The New Yorker explains Vancouver real estate is all about rich people parking cash

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      The New Yorker has offered a few thoughts on our little West Coast city’s oft-discussed housing crunch.

      According to a May 26 article published by Manhattan’s monocled weekly, Vancouver is “at the heart of one of the biggest trends of the past two decades—the rise of a truly global market in real estate.”

      That means we’re lucky enough to lay our heads in the most expensive housing market in North America, notes author James Surowiecki.

      “By all accounts, it is a wonderful place to live,” he writes about Vancouver. “But nothing about its economy explains why—in a city where the median income is only around seventy grand—single-family houses now sell for close to a million dollars apiece and ordinary condos go for five or six hundred thousand dollars.”

      What’s happening isn’t a result of Mayor Gregor Robertson keeping HootSuite's office north of the border, and has has nothing to do with Premier Christy Clark’s promises on LNG.

      “Vancouver isn’t an obvious superstar,” Surowiecki notes. “It’s not home to a major industry—as New York and London are to finance, or San Francisco to tech—and it doesn’t have the cultural cachet of Paris or Milan. Instead, Vancouver’s appeal consists of comfort and security, making it what [Bing Thom Architects’] Andy Yan calls a 'hedge city.'”

      Basically, rich and famous people from cities not quite as stable as Vancouver are stashing cash here in condos for safe keeping.

      For middle-class locals, this isn’t such a great thing. (This is the New Yorker, so we’ll follow their lead and forget that low-income earners even exist.)

      “The globalization of real estate upends some of our basic assumptions about housing prices,” Surowiecki writes. “We expect them to reflect local fundamentals—above all, how much people earn. In a truly global market, that may not be the case. If there are enough rich people in China who want property in Vancouver, prices can float out of reach of the people who actually live and work there. So just because prices look out of whack doesn’t necessarily mean there’s a bubble. Instead, wealthy foreigners are rationally overpaying, in order to protect themselves against risk at home.”

      What does this mean for millennials entering the market? Exactly what you think it does.

      “The challenge for Vancouver and cities like it is that foreign investment isn’t an unalloyed good. It’s great for existing homeowners, who see the value of their homes rise, and for the city’s tax revenues. But it also makes owning a home impossible for much of the city’s population.”

      A couple of options are discussed for how Vancouver might try to reign in oil barons' impact on real estate. Politicians could restrict “foreign” ownership, though that might not be realistic, Surowiecki notes.

      Another idea is to charge foreign buyers a premium, and “get used to being tenants”.

      Read the article in its entirety at

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      May 20, 2014 at 7:35pm

      The rich Chinese park their money here so it won't be in China when the sh*t hits the fan. And it will!! In the meantime, we pay the price.


      May 20, 2014 at 8:34pm

      Why do we always only listen to what is under everyone's nose when it comes from somewhere else? And as usual the Yanks have got it half-wrong: housing is far more expensive than Surowiecki states. They're called "holding properties" for a reason: because this is where the Chinese princelings park their money that they don't want China (or Canada) to have. My landlord is a gangster (the father of a princeling). He paid $2.5 million of this 1930's vintage stucco bung in West Point Grey in 2012. He sat on it for a two years without heat or lights, until it slowly began to deteriorate. He now rents it to me, but insists I pay him every month in cash. There are countless empty houses in this neighbourhood, all owned by the same people. They are slowly rotting banks.


      May 20, 2014 at 9:38pm

      An excellent article on our obvious affordability problem.

      That no one at City hall wants to address. Since they've been at th forefront of ensuring we are not affordable...


      May 20, 2014 at 10:46pm

      Nice try by Mr. Surowiecki in writing for the New Yorker but...

      I detect some typical good-old fashioned American fear mongering behind the article. Yes there is questionable real estate investment in Vancouver. But for the most part, it's only because this is the Best Place on Earth.

      Sunny Day Real Estate

      May 20, 2014 at 11:13pm

      Boring! The New Yorker article is basically a re hash of what most people already know. C'mon New Yorker, please write about something we don't already know!


      May 21, 2014 at 7:24am

      Another idea is to charge foreign buyers a premium, and “get used to being tenants”.

      Or another is to move to another area that is affordable and buy. An option i have seen many friends and acquaintances take. Governments and officials are seriously deluded if they don't think this bubble will have significant impacts down the road as youth and talent moves out to more affordable regions. What you will be left with is a bunch of people who either have no community 'roots' or are simply vacant. The implications for community building and the decisions that are made will be for the benefit of a select few at the expense of the many. I expect to see Vancouver quickly lose its desirability as get rich quick opportunists take over.

      R Smith

      May 21, 2014 at 8:12am

      All desirable cities are expensive and well beyond the means of the average worker. Nothing new here. Vancouver is not that different than any other city where people want to live. Unlike many cities, what makes Vancouver expensive is permanent - mild climate, mountains, skiing, beaches, coast, proximity to the US and Asia and abundant natural resources. Plus stable and good quality education and health care systems. Ever been to Mumbai? property prices through the roof and massive poverty. The argument about average wages is irrelevant - you don't need much demand to sustain the market. Even during the recent financial crisis prices didn't drop that much and came right back. Keep in mind Canada was built on immigration and that is not going to change anytime soon - the global demand for Vancouver exceeds the supply and the city is land locked on three sides (border, coast send mountains). It would take something very extreme to change what is basically a permanent feature of this city.

      "Globalization of the real estate market" worth remembering

      May 21, 2014 at 8:33am

      Thanks for covering this. Surowiecki says things that local real estate moguls avoid (see for example Smith's current article on Rennie on this website). International capital invests in Vancouver real estate for the same reason that it invests in other speculative tools, it has been relatively safe and offers a significant profit over a relatively short period of time. Pity that some of us poor bastards actually have to live here and somehow turn our $70 000 a year into a $600 000 condo. This is Vision Vancouver's real legacy, for which it will be remembered. Any legitimate government would regulate this, by for example charging a surtax for non-residents on their property taxes, or in many other ways. China does not allow foreign speculation in its real estate market, which I agree with.

      Expo 86

      May 21, 2014 at 9:12am

      And they say americans are a bit slow. This place was sold at expo 86 to the highest bidders and now the repercussions are being felt.


      May 21, 2014 at 9:20am

      As much as we want to believe Vancouver is a special snowflake, the reality is that Hot Asian Money, while a real influence, is not the main thing going on.

      Housing prices are inflated in most Canadian cities. The graphs of the price ramps ups are eerily similar.

      Now, compare Canadian housing price trends to the USA:

      All of Canada is in a bubble. Everybody has their own special local explanation. But it's macroeconomic. The federal government openly conspires with the real estate and development industries to prop up the Canadian economy using credit. The risk of losses to the banks are taken up by the government through the CMHC.

      Local and provincial governments get into bed with characters like our local "condo king" and a small number of condo developers that control the market so they can get their share of the action.

      And this is massively risky. It's more than risky - living on house-porn and credit instead of developing a real economic base will (100% probability) crash the finances of the middle class at some point. It happened in the USA, it happened in Japan, it happened in Spain, and it will happen here.