Thursday, February 16, 2012
Vancouver the Most Expensive City in North America
Categories:Vancouver Most Expensive City
As highlighted by Global TV's Tanya Beja on February 14, Vancouver was recently named by The Economist Intelligence Unit as the most expensive city in North America in which to live. The "good news" is that we are not as expensive as many other desirable cities such as Paris, Sydney and Zurich.
Interestingly, real estate prices are not factored into the survey directly, but rather indirectly, through rent. Investors love Vancouver's rental returns, as do home owners with mortgage helper suites, and this puts upward pressure on prices. Plus, to quote from the The Atlantic in attempting to explain the results, and perhaps why Vancouver edged out cities such as Los Angeles and New York:
"Restrictive urban policy raises the price of rent in similarly productive cities."
Some of the reasons why Vancouver is so expensive, and could remain that way, are mentioned in the TV piece, and go back to the fundamentals:
1) Vancouver is geographically restricted (mountains to the north, water to the west and border to the south), making single family lots close to the city in short supply;
2) Vancouver sees strong demandbecause it is highly liveable (stable governance, decent climate, low crime, picturesque) and has a long tradition of immigration.
I see very little in the way of relief for prices in the short term. As one interviewee noted, unless the economy tanks (in which case we all have problems) or crime skyrockets, real estate prices will continue to rise over the long run.