Is Vancouver’s geography also to blame for soaring house prices?

A quick comparison with Toronto suggests foreign investment isn’t the only reason we have $2-million bungalows

Vancouver: unaffordable resort town in the making? That was the hypothesis of a November Maclean’s story (kindly titled “What’s the point of Vancouver?”). It was a familiar tale for any tuned-in Vancouverite, suggesting the city was at risk of turning into one of “millionaire homeowners and their support staff.”Looking at the typical price of a detached home on Vancouver’s west side ($2.9 million as of December 2015, according to MLS), one might think we’re already well on our way, that foreign capital is encroaching like Sauron onto our beautiful West Coast Shire. But the thing about this lovely land—mountains, ocean, a nearby border—is that it’s perhaps as much our enemy as any outside economic force.Consider a 2015 report from Toronto-based Neptis Foundation, which found that 86 percent of new residents (or their mathematical equivalent) between 2001 and 2011 in the Toronto-Hamilton region moved onto new land. For B.C.’s Lower Mainland, just 31 percent did the same over that decade. In Vancouver, which has less available land than Toronto, fewer detached homes are being built. That means this isn’t just a (foreign) demand problem but also one of supply. We’re building up, not out.The truth of this is borne out in condo prices, which have not increased at the same rate as detached homes in recent years. According to MLS, Greater Vancouver condo prices increased 20.9 percent over five years as of last winter, compared to 51.2 percent for detached homes. And while the typical detached home in dense Greater Vancouver currently costs 85.2 percent more than the typical detached home in sprawling Greater Toronto (as of December), the price difference between condos in these respective regions is significantly less: 31.8 percent. In other words, you pay a hefty premium to own dirt in Vancouver.Which isn’t to say the city doesn’t have a problem. People make more money in Toronto, after all, and 2011 census data revealed that a quarter of Coal Harbour condos, popular with foreign investors, are sitting empty. It’s just that the cocktail of causation is a complex one. And this: Perhaps Vancouver never had a white-picket-fence future, with or without the influx of foreign capital. Building between sandy beaches and majestic mountains comes at a cost.Follow @trevormelanson