Housing prices in Metro Vancouver continue to be the topic du jour, with debate playing out in the media and among locals.
With prices in the city continuing to rise at unprecedented levels, many are asking who or what is responsible?
The Washington Post says Chinese money seeking a safe haven from their falling currency is fueling skyrocketing home values here, calling real estate a “massive trend” among the global elite. And Vancouver happens to be a very attractive destination for this capital.
Meanwhile, developers and real estate economists continue to disagree over the root cause behind skyrocketing housing prices. Jon Stovell, president of Reliance Properties says a lack of supply is the reason.
Stovell told Business in Vancouver, “the public is looking for a smoking gun with respect to housing affordability, like shadow flipping or offshore buyers or speculators,” Stovell said. “But it’s not that; it’s just straight out supply.”
He also pointed to our land constraints as a contributing factor. And there’s some truth to that, downtown Vancouver is essentially a peninsula hemmed in by water, with high land prices and limited redevelopment opportunities. But, massive price gains have spread all across the region, with stories of bidding wars as far out as Langley and Maple Ridge. People, especially families, are getting pushed further out and that’s heating up competition in previously sleepy markets.
Prominent UBC real estate economist Thomas Davidoff disagrees with Stovell, saying outside aka foreign capital is what’s driving Vancouver housing prices, and that the current prices don’t make any sense compared to local incomes. He says they only make sense as “bags of cash hiding out in real estate looking for a safe return.”
Amidst all this debate and discussion, prices keep rising and even more money is flooding into the Vancouver market. Just this week, it was announced a group of Chinese investors had purchased a 66% interest in the Bentall towers in downtown Vancouver – long considered the crown jewel of commercial real estate in our city. The purchase values the complex, at a prime downtown location, at over $1 billion.
I have a feeling we ain’t seen nothing yet.