Not just Chinese money, see my comment below.
To summarize: 1) best climate for Canada, 2) bounded north, west, and south, 3) land already developed, 4) high immigration
The Okanagan valley seems like it might merit that title as well, being fairly dry and sunny (sagebrush and wine growing!)
https://en.wikipedia.org/wiki/Okanagan
Looks nice! https://goo.gl/maps/nWS4Stwc1WT2
The sunshine coast a little up from Vancouver has reasonable climate as well, it's in the rain shadow of the Vancouver Island mountains.
So there's no shortage of land with similar enough climate. It just doesn't have "Vancouver" on it.
Given that it's nice and dry, that's a feature, not a bug!
Someone in town for the day might have to open Yelp: https://www.yelp.com/search?find_desc=Cheap+Fast+Lunch&find_...
ya, 5000 entire people last year in CoV...
Not for cities like Vancouver. The cost is land. That is where the inflation is. Whenever you price out a house in the far outskirts, it is crazy cheap in comparison.
In the case of LA, not really. The whole city is surrounded by mountains, and there are just a few mountain passes connecting most of Los Angeles County and Orange County to the rest of California [0]. The only part of Los Angeles County that hasn't been fully developed is the Antelope Valley around Palmdale, and that's separated from the rest of the county by the San Gabriel Mountains.
I guess there's some room left to sprawl in the Inland Empire too, but that's technically not part of the LA metro area, and it still has the problem of the mountain passes bottlenecking any commute between LA and the IE, so businesses will have to embrace the edge city model and start locating their headquarters in the Inland Empire.
[0] Here's a satellite map: https://goo.gl/maps/oK9Kt3zb3vr
(Edit: Oh, and as for Chicago... they're not quite as free as landlocked cities. They've got Lake Michigan to the east, and they can't go too far north because then they'll run into Milwaukee's suburbs. That just leaves the west and south. Landlocked cities can sprawl in all four directions.)
Also, the stock market historical average of annual return is 6-7%, whereas it's lower for real estate. As with anything, diversification is the most important point.
One observation I have is that even if it's just single digit as a %, it can exert very significant pressure on the market. A bubble is a mob effect. It begins with some properties purchased at prices the local market can't support, regional opportunists jump in seeing the opportunity for flipping, then fear of missing out, especially for first time buyers, results in a stampede as people see the ladder going up and leverage themselves to get the last rung before it goes out of reach. But there was never any real scarcity in the first place.
Point being, a small amount of foreign investment can have a leveraged influence on local markets.
I do think the "foreign" word there gets too much attention though. The more important question to ask is - should property as an investment be something we economically encourage. How much economic activity does a $5M 3 bedroom house actually generate? I don't pretend to know the answer but I think this focus on the "foreign" bogeyman is blocking us from having more important conversations about the role of real-estate in economic policy.
Eg. Chinese family has one member whose been granted citizenship. They all come together to pool money, transfer it to the Canadian relative, purchase together, profit(for now).
All thats recorded is a Canadian purchased a home, "how" they purchased is not yet a government issue.
The government/banks/real estate industry has known about this for years...
As Shiller demonstrates and you even agree to, home prices track inflation over the long term. Further, Shiller -- in Irrational Exuberance -- shows that this is largely because of the money some owners reinvest in keeping their homes modern, so this isn't even a passive tracking of inflation, on average.
The arguments about finite land mass, etc, have been said for decades and I suspect one of two things is true: (1) It's wrong: Manhattan continues to build vertically and while it has a high average rent, the median and lower quantiles are actually much lower than on the West Coast, for example. (2) It's already priced by the market.
Finally, stocks also perform very well in high-inflation environments, so this isn't unique to property. The one difference is that most people have 5-to-1 leverage on their homes, so they enjoy outsized gains, but this is a risk as much as a benefit.
Prices have risen _way_ above inflation in Vancouver and Toronto the last 10-15 years. Incomes have been virtually flat, possibly even dropped in real terms after adjusting for inflation.
Atlanta's spread slowed to a crawl once it got to about an hour's drive outside the perimeter. If you pay close attention on Google Maps (satellite view), you'll see the growth hugs major highways and interstates, and falls off sharply after a point. There is definitely a limit.
This might change if the NIMBY crowd dies off or moves away and MARTA is finally able to expand to the metro area.
Why hasn't Atlanta embraced the concept of edge cities [0] as Dallas has?
Caterpillar did open a plant outside the edge, but it's also close to Athens with its airport and relative proximity to both a port and a major city.
The Dallas area did a very good job of organizing outward sprawl into rings like a sequoia. There are edge cities, sometimes more than one, within each ring (Far North Dallas & Richardson, Plano, Frisco & McKinney, Prosper...). Freeways delineate the rings (380 isn't a freeway yet, but plans are in the works), six-lane arterial roads are laid out in a nice, neat grid even extending into the exurbs' exurbs, and subdivisions are packed closely together to get more use out of the same space (I honestly can't stand how suburbs in eastern states look rural to my eyes... I grew up in a suburb filled with single-family homes with yards, and we still don't waste space like eastern states do).
For example, compare the northern sprawl of Dallas https://goo.gl/maps/qhK6geVaYKz with the northeastern sprawl in Atlanta: https://goo.gl/maps/PZsPw6YUyD92
It seems to be you who is perpetuating the non-sense. Provide some actual data and proof of this and then we can talk. No anecdotes please.
Counter proof: since BC's 15% foreigner tax was implemented, has the Vancouver housing market cooled off? No. To the contrary, it has actually heated up even more. This indicates that the "illegal Chinese dirty money" that the wonderful local Vancouverites keep spouting is not, in fact, the driver of this growth. It's too bad because they are such an easy racial scapegoat, aren't they?
It could also be possible that the Chinese market for Vancouver houses is inelastic enough that the foreigner tax doesn't have teeth.
[citation needed.]
1. It needs to separate out Vancouver and the rest. Vancouver is its own bubble of self-perpetuating nonsense propagated by Chinese money.
2. The article states shares are better because companies can plow money back into the business, which completely misses the point because price rises aren't pure speculation. There is a HUGE labour cost in housing such that housing prices track inflation (particularly wage inflation).
And that's the real value in property investment in periods like the 1970s that saw really high inflation.
What's more land represents a largely non-renewable resource. Take Manhattan as a fairly extreme example. They're not making more land to put things on. Other cities like Chicago, LA and especially Atlanta can basically spread forever. But even in those cities, inner city land is irreplaceable and finite.
Now I'm not saying Canada isn't in a bubble or that bubble won't burst. But the author takes a naive stock-centric view of things.