One of the precious few ways to offend your Canadian friends is to suggest that their country is a paler and colder version of its southern neighbor. And there are indeed many ways in which Canadians are different. Food seems to be more edible here and cities actually resemble places to live in and not abandoned movie sets. But in some cases Canadians are just dead set on repeating American mistakes. The ever present foreclosure signs and empty subdivisions disappear when you cross the border. Instead props that we begin to forget show up: real estate agents are shamelessly peddling their trade on every inch of promotional space, houses are getting bought, demolished and reconstructed apparently overtime, your bartender is giving you free buy vs. rent advice with a pint of local brew.
With the inevitability of an iceberg drifting south, each conversation gravitates towards real estate. All one can talk about is how much money someone sold/bought their house for, how many new condominiums are being built, how expensive houses have become. When you walk down the street, just sold signs pop up on every corner. Banks flood the media and your mailbox with offers of no money down and cash back mortgages. News outlets announce home prices hitting million-dollar landmark.
Where did I experience all that before? Oh, yes: in each and every American city. Predictably, as I try to inject a notion of doubt, I am presented with a winning assertion: Vancouver is different. Its population is growing. Its location is both desirable and constrained by water on the one and mountains on the other side. Its income is, well, not growing, but Canada - thanks to its oil, gas and lumber - is not experiencing an American-style slump. And, to boot, a local twist: Chinese billionaires are driving the market.
You can come across all flavors of Canada is different story. Although the differences that I find make probability of the bust bigger, not smaller. The safest American style 30-year fixed mortgages are conspicuously absent. The longest a borrower can lock the interest rate is 10 years. Banks, unsurprisingly, advertise the flexibility of such system. What is considered exotic - subprime, Alt-A, option ARM - in US, is the norm north of the border.
I have seen all that before. So I politely listen. I state my opinion not to convince anyone but just to stake a claim to I told you so when Vancouver’s real estate market implodes. I know it’s a question of when and not if, so I also urge everybody with a house to sell now. It’s probably not the top of the market yet, but it might be the best deal to make. I tell everybody renting to hold off on buying: there will be ample time to do so when all just sold signs turn into desperate for sale.
Vancouver is a great city: walkable, full of bike paths, amazing vistas, shops and restaurants, inhabited by diverse, tolerant and interesting people. Walking down the street one is as likely to hear English as any other language. It is not surprising that more and more people are prepared to pay a premium to live here. For all its qualities though, Vancouver just cannot be the only place in the universe to defy gravity and experience an indefinitely inflating bubble.