The usual commentary on the June sales stats Info is a little late this month due to travel through the Euro Zone when all the excitement in Vancouver was taking place. Coming back from Central Europe and the drama of Greece and whether it would stay or leave the Euro currency gives someone from Vancouver a wider perspective on the world including that of real estate. As the detached housing market here went up in flames in June it was interesting to see that most people in cities elsewhere don't aspire to a detached home. They are satisfied with an apartment in a building located near parks or city amenities and transit. It appears to this writer that many here would be much happier for that same change in ambition.
Sun Over Vancouver by Jerry Meaden
Everywhere in the world detached properties in major cities are for the rich. Land is at a premium and prices are high. Cities that have been densely populated for hundreds of years know this and residents make satisfying and happy lives without constantly feeling entitled to own a detached house of their own. North Americans have been wired to believe that land and water are always available to them.
In desirable, expensive and crowded cities like Toronto and Vancouver that is no longer the case. In this connected world people can live and work everywhere and do so. Many buyers today are international in lifestyle and live in several places during a calendar year. Those buyers are part of the reason that the benchmark detached home price in the prized Westside of Vancouver is now $2,600,000 (mainly lot value) and that the $3 million to $5 million price range is the most active.
It would be nice if city planners and city councilors took responsibility for the way their decisions shape the future of our cities. Everyone who protests and deplores the pace of change or the destruction of our West Coast trademark style is not to be dismissed. Everyone who comes to a public meeting with an opinion that differs from the received wisdom is not wrong. It's not even wrong to keep some beautiful neighbourhoods and architecturally meritorious homes intact. People who have money will pay for the homes that are available. In Richmond and Vancouver the Councils are frightened of the wrath of those who contribute to their re-election campaigns. Then there are also those voters who want to maximize their miniscule early investment in their property to fund their future lifestyles at the expense of their former neighbours. They may not be even staying in the city but still they are intimidating to those elected to govern who want to stay in office indefinitely.
There is fear-mongering among real estate executives and international economists that the recent lowered bank rate by the Bank of Canada will lead to an inflated real estate price through the magic of low mortgage rates. Speculation arising on whether the federal government will raise the minimum downpayment required for a mortgage from 5% to 10%. Not likely given 2015 is an election year and that the government lately has allowed the real estate market to respond to conditions without over regulation. Changes were made when the late Jim Flaherty was Finance Minister that reined in speculation and excess.
Probably the best explanation for the pressure on prices in June 2015 was given by Darcy McLeod, President of the Real Estate Board of Greater Vancouver when he stated : "Conditions today are being driven by low interest rates, a declining supply of detached homes, a growing population, a provincial economy that's outperforming the rest of Canada, pent-up demand from previous years and, perhaps most importantly, the fact that we live in a highly desirable region."