Geography Reference
In-Depth Information
boom and bust in Vancouver in 1980-82, divergence between the cities is
magnified only after 1985, when Toronto and Vancouver prices show a dra-
matic take-off, with real prices doubling in Toronto between 1985 and 1990,
and in Vancouver between 1985 and 1994. Third, the cities with the largest
year-to-year gains were most likely to endure the sharpest corrections, notably
Vancouver in 1981-82 and Toronto from 1989 to 1991. Overall, Vancouver
and Toronto registered six of the ten most rapid annual percentage price gains
among the eight cities, but also five of the ten most substantial annual losses.
In Vancouver's five strongest years, real estate appreciation averaged 36 per-
cent, but in the five weakest years the residential market lost an average of
almost eight percent a year, exemplifying all too well the 'ebbs and flows' that
Goldberg (1994) associated with global real estate investment.
There are of course significant human consequences of such a property
roller coaster. During the upturn, there is a sense of both exhilaration and
foreboding, windfall gains but also growing affordability burdens; during
the downturn, in contrast, acute apprehension, the burden of negative
equity and growing debt, mingle with opportunities for bargain hunters. In
such a scenario outcomes become polarized; there are privileged winners
and penalised losers. As an enticing opportunity and then, in short succes-
sion, a serious problem, real estate will become a public and thus a political
question.
In the Vancouver market, global variables prevailed in the 1980s and
1990s. A surge in net domestic migration coincided with a rise in interna-
tional migration to fuel the 1980-81 boom, though net domestic migration
fell rapidly once the boom was underway (Figure 5.8). Thereafter net domes-
tic migration to metropolitan Vancouver fell to a low level, with a net outflow
from 1997 to 2002. House prices surged from 1986 to 1995, closely follow-
ing the upward trajectory of net immigration, and fell back as Hong Kong
immigration waned after 1997. Correlations between the variables are unu-
sually decisive: over the 25 years from 1977 to 2002, a positive correlation
coefficient of 0.94 between Vancouver house prices and net international
migration contrasts with a negative correlation of −0.57 with net domestic
migration.
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This significant finding defies conventional wisdom, for interna-
tional population flows are correlated with house price inflation, while net
domestic migration comprised only a weak inflow or even an outflow
although house prices advanced decisively. These relationships have more
than theoretical interest, for as we shall see shortly, in an intricate politics of
explanation advocates of global flows were suggesting that domestic migra-
tion not immigration was shaping the upward trend of Vancouver house
prices. Nor were other regional indicators viable predictors of house price
changes, as a fuller analysis made clear (Ley and Tutchenor 2001). A series
of made-in-Canada variables - the national bank rate, the provincial unem-
ployment rate, net domestic migration to Vancouver, rental vacancy rates in
