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Vancouver vs Seattle

By Matt Goyer September 30, 2009

Eric has a question I have no idea how to answer. Hopefully one of you has some insight!
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Hey Matt,

I regularly read your blog, and since you work in real estate and are Canadian I was interested in your perspective on Vancouver condo price trends versus Seattle. It seems like a good topic for your blog.

My boyfriend lives in Vancouver, so I’m there every-other-weekend, and I’m shocked by the huge number of condos compared to Seattle and its suburbs. Everyone knows that Vancouver has tons of condos, but what surprised me the most was to see a dozen 30+ story condo towers in Port Moody and Coquitlam. Surrey, Burnaby, Richmond, and New Westminster all have tons of huge condo towers along the Sky Train lines.

Even more surprising, I can’t find a single condo auction and it looks like condo prices are only 5% lower than the peak last year.

It doesn’t look like there is a Case-Shiller type index for Vancouver, so the best that I could find is the attached chart of median selling prices (as of June 30) [pdf] and this blog post.

My guess is that the huge amount of monetary stimulus worldwide and the upcoming Olympics are the main reasons prices are so close to the peak. Do you have any friends or college classmates who bought condos in Vancouver? It would be interesting to get the perspective of someone who owns a condo in Vancouver, since it’s hard to get a feel for the market just by reading newspaper articles.

Best,

Eric K

I own and manage Urban Living, a boutique Seattle and Bellevue real estate brokerage. I love lofts, floating homes, new construction, and mid-century moderns, but I will help you buy or sell just about anything!

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7 responses to “Vancouver vs Seattle”

Jason says:

September 30, 2009 at 11:32 pm

One bit of info I picked up from Marketplace earlier today: in Canada mortgage interest isn't tax-deductible, so Canadian home-buyers have tended to buy homes that suit their actual incomes. The average new house sold in Canada is about 1800 sq ft*, versus about 2300 sq ft in the United States.

* I thought it odd on my recent trip to Vancouver that building area is marketed using square feet, not square meters.
Kevin says:

October 1, 2009 at 12:59 am

I'd love to hear some urban planning and real estate professionals' take on this.

I came from Canada and from what I can observe the differences are

– Vancouver's market demand is higher than Seattle, with faster population growth from immigration and the star attraction of “world's most livable city”.

– Vancouver's downtown is awesome, miles better than any US cities, so the urban lifestyle is more ingrained and people are willing to live in the city.

– Vancouver downtown's urban planning is very successful, also I think several signature projects are done by renowed HK and Canadian national developers, which makes downtown living attractive to more people. Seattle is very ad-hoc, where one developer builds a single tower as tall & ugly possible, makes a quick buck and disappears.

– Vancouver is public transport central. So there are also a lot of dense transit oriented developments and condo clusters even in suburbs.

– Vancouver's house is insanely expensive, and there is a collective political will to support dense development. Yaletown, used to be similar to SLU, now has like 50+ highrise condos. Seattle mayor that strongly supports urban revitalization just got kicked out and I have heard numerous complaints about how city “wasted their money” in redeveloping SLU.
flotown says:

October 1, 2009 at 8:16 am

Can't speak to Coquitlam et al, but “downtown” Vancouver is a much more desirable place, IMHO, that downtown seattle, especially the areas zoned for high-rise zoning. What is the draw to building a 40 -story tower in the Denny Triangle, other than the fact that its about the only place in the city where you can legally do it. the area overlooks I-5, is a good distance from the waterfront (the condition of the waterfront – ex. Sculpture Park – is a whole different story), and is not proximate to quality open space. The only real draw is views and proximity to the retail core. Now, if say, Queen Anne were zoned for High-rise, we'd see that entire hill covered with that building form, for better or for worse. Same can probably be said of capitol hill, because these are much more desirable areas. In short, the zoning is not well matched with amenities to drive many high-rise condos in seattle.
The MD says:

October 1, 2009 at 8:27 am

Actually, there have been condo auctions in Vancouver in the past several months (ie. Onni), just not to the degree we have seen in Seattle. Personally, I prefer Vancouver's livability over that of Seattle's, which is why I plan on retiring there. But, as a man of objectivity and opinion, I feel there is much to be discussed around this topic – primarily transparency in the Real Estate system's of one country over that of the other. What I find is the RE system in general in the U.S. is more transparent and more heavily regulated than that of other countries. This causes for easy access and review and confirmation of information, hence Case-Shiller-esque reports are accessible to the masses, which in turn allows for a “checks and balances” in the system. Yes, I understand we are in the largest economic downturn and correction since the Great Depression, so the question would be, “With all this transparency, why did over-inflated home prices happen in the first place?” The answer is this – rates, creative new loan structuring, and lack of enforcement of the regulatory standards that were already in place. The problem had more to do with the Banking system than it did with the Real Estate system. Times, oh, they are a changin' now!

Also, Seattle did, relatively speak, an outstanding job of keeping out speculators as much as possible (ie. contracts stating you must hold a property for a minimum of 1 year, or all profits received in the sale of the property must go back to the developer. Or, there were caps put into place in Seattle buildings to the amount of investors that could buy in a particular building). Vancouver has taken a “come one, come all” position without consideration of the speculators, offering up the buildings without asking, “Who are you, and why are you buying here?” So, the auctions taking place in Seattle are primarily from EXCESS inventory from buildings that unfortunately came to fruition a 6 months too late. Once the auctions are done in Seattle, the market will settle quite quickly. It's much like ripping off a band-aid.

Vancouver's predicament is quite different – Vancouver's massive amount of speculation is approaching that of Miami, FL. This will translate to everyone wanting to sell their unit at the same time, forcing price undercutting and large losses to previous buyers. It is a downward spiral that is difficult to control until the market finds its true bottom. For now, the mass offload has not taken place, and it probably won't until after the Olympics.

So, where does this leave Vancouver and many other areas of the globe? Well, the answer is simple here too. With a lack of transparency and regulatory control in any system, it is much easier to continue to keep prices over-inflated, and construction will continue regardless if buildings aren't selling (especially if it is controlled by only a handful of developers and marketers). “Keeping up appearances” is the name of the game here, but it will only last for a time before the roof crashes in. With these countries practicing nearly the same banking standards of that which were taking place in the U.S., it only makes sense it will be coming. Nearly 35% of all condos being built in Vancouver are for sale right now. This is a mass excess inventory, especially when considering the peak has already come. It is clear condo sales are at a halt in Vancouver (I get a call at LEAST once every other day from the developments I've toured there asking me to come take another look! Come on up, we'll pay for a hotel for you to visit us!). This is NOT GOOD for the long term in Vancouver. The large crash has not yet his this beautiful city, much in part due to the speculation the Olympics is bringing. But, as any city that has ever experienced the joy of hosting the Olympics, I'm confident they would tell you the Olympics are a horrible long-term investment into a city's future. I do predict after the Olympics are over in Vancouver, this is the time when the massive condo crash will ensue. History has proven a significant spike in real estate purchases prior to an Olympic even in any hosting city, and then an immediate offload and sale of excess inventory and already-purchased properties after the Olympics is over.

Yes, there are several international buyers in Vancouver, primarily from Asian countries, and this accounts for the MAJORITY of the purchases currently taking place and more recently. Still, it isn't enough to account for the massive surplus the city has at this time. And, in general, Canadians are not the buyers in these buildings in more recent months, especially in the downtown core. Canadian salaries do not and will not support the asking prices of most of these projects (Canadians earn roughly 20%-25%less than Americans in the same position, while at the same time are taxed at a higher an all-in rate around 38%). What does this mean? Simple – a large crash is coming much like it did in the U.S. There is no other way around it.

I have several friends in Vancouver that agree with these sentiments and are holding off until 2011 to make their purchase as they too feel there is a significant crash in the near future. I feel they are wise in their decision. Also, I have friends living in Seattle that hold premium properties in Vancouver right now, including the Fairmont, Shangri La, Hermitage, and a few others. All have been unsuccessful at selling their condos (and yes, this supports the argument for the massive amount of speculation in Vancouver's market). These people are already asking 15% LESS than they originally paid a year or so ago, and they still can't sell the property.

Auctions get more media attention as they are simply a larger amount of units at a single address. You're not going to get that attention as a single buyer trying to offload your property at 15% less than you originally paid, even if there are 100 units in that predicament in a single address. As long as anyone walking in off the street will be permitted to buy the condos in Vancouver, there will be less auctions there. But, eventually, the speculators being permitted to buy will offload property and devalue a true homeowner's purchase, much like Miami.
michel77 says:

October 1, 2009 at 10:01 am

Great post MD, I am no expert by any means but your theory makes sense to me, time will tell..
dildough says:

October 12, 2009 at 1:47 am

DOnt act like the 'entertainment' district of Vancouver is so perfect. There are stabbings on Hastings St every weekend night. That place is a dive, and there is a lot of weird stuff going down with gangs in Vancouver, mostly because the Asian-biker-LA connections that Vancouver has aquired that it didnt have. The weather there is worse than here if not better. They have a cool beach, not all that different from West Seattle, closer skiing, but they still have our bad weather, if not worse. They have hot girls, but whatever. The entire NW is overhyped. Its just in comparison to the dumpy east coast and LA that it looks good.
dildough says:

October 12, 2009 at 8:47 am

DOnt act like the 'entertainment' district of Vancouver is so perfect. There are stabbings on Hastings St every weekend night. That place is a dive, and there is a lot of weird stuff going down with gangs in Vancouver, mostly because the Asian-biker-LA connections that Vancouver has aquired that it didnt have. The weather there is worse than here if not better. They have a cool beach, not all that different from West Seattle, closer skiing, but they still have our bad weather, if not worse. They have hot girls, but whatever. The entire NW is overhyped. Its just in comparison to the dumpy east coast and LA that it looks good.

Vancouver vs Seattle

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