How much higher can house prices go in Metro Vancouver?
Aside from a very brief blip during the darkest days of the recession, prices have been rising for more than a decade. We could call the rise “steady,” but it’s been closer to meteoric.
Meanwhile, wages have been rising much more slowly. And we’re running out of land that isn’t part of the ALR. You would think that eventually, some kind of limit would be hit and there’d be a price correction, or at least a pause while we caught our breath for a few years.
So far, everyone who has predicted the housing apocalypse for Vancouver (and Toronto, in a similar situation) has been wrong. It seems like such a safe bet. What goes up must come down. And yet, house prices stubbornly refuse to decline.
Whether the cause is foreign buyers or local speculators, or just ordinary demand, we are already seeing some consequences for local homeowners.
One of the least talked about is that the gap between detached houses and every other type of home is splitting owners into winners and losers.
Winners bought houses five, 10, 40 years ago. They will reap huge rewards if they sell now.
Losers have been renters, or bought townhouses or condos. Their homes have not appreciated in value, or not nearly as much. Throw almost everyone between the ages of 18 and 30 into this category – none of them were old enough to even think about buying before the market started to shoot up.
For quite a while, the traditional advice for young folks starting families has been to buy and move up – get a starter home, a condo, a townhouse, and build some equity.
It turns out that for a generation, that equity is at best a static investment, and the second stage – the detached house – just keeps getting farther out of reach. Who’s going to deal with all those younger would-be homebuyers when they have two kids and a townhouse that won’t sell?
– M.C.