Hangout with Paul Toffoli
Voted in the The Straight newspaper as best realtor in Vancouver 4 years in a row! Why are properties in Vancouver so expensive?
Mark: Hi, it’s Mark Bossert from Top Local Lead Generation. We’re here with Paul Toffoli from Toffoli Realty in Vancouver and today we’re going to be doing something that I’m sure everyone in Vancouver always is asking “why are properties in Vancouver so expensive”. How’re you doing Paul?
Paul: I’m great Mark. Having a good day; it’s sunny outside.
Mark: I’m sweating, so it’s definitely warm. So what’s the deal, how come it’s so expensive in Vancouver?
Paul: Well, I was born in Vancouver, 47 years ago and I think since before I was born people have been asking that same question. Why is Real Estate in Vancouver so expensive and I think there’s some historical reasons for that. There are also some new reasons for that, but I’ll run through what I think are some of the reasons and what some of the experts and pundits have been saying and at the end of the day, maybe there’s no real rational behind it. But I’ll tell you what I think the main reasons are.
First of all historically, part of the explanation has always been that we’re landlocked, so we’ve got the US border to the south, we’ve got the mountains to the north, we’ve got the ocean to the west, we’ve got a little pocket of land that people can live on. In addition as we go out into the Fraser Valley we also have the Agricultural Land Reserve which has taken some other land out of the buildable areas and municipalities, particularly in the city of Vancouver, set zoning guidelines and zoning bylaws that restrict what can be built where. Those things combined have restricted the number of housing options for people.
Now that being said, there’s lots of housing here, there’s lots of big buildings, there’s lots of homes, why is it so much more expensive here than elsewhere in North America. We are historically and we are now for sure one of the most expensive places to live in North America, particularly in the city of Vancouver proper but also as you get into the suburban areas and into the rest of greater Vancouver, we are also more expensive.
At the end of the day, housing is a bit of a commodity and housing prices are driven by supply and demand and lots of people love living in Vancouver and the last ten years and projected into the future, we had forty to fifty thousand people a year moving to the province of British Columbia, some years more than that and the bulk of those people are moving into the lower mainland and the closer you get to the downtown core or the closer you get to the epicentre of activity in the lower mainland the higher housing prices are.
Now municipalities have tried to mitigate that by giving different housing opportunities, building smaller condos, building townhomes, building more multifamily so that you don’t just have this single family, which is highly desirable but highly expensive, but people still keep on moving here and still keep on buying.
Interestingly, the demographics of the groups that are moving to the lower mainland have changed significantly in the last ten years so not only do we have the working class, the middle class, professionals that have traditionally moved to the province to provide for their families, but we’ve also got some really high net worth individuals and groups that are coming and taking wealth from other parts of the world and enjoying the lower mainland and Canada, generally as a safe place to park their wealth and they find that real estate is a very safe and a desirable place to put their money because it’s concrete, something they understand.
So that’s it in a nutshell. It’s a bunch of reasons. Now the question is, ‘is it sustainable’? That’s the big question that my clients always ask me. Is the cost of real estate in the lower mainland sustainable? And the short answer is that really we don’t know and particularly in a short term basis, there will be corrections. It’s going to happen. Historically we’ve had corrections in the housing market in the lower mainland; the last one we had was in 2009 when there was a world-wide housing correction and the market went down sharply. It recovered in six to twelve months. It was a shock to me. I was expecting it to stay low for a longer period of time. We will have real estate prices dropping; they will recover so what I tell my clients is, if you’re buying and planning on selling in a year or two years, there’s no guarantees. We don’t know what’s going to happen. Real estate prices have been fairly flat, inching up but they’ve been fairly flat for the past couple years, but if you’re thinking five to ten years to fifteen to twenty years out, the likelihood is, that real estate in Vancouver will be more expensive than it is now. For some people that’s great if you’re already in the market, for those who aren’t in the market yet that could be a bit intimidating.
Mark: So, I guess in some ways it’s like, hey it’s a really nice place to live, you’ve got the ocean, the mountains, a really good winter climate certainly compared to the rest of Canada or a big part of the rest of Canada and we also have a lot of people moving in from other countries in the east especially and like you said, supply and demand. It’s a really nice place so it’s in demand and like you started with there isn’t any more land. It’s not like there’s a volcano growing more and more land base.
Paul: And I think, one of the things is that, I would look at and say, there’s land, but in the city of Vancouver you’re not getting any more single family land. It’s not happening, so and that single family supply is actually shrinking as zoning changes and multifamily is built, so you’ve got single family homes going away and townhomes and condos being built and you know what, they can always go higher. They have been going higher. Different areas are going to be zoned, so I think that is what’s keeping it somewhat affordable is they are building new supply. The challenge is there’s not a lot of supply for single families.
Municipalities are trying to reduce that urban sprawl and that’s been a sustainability that been going on, the livable city, the livable region, or the livable cities plan that started in the late seventies, early eighties, was big part of that. But they’re not growing any more land, we’re a really great place to live, we’re a safe place to live. I know many of the people out there have travelled, I’ve travelled in Asia, I’ve travelled in Europe, I’ve been in some areas of the world that there’s extreme poverty compared to what we have here. We are dam lucky that we live in a safe, comfortable, beautiful part of the world and guess what a lot of people from the rest of the world want to live here too and people from across Canada. It’s a great place to live. There are other great places to live, but we’re blessed.
Mark: Absolutely. Well I guess it’s pretty simple really. Really appreciate that Paul, again we’ve been talking with Paul Toffoli from Toffoli Real Estate. Toffoli.ca is where you can reach him, you can call him, he’s a good guy to talk to, he really knows his stuff. 604-787-6963. Thanks a lot Paul.
Paul: Thanks Mark