There’s no question that West Vancouver real estate is booming – average housing prices exceed $2 million for a typical, detached single-family home. But one question looms, is that “boom” really the sound of the bubble bursting? OK, fair enough – the bubble has certainly not burst quite yet, but there is definitely a lot of debate among Vancouver residents about the stability of such a high-flying real estate market.
New York, San Francisco, Los Angeles, and Singapore are all cities that have been subject to this kind of housing market, and in every case the bubble has burst. As housing prices rise at nearly exponential rates, economic growth struggles to maintain pace. Eventually, the residents of these cities were no longer able to afford the home.
Vancouver is a coastal city with limited space for growth. The downtown core is surrounded by water on all sides, and suburbs such as West Vancouver are somewhat isolated from the urban centre because of geography. Limited room for growth means that competition for real estate is fierce. Since 2002, the average detached home price has risen by almost 300%.
Moreover, in West Vancouver (and the entire Metro Vancouver region), focus has turned to wealthy foreign investment. The perceived threat is that immigrants, speculators, and foreign investors are buying up property at exorbitant rates while not actually occupying these residences. Locals have become disillusioned and have started to pressure the local government to implement protections that will prevent prices from escalating further. And there’s a solid case to be made for such protections.
Despite strong economic growth that has allowed residents to access the local real estate markets to date, foreign purchases of West Vancouver real estate have helped this market far outpace national averages. Comparing other major markets in Canada with West Vancouver, we see that average prices have risen only around 120% since 2002. More specifically, housing prices in Calgary have risen 133%, in Montreal 124%, and in Toronto 115%.
So what does this mean for West Vancouver, and Vancouver at large? Prepare yourself for the real boom, because this bubble is going to burst. Increased foreign investment means there is a lot of interest in residential properties so prices will continue to rise. However, as fewer people occupy these residences, and access to affordable housing for local Vancouverites stifles, the economy is certain to suffer. Eventually, the ability to buy real estate in West Vancouver will be a dream of foreign investors only. In the end, demand for housing will dwindle, and prices are likely to crash.
Yes, there is a real estate boom in West Vancouver, but that boom is inevitably more likely to be a bubble bursting than an economic windfall!