Vancouver is my favorite city in North America. It’s my second favorite in the world, roughly tied with Capetown, South Africa.
The top spot goes to Sydney, Australia. Then San Francisco and Austin round out my top 5.
That said, I’m not the least bit surprised that Vancouver has become a prime example of the global real estate bubble, and one of the single most bubbly cities on the planet.
The argument is always this: They ain’t making any more real estate. And the people still want what’s there, so the best spots will go up, up, up. Oh, and we’re the best.
I’ve heard the same thing in any bubble city I’ve been to. New York, Miami, San Francisco, L.A., Singapore, Shanghai, Beijing, London, Paris – they all think they’re invincible. And I’m sure Tokyo’s residents said the same at the height of their boom in 1989. Now, 26 years later, their real estate is still down 60%. Commercial real estate, down 80%.
Make no mistake, Vancouver will pop just like all the others.
No bubble lasts forever. Whether it’s stocks or real estate, when it grows so exponentially that it outpaces more fundamental economic growth, there comes a point when almost no one can afford the higher prices.
That’s what’s happening in Vancouver and so many other bubbly cities. Tons of wealthy international immigrants and speculators – and even some national migrants – come in and jack the costs up. Then the locals start demanding that the government restrict these real estate purchases. As citizens, they increasingly demand the government represent them, not these “damn foreigners.â€
These “damn foreigners†are primarily wealthy Chinese foreign buyers picking up the nicest real estate – in this case, downtown areas like Vancouver Island and the poshest suburb across the Bay in West Vancouver.
For a coastal city like Vancouver surrounded by water and mountains, there’s already limited land to begin with.
