Vancouver's real estate mania:
Because the guided kayaking trip was billed as a leisurely paddle by the ocean, the last thing I expected was a real estate tour. On hindsight, I suspect the whole thing was concocted by a savvy real estate agent. This is British Columbia, after all, home to the country's hottest housing market.
Tracing the coves of the Sunshine Coast, which is fast becoming Canada's version of the Hamptons, I saw none of the usual eagles and seals. Instead, there were glimpses of mansion after waterfront mansion, along a shoreline that skirted a protected marine park.As far as I could tell, the only areas that looked protected were the padlocked entrances to multi-million-dollar homes. A sprawl of them, all claimed by Americans, recently formed the area's first gated community.
My guide -- a transplanted Ontarian who seemed to have adopted the West Coast flair for virtuous lifestyle -- clucked with disdain at such an incursion. In the same breath, she gossiped about Joni Mitchell and Premier Gordon Campbell. Both own vacation retreats in this former fishing outpost, which has been transformed into a prosperous bedroom community north of Vancouver.Until real estate became the new game in town, the Sunshine Coast's main claim to fame was as the backdrop for The Beachcombers.
These days, as the wealthy boomer's paradise, the only things remotely wild about the area are the housing prices.In fact, no matter where you go in house-mad B.C., real estate is the main topic of conversation. It borders on a province-wide obsession.On the suburban street where my uncle lives, rezoning signs stretch for more than a kilometre. Developers who are scrambling for large lots have snapped up tear-downs in the form of aging split- levels and "Vancouver specials" -- two-storey houses with main- floor granny suites.
My uncle sold his Vancouver special two months ago and moved into a smaller duplex nearby. Over dinner one night, he sheepishly confessed to having his eyes on the unit next door, after learning that his elderly neighbour was in frail health.I scarcely recognize the city where I grew up, and it's not just because whole neighbourhoods are being swallowed by a building boom.
Laid-back Vancouverites, for whom talking big usually revolves around doing the up-mountain march known as the Grouse Grind, appear gripped by manic status anxiety.Perfect strangers, for whom talk of money would normally be more private than sex, think nothing of divulging the size of their gargantuan mortgages, or the sums that they made from flipping houses.
Two days after my kayaking trip, I met a man on the beach who, last year, sold his farm in the Fraser Valley and moved into a bungalow farther in the country.With housing prices continuing to skyrocket, he was considering putting the bungalow on the market and trading it for a lower- priced property even farther up the valley. The man boasted of sitting pretty on his real estate profits. A music teacher by trade, he was thinking of getting into property management.
Because just about everyone, fed by media hype and gleeful industry boosterism, shares the belief that the country's most expensive housing market won't get cheaper any time soon, finding the bargains has become a parlour game. It is a point of pride in this freewheeling, highly speculative market. Just don't call it a real estate bubble. Nobody seems to buy that line, despite warnings of a market correction.According to a report by RBC Financial, the double-digit-per- cent hikes in B.C. housing prices are "unsustainable" given that increases in incomes haven't kept up. In Vancouver, Canada's least affordable city, the cost of carrying the mortgage on a bungalow now chews up a whopping two-thirds of average income. In Ottawa, the same mortgage would cost about 29 per cent of before-tax income.
How can British Columbians afford housing? That seems to be the only question that stops people in their tracks. Many mumble something about renting out their basement suites. My aunt, who works at a bank, sees more people taking advantage of low interest rates to negotiate new mortgages. No one admits to being overstretched.If anything, the Canada Mortgage and Housing Corp.'s move last month to insure longer mortgages and interest-only payment plans was trumpeted as good news for first-time buyers. "I think it will open up financing to more people than would otherwise be able to get in the market," economist Helmut Pastrick told a Vancouver newspaper.
For the time being, no one wants to believe that there will be a day of reckoning.Pauline Tam's column appears Monday, Wednesday and Friday.E-mail: email@example.com
(Copyright The Ottawa Citizen 2006)