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.
VANCOUVER, B.C. – February 6, 2012 – Greater Vancouver home sellers were more active than buyers in January and overall home prices, according to the new MLS® Home Price Index (MLS® HPI), continued to experience more stability and less fluctuation compared to the beginning of 2011.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 1,577 on the Multiple Listing Service® (MLS®) in January 2012. This represents a 4.9 per cent decrease compared to the 1,658 sales recorded in December 2011, a decrease of 13.3 per cent compared to the 1,819 sales in January 2011 and an 18 per cent decline from the 1,923 home sales in January 2010.
January sales in Greater Vancouver were the second lowest January total in the region since 2002, though only 146 sales below the 10-year average.
“We’re seeing trends emerge in our market that favour buyers, such as increased selection and more stability in pricing compared to this time last year,” Rosario Setticasi, REBGV president said. “Last month’s activity tells us that competition amongst home buyers was reduced in January, which means that individuals looking to purchase a home had more time to do their homework, consult with their REALTOR®, and make a decision.”
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,756 in January. This represents a 19.9 per cent increase compared to the 4,801 new listings reported in January 2011, and a 253.3 per cent increase compared to the 1,629 new listings reported in December 2011.
Last month’s new listing count was the highest January total in Greater Vancouver since 1995.
The total number of properties currently listed for sale on the Greater Vancouver MLS® is 12,544, a 12.5 per cent increase compared to December 2011 and an increase of 20.2 per cent compared to January 2011.
The first few months of 2011 produced incredible growth in the Vancouver real estate market. Double digit growth in most of Vancouver's Westside, West Vancouver and Richmond skewed regional prices to a peak in June.
The surge in pricing is now cooling according to the Royal Bank of Canada.
Some home owners may be concerned that if interest rates climb, home values will drop. This would happen in a normal market, but we all know that Vancouver's real estate market doesn't play by the rules. Many Chinese buyers do not rely on bank financing - they are comfortable paying cash for their homes and would not be forced to sell if interest rates were to rise.
China's housing market has been rising for 19 straight months with crazy yearly gains in Beijing and Shanghai of 30%. According to the Wall Street Journal this is now starting to change and property prices in 70 Chinese cities fell for the third straight month. Chinese official have been working to make this happen by restricting multiple home purchases in China. This, in turn, is pushing Chinese investors to look to Vancouver to invest.
Some believe that the time has come for our government to impose foreign ownership rules to cool the Lower Mainland's hot housing market, but this is a topic for another article.
One nuisance that condo buyers may not think about is cigarette (or other) smoke coming from neighbouring units. While it may seem easy to dismiss if you are blessed with a tolerant nature, for most people including myself, it can be an annoyance at best and a health hazard at worst.
The only jurisdiction wide ban on smoking in common and limited common property (such as your own balcony) that I am aware of is Sonoma County, California. Starting May 10 of this year, there will be a ban on smoking in all new multi-family dwellings that will extend to existing condos as of January 2013.
The idea has been recommended for Vancouver – local endocrinologist Dr. Stuart Kreisman proposed it in the October 2011 issue of the BC Medical Journal. Dr. Kreisman noted:
“Given recent and ongoing trends toward urban densification, an increasing fraction of the population is now living in multi-unit dwellings (i.e., apartments and condominiums), and potentially exposed to the secondhand smoke of their neighbors. This occurs both indoor and outdoors.”
A few (too few) stratas are taking the matter into their own hands. The Envy and Verdant condominiums in North Vancouver and Burnaby, respectively, are known to have antismoking strata bylaws. My own strata at 16 Willows in Vancouver also enacted a complete smoking ban last summer on common property, including limited common property.
Even with a ban on common property, smoking within a unit may still be a problem as smoke inevitably travels out of windows and generally upwards into neigbouring units. I have personally experienced this in previous homes I have lived in as well as hotels. It is a very difficult situation to resolve due to the addiction and lifestyle issues that accompany it.
Can you imagine buying a new home only to find that a neighbour’s smoke funnels right into the nursery or your own bedroom at random times? Some things you can do as a home buyer to help avoid this:
• Always ask about anti-smoking bylaws for a strata; • Have your Realtor question whether there is a documented nuisance in any unit you are considering buying; • Be mindful of where smoke may come from and prevailing breezes. Be aware of windows just below yours (at least 1 to 3 stories) and retail areas such as cafes or bus stops; smokers may ‘gather’ just outside the 6m ban zone, preferring covered alcoves or doorways; • Consider ground floor units, as smoke usually travels upwards and dissipates better horizontally.