Something's Happening Here

Last week was the 25th anniversary of Expo 86, the world's fair held in Vancouver in 1986, lasting from May until October. From a housing perspective 1986 is important because it corresponds to the lowest point of real prices since the mid-70s. Since then, for the past 25 years, prices have been rising and average detached houses now stand at close to ten times the nominal price of those heady days of 1986. (Graph courtesy yattermatters)

So just for fun, how many people were around before 1986 who still live in Vancouver? It's an interesting question -- how many people are old enough to remember the carnage of the second-largest bubble in Vancouver's history that occurred in the early 1980s? (Graph courtesy UBC Sauder School of Business.)

So running a few numbers we arrive at the following:

• There were 3 million people in BC in 1986.
• 676,000 people died in BC since 1986.
• Approximately 1 million people out-migrated from BC since 1986.
• The population of BC now stands at around 4.5 million

We assume that most of the people dying in BC were living in BC in the early '80s, say 80%. We then assume that 50% of the 1 million out-migrants have since returned to, and are currently residing in, BC (and were residents before 1986). From these estimates of the 3 million people who resided in the province in 1986, only about 2 million remain in the province. Therefore, only about 43% of BC's population would have any chance of experiencing the fallout of house prices in the early '80s. Practically it is even less, since many counted in that population weren't old enough to be interested in housing prices in the early '80s anyway.

Given that most people residing in BC would not have remembered Vancouver in 1986, with its bargain-basement housing prices still shivering from the sell-off earlier in the decade, it should not be surprising in the least that the majority of people view BC's, and particularly Vancouver's, real estate as a can't-lose bet. We haven't even begun to include people who rode the early '80s bust but think this time is different.

I have high confidence that most of readers here will not remember Expo 86, not least the younger demographic of people likely to be reading this post. But in the off chance you do remember Expo Ernie, monorails, and what the heck that other platform at Stadium Skytrain Station is for, here's some nostalgia, from simpler times when a house was simply a place to live: