Foreign investors take a lot of flack in Vancouver and are generally blamed for the rise in home prices in recent years. The unease is completely understandable as the average single-detached home in the Greater Vancouver Area now costs $1.1 million dollars. Within the City of Vancouver itself, the average single-detached house ranges in price from $1.1 million in Vancouver East to $2.6 million in Vancouver West (areas defined by the Greater Vancouver Real Estate Board). Using year-to-date sales as a weight, the average single-detached home across the city of Vancouver now costs upwards of $1.86 million.
While it may be easy to blame foreign investors, the data simply don’t support the assertion that they are the main driving force behind price growth in the Vancouver market. Rather, it appears to largely be a home-grown issue – we have fewer single-detached homes now than we did in 2001.
First of all, we need to be specific when we talk about housing prices in Vancouver. The headline number of $1.1 million for an average single-detached home is catchy, but it glosses over too much:
A careful examination of available data shows important trends in new housing development within Vancouver, stemming from the lack of available land for single-family development. The graph below is a solid visualization of the effect of being land-locked:
At this point, it is basic economics. With increasing population and falling supply, price increases are unavoidable.
If you buy the above argument, then you are stuck with the logical conclusion that the issue will only become more acute. As we have argued in the past, dealing with the realities of affordable housing in Vancouver requires a fundamental change in how we view and discuss the problem.