I’ve considered the question of Vancouver housing prices for some years, and will venture a conclusion.
Housing prices are high and rising in the City of Vancouver because people want to live in Vancouver. (And at a benchmark price of $2 million for a detached home on the west side, those prices are spectaular.)
Housing prices are lower and declining around the urban perimeter, for example in Mission or Squamish, because fewer people want to live there. Does this seem too simple?
The City, with roughly 20 per cent of the population of Fraseropolis and the near coast, offers transit, walkable urban villages, entertainments, and — especially — career-track jobs in the private sector. The latest figures from the Greater Vancouver Real Estate Board show a continued rise in detached home prices in the highest-priced areas — in Vancouver, and in the adjacent cities of Richmond and Burnaby, which also have complex private-sector economies.
Detached home prices in the mid suburbs such as Coquitlam are flat over the past five years. Prices at the urban margins and beyond are generally down, even though purchase prices are superficially atttractive. Why is this?
One obvious answer is that people are increasingly resistant to commuting long distances and paying high transportation costs. The average North American is driving fewer kilometres per day than before, reversing a long-term trend. The post-war “driving boom” is over. At least for now.
There are other factors too, perhaps related to transportation costs. Peripheral cities such as Maple Ridge lack management jobs and creative jobs, and they lack excitement. Upwardly-mobile workers move out.
The pattern is more stark when we look at apartment prices. Of the 40-odd arbitrary real estate zones defined by the Greater Vancouver and Fraser Valley real estate boards, only City of Vancouver West, City of Vancouver East and Burnaby South show a nominal price improvement over five years. Whistler apartment prices are down 41%, admittedly due in part to a 2010 Olympic bubble. Maple Ridge apartment prices are down 21.5%, and we did not have an Olympics. Not that I heard.
Representative charts for June 2013 are shown below.
Region-wide, selling prices for detached homes in the Greater Vancouver real estate area (including Howe Sound and the Sunshine Coast) have gone up by 15% over five years, compared with 6% in the Fraser Valley area (including Surrey).
With regard to townhomes, the “Greater Vancouver” set shows a marginal gain of 2%, while the “Fraser Valley” area has dropped 6% over five years. The South Surrey/White Rock zone is a standout among the outer suburbs in both the detached home and townhome markets, for reasons of prestige and climate. North Surrey, just up the road, lacks prestige and elite services, although the transportation connections are good and the local government is working hard to create a new civic and cultural zone.
The apartment market is weak across the board, with a 2% drop across the Greater Vancouver zone (again, this definition includes some geographical outliers) and a 10% drop in the Fraser Valley. The decline in apartment values is especially bad at the edges, but it creeps close to the urban core to Burnaby East, and South Surrey/White Rock shares in the general negative trend.
The latest federal government figures show continued new multi-family construction in those Greater Vancouver areas where prices are rising, and also in less promising areas such as Surrey and Port Coquitlam. New detached home construction has increased in 2013 compared with 2012, and is steady in the Fraser Valley.