VANCOUVER -- Even for longtime residents used to stratospherically priced real estate in this sparkling Pacific Rim city, news last week that a downtown condo had just sold for $25 million did come as a bit of a shocker.
The two-floor penthouse at the top of the Fairmont Pacific Rim hotel boasts 6,459 square feet, a rooftop deck, three bedrooms, four bathrooms, an open courtyard, a gym, a library and spectacular views of the harbour and the North Shore mountains. It was also a real steal, considering the asking price was $28.8 million.
According to one news report, the Vancouver penthouse is the most expensive ever sold on the local Multiple Listing Service. It will cost $68,000 a year in taxes and $4,200 a month in condo fees.
Ah, Vancouver, you jewel-studded playground flirt for the very rich and those lucky enough to have bought into the real estate market in the early 1980s before it went absolutely skyrocketingly batty.
Consider the $25-million penthouse sale in the context of an average income in the city. According to the most recent statistics compiled by the Canada Revenue Agency, in 2009, Vancouver's average income was less than $44,000 -- $24,000 less than the annual taxes on the condo.
All societies have rich people, of course, as Hollywood is currently reminding us with its latest version of The Great Gatsby, F. Scott Fitzgerald's novel about the ºber-rich. But when there is such a staggering chasm between those who can afford to buy in Vancouver and those who can't, something has to give.
And it has been giving for some time now, as Vancouver continues to bask in positive international media attention, which began with the Expo '86 trade show that attracted about 22 million visitors and continued right through to the successful 2010 Winter Olympics.
Before Hong Kong reverted to communist Chinese sovereignty in 1997, a new wave of immigrants brought with them an enormous infusion of money to Vancouver, further changing the economic makeup of the city and driving house prices even higher.
And, of course, numerous Canadians tired of experiencing bitterly cold and snow-laden winters have set up home in Vancouver, which, along with nearby Victoria, experiences the most benign climate in the nation.
Geography is another reason for the astronomical house prices. The city is sandwiched between the coastal mountains, the Pacific Ocean, the Fraser River, the border with the United States and an ambitious agricultural land reserve. Vancouver is also a non-stop flight from many major centres in Asia, Europe and across North America.
That means developable land -- certainly for the fabled single-family home -- in Metro Vancouver is rapidly becoming a thing of the past. This is especially true for Vancouver, which is continually increasing its density targets through up-zoning measures.
For most new homeowners, say goodbye to that dream of a white picket fence and a lawn for Junior. Instead, it's hello to triplexes, condos, laneway cottages -- all in a much smaller footprint and still not cheap.
It all comes down to money. The average selling price for a detached home in Vancouver at the end of May was about $1.8 million, requiring a minimum down payment of $90,000. (Across the entire Metro Vancouver region, the average single-family home sold at $1.17 million.) The average Vancouver condo price for the same period was $557,000 while the average townhouse went for $794,000.
Helmut Pastrick, chief economist at Central 1 Credit Union, has been watching Vancouver real estate prices for 35 years and is not at all surprised by the high cost of housing in the city.
If anything, Pastrick suggests "geographic limitations to urban growth and development" means the prices in Vancouver will continue to go up as the region anticipates an additional one million residents over the next three decades.
"Prices in Vancouver are what I would consider as fairly valued," he said, adding nowhere else in North America is developable land as constrained as in the city. "It's really land prices that drive house prices... maybe it's a wonder that prices aren't even higher."
Paul Eviston, a real estate agent who has been involved in about 3,000 sales in the past 29 years, agrees high prices make it difficult to buy a detached home in Vancouver but says the city is still a deal compared to other more expensive places.
"It's always been a bit of a challenge," said Eviston, adding Vancouver is becoming an international city. "But it's been a challenge that people have overcome."
People who want to live in the core of a popular city like Vancouver, he said, either have to already own real estate and have considerable equity, be a professional couple making good money or be a successful entrepreneur.
Not everything is bad about this shift to a more densely urban society, however. Increasingly, young people are saying no to 90-minute commutes both ways into traffic jams on top of hefty car and parking costs just so they can be the proud owners of modest bungalows with staggeringly high mortgages and rotting stairs.
After all, Europeans have never been exposed to the idea of a single-family home like Canadians have. And, for the most part, their very dense cities, where extremely small apartments, whether rented or purchased, are the norm, are vibrant, full of culture and fun.
But the shift is undeniably changing Vancouver in a profound way. While some might call it a new version of Beauty and the Beast, with the city being the beauty and punishing monthly payments for 25 years assuming the mantel of the beast, others shrug and get on with their routines the best they can.
For many it's renting instead of buying, living with families in co-ownership arrangements, having fewer children, embracing smaller spaces, and not worrying about a lawn mower.
It's called life, and there's no turning back.
Chris Rose is the Winnipeg Free Press West Coast correspondent.