Vancouver Real Estate Prices Skyrocketed Following 2010 Olympics
When people think of Vancouver they think instantly of its world famous quality of life. The city is always winning awards for liveability. One thing it certainly won’t be winning any awards for however is affordability. Following the 2010 Olympics prices have gone through the roof. The average sale price of a detached house in the city in 2016 was $1,830,000, an increase of more than 40% on the previous year. But is it just the Olympics that is to blame for the skyrocketing prices in Vancouver real estate? Or are there other factors playing an equally important role?
The obvious answer to that question would seem to be: No.
The Olympics were not a decisive turning point in the real estate market of Vancouver, and did not send prices through the roof. They certainly had a palpable ripple effect in the renting prices of condominiums and other properties while they were being held and for the months before and after, but we need to look at long term home sale prices, not short term rental.
The statistics show that in 2008 and 2010 the percentages of Vancouver homes for sale sold in the city for more than $1,000,000 read 39% and 40% respectively. Then in 2012 the number of houses sold for more than a cool million dollars jumped, to 55%. If more than half of the city is being valued at over a million dollars, that is not an affordable city.
But were the Olympics really to blame for this huge increase in Vancouver homes for sale prices?
The 2006 statistics show that only 19% of the houses sold went for over a million, while the 2014 ones show that 59% of the houses sold that year broke the benchmark. So the pattern seems to have been in place before the Olympics, and continue after it. The statistics for 2016 shockingly show that 91% of Vancouver homes for sale are being sold for over the magic million and while we dont have this year’s numbers yet, we can predict they will look pretty similar. Blame the Olympics or not, the truth of the matter is that prices for Vancouver homes for sale have reached absolute record highs.
So why exactly have Vancouver real estate prices been driven so high?
Although the whole world is interested in investing in Canada, and investment has risen significantly over recent years, it is the Chinese investment in the country that has really turned heads. If you drive down a street in suburban Vancouver right now, chances are you will see real estate adverts in two languages. Bilingual signs may have been the norm in some parts of Canada for a long time, but not ones with Chinese lettering right next to the latin.
But why is all the money coming from China?
Well it seems that the 3,600,000 millionaires from the Asian nation are mightily aware of the political situation in their country and how it affects their standing. They live under a regime where at any point any man may be denounced as an enemy of the state, and would have all of his assets seized. Chinese investors are looking at Canada as a safe place to park their money.
It is not only the Chinese political situation that could be seen as volatile, but also their housing market. In the city of Shenzhen last year house prices rose a whopping 60%. However it would seem that Chinese attempts to escape that bubble are simply bringing the same effect to the North American continent. Canada may be staring down the barrel of the same gun.
Although Vancouver and its unprecedentedly high rise in home prices is the most famous and obvious, Chinese investors have also bought up land on the remote coast of Novia Scotia, or abandoned mining towns in British Colombia. Just why is a closely guarded secret, but it is having a noted effect on the home prices of the whole nation.
No-one is really sure how much the Chinese are investing in any one place, but estimates state that they could be collectively investing over $1 trillion dollars overseas every year. It is possible that as much as $12 billion of those dollars are being invested every year in Vancouver’s real estate market. A number which has obviously helped push the housing market up to its current, record proportions.
What about Vancouver condos?
But is it completely fair to put the incredible increase in Vancouver home prices down to faceless Chinese investors buying abandoned towns and coastline? A look at the statistics show that vancouver condos, apartments and attached Vancouver real estate and detached homes all rose at around the same rates between 2002 and 2010. The average price rose significantly, from $200,000 to $500,000 for anything apart from a detached home. Detached Vancouver real estate are where we see the real skyrocketing in prices in Vancouver home for sale. Vancouver condos were not an exception to the rule
The average detached home at the time of the 2010 Olympics would have set you back about $1,000,000, but today that same house would cost you almost double. In the same time period prices in the markets for other home types remained about the same.
So why the huge skyrocket in prices in detached homes for sale in Vancouver?
It would seem for the answer to this question we need to look back at the Chinese. This time not the millionaire investors however, but the average Chinese family moving not just their money to Canada, but their whole lives. Growing communities of minorities already established make it easier for more and more to follow suit and move their lives to the western world. One study found that as much as 66% of the property sold in Vancouver was sold to anglicized Chinese names. The pattern is clear for homes for sale in Vancouver.
So why have the prices of homes for sale in Vancouver skyrocketed since the 2010 Olympics?
It would seem that any connection between the two is more of a coincidence than a real cause or effect relationship. Instead, to learn why we must look to the world famous quality of life that is attracting more and more families from around the world to come and experience it for themselves. Its not the billionaire businessmen trying to buy out the city driving the prices so high, but the average working man hoping to live in it.