Originally Posted by freeweed
There's a lot more than S&D going on in Vancouver. How the hell does the average person afford a $1,000,000 house there? It's not like salaries in Vancouver are 3-5x the national average. Demand only accounts for so much - when most people simply cannot afford the cost, there's a lot more going on.
-General desirability of the city. Vancouver is a great city with a mild climate (for Canada) and would be pricey even if it had a healthy market, but not $1.2M for a shack.
-Low interest rates, as mentioned.
-Government-backed mortgage insurance makes risky loans cheaper than they could otherwise be.
-Foreign, particularly Asian, buyers.
-Crazy public perception of housing as a foolproof investment that is "free" because "you have to pay rent anyway". Not many people realize that it took until 2005 for Vancouver housing values to get back up to 1983 levels when adjusted for inflation. People here really will fork over 60% of their money to pay for housing and shrug it off because it's Vancouver.
-Limited number of houses on the market. Most people living in average houses bought them many years ago. Not many paid premium prices.
-Some people sell crazy overpriced houses and upgrade. They are being ripped off but they have to put up $500,000 or whatever, not $1.2M.
-Lots of people rent out basement suites.
-NIMBYism. The downtown peninsula has lots of highrises but they are not permitted in most other inner-city areas.