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Yes, real-estate values have fallen in Vancouver since the economic meltdown last year, markedly in some neighbourhoods, but nothing like we’ve seen in many parts of the U.S. In California, for instance, people are flocking to seminars on how to acquire foreclosed property for peanuts; here, some well-priced homes are again attracting multiple offers and selling above asking price.
There are good reasons why prices for most types of local property are unlikely to go the Phoenix or Las Vegas route. In Dunbar, the part of town where we bought our house, the once-illicit basement suite has been effectively legalized to help assuage a rental shortage. Soon, to further ease the crunch—and, even more high-mindedly, to lower the city’s eco-footprint by increasing urban density—elected officials will grant us another batch of potential tenants by allowing us to put laneway housing where now there is only a garden shed. Developers typically pay $100,000 or so for enough land to build an apartment unit, but for us this patch will be delivered free of charge.
We further max out the value of our 50-foot lot by regularly engaging in home exchanges, and though we’re unlikely to go the Craigslist route of subletting the place every time we’re out of town for a few days, we may well help out Olympics organizers scrambling to find accommodation during the 2010 Games. Apparently, this public-spirited act could net us another 15 or 20 grand.
Meanwhile, the value of our place is further supported by far-sighted policies aimed at protecting food supplies, controlling greenhouse-gas emissions, and enhancing livability. Within 20 minutes of downtown there are large expanses of land that in any other city would have become housing tracts—thus forcing down the value of our place—but that in B.C. are restricted to cranberry fields under the Agricultural Land Reserve. And those fields would be only 15 minutes from downtown if we built freeways and bridges as eagerly as many cities do.
Vancouver is behaving in a rational and even laudatory way. At the same time, we’re ensuring that centrally located single-family houses will probably never again be affordable to mere wage earners. The only buyers will be the very wealthy, and people like us: homeowners willing to take advantage of what an economist would call a “densification premium” but I prefer to call a Fonzie scheme, in honour of the rough-edged yet carefully groomed sitcom character who provided added value to the Cunninghams by bunking above their garage.
Vancouver’s response to the challenges of sustainability is one of the reasons our real-estate values have not followed similarly expensive American markets into the toilet, and probably won’t. And one of the reasons why, if you’re thinking of buying, now might well be a good time.
There are other reasons, of course, and any assessment of whether now’s the moment to take the plunge needs to take these into account. For starters, we live (in case you’ve forgotten) in a part of the world most people can only salivate over. 2010 will attract an estimated 250,000 people, and Olympic broadcasts will beam images of our fair city around the globe almost continuously for several weeks, attracting an audience expected to exceed two billion viewers. If that sort of mass marketing has the same long-term effect that Expo 86 had on local real estate, we can expect people to buy here who first considered our city’s appeal while watching triple axels and quadruple toe loops. “Home-buying activity is forecast to continue at a healthy pace for the remainder of the year,” a recent RE/MAX report predicts, “with year-end sales slightly ahead of 2008 levels. Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news.”
Much of the local activity in recent months involves first-time buyers who’ve taken on a mortgage payment because, in some cases, it’s smaller than their rent cheque. Cheap mortgages mainly goose the low end of the market, and it’s the low end that eventually stimulates the trade in higher-priced homes. With mortgages at all-time lows, it’s no wonder more and more young people are taking the entry-level plunge.
Should you buy now? “The first question to answer is about yourself,” says Ozzie Jurock, who’s followed Vancouver real estate closely for 40 years. “Are you buying a home to live in or as an investment? If it’s an investment, are you looking for cash flow or long-term appreciation? You need to understand who you are and what your motives are.”
Are there hot pockets Jurock especially likes? “Lower Lonsdale is transforming into Yaletown North, minus the high prices,” he says. “The $250-million Pier Project adds tremendous value. Steveston has great ambiance and is still affordable. In the Main and Broadway area, with proximity to the south shore of False Creek, the SkyTrain, and Canada Line, condo prices still make sense. We like all of Vancouver, but particularly Dunbar, between 10th and 34th.”
Tsur Somerville, of the Sauder School of Business at UBC, takes much the same view. “Prices have fallen, interest rates are low, and if you’re secure in your job and have a decent income and a good idea of what you’re looking for, then yes, buying now makes sense.” He warns, though, against thinking that Vancouver is “magically immune” from further economic malaise if the U.S. fails to recover soon.
Over the long term, Somerville believes, a house will appreciate more than a condo. “The issue of overbuilding is much more of a danger on the condo side than the single-family-home side. The commodity that’s in short supply is land.”