Real estate prices are rising quickly all across British Columbia (as this Vancouver Sun article mentions). In the past year alone, the total value of assessed property in the province grew by 17 percent. Demand has been fueled by a hot economy and low interest rates.
Not surprisingly, luxury real estate—waterfront property and the like—appreciated fastest, with rises in some areas of 50 percent in a single year. But perhaps more suprisingly, the value of residential properties in downtown Vancouver—including the sky-high condos—also grew faster than the provincial average. Downtown condo and townhouse prices increased by 24 percent. In contrast, the price of upscale homes in West Seattle west Vancouver suburbs grew by 16 percent. In percentage terms, at least, that makes downtown real estate the better investment. [Note: edited to correct typo.]
The rise in downtown property values is, of course, a mixed blessing. On the good side, it’s a sign that there’s very healthy demand for downtown real estate—and that living downtown is a genuinely popular alternative to suburban living. Futher, the rise in prices could help spur demand for additional construction in the urban core. Downtown development helps curb sprawl at the metropolitan fringes, reducing driving and the attendant strains on the province’s infrastructure.
But there could be trouble on the horizon if home prices downtown grow too quickly. Not only is there the risk of a real estate bubble (bad news when those burst), but there’s also a risk of income stratification in the city—the possibility that downtown could become affordable only for the very rich and the very poor. That kind of trend has been bad news in a number of U.S. cities. Which is all the more reason to increase downtown construction, to make room for more middle income homeowners.
