number coming from Hong Kong and Taiwan. A startling one out of four have PhDs.

These immigrants are in some sense political and economic refugees, securing citizenship in Canada as a backup plan for their children’s futures. Getting work here is often difficult, so a common pattern is for one spouse to stay here with the kids, and the other to work back in China. Eventually the spouses reunite in China and the children stay here. One third of young-to-middle-aged Chinese immigrants leave Canada and never come back.

Chinese people also come here as environmental refugees. One recent immigrant told the vancouver Sun, “The air is very fresh here and it’s very green. You feel like you’re in a garden.” In a recent study by a local Asian studies professor, one new immigrant mother pointed out the impact of the beauty of the Pacific Northwest: “I like the blue sky and white clouds of vancouver,” she said. “In my home city in China the sky is always grey. Once when my eight-year-old son saw a large piece of white cloud flying over his head, he was startled.”

For frustrated middle-income vancouver renters equally startled by disappearing real estate affordability, the prospects for municipal political action to somehow cap runaway prices are as grey as the skies over Beijing. The prevailing political, media, financial, and real estate muscle is still solidly behind keeping prices rising. vancouver was founded on real estate speculation and once you’re on board, it’s a giddy ride to a comfortable retirement, second homes, and kids without college tuition debts.

Property owners are the city’s most enthusiastic voting bloc, and property developers are by far the biggest contributors to municipal election campaigns. Besides, salvaging the city’s investment in the overly-luxurious Village at False Creek, otherwise known as the Olympic Athletes’ Village, Southeast False Creek or Millennium Water, depends on those inflated prices staying high for at least a year or two.

I can only think of two factors outside of rising political pressure from renters that could threaten to close the door on rampant overseas investment. One is the erosion of business opportunity when employees at all levels can’t afford to live here. A representative of the mining industry told me about a vancouver mining company — in an industry that’s redefining the word “boom” — that recently had a newly-recruited CFO turn down a job offer in vancouver because he couldn’t afford to trade his house in an eastern city for a decent family house in vancouver. A mining CFO!

The other factor is that vancouver might learn a lesson from China. In February, Beijing announced that local residents will be limited to two homes, and non-locals will only be allowed to buy one property. Shanghai, Qingdao, and Jinan are also imposing restrictions on outside buyers. Investors are worried that these restrictions will hurt property demand.


Peter Ladner is the founder of “Business in vancouver” newspaper and a former vancouver City Councillor. He is currently a Fellow at the Simon vancouver-east-fraser-homes/” >fraser University Centre for Dialogue.

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7 responses to “Vancouver Real Estate Market – A new form of Goldrush! There is gold in those hills!”

  1. David McPhee says:

    Another factor would be zoning that would proactivley encourage and allow for increased density and new multi-residential housing. As well as encouraging zoning that allows office space and living space to exist closer together. Home offices need to become much more common than they are now. Avoiding the unfortunate circumstance mentioned in the article although my gut tells me there was more at play than just real estate pricing.

  2. Wendy says:

    A couple things to keep in mind, however.

    One is that the city of Vancouver is part of a larger metro area with a lot of different housing options. There are condo homes available within a 30 minute drive of downtown Vancouver for $200,000 or less.

    Second, as David mentions, convincing local Vancouver residents to increase the density in their neighbourhoods is tough. New high rises can receive tremendous opposition, but so can proposals for 2-3 storey townhouse projects that keep with the character of the neighbourhood (replacing a few large, decrepit single family homes with many more smaller units).

    Before blaming immigrants for high housing prices in Vancouver, we all need to look at what we haven’t been doing to increase housing supply.

  3. Wendy says:

    Oh, third issue. This will further reduce the rental supply. Much of the rental in Vancouver is in the form of small-time investor-owned condos, or privately held houses (converted triplexes in east van, for example).

    If you don’t allow people to own more than one or two properties, they’ll be forced to sell houses to owner-occupiers. Even if you “grandfather” existing ownership, there won’t be a new generation of small, private investor-land lords and the rental stock will erode further as this generation sells.

  4. Wendy says:

    Sorry, last point I was thinking of Ladner’s suggestion written up on News1130 that some regulation should prevent people from owning more than 1 or 2 homes. He doesn’t say that in this piece.

  5. Hi All, I have posted an interesting tie in with this article here regarding density. Check it out:

  6. Peter Ladner says:

    Actually I didn’t say anywhere that people should be prevented from owning more than one or two homes. I did say there are restrictions like that in cities in China, which is one reason Chinese real estate speculators are coming here.

    By the way Richard, why are you reprinting articles I’ve written without permission?

  7. Hi Peter,

    As per our emails, thank you for allowing us to post your article.
    We will continue to do so and will ask your permission next time.


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