The Economist performs an annual review of the world’s cities with an eye to determining which are the most expensive to live in. While Zurich, Switzerland nabbed the top spot globally, Vancouver received the distinction of being the most expensive city to live in within North America. Higher costs for most things — goods that have to be transported longer distances cross-country, higher fuel costs, and higher taxes on most discretionary purchases, were all listed as factors. But, the high costs of our residential real estate costs were deemed the largest contributor towards our least-affordable ranking.
Vancouver Real Estate Goes Global
Statistics show that Vancouver’s housing prices are significantly higher than what the median local income can afford. However, while pundits conclude that misalignment between income levels and housing costs are indicative of a bubble, there is a missing piece to this puzzle. Vancouver’s real estate is wanted and held not only by residents who live and work here, but by the wealthy citizens of the world who seek its safety, economic and political security, natural beauty, and lifestyle benefits.
The New Yorker published a piece outlining this phenomenon on May 26, 2014: “[Vancouver] has found itself at the heart of one of the biggest trends of the past two decades — the rise of a truly global market in real estate”. Joseph Gyourko, Christopher Mayer and Todd Sinai, all economists, studied global metropolitan centres where housing prices have risen steeply since 1950, and called the top contenders “superstar cities”. New York and London are home to both high finance and have a high density of head offices. San Francisco is a tech hub. Paris and Milan are not only the business centres of France and Italy respectively, they also enjoy rich cultural cachet. Vancouver offers a portion of these benefits, but not in any significant concentration. Rather, Vancouver’s strength is that it is a “hedge city…a city that offers social and political stability…and long-term protection against climate change”.
Indeed, Vancouver is the most geopolitically and economically stable city on the Pacific Rim. These are irrefutably important factors for the sophisticated investor. It could be argued that they make Vancouver’s real estate fundamentals as solid as bedrock. We market and sell blue-chip real estate throughout Greater Vancouver. While economic confidence waxes and wanes, the over arching trend of increasing demand for our housing continues to strengthen, and we believe, this is a trend that will continue until peace, prosperity, and natural beauty no longer matter to the real estate buyer. Not something we expect to see anytime soon!
