Interactive: Explore changes in Vancouver home sales between May, 2005 and May, 2012. Click and drag to zoom and move around, or type an address into the search bar.
This may come as a shock, but a bubble of sorts has already deflated in Vancouver.
Prices and resale activity have only just begun picking up this year from a pronounced slowdown that stretched back to 2011, when median houses sold for about $690,000.
If you’d bought a detached home in Vancouver three years ago, it’s worth about five per cent less today, according to TD Bank. Resale activity has also dropped after mortgage rules were tightened last year, down almost a third last December from where they were a year earlier (they’ve since ticked back up).
Despite this, compared to other pricey Canadian cities, Vancouver’s property values are from another planet. A far, far richer one.
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“The cost of buying a house in Vancouver, whether it be in the West or East Side, is considerable,” Royal LePage sales agent Chris Simmons says matter-of-factly.
That’s putting it mildly: The houses he can see from his office in Kerrisdale are going for more than $1.5 million. In May, 2012, the average Kerrisdale house sold for $2.3 million.
Kerrisdale’s been expensive for years. But the rest of the city’s catching up: The average single-family detached home in greater Vancouver will set you back almost $1 million.
The Greater Toronto Area is a bargain by comparison: There, the average detached is a steal at $686,100 (as of October).
A finite supply of land helps push prices higher. Local governments have policies in place enticing developers to build up, not out.
And then there’s that perennial theory, as yet unproven by data, of the wealthy foreign investor.
“The prices are largely driven by immigration and investment dollars from China and from other areas, Persia, Iran, Mexico,” Simmons says.
Simmons says as many as four in five clients he serves are Chinese or Chinese-Canadians.
“It’s new immigration and offshore investors who have fueled the market,” he said. “High net worth individuals wanting to live in a city where the quality of life is very high.”
Bank economists have also bought into the rich international buyer thesis.
“Large foreign investment inflows have been a key supporting factor,” TD said in regional housing report last month. “And the decline in home prices over the past few years appears to have rekindled some interest.”
What’s clear is that the average Vancouverite has little hope of owning a home in their hometown – not unless they’re prepared to take on a lot of debt.
At over $40,000 per person, personal debt levels in Vancouver are the highest in the country, according to a recent survey from TransUnion, a company that tracks consumer credit.
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One explanation is the so-called wealth effect of high home values, which incites home owners to spend more because they feel wealthier. Another explanation could be big monthly mortgage payments forcing homeowners to use other forms of credit for day-to-day needs.
According to U.S. urban development consultants Demographia, Vancouver home prices are now 9.6 times the average household income – by far the biggest multiple in Canada, and second globally behind only Hong Kong.
The Canadian average stands at 3.6 – still “moderately unaffordable,” according to Demographia,” but not “severely” so, which starts when a home costs more than five times your paycheque.
TD calls the yawning gap “exorbitant,” adding, “housing appears unattainable to the average household in Vancouver.”
Vancouver’s hottest neighbourhoods:
1) Shaughnessy: 160% growth; average 2012 sale price $4.5-million
2) South Granville: 147$ growth; average 2012 sale price $2.9-million
3) Cambie: 146% growth, average 2012 sale price $2 million
4) Arbutus: 140% growth, average 2012 sale price $2.5 million
5) Quilchena: 139% growth, average 2012 sale price $2.8 million
Compares May 2005 average sale price for detatched home to May 2012 average price.