Tuesday, November 1, 2011

Note from a Friend in Vancouver on the Housing Bubble There

A good buddy of mine lives in Vancouver and we've been exchanging messages about the housing bubble there. I keep sending him posts like this showing the Vancouver market is going crazy. His latest response:
"Renting--rent hasn't changed in the 3.5 yrs we've been here...the house buying money is all asian cash (obviously), the rest of the economy is fine, relatively flat, and mostly based on tourism and commodities (mining, electricity).  The biggest implications of all of this in my eyes is what it is doing to the community...you walk around at night and only a third of the houses have residents in them and lights on.  No one who lives in those houses are contributing income or sales taxes to canada so what's going to happen to social services over time? An interesting social experiment that I would rather not be surrounded by.
I've actually been thinking about it a bit more and was thinking about what it will do to all the local businesses in addition to the social services.  How does a neighborhood restaurant and market stay in business when there's 50% occupancy around (even with 100% ownership)?  I feel OK about our business b/c it draws people from reasonable distances, but small companies that rely on short-distance "locals" are going to have their number of potential customers cut in half.  It's all kind of fine now that it's a new thing and all these problems are offset by rising property prices...but time will take it's toll on the businesses at this rate and the problem will compound when and if property prices start dropping to boot."