Debunking the Vancouver Real Estate Bubble Myth

Nov. 25, 2010 - PRLog -- Another month, another news article with "Vancouver Real Estate Bubble" in the title. Several international news outlets ranging from Businessweek to Reuters have reported on a housing market that they expect to go "POP". The particular news article I am going to comment about was in the Globe and Mail, November 25, 2010. We may look back on this and realize that these warnings were justified, but I am going to dispel the myth of the bubble in regards to the Vancouver real estate market.

The Globe and Mail article does make a few good points and mentions that the affordability ratio has rocketed upward so quickly that the Vancouver real estate market is now the steepest in North America: more than double the Canadian average and more expensive than in places like New York and San Francisco.

So who is who is buying property in Vancouver? It is well known that wealthy Chinese immigrants buy property in Vancouver, and have done so for decades. This has certainly driven up the prices of property here. These Chinese buyers dominate the top end of the real estate market. Vancouver is an incredibly sought-after location for property buyers from China - they seek a place to invest their money that has fresh air, good schools and geopolitical stability--mountain and ocean views help of course.

Old 1920s Georgian listed homes are selling for $5-million, condos in new high-rise developments sell for $2-million. Prices are crazy, but demand is keeping it that way. 80% of immigrant investors are from Asia, and the majority wealthy Chinese. The numbers of wealthy Chinese looking for property shows no signs of slowing. China's economy is growing and growing, while the economies of the Europe and the US are in decline.

Surrounded by the ocean on one side, the mountains on another, and the US to the South means land for housing will always be at a premium in the Greater Vancouver area. This means property prices will always be high as long as there is a demand. It's simple economics - the rule of supply and demand. The Vancouver real estate myth has been in the news on and off over the years, but that is all it is--a myth. A strong economy, a banking system that is the envy of the world, and a city that is often voted amongst the best places to live in the world means that Vancouver will be just fine when it comes to it's property market.

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