James Surowieki writes regularly in The New Yorker. His "Financial Page" pieces are often the first or second thing I read in the magazine; always intelligent articles with a thoughtfulness and civic sensibility far beyond the typical business stories one finds in most publications.
In the May 26 issue of The New Yorker Surowiecki writes about the globalisation of real estate and reports that the "most expensive housing market in North America is not where you'd think." Those living in the most expensive real estate market on the continent are probably not surprised, though to read an analysis about their city in a leading American publication does catch attention.
The most expensive housing market is not New York City, though it certainly has the highest incomes. Nor is it the tech area around San Francisco, with lots of high earners there too. No, the costliest city in which to buy a home is Vancouver, Canada, and as Surowiecki points out, it shouldn't be.
"By all accounts, it is a wonderful place to live. But nothing about its economy explains why - in a city where the median income is only around seventy grand - single-family houses now sell for close to a million dollars apiece."
Much of the increase in house prices in Vancouver has been caused by wealthy foreigners buying property as a "hedge" against social and political instability at home. A significant number of these wealthy people don't even live in their "hedge city."
The rich are willing to pay a premium for the security cities like Vancouver offer, and prices will "float out of reach of the people who actually live and work there." Not necessarily a bad thing, especially if you are a homeowner in one of the "hedge cities" of the world. However, not all of us own homes, and many more never will, especially in Vancouver.
The last line in Surowiecki's piece says it all: "As for the rest of us, we'd better get used to being tenants."
And for others, not.
James Surowiecki photo
from The New Yorker.
from The New Yorker.
Vancouver photos by Jim Murray.