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Globalisation and residential real estate in Canadian cities: a spatial approach Tutchener, Judith Karen 1998

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GLOBALISATION AND RESIDENTIAL R E A L ESTATE IN CANADIAN CITIES: A SPATIAL APPROACH by JUDITH KAREN TUTCHENER B.A.(Hons.), Queen's University, 1994 B.Ed., University of Toronto, 1996 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF T H E REQUIREMENTS FOR T H E DEGREE OF MASTER OF ARTS in T H E F A C U L T Y OF GRADUATE STUDIES Department of Geography We accept this thesis as conforming to the required standard  T H E UNIVERSITY OF BRITISH COLUMBIA August 1998 © Judith Karen Tutchener  In  presenting this  degree at the  thesis  University  in  partial  fulfilment  of  the  requirements  of British  Columbia,  I agree that the  for  an  advanced  Library shall make it  freely available for reference and study. I further agree that permission for extensive copying of  this thesis for scholarly purposes may be  granted by the  department  or  understood  by  his  or  her  representatives.  It  is  that  publication of this thesis for financial gain shall not be allowed without permission.  Department of  Qc!^  The University of British Columbia Vancouver, Canada  DE-6 (2/88)  head of my copying  or  my written  Abstract Research on house prices and housing markets has traditionally been concerned with the modelling of house price determinants using hedonic regression equations and other methods of data interpretation. While this research has unveiled some useful insights into the relationships between housing supply, housing demand, and selling price, more recent work has focused on the "specialness" of housing as a commodity and the subsequent dismissal of regression techniques that only serve to throw us into a "statistical soup". Recent research is different in two key respects. First, forces other than macro-level variables (eg. interest rates and the availability of finance) and micro-level variables (household income, size, proximity to work) are believed to contribute to the fluctuations in housing prices over time and through space: specifically, more subjective evaluations of locational amenity, identity construction, and community are now considered in the valorisation of housing. Furthermore, newer research also understands that exogenous influences (eg. immigration, foreign investment) now play a key role in the determination of residential value. This research on residential real estate markets in Canada engages in discussions revolving around the latter of the two approaches using both qualitative and quantitative methods. At the inter-urban scale, analysis of house price movements in Canada's largest cities shows the divergence of Toronto and Vancouver from other CMAs, a trend that coincides with the increasing globalisation of both cities over the last 15 years. Further, intra-urban analyses of both Toronto and Vancouver demonstrate differential impacts of globalisation and economic restructuring within each city with particular neighbourhoods being placed on more of a "global" real estate market (eg. gentrified neighbourhoods, residential areas experiencing offshore investment, and areas of settlement for wealthy immigrants). The particular impacts of globalisation are, however, very different in each city and is dependant upon the nature of the global flows that converge there. Moreover, these results are not politically mute; considerable effort has been expended in Vancouver at least to obscure the actual effects of internationalisation on the regional housing market.  Table of Contents Abstract  ii  List of Tables  v  List of Figures  vii  Acknowledgements  x  Chapter 1 Globalisation and House Price Movements in Canadian Cities: A Spatial Approach 1.1 Reflections on the Research Process 1.2 Thesis Organisation  1 1 4 5  Chapter 2 For Sale: Corner of Main and Bay 2.0 Literature Review: Approaches to Price Studies 2.1 The Influence of Globalisation in Local House Price Studies 2.11 Land Economics 2.12 Demographic and Social Change 2.13 Cultural and Ideological Factors 2.14 Globalisation and world cities 2.2 Whither the Local? The Debates  7 7 7 16 19 24 26 28 32  Chapter 3 39 Canadian Housing Markets and Global Forces: The National Context 39 3.1 Methodology 40 3.2 Interurban Results 42 3.3 Explaining the Trends in Toronto and Vancouver C M A s 62 3.31.1 Metropolitan Toronto: Canada's Economic Engine 63 3.31.2 The Simple Explanation Explored: Interest Rates, GDP, Employment 63 3.31.3 Complexity Component One: Demographic Change 74 3.31.4 Complexity Component Two: Toronto As A Global Node 81 3.31.5 The 90s Crash: The Downside of the Global 88 3.32.1 Vancouver: The Newest Asian Capital on the Pacific Rim? 89 3.32.2 Contextualizing the Trends 89 3.32.3 Vancouver's Housing Landscape: Response to Globalisation or the Ageing of the Baby Boomers? 103 3.32.4 New Asian Immigration and Real Estate: What is going on? 109 3.32.5 Asian Investment in Context Ill 3.4 Conclusion: Comparative Overview of Toronto and Vancouver 118  Chapter 4  121  Intraurban Study: 4.1  A C l o s e r L o o k at T o r o n t o and V a n c o u v e r  121  T o r o n t o : Results and Interpretation 4.11  123  A n A t t e m p t at E x p l a n a t i o n : S o c i o - E c o n o m i c C h a n g e  133  4.12 Further E x p l o r i n g the Relations w i t h I m m i g r a t i o n  142  4.13 O w n e r s h i p and location: recent settlement patterns o f wealthy A s i a n i m m i g r a n t s  151  4.14 T h e N o r t h T o r o n t o S e c t o r — T h e N e w Immigrant M e c c a ?  152  4.15 T h e N e w E l i t e and the E s t a b l i s h m e n t — N e i g h b o u r h o o d s 4.2 V a n c o u v e r : Results and Interpretation 4.21  of Comfort  155 157  E x p l a n a t i o n : M o r e E v i d e n c e o f I m m i g r a t i o n Pressures o n the V a n c o u v e r H o u s i n g  Market  165  4.22 L o o k i n g for C l u e s : " E v i d e n c e " f r o m the Westside  174  4.3 C o n c l u s i o n Chapter 5 C o n c l u s i o n s and Suggestions for Future R e s e a r c h Bibliography  186 187 187 191  IV  List of Tables  Table 3.1  Nominal House Prices, Selected Canadian Cities, 1971-1996  43  Table 3.2  Real House Prices (1986$), Selected Canadian Cities, 1971-1996  44  Table 3.3  Correlation Matrix for Annual Rates of House Price Inflation  49  Table 3.4  Annual Metropolitan Rates of House Price Inflation  57  Table 3.5  Top Ten House Price Oscillations (1971-1996)  62  Table 3.6  Correlation Matrix - Toronto 1971-1996.  66  Table 3.7  Correlation Matrix — Toronto 1971-1985 (pre-globalisation period)  67  Table 3.8  Correlation Matrix - Toronto 1986-1996 (global era)  68  Table 3.9  Ownership Rates by Period of Immigration and Age of Household Maintainer For all Households, Toronto, 1991  79  Table 3.10  Median Household Income, Immigrant and Non-Immigrant by Place of Birth and Period of Immigration, Canada, 1991  79  Table 3.11  Employment Change in the Toronto C M A , by Occupation, 1971 - 1991  85  Table 3.12  Employment Change in the Vancouver C M A , by Occupation, 1971-1991  92  Table 3.13  Correlation Matrix - Vancouver 1971-1985 (pre-Expo)  106  Table 3.14  Correlation Matrix - Vancouver 1986-1996 (post-Expo)  107  Table 3.15  Correlation Matrix - Vancouver 1971-1996  108  Table 4.1  Correlations of Annual House Price Percentages TREB Data 1971-1996 The Changing Spatial Distribution of Employment within the Greater Toronto Area, 1981 -1991  Table 4.2  Table 4.3  Owner-Occuped Units as a Proportion of A l l Occupied Units Toronto C M A  131 136  137  v  Table 4.4  Table 4.5  Table 4.6  Table 4.7  Table 4.8  Correlation of Average Value of Dwelling 1986 and Socio-Economic Census Data Toronto C M A  144  Correlations of Percent Change in Average Value of Dwelling (1986-1991) and Socio-Economic Census Data - Toronto C M A  146  Correlations of Average Value of Dwelling (1991) and Socio-Economic Census Data - Toronto C M A  147  Correlations of Change in Average Value of Dwelling (1986-1991) and Socio-Economic Census Data - Toronto C M A  149  Correlation Matrix - House Price and Socio-Economic Census Data: Vancouver 1986 and 1991  166  vi  List of Figures  Figure 3.1  Nominal House Prices - Selected Canadian Cities  45  Figure 3.2  Real House Prices (1986$) - Selected Canadian Cities, 1971-1996  46  Figure 3.3  Average House Prices as A Percent of the Toronto Average  53  Figure 3.4  Nominal House Prices at Five Year Intervals, Selected Canadian Cities  54  Figure 3.5  Ranking of Selected Canadian Cities by Average House Price  55  Figure 3.6  Annual Rates of House Price Inflation, Selected Canadian Cities 1971-1986 (Nominal Prices)  58  Figure 3.7a  Boxplot of Annual House Price Change (percent) - Selected Canadian Cities (1971-1996)  60  Figure 3.7b  Annotated Sketch of a Boxplot  61  Figure 3.8  Bank Rate vs House Prices - Toronto 1971 1996  65  Figure 3.9  Selected Economic Indicators - Ontario  69  Figure 3.10  Gross Domestic Product - Canada and Ontario  71  Figure 3.11  Unemployment Rates - Canada and Ontario  73  Figure 3.12  Comparison of Number of Households, House Price and Migration-Toronto C M A 1971-1995  76  Figure 3.13  Types of Net Migration for the Greater Toronto Area  77  Figure 3.14  Overseas Visitors to Ontario by Origin  83  Figure 3.15  Enplaned/Deplaned Passengers - Pearson International Airport  84  Figure 3.16  Enplaned/Deplaned Passengers - Vancouver International Airport  94  Figure 3.17  Port of Vancouver - Top Ten Destinations of Exports 1995/96  95  Figure 3.18  Overseas Visitors to British Columbia by Origin  96  Figure 3.19  Immigration to the Vancouver Area by Origin  98  vii  Figure 3.20  Immigrant Landings by Class - British Columbia as a Percent of Canada  Figure 3.21  Gross Domestic Product — Canada and British Columbia  101  Figure 3.22  Unemployment Rates — Canada and British Columbia  102  Figure 3.23  Bank Rate vs House Prices — Vancouver 1971-1996  104  Figure 3.24  Comparison of Number of Households, House Price and Migration: Vancouver C M A 1971-1995  117  Ratio of 1996 to 1971 Average House Prices, current $ - Greater Toronto Area (selected areas)  124  Figure 4.1  Figure 4.2  100  Toronto House Prices: Ratio of 1996 Prices to 1971 Prices (current dollars)  125  Figure 4.3  Average House Price - Toronto (by district), 1971-1996  127  Figure 4.4  Top 20 Areas with the Highest Positive Annual House Price Oscillations  128  Figure 4.5  Top 20 Areas with the Highest Negative Annual House Price Oscillations  129  Figure 4.6  TREB Areas Ranked by Average Price in Descending Order at 5-year Intervals  132  Figure 4.7  Annual Population Growth, Greater Toronto Area 1971 -1991  139  Figure 4.8  Comparison of Number of Households, House Price, and Migration Data Toronto C M A 1971-1995 International Migration, Gross Arrivals 1981-1991  140  - Metropolitan Toronto and the Greater Toronto Area  141  Figure 4.10  Percent Census Tract Population Immigrant, Toronto C M A , 1991  143  Figure 4.11  Scatterplot: Relationship Between Change in Value of Dwelling  Figure 4.9  and External Migation to Toronto (1986-1991 census tract level)  150  Figure 4.12  Average House Price: Vancouver (by district), 1971-1996  158  Figure 4.13  Greater Vancouver Areas Ranked by Average Price in Descending Order at 5-Year Intervals 1996:1971 Ratio, Average House Prices, current $: Lower Mainland  160  Figure 4.14  161  Figure 4.15  Figure 4.16  Figure 4.17  Figure 4.18  Figure 4.19  Figure 4.20  1996:1979 Ratio, Average House Prices, current $: Lower Mainland  163  1996:1986 Ratio, Average House Prices, current $: Lower Mainland  164  Scatterplot: Relationship between Change in Value of Dwelling and Intraprovincial Migration to Vancouver (1986-1991, census tract level)  168  Scatterplot: Relationship between Change in Value of Dwelling and Interprovincial Migration to Vancouver (1986-1991, census tract level)  169  Scatterplot: Relationship between Change in Value of Dwelling and External Migration to Vancouver (1986-1991, census tract level)  170  Scatterplot: Relationship between 1991 Value of Dwelling and External Migration to Vancouver (1986-1991, census tract level)  171  Figure 4.21  Total Immigrant Population: Vancouver C M A 1996  172  Figure 4.22  Average Value of New and Traditional Houses in Kerrisdale Compared with the Vancouver Mean  180  i x  Acknowledgements M y thanks to my supervisor, Dr. David Ley, whose guidance, understanding and patience has been immeasurable. I would also like to thank Dr. John Miron and Dr. Larry Bourne who generously offered their insights and database expertise during a brief visit to The University of Toronto. I also owe gratitude to others who have helped in the production of this thesis: Dr. Tom Hutton, the real estate agents who participated in the interviews, Wyng Chow of The Vancouver Sun, Jerry Dool at the Real Estate Board of Greater Vancouver, Frank Ip of B C Stats, David Andrien of the U B C Data Library, Dr. Kris Olds, Vincent Kujala for answering endless computer questions (no more passwords!!), and Sonia Talwar for her invaluable assistance with Corel Draw. It has, however, been my friends and colleagues here in Vancouver whose smiles offered glimpses of humanity in a department that was often devoid of healthy social interaction. At the beginning, Anne-Marie Bouthillette, Shannon Shaw, Wendy Hales and Heather Smith were great friends and tremendous pillars of support. Over time, others came into my life who I will forever cherish for their laughter, encouragement, crazy times, and amazing memories: Nicky Hicks (and her fine collection of scarves), Trina Bester, Kamala Todd, Brett Christophers (the fishburger connoisseur), Emmanuelle Arnaud (especially for taking out my contacts), Gord Drewitt, Rima Wilson, and Paul Tukker. I dedicate this thesis to my parents and my grandmother who have each patiently listened and endured several long distance phone calls during the last eight years of university. Although I am the author, they have contributed to each and every page through their unsinkable belief that I could complete this degree.  Chapter 1 Globalisation and House Price Movements in Canadian Cities: A Spatial Approach On July 8 1998, The Vancouver Sun ran an article in their business section that highlighted the falling house prices in Vancouver's exclusive Westside neighbourhood. "This is the first time since 1988 that two working professionals can afford a west-side [sic] starter home" said a Vancouver realtor (Chow, 1998b). Another realtor spoke of the recent sale of a home on the Westside that was listed for $379,000, and sold for $360,000 - a full $70,000 less than it would have sold for in the previous year (according to reports of similar houses sold in the same area). On average, detached homes on the Westside dropped $139,000 between June 1997 and June 1998. For the present state of the Vancouver housing market, these stories are not unusual. However, if we investigate this vignette further and look back only three years ago to 1995, we would find that Vancouver's housing market was by far the most expensive in Canada, with average housing prices $100,000 more than in Toronto and $200,000 more than in Montreal. The dramatic rise in housing prices was increasingly attributed to high levels of immigration and newspaper reports covering these price movements often took the headline position in The Vancouver Sun. Yet if we retreat back another 10 years, we would discover a very different situation where Toronto occupied the position as the most expensive housing market in Canada with a gap between Toronto and Montreal (the least expensive of the major Canadian centres) of approximately $50,000. Again, in this case the high priced market in Toronto was linked to its increasingly important role as a global node and its attractiveness as a destination for international migrants.  1  This thesis seeks to tell the story of house price movements in Canadian cities between 1971 and 1996 ~ the first major contribution of its kind to a growing body of international research that links house price movements, especially over the last 15 years, to the processes of global restructuring and the resulting urban change. Traditionally, studies of house price dynamics have concentrated on the influence of local and regional factors on the housing market. However, studies conducted in the United States, Australia, and the United Kingdom have demonstrated that certain cities, and particular neighbourhoods within those cities, are placed on a "global" real estate market as a result of their "international" orientation. This is especially evident when house price movements are observed spatially and temporally from the early-1970s onwards, for a correlation begins to emerge in "global" cities between price movements and the increasing global flows of goods, services, information and populations. These developments, however, have scarcely been addressed in the academic sphere outside the discipline of geography as the essential elements of spatiality and scale are frequently taken for granted and not explicitly explored. This thesis unpacks the spatial aspects of these processes at work in major Canadian centres and seeks to capture those parts of the housing market story that get "lost" in the statistics of classical economic approaches to house price change. The study of the patterns and dynamics of residential real estate investment is important for a number of reasons. On a practical level, the examination of housing markets allows for a fuller understanding of the role of housing as a source of investment and wealth accumulation for the homeowner. On the production side, the financing and development of housing are performing increasingly important roles in national and local  2  economics, not least in employment. Price changes themselves affect the actors and institutions of the urban sphere on a number of levels: the mobility of population and labour; the nature and extent of residential differentiation; the differential accumulation of capital gains; access to public goods and services; and the nature of future urban development (Maher, 1994). The temporal and spatial shifts in residential investment can have a considerable impact on the distribution of wealth in the city, in addition to policy considerations for both public and private institutions, especially in periods of rapid growth and decline. It is therefore essential to gain an understanding of the present climate of urban restructuring and how this is affecting patterns of residential investment. On a more abstract level, this study strives to understand how people in advanced (post)industrial cities value urban space. It has been suggested that the past 25 years of economic restructuring have seen a coinciding shift in intra-urban residential patterns of investment. In particular, it has been observed that there has been a transfer of value taking place from the suburbs towards the inner city. Badcock (1992a) has suggested that this transfer of value can be estimated by looking at the temporal and spatial movement of house prices. However, beyond knowing the economics of price change between the suburbs and the central city, this knowledge gives us some insight into the social, cultural, and in some places, political significance of certain neighbourhoods and the aspirations of the populations that (can) choose to enter into homeownership in these areas. This being said, it can therefore be seen that the examination of housing prices provides more than just a topical snapshot of the dispersion of residential investment in a particular place. Furthermore, differential longitudinal studies between metropolitan  3  centres paints a brighter picture of the spatiality of house price movements in the national context. In essence, seemingly simplistic house price studies open the door to a thick description of the dynamics and meanings behind the spatial, social, and cultural differentiation of the city.  1.1  Reflections on the Research Process I came upon this thesis topic towards the end of my first year of graduate work -  introduced to me through a course on the social, cultural and economic restructuring of North American cities. My interest was heightened when I decided to do my term paper on the subject. At the time, Vancouver's newspaper headlines were filled with stories of astronomical house prices on the Westside and attributed the price increases to the flows of immigration to the Lower Mainland. To me, the connections between rising prices and immigration were not problematic. However, I did have difficulty with the discourse of the reporting which seemed to "blame" immigrants for jacking up the prices in "our" housing market - reporting which, I thought, exemplified both arrogant and irresponsible journalism. Due to data and time limitations, I was not able to pursue the research as far as I would have liked so I decided to embark further upon this topic through my thesis thinking that I could do an interesting and fairly straightforward piece of research. Now, four years after the start of my graduate program I see that my naivete in thinking that I could finish in two years (and get a job) was second only to my naivete in thinking how straightforward this project would be. Throughout the duration of this research, I found myself encountering several academic and ethical struggles. First, I had difficulty negotiating the time commitment of data collection and analysis with my desire to do a more qualitative study by interviewing a diversity of actors involved in the  4  story. I wanted to ensure I was not making claims to knowledge that I was not totally qualified to put forth. Secondly, I wanted to engage myself in the ethnic and "race" literature to explore the underlying currents of the rising discontent amongst Vancouverites. However, time has not been available to do justice to the subject. Third, I was constantly frustrated with the data collection process, frustrations which arose from the veils of secrecy and politics surrounding the data, and that took months to finally penetrate. While I often wanted to switch the focus of my thesis to that of the politics of urban development, I have had to constantly remind myself of my original task: laying the groundwork and building the scaffolding for further research into this topic. In a way, this is also strategic, for the discourse of economics and hard statistics often speak louder and are more accessible to a larger segment of Canadian society than social theory.  1.2  Thesis Organisation This thesis is organized into three main sections. The empirical chapters begin  with a thorough discussion of data sources and methodologies and then move towards results and discussions that incorporate both quantitative and qualitative sources. In chapter 2,1 review key pieces of research that have emerged over the past twenty years as major contributions to the spatial and temporal study of house prices. Coinciding with the latest phase of urban restructuring, the focus of these studies has shifted from a discussion around domestic sources of price change to one of globalisation and the international flows of goods, services, information, and people which impact house prices in areas where these forces congregate. 5  Chapter 3 explores house price change between 1971 and 1996 among eight of Canada's major cities: Calgary, Hamilton, Halifax, Montreal, Ottawa, Toronto, Vancouver, and Victoria. The remainder of the chapter discusses the uniqueness of Toronto and Vancouver in the national context and attributes this uniqueness to their respective roles in the global city hierarchy, each occupying a very different niche. Chapter 4 further investigates house price movements in both Toronto and Vancouver at the intra-urban scale. A variety of data sources are employed to further the argument that immigration flows are impacting the housing landscapes of both cities, albeit in very different ways. Highlighted are the settlement patterns of wealthy immigrants and the specific responses to globalisation in the traditional elite and nouveau riche areas of both cities. The concluding chapter posits a need for global factors to be included in the house price equation in certain cities and in certain areas within those cities. Future avenues of study are also suggested using this research as a base upon which the understanding of global processes and housing markets can be built and expanded.  6  Chapter 2 For Sale: Corner of Main and Bay  Organising the extensive array of housing studies literature into the coherent and logical sequence which is demanded of a traditional literature review has been a challenging process. This being the case, I have opted to focus specifically on research that deals with house prices and the economic, cultural, and social factors that influence the house price equation. As we shall see, the spatial and temporal dynamics of these factors are elements of house price movements that, while largely ignored, are extremely influential.  2.0  Literature Review: Approaches to Price Studies Any inquiry into the nature of housing and the housing market presents some  unique and complex challenges to the researcher. A heterogeneous commodity, housing has been described as a "complex and multidimensional" good (Maclennan 1977). As an object of consumption, the utility of a home functions on a number of different levels as ideologies of home vary; for example the home may be a place of shelter, sanctuary, and family life, and also a place of business as in the case of telecommuting and home-based businesses. However the utility function of a home extends well beyond its parameters as a consumption good. As an investment, owner-occupied houses are valuable, durable, and immobile assets which are increasingly becoming a real source of wealth for homeowners across western economies (Thorns 1982). The utility of a home, therefore, differs across time and space on both the macro-scale of nation or region and on the micro-scale of the city and neighbourhood  7  In Canada, the decision to purchase a home involves a range of considerations for the potential buyer such as: where do I want to live? what part does a home play in my lifestyle? why am I purchasing a house? how long do I want to live in the house? how much can I spend and what debt load can I handle? what are the potential returns on my investment? Hence, perceptions of housing value differ dramatically between purchasers, and the concept of value with respect to housing is, in itself, an ambiguous concept. In monetary terms, depending on the theoretical stance, value denotes the intrinsic worth of something arising from its scarcity and/or the value of capital and labour time injected into its production. However, value can be more qualitative in meaning with the incorporation of social, cultural, or ideological factors into the "calculation" of value (Johnston 1976). Because of the heterogeneous nature of housing as a commodity, an equilibrium price derived from standard supply and demand curves is of limited validity. In attempting to resolve the problem of housing heterogeneity, a special statistical technique - the hedonic price index - is a multiple regression approach widely used by housing analysts. Often used to create comparative price indices between cities and within cities, as well as its use as a tool in the estimation of the market value for an individual housing unit, hedonic regression works on the premise that certain measurable characteristics inherent in a particular housing unit (e.g. number of rooms, bathrooms, age of dwelling, size of lot, neighbourhood amenities) contribute differentially to the market value of a dwelling. Although the equations predominantly consist of supply factors, some demand factors (e.g. the purchaser's income) can be integrated into the equation.  8  Although this method does take into account the differential contributions of various factors, the hedonic approach, not unlike the neo-classical economics supply and demand functions for other commodities, is dominated by the concept of equilibrium. This is intrinsically problematic as it depends upon either an absolute market system or an absolute state system of housing provision—neither of which exist in a pure form in western capitalist economies. Furthermore, the function produced through this method assumes linear relations and constancy over space. Akin to the concept of the isotropic plain, the submarkets arising from ethnic, political, cultural, and geographic segmentation of the housing market cannot be quantified. On the demand side, other important determinants of housing value cannot be incorporated into the hedonic approach such as differences in preference, motivation, aspiration, information, and expectation. These factors combined have convinced several housing researchers to dismiss these regression techniques as they "largely play down the important real dimensions of the housing market in space and time and, in consequence, have little to say about the temporal or the spatial structure of dwelling prices" (Monroe and Maclennan 1987: 66). In other words, those who engage in such methodologies are thrown into a "statistical soup" without really unpacking the processes at work on the housing landscape. Because "empirical results are complex amalgams of global trends, national policies and processes, and local factors, all interacting to bring about a highly differentiated set of outcomes at a variety of spatial scales", alternative approaches to the hedonic technique incorporate macro-economic and political factors (Maher 1994:17; Badcock 1995). This broader approach seeks to determine and explain the impacts of economic change and how related processes affect housing markets between cities and  9  within cities. These studies, however, have themselves undergone an important (yet largely unnoticed) transformation in their orientation, and consequently, their explanation and discussion. Early investigations into the volatility of property markets (at both the inter- and intra- urban scales) and their explanation mainly revolved around forces indigenous to the region or nation under study. While recent investigations have considered price influences from outside the geographic unit of the nation state (eg. immigration), explicit connections of these forces to the globalisation literature is wanting. While there has been a dearth of suitable price studies, several key papers have emerged as vibrant illustrations of how researchers have changed their approach to the explanation of housing value. In an insightful and rigorously researched paper, Johnston (1976) investigated the spatial and temporal variations in land and property prices in New Zealand for the 20year period from 1953 to 1972. Here, Johnston emphasizes the need to look at demand factors (as opposed to supply) in the determination of property value; the "quasimonopoly" held by landowners (due to the "specialness" of property as a commodity, discussed earlier) plays a determining role in value as "variations in selling prices thus depend largely on the degree to which this monopoly power can be exploited" and therefore, a discussion of demand factors remains paramount (1976:32). With an initial explanation of the difficulty of measuring the utility of land (because of its multidimensional nature), Johnston then relates the demand-led dynamics of urban land values to trends in the national economy, and more specifically, export price trends. According to Johnston, the layering of the factors implicated in house price determination has its "base" in the national economy (i.e. the investment environment  10  and income related to national exports) which dictates the overall movements in prices. When the economy experiences a boom period with an influx of money into the country, fiscal and monetary policy favours the free movement of capital into the property sector. Conversely, when money is tight, the property market remains quiet. On a smaller geographic scale, the specific amplitude of prices in particular places is then mainly dependant upon the ability of the landowner to extract the monopoly rent embodied within a certain piece of property. This depends upon vendor and purchaser attitudes and their consequent valorization of a particular property unit. While this value has traditionally been associated with accessibility in neoclassical land models, this assumes an isotropic plane and has since been considered inadequate as it ignores factors such as population growth, government zoning, locational amenity, and various socio-cultural factors that cannot be modelled through accessibility variables alone. Johnston's results led him to reaffirm his conviction that overall price changes in national property markets were strongly related to the changes in the national economy. Between cities, prices were positively related to the city size and growth rate with the largest and fastest growing cities experiencing above average price gains. Distantly related to neoclassical theories of supply, demand, and equilibrium price, this explanation regards higher values to be a "natural" outcome of the increased demand and shrinking supply of land in urban areas undergoing growth, especially in municipalities with strict zoning regulations limiting sprawl. Johnston's study is indicative of early geographic research on house prices. With its emphasis on national factors and influences, the parameters of the value equation remain  11  largely within the spatial realm of region and nation. No discussion within this research looks at more global influences such as immigration and international capital flows. The determination of housing value is seen to be lying solely within the boundaries of the domestic sphere. Even with this focus, not all price movements could be explained through Johnston's regression results. For example, the boom period in property values in the early 1970s was left "unexplained" as the national economic data underpredicted this anomaly . 1  Studies conducted in the 1980s on housing and house price determination continued with the emphasis on regional and national factors in the calculation of value. A 1984 investigation of Glasgow's price distributions from 1972 to 1983 also stressed local variables and factors: "...the special focus of this paper will be on small areas, at which level many interesting questions as to the interactions between national and local influences can be addressed" (Munro and Maclennan, 1987: 65). More specifically, this study wanted to explore the connections between labour market activity in the economically depressed region around Glasgow and house price movements. Surprisingly, the study found that areas of lower-than-average house prices in Glasgow experienced larger price increases (relative to a 1972 base) than areas with more expensive homes. This runs counter to the wealth accumulation argument which stresses that gains in equity through homeownership are highest for those in higher priced areas (Thorns, 1982). Yet upon further examination, the dynamics of the Glasgow market are found to be, in large part, influenced by local government expenditure in the form of financial assistance to renters wishing to enter into ownership and through funds  ' The "bandwagon effect" that results in inflationary spirals is more related to psychological factors than rational economic influences (Whitehead, 1996).  12  allocated to inner-city revitalisation. This study highlights the need for caution in house price studies to watch for overgeneralization when drawing conclusions from individual studies as local government policies and regulations can affect market activity in a variety of ways. In another study, Champion et al (1988) looked at the relationships between economic restructuring, labour markets and housing markets in Britain. Lacking a temporal series of price data, the study was very much an overview and a "snapshot" of the price differentials between the British regions in 1985. However, these results did illustrate how the spatial distribution of mean house prices showed a strong resemblance to the overall pattern of economic prosperity. Clear geographical patterns emerged with a distinct North-South divide with prices highest in London and the Southeast region. Again, the authors explain that spatial disaggregation beyond these broad regional classifications was not possible due to data limitations and hence limited the geographical reach of their study. Nevertheless, their explanations beyond the category of "economic prosperity" do nothing to unpack the processes at work in London and the surrounding region. True, it can be inferred that London is enjoying sustained wealth in comparison to the declining industrial regions in the North, yet this is not explicitly investigated further. Indicators of prosperity such as unemployment and other measures of "wealth" fail to take into account factors such as international labour mobility, immigration, or even the type of economic activity in the region. A Canadian study by Fortura and Kushner (1986) used regression analysis to investigate the sources of inter-city house price differentials between 30 Canadian cities for 1981. Again, the variables used were endogenous to Canada or the cities themselves  13  (for example, household income and characteristics, mortgage rates, taxes, and inflation rates). The model explained 83% of the variation with demand factors being of crucial importance: a 1% increase in the income of householders raised house prices by 1.11%; higher rates of anticipated inflation resulted in higher house prices as households increase their demand for real assets such as housing during inflationary periods; and those areas with higher rates of household formation and non-family households were positively associated with house prices. Overall then, the study found that demand variables are the major force in determining inter-city house prices. With an explained variance of 83%, it might be thought that my assertion that price factors cumulating from outside the region or nation is a stretched claim. Yet this is quite the contrary. A closer examination of the Fortura and Kushner study reveals that Canada's largest (and, for some, more internationally orientated) cities were excluded from this study such as Toronto, Montreal, and Vancouver. Secondary cities in the Canadian urban system such as St. Catharines, Oshawa, Victoria, Saskatoon, and Sherbrooke were the main focus of their study as they wanted to equalise the size and growth patterns of the cities used in the model formulation. The impacts of the more "global" or "international" forces I feel contribute to housing value are initially spatially selective with larger centres receiving the primary effects of these forces with the smaller centres surrounding these larger cities benifitting from spin-off. One other clarification should be stressed at this point: since the Fortura and Kushner study was published in 1986, the effects of more global influences are not readily apparent. As we shall see, significant changes to the orientation of the Canadian housing market materialise around the mid-1980s.  14  Relatively recent examinations of housing value and price determination continue to emphasize the importance of local variables. Case (1992) looks at the effect of the New England real estate price boom between 1984 and 1987 and its effects upon the regional economy. As a reversal of the conventional studies on price booms, Case strives to unpack the economic consequences of housing booms such as growth in consumer spending and the expansion in the trade and service sectors, the increase in available commercial, residential, and industrial space emerging from the building boom, the temporary increase in the demand for labour, and banking and capital shortage problems that can occur during boom periods. While Case stresses that the nature of the boom is debateable with reasons ranging from demographics, lower interest rates, and buyervendor psychology, he again focuses only on domestic matters. Labour migration is discussed: "...house price differentials are important determinants of household moves and operate to offset some of the added incentive to migrate to regions characterised by tight labour markets...", yet migration in this context is only regarded as a regional phenomenon, and is not discussed further. As Case continues, "...housing prices, wage rates, and labour availability are all very significant determinants of regional and state employment growth rates" (178, 181). A 1993 study of inter-metropolitan house price differentials for 65 of the largest US metropolitan areas in 1960, 1970, and 1980 statistically explores the relationships inherent in housing value (Cadwallader, 1993). Once again, international forces are overlooked as the variables selected for the investigation are limited to local incomes, unemployment levels, type of employment, taxes, government spending, climate, and crime levels. While Cadwallader does mention that, in 1980, those cities with a high  15  percentage of the labour force in the tertiary sector tend to be among the fastest growing cities, this set-up for a potential discussion of the relationships between the higher housing values and the emergence of globalizing pressures in these cities is unfortunately neglected. Also problematic in this study is the lack of attention paid to demographic pressures: age structure of the population, household formation rates, domestic migration, and immigration are ignored. Not surprisingly, the study concluded that there is a strong relationship between income and housing value and that the local factors isolated for this study also play a role in explaining the inter-urban housing value differentials.  2.1 The Influence of Globalisation in Local House Price Studies The 1990s have seen some house price studies shift their emphasis from the consideration of local economic factors to an approach that discusses the interplay of both local and global economics plus the resulting political, social, and cultural changes. By far, the most notable and comprehensive surveys on house price changes conducted in this "holistic" vein of analysis have been based on Australian cities. A study by Chris Maher (1994) found that, in general terms, house prices in Australian cities experienced a substantial increase in value around 1980, with another upward surge in 1987. However, the increases were uneven in space, thus causing a growing disparity of house prices between Australian cities. Traditionally expensive areas such as Sydney that experienced the most substantial increases in the 1980s also experienced the most substantial readjustment in prices in the late 1980s and early 1990s. Conversely, less expensive cities that did not experience such dramatic increases in house prices in the 1980s (such as  16  Perth and Melbourne) were insulated from the sharp declines in prices in the post-boom period. To see if these trends were reproduced on a local scale, Maher also investigated intra-urban house prices in Melbourne. From his results, Maher concludes that the trends observed at the national level are mirrored at the metropolitan level, with the three central city areas (the gentrified and traditionally elite districts of Melbourne), recording a rate of price increase in excess of that for the peripheral, more suburban, areas. Similarly, in periods of price decline, the same expensive areas experienced the largest price decrease. Therefore, Maher is able to conclude decisively that the areas (both metropolitan and intra-metropolitan) that benefit from housing booms consequently endure the most substantial phases of readjustment. Blair Badcock's study on Adelaide reports similar findings (1992a, 1992b). Here, Badcock found that in the period between 1970 and 1988, the biggest real gains in property value were to be found in Inner Adelaide, with the outer suburbs lagging behind the average rates of change. In terms of housing stock, the older elite and gentrified central city areas of Adelaide only experienced a 4.4% growth in their physical stock between 1970 and 1988, but the gross value of this stock doubled in real terms. The opposite side of the coin sees a modest increase of value in the suburbs having more to do with new construction rather than a transfer of value within the property market. In the suburbs, the average rates of appreciation per dwelling lagged behind the metropolitan average. This transfer and subsequent capture of value in the central areas of the city from the suburbs is metaphorically referred to as a "heart transplant", where post-war investment which concentrated itself primarily in the outer suburbs to the  17  detriment of the central city is reversed, with an increase in investment and in value now occurring in the central elite and gentrified areas of the inner city. The theoretical framework supporting these Australian house price studies revolves mainly around theories of globalisation, world cities and urban restructuring, gentrification, and inner-city revitalisation. For example, Maher partly attributes the spatial differentiation of Melbourne's prices to economic restructuring and the desire of well-paid white-collar workers to live in specific neighbourhoods, most of which are in the inner city close to their place of employment. He also discusses the effects of population change, the most notable being Australia's high rates of immigration with eighty per cent of new immigrants choosing to locate in the largest urban areas with 55 per cent locating in either Sydney or Melbourne which translates into high demand in these cities (Maher, 1994: 19). Badcock attributes the centralisation of prices in Adelaide to workforce restructuring towards a strong tertiary and quaternary base, increased disposable incomes, changes in consumption, and the in-flows of foreign capital into the C B D where some of the value created by this investment is "captured" by private property owners. In a 1986 paper on gentrification in Canadian cities, David Ley categorised the vast and eclectic mixture of interpretations for inner-city gentrification into four principal categories. With some slight modifications, I will use roughly the same schema in my discussion of the concentration of high house prices in specific cities and within those cities, the centralisation of high prices and price increases in the elite and gentrified neighbourhoods. I have decided to use this schema as my framework because, as Beauregard has noted:  18  Our goal [as geographers] should be to consolidate the significant intellectual advances made around gentrification and then use these new understandings as a foundation upon which to build a more expansive urban theory (Beauregard 1994: 11 quoted in Badcock 1995: 87). Therefore, the four axes I wish to focus upon are: land economics; demographic and social changes; the cultural and ideological elements of inner-city revitalisation and urbane living; and economic restructuring and globalisation. Because of the chaotic nature of urban change, I do not wish to imply that these four groupings are by any means mutually exclusive. Nor are all components causal factors, rather, some are merely descriptive indicators of the processes, while others examine the philosophical underpinnings of urban change. Following a route that takes us from rudimentary economic interpretations towards a more abstract cultural and ideological discussion revolving around urban restructuring, this section will commence with a more detailed look into the dynamics of land economics. 2.11  Land Economics Starting with land economics allows us to return to the discourse of neo-classical  economics. Some have suggested that the return of capital and people back into inner cities has been a result of escalating energy costs, especially after the energy crisis of the early 1970s. The extent of post-war suburbanisation was so immense that many have found commuting to downtown places of employment economically unfeasible in the face of high gas prices. Hence, the homeowner (the rational individual), would see the opportunity costs of living in the suburbs as too high to justify residing there. This results in a migration back into the inner city to be in close proximity to work.  19  In particular, one Australian study has attempted to demonstrate how property values have changed as a result of the changes in the price of gasoline, specifically in Melbourne (Evans and Beed, 1986). The increase in prices served to inflate the costs of commuting from suburban locations to downtown locations of white-collar employment. Alternately, those employed in the decrepit manufacturing sector (which was also adversely impacted by the energy crisis), saw a movement in industrial location out of the inner city towards more suburban locations. Therefore, Beed and Evans' hypothesis of changing property values states that those who work a relatively long distance from their homes will strive to reduce their transportation costs. The fact that an excess of professional-managerial employment is located in the central city will cause property prices to increase in more central areas with a consequent relative decrease of property values in outer suburban areas. Although Beed and Evans have incorporated the essential element of linking housing and labour markets in the discussion of housing dynamics, their causal linking of gasoline prices to gentrification is merely a correlation, and a simplified explanation of the much more complex process of gentrification. Indeed, this hypothesis has not held up to empirical scrutiny (Ley, 1986). In addition, another fundamental factor has been overlooked: gentrifiers are generally not migrants from the suburbs. As Ley (1986) and Smith (1983) have noted, several studies have demonstrated that former addresses of gentrifiers show that only a small minority of these households have moved from the suburbs. Other variables that come to the fore in the discussion of economic demand for inner-city housing include: the availability and cost of finance; interest rates; the pace  20  and level of inflation; land supply and availability; and the existing spatial structure of intra-urban price differentials (Ley, 1986; Maher, 1994). Specifically, deregulation of the banking industry increases the availability of credit, as loan restrictions and requirements are replaced by the operation of the free market (Maher, 1994). In conjunction with greater access to finance, low interest rates stimulate the economy as investors switch resources out of less risky investments and into the property market. And in terms of the effects of inflation, "...housing demand is strongly influenced by its perceived role as an appreciating asset against inflation" (Maher, 1994: 22). In a climate of doubt regarding whether interest rates (or house prices) will increase, many buy before the increase thereby promoting a "bandwagon effect" and in essence, inflating house prices. (Maher, 1994: 22). As the law of supply and demand dictates increased demand and higher prices in the face of scarcity, it is no surprise that the low densities in many desirable central city locations produce a situation where prices stand in excess of their theoretical equilibrium price (Maher, 1994). A n alternative conceptualization of the housing market identifies supply rather than demand criteria as of uppermost importance in triggering gentrification. Simply speaking, the processes of economic restructuring manifest themselves spatially through a restructuring of urban space. A structural (and Marxist) interpretation is based on Harvey's (1978) conceptualisation of the urban process under capitalism, and the circulation of capital within the built environment. With respect to urban restructuring, Harvey speaks of capital switching in its investment patterns not only in method, but also in location. According to Harvey, in order for the capitalist system to survive, capital must always be seeking profit. Harvey ascribes a crucial causal role to times of crisis and  21  overaccumulation, when capital switches investment out of the production of commodities (the primary circuit of capital) into other circuits of capital. When capital is switched into the secondary circuit (which incorporates the realm of the built environment), investment and development results. Periods of crisis dictate the rhythm of investment in the built environment, and, according to Harvey, this has historically coincided with crises of overaccumulation and falling rates of profit in the primary circuit of capital. Therefore, economic activity within the built environment depends upon the dynamics arising within, and from, the primary circuit of capital (Harvey, 1978; King, 1989; Badcock, 1992a). In evaluating Harvey's circuits concept in the context of capital's spatial switching in Adelaide, Badcock (1992a) has noted that despite Marxist undertones, Harvey still has some valuable insights and his model is useful as a guide of city forming processes under capitalism (216). But Harvey's view has been criticized for many reasons: its emphasis on supply side explanations; his primacy of economics over other socio-cultural determinants; his lack of specificity, so that the generalities in Harvey's framework smooth out local and regional variations of investment in the built environment; and an ignorance of other sources of capital outside the industrial sphere (e.g. government outlays and availability of finance) (King 1989a, Smith, 1986). Because of these criticisms, Smith builds upon, and contextualizes, many of Harvey's ideas in his theory of the "rent gap". Briefly, the rent gap shows how ground rent in cities shapes the geographies of suburbanization, renewal, gentrification, and office and plant location. To account for the switching of capital back into the inner city, Smith's theory sees the rent gap emerging as a result of the selective investment in the  22  post-war period up to the early 1970s in suburban areas, much to the detriment of property values in the central city. As the gap between the present (and depressed) rents and potential ground rent increased in the inner-city, an economic opportunity arose for the redevelopment of this land and the subsequent realization of economic gains. This is especially true during periods of economic crisis and overaccumulation in the primary circuit of capital, where the rent gap, "emerge(d) at a time capital (was) seeking outlets in the built environment" (Smith, 1986:30). Hence, profitability for inner-city investment increases and subsequently, capital returns from the more expensive periphery to revalorize the central city. Although Badcock (1992b) has concluded that Smith's work does account for some of the geographical transfer of value within the built environment, criticism also surrounds Smith's linking of economic and spatial restructuring. Many researchers have noted that the rent-gap thesis, like Harvey's circuits argument, is still too general and simplified to account for the many facets involved in spatial restructuring (King, 1989; Ley, 1986). Specifically, King (1989) feels that investment and disinvestment in the built environment have more to do with the availability of finance and interest rates than any crisis of overaccumulation in the primary circuit. Similarly, Ley (1986, 1988) and Badcock (1992b) have noted that Smith largely ignores the role of private and public institutions in the revitalisation of inner-city districts. The spatial patterns of government expenditure especially figure prominently in spatial restructuring. As well, at least in the Canadian context, Ley (1986) has statistically demonstrated that reinvestment and gentrification occur in areas that have not experienced a substantial decline in land values. Rather, reinvestment occurs either in existing upper-income areas or in areas  23  adjacent to elite areas. In Vancouver, the areas that experienced the most social upgrading were not in the most devalued areas such as the Downtown Eastside and Strathcona; rather, they were in the middle-class districts of Kitsilano and Fairview (Ley, 1986). This would suggest that affordability is not of paramount importance for gentrifiers and that the agents involved are not as rational as both Smith and Harvey would have us believe. Therefore, other factors besides affordability must be considered in order for us to understand the dynamics of housing markets.  2.12  Demographic and Social Change In terms of demographic and social trends, the increase in the incidence of smaller  households, higher rates of household formation, the aging of the baby-boom cohort, the emergence of a the new middle class, and the influx of a transnational elite into particular cities have all often been cited as explanations for the recent phase of urban restructuring. As already stated, Vancouver, seen by many as the epitome of the post-industrial city, has observed a movement in its occupational structure towards white-collar employment. However, this change in occupational structure is also cultural as it has resulted in the emergence of new lifestyles that are more cosmopolitan in nature. Aspects of this lifestyle include childless families or singles, and the rejection of suburbia in favour of a central city habitat. As an illustration, the unprecedented rise in the number of "unconventional" households in Vancouver is indicative of this smaller family structure, a phenomenon that stands in opposition to the post-war ideal of the nuclear family. In his study on the changing characteristics of Vancouver's population, Baxter (1989, vii) found that between 1951 and 1986, the number of households in Greater  24  Vancouver increased from 171,787 to 532,220. Even more interesting is the dramatic increase in one-person households, a category which, in 1986, grew in number to 845% of its 1951 base. In comparison to increases in the total number of households over the same period (310% of the 1951 base), the magnitude of the increase in one person households is amply illustrated (Baxter, 1989: vii). None of these developments would have had the enormous impacts they have had if it were not for the entrance of the baby boom cohort into the housing market starting in the late 1960s (Foot and Stoffman, 1996). With approximately nine million members, housing demand from this generation of home buyers grew steadily throughout the 1970s until the early 1980s when recession hit most of Canada. With large numbers still in the rental market, the economic upswing in the second half of the 1980s saw pent-up demand create a surge in residential real estate market activity creating price wars in the most sought-after areas in major Canadian cities. Debate has emerged surrounding the ways in which demographic and social change contribute to urban restructuring and inner-city revitalisation. Smith (1986) states that while demographic changes and changes in consumption are factors in the gentrification process, these factors dictate the form of inner-city revitalisation rather than explaining why the process happens in the first place. Ley, however, asserts that the inner city is increasingly becoming the "playground for the aesthetic personality" of the new middle class and thus, their culture of consumption increasingly plays a decisive role in both the incidence and form of gentrification (Ley, 1996: 20). The quest for distinction and identity as part of the habitus of the new middle class cannot be overlooked (Bourdieu, 1984). This leads us nicely into a fuller discussion of the culture  25  of the gentrifiers and the ideology behind the landscapes of gentrification to help explain why gentrification occurs.  2.13 Cultural and Ideological Factors In the quest for identity, the new middle class craves individuality and distinction apart from the broader middle class. The suburbs as a residential location have "mass" connotations to the new middle class and are therefore inappropriate places of residence (Moore, 1982: 18); gentrification is an attempt by the new middle class to distinguish themselves from the blandness and homogeneity they see in the suburbs (Moore 1982; Ley, 1996). Central-city locations with their environmental amenities, built environments of heritage and architectural significance, and proximity to places of central-city employment are seen by many to be of considerable attraction, especially to small, affluent households. This can be seen as part of the postmodern culture of the new middle class and their rejection of meta-ideals into which they were socialized during the Fordist era of mass consumption. Gentrification sets the new middle class apart from the broader middle classes and their suburban lifestyles. The more urbane lifestyles of the new middle class hence help in the formation of what they perceive to be a distinctive identity. Hence, gentrification also becomes a marker of taste (Jager, 1986). The residential credentialism embodied in gentrified housing is the new middle class' technique of advertising their class identity and social status on the urban landscape (Moore, 1982). With the new middle class' commitment to the aestheticization of life and their preoccupation with the symbolic, gentrified neighbourhoods become markers of  26  social prestige and exemplify the habitus of the new class (Bourdieu, 1984; Moore, 1982) . Smith (1983) does not entirely agree with this interpretation of gentrification. With respect to the primacy he alleges some urban theorists have given to cultural choice and consumer preferences over other factors (most notably David Ley), he feels that the international nature of gentrification dictates that consumer preferences have changed universally in the advanced economies of the world (Smith 1983). Ironically, Smith (a neo-marxist) states that this paints a "bleak view of human nature and cultural individuality" (282). Indeed, although the new middle class is not homogeneous (it is a delusion to think any group is), their socialization in the advanced industrial economies during the post-war period of equalized preferences and homogeneity precludes the dismissal of the fact that the new middle class share some common cultural characteristics across international borders. Smith also feels consumers are not lone actors in the process of gentrification, and that a broader theory of gentrification must also take producers as well as consumers into account. More specifically, he feels that consumer preference and demand are of secondary importance in initiating the actual process of gentrification although again, it does play a part in determining the final form and character of revitalized areas (Smith, 1983) . Yet this is also a bleak view of consumer behaviour and an inflated view of the behaviour of developers: consumers are not always "duped" nor are producers always manipulators or risk takers. Regardless, the debate surrounding this point is moot given the fact that Ley has suggested that both the producers and the consumers in the  27  gentrification process might be of the same social and cultural class (Ley, 1987 in Mills, 1988).  2.14  Globalisation and world cities Since the publication of Friedmann's influential paper "The World City  Hypothesis" in 1986, there has been a plethora of discussion and research surrounding the concept (and in some cases, the existence) of world cities. In this early look at the world city, Friedmann sought to give a "spatial perspective on an economy which seems increasingly oblivious to national boundaries" and to describe "the main theses that link urbanisation processes to global economic forces" (69). As a turning point for urban theory, the hypothesis regards certain key cities as "basing points in the spatial organisation and articulation of production and markets" (70). The resulting combinations of flows and linkages of the world capital system find themselves arranged in a manner which results in the hierarchical spatial ordering of the cities in the world system as "the global control functions of world cities are directly reflected in the structure and dynamics of their production sectors and employment" (73). Meant only as a framework for research, Friedmann's hypothesis has received considerable elaboration and some criticism in the twelve years since its publication (Knox and Taylor, 1995). While early critiques stressed the need for detailed analysis of specific cities (especially Korff, 1987), more recent work has sought to broaden and expand the global or world city concept by adding one or more important specific  28  functions or traits that characterise these cities . 2  In general, the " w o r l d " a n d " g l o b a l "  cities are "the central w o r k p l a c e s o f globalisation...nodes w i t h a h y p e r c o n c e n t r a t i o n o f facilities" (Sassen, 1994: 1). B e c a u s e these points control a n d co-ordinate g l o b a l e c o n o m i c activity, a large segment o f its p o p u l a t i o n is engaged i n e m p l o y m e n t that surrounds the p r o d u c t i o n and export o f services.  N o t o n l y is this p o p u l a t i o n  "transnational" i n their o c c u p a t i o n a l orientation, they also e m b o d y an o u t w a r d - l o o k i n g lifestyle that craves n e w a n d distinctive experiences.  A n d as L e y (1986) has noted, this  process is not o n l y societal, it is spatial as w e l l . In terms o f gentrification, it c a n be said that a city's adherence to a post-industrial e c o n o m i c landscape is, i n part, an impetus for inner-city revitalisation.  C h a n g e s i n the structure o f e m p l o y m e n t c o m b i n e d w i t h the  d e i n d u s t r i a l i z a t i o n o f the city core a n d the subsequent emergence o f tertiary a n d quaternary sector activity as d o m i n a n t i n the central-city, undoubtedly results i n changes i n the b u i l t e n v i r o n m e n t ( S m i t h , 1986). It s h o u l d be clarified that the service sector is not a h o m o g e n e o u s classification. Indeed, s o m e have argued that social p o l a r i z a t i o n has increased i n post-industrial societies w i t h the proliferation o f both lower- and higher-order service occupations to the detriment o f m i d d l e - c l a s s j o b s (Sassen, 1994). T h i s d i c h o t o m y is also reflected spatially w i t h the p l a c e m e n t o f lower-order, white-collar functions i n suburban office  enclaves,  w i t h h i g h e r - o r d e r , d e c i s i o n - m a k i n g functions increasingly taking advantage o f face-toface contact a n d a g g l o m e r a t i o n e c o n o m i e s i n the d o w n t o w n locations ( S m i t h , 1986). L e y (1986) c o n c u r s w i t h his statement that "high status quaternary o c c u p a t i o n s i n particular are concentrated not o n l y i n national a n d r e g i o n a l service centres, but  A l l of these terms are social constructions and as such, are fluid over time. The parameters of the debate are in constant flux and mean different things in different places (see Hall 1984, 1989, King 1990, Sassen-  2  29  disproportionately in the downtown cores of the city" (525). The fact that 56% of Vancouver's office space is concentrated in the downtown district speaks volumes to this effect (Ley, 1986: 525). Therefore, the changing employment structure of the inner city manifests itself spatially not only in the economic landscapes of the city, but also in the residential landscapes with a downtown professional workforce (the new middle class) who increasingly desire to reside in areas in close proximity to the downtown region. O f course, the reduction of journey to work time is too simple an explanation for the sharp rise of gentrification in the inner city (Moore, 1982). Nevertheless, the changing social and economic composition of downtown activity has definite implications for the spatial structure of the city. More recently, other forms of residential reinvestment have started to take hold in certain city cores. In addition to the "home-grown" group of inner-city dwellers that have had a profound impact on the character of recent urban change, a dramatic increase in the number of wealthy international migrants into central city neighbourhoods has also played a major role in the central-city transformation . The emergence of a transnational 3  elite class has seen recent immigrant settlement expand beyond the traditional inner-city immigrant reception areas into (as in the case of Vancouver) established Anglo-elite neighbourhoods located close to the city core (see Mitchell 1993; Ley 1995). While the decision to locate in these neighbourhoods delivers the prestige and privilege embodied  Koob 1986, Sassen 1991, 1994a, 1994b, Knox and Taylor 1995). O f course, not all immigrants are wealthy, nor do they all settle in the downtown core. The influx of refugees and lower-income migrants into some world cities (e.g. New York, Los Angeles, Toronto) has increased substantially (see Sassen, 1986). Spatially, while many new immigrants continue to settle in traditional immigrant reception areas in the inner city, a considerable number now settle in suburban areas which, especially in Canada, are the locations of public housing projects (see Murdie (1994), and H . Smith (1992)). 3  30  in an elite address, they also ensure a prime education for their children as these neighbourhoods are often sought out especially for the superior quality of the schools in the area. The movement of these immigrants into elite areas in the city core is not directly related to gentrification in the sense that their investment patterns are not in response to depressed land values in the central city (they are purchasing homes in established elite neighbourhoods); these new residents are not, generally, small households seeking smaller apartments vis-a-vis a desire to enjoy a playful, urbane lifestyle; and they are not deliberately rejecting the homogeneity of the suburbs in order to acquire an identity seen as an escape from an upbringing of mass consumption. Clearly then, the settlement patterns of these new immigrants stem from processes that, while distantly related to the behaviour of gentrifiers (i.e. residential and retail gentrification undoubtedly contribute to the appeal of inner-city living), are enabled by tangential processes that impact the evolution of the urban landscape. The rapid advancement of information, communication, and transportation networks in conjunction with the emergence of world cities and their global-oriented economies have made the transitions experienced during overseas transborder migrations less burdensome. Though the development of a global residential real estate market has left a remarkable imprint on the housing landscapes of certain world cities, the actual workings of the global residential real estate market are difficult to unpack. The identification of key players involved as well as the understanding of the procedures and norms of day-today business is a murky task given the complex web of social, business and information networks reaching across borders and oceans. Many have even argued against the  31  concept of a global real estate market given the "specialness" of housing as a commodity. This final section briefly considers these debates and attempts to situate local housing markets within the complex (and sometimes ambiguous) context of globalisation.  2.2 Whither the Local? The Debates The last five years have witnessed increasing debate surrounding the spatial orientation of real estate and, in particular, housing markets. The need to investigate local details such as neighbourhood, community, and amenity during the purchasing process are all essential elements of real estate transactions that require the physical presence of all actors involved (Logan 1993). Real estate markets also rely largely on local politics and citizenship for zoning, planning, and service provision to take shape to the advantage of the property owner. In addition, real estate cycles are influenced to a great extent by the investment climate and political stability, both of which are very local in character (Mueller 1992). However, with the emergence of the "world city", several urban analysts have commented on the changing spatial orientation of certain real estate markets in those cities that serve as global nodes in the world system. As Saskia Sassen (1991) has commented: The rapid growth in the number offinancial firms, service firms, and high income workers concentrated in major cities has contributed to the rapid growth of a high-price real estate market...The central areas of these cities have become part of an international property market...[where] buildings and commodities which can be bought, sold, and resold as commodities, in a market that is autonomous from broader conditions in the national economy (183, 187). According to Michael Goldberg (1994), the success of any "global" real estate transaction depends upon first, information availability and knowledge of the  32  metropolitan region, and second, the degree of "comfort" of doing business and investing in that region. In terms of information flows, clarity and continuity are essential. Profitability depends upon the ability of the actors in the global market to assess risk and to securitize real estate investment . The enabling factor here is the development of 4  massive knowledge and capital networks that serve to relay information and capital to the respective actor nodes in a particular property development. According to Olds (1995)  Analysts are increasingly paying attention to the role of world-wide social networks of knowledge-based experts who have the resources and power (or access to power) to impact decisions in arenas such as foreign policy, economic policy, or ...property development and planning (1717). One example of such a "strategic alliance" was researched by Kris Olds in his study of Vancouver's Pacific Place and its development process. Here, The investment decisions and planning process are mediatedfor the Hong Kongfinanciers by global elites who have strong cultural, economic, and political knowledge bases on both sides of the Pacific (Olds 1995: 1735). One example of a member of "global elite" who has served as a key player in the development of the Pacific Place site has been Stanley Kwok. A Vancouver resident of Chinese origin, Kwok is an architect and property developer who served as director of the provincial crown corporation which owned the Pacific Place site (then known as the "Expo" site) prior to its purchase by Concord Pacific (the Hong Kong-based development company). After the sale of the site, Kwok moved into the private sector where he served as a liaison between the global and the local in the development process and hence, was  Securitization here refers to the transformation of real estate into a commodity not unlike stocks or bonds. Historically a residual user of capital, real estate has now moved to the forefront of capital markets where securities firms buy home mortgages and, in turn, publicly trade bonds based on the mortgages. In effect,  4  33  able to successfully negotiate and execute much of the site development on behalf of Concord Pacific, a result of his "impeccable connections to investors, city officials, and politicians both locally and overseas" (Olds 1995: 1725). However, while land speculation on a global scale is more feasible than ever before with the massive networks of capital and knowledge (e.g. the increasing linkage between the financing of real estate and broader capital markets, and the emergence of new kinds of organizations to plan and execute development projects) many watching the industry disagree about the extent of this "multinationalization" of real estate. As one observer has noted, "real estate is a local market, by definition. It is not possible to focus on national trends, one must focus on local issues and characteristics" ( Zell 1986:1 in Logan 1993:46). And as Mueller has discovered, "the availability of reliable real estate information is surprisingly scarce in comparison to the availability of information in the stock and bond markets" (1992:30). While real estate represents much of the world's wealth—estimates vary from 20 to 60 percent—many investors are held back as a result of poor information. Another essential element of successful global investment in local real estate is the receptiveness of both citizens and politicians to foreign ownership of domestic property. According to Goldberg, local governments are shapers of public attitudes and need to ...open up [the] local perspective to the wider global one... [they are] both symbols of local willingness to think globally as well as the means by which to lure foreign attention and action... they should be encouraged to be considerably bolder and more outward-looking than they  local property development obtains more access to new national and international sources of capital through (but not limited to) the use of money pools such as insurance and pension funds.  34  have been in the past since the potential local benefits can be highly significant (Goldberg 1994: 10). However, the promotion of a healthy investment climate does not guarantee foreign investment and also assumes that the impacts of globalisation are both even in space and skewed in the positive direction (i.e. profits) for the entire metropolitan population. Indeed, this is the underlying premise in a statement made by Goldberg, an academic who is also a growth booster: These physical manifestations [i.e. luxury condos and deluxe Asian hotels] catch the public eye and ire, while underlying economic changes and opportunities elude the public view (Goldberg 1994:13). Of course, the effects of globalisation are highly uneven over space and through time: Globalisation is a contingent, dialectical, nonuniform, and undulating mesh ofprocesses which do not, contrary to popular opinion, lead to simple homogenization; globalisation also initiates a myriad of local interpretations and transformations. Seemingly uniform flows of ideas, images, or capital are interpreted to an infinite degree, creating diverse impacts in similar localities at the same time or in the same locality at different times (Olds 1995: 1714). Not all cities and not all neighbourhoods within world cities are influenced by global flows. In the cases of both London and New York, the most dramatic increases of the 1980s property boom were confined to the central areas of these cities with a large disparity between central locations and the rest of the city (Sassen 1991). Initiated by foreign investment, certain inner-city addresses commanded very high prices much to the detriment of certain places and populations within those spaces who were not able to capture the benefits ensuing from globalisation. Furthermore, it should be recognized that the globalisation process is not a "steamroller" and local governments and  35  populations do have some power to contain or resist the changes imposed upon them arising from global forces . In essence, while globalisation does not change the 5  importance of locality itself, it does change the environment within which the actors in the housing market operate. It should also be noted that the spatial and psychological distance created through the globalisation of real estate results in a whole other set of circumstances that can lead to oversupply and other financial setbacks, especially when market signals are not readily communicated to overseas investors. Another major aspect often neglected in the promotion of a global real estate market is the placement of a city's "international" submarkets in a position which leaves them vulnerable to fluctuations in the global economy. While these areas are, to a degree, influenced by local economic forces, they are particularly sensitive to the oscillations of global capital, population, and information flows while their suburban hinterlands are somewhat insulated from global fluctuations. So while these areas are more susceptible to financial and capital fluctuations, they still benefit tremendously from the enormous markets and potential bidding wars that global exposure gives them. To be sure, it should be stressed that my assertion that global forces impact real estate in particular places is nothing new; international property acquisition has always been a major component of portfolio investment (especially in places such as London and New York) — this investment, however, usually took the form of commercial and retail space or, if residential, the purchases were usually those of large apartment buildings. Indeed, the majority of the literature surrounding the globalisation of real estate still  For a good overview of locality studies and the importance of placing the local within a global context see Cox 1997, Featherstone 1993, Jackson 1991, Massey 1993a, 1993b, and McGee 1995.  5  36  concentrates on changes in the property development industry and the emergence of urban megaprojects with little or no mention of residential space outside the context of massive development projects in which a large component of the development is residential (see Logan 1993; Olds 1995). Over the last 10 to 15 years, however, there is evidence leading to the conclusion that housing markets, and in particular, new and resale markets for single family dwellings, are increasingly being influenced by global networks, especially information networks. Evidence for such a position includes the emergence of international magazines and newspapers which feature residential listings in different countries, transnational real estate companies that specialize in housing, and multilingual listings on the internet. For example, a prominent Vancouver real estate analyst, Ozzie Jurock, has a world wide web site titled "Jurock's International Real Estate Net" (www.jurock.com) that focuses on "International, National, and Pacific Rim perspectives".  Here, web browsers have access in both English and Chinese to real  estate listings catagorized by location: Vancouver, British Columbia, Canada, the United States, and the World. This web site also gives other information that will help those involved in the real estate market maximize their investment dollar. In 1996, one of the monthly newsletters featured an article on Feng Shui, a branch of cosmology which many Chinese adhere to and, according to Jurock, "Any Vancouver homebuilder will find it extremely useful to understand the concepts" (www.iurock.com/96fax6.html).  Visitors  to the site can also participate in a chat room where they can list and/or enquire about properties and property values without the mediation of a real estate agent. Periodically, Ozzie Jurock himself joins the chat and offers his advice free for the asking. Another example of the more outward-looking nature of real estate encountered during the course  37  of my research was at a the 1996 Real Estate Expo held in Vancouver. Seminars at the event were conducted in both Chinese and English and two of the seven main sponsors of the expo were Chinese-language media outlets (AMI320 C H M B and the Ming Pao daily newspaper). Such services as the internet, housing fairs, and magazines like The Emigrant, published in Hong Kong for those interested in moving to Canada, the United States or Australia, all aim (with some success) to provide detailed information and purchase opportunities to motivated transnational buyers. In the next chapter I shall examine some implications of the globalisation of real estate upon residential price movements between cities in Canada. Following this analysis, Chapter 4 will carry the discussion to the intra-urban scale of house price change in Vancouver and Toronto, where we will see the particular variations that emerge from a meeting of local and global processes.  38  Chapter 3 Canadian Housing Markets and Global Forces: The National Context Obtaining house price data for the purposes of this study has proven to be an onerous task; either the data did not exist or, alternatively, any data that were available were found to be deficient for reasons of incompatibility in terms of methods between series (e.g. median versus average price) and/or differing definitions of single family housing (some boards include only single-family dwellings while others incorporate both condominium apartments and townhomes in addition to single-family dwellings into their respective statistical compilations) . 6  Fortunately I was directed by C M H C to a market analyst who just happened to remember a unique data collection compiled by C M H C in 1995. Titled Long Term Changes in Average Resale Home Price, the data were a complete series covering the 1971 to 1994 period for 27 of the major Canadian housing markets. In spreadsheet form, the set included data relating to annual nominal average prices, real prices for each year in each centre, and the Consumer Price Index (CPI) data used to calculate the real prices. Using the Multiple Listing Service (MLS) Annual Report published by C R E A (and only available to members or those willing to purchase the reports (most definitely not university libraries!)), C M H C was able to produce an informative and readily available database. Purchased for a reasonable cost, this compilation has emerged as the only  Various data sources investigated included: Canada Mortgage and Housing Corporation (CMHC) which only compiled statistics based on new construction costs; individual real estate boards who either did not keep continuous statistics from the early 1970s or whose statistics were of a format incompatible with other board statistics; the Canada census which does record statistics based on owner-assessed values of dwellings, however, the five-year gaps between census counts and its self-evaluative nature were of issue; special reports published by major Canadian real estate corporation (i.e. Royal LePage, Century 21) but these did not include the essential historical data going back to the 1970s; and annual reports of the Canadian Real Estate Association (CREA) which were either not available or, were available yet at a financial cost beyond the means of this study. 6  39  reliable, consistent, and continuous data source for this study . The C M H C database 7  was updated to 1996 using C R E A data obtained for me by special request from the Real Estate Board of Greater Vancouver.  3.1  Methodology Before commencing an intense examination of the data, several key issues need to  be addressed which are connected with issues of methodology. As this unique series of metropolitan house price data is based on average values (as opposed to medians), an awareness needs to be directed towards the skewing of values by extreme data points for each metropolitan series. That is, any point that is extremely low or, conversely, extremely high, will distort the final average figure. The employment of averages also implies a normal distribution which may not account for the "compositional effect", a phenomenon that could also lead to a misinterpretation of the actual processes at work in these Canadian cities . Nevertheless, one must work with data in the form with which it 8  is presented. No degree of data manipulation on my part at the stage at which the C M H C data was made available to me could account for these concerns nor could I examine the distribution of the selling prices as this information was not made available to me. While I acknowledge the fact that samples of residential selling information taken from  ' However, it should be noted that the set is not flawless. 1971 to 1973 statistics are based on all M L S transactions - accordingly this would tend to include any residential, commercial, or vacant land sold through the M L S service. Post-1973, only residential transactions are included, however, this can also be problematic as these statistics are not limited to single-family dwellings - condominium apartments and townhomes would also be included in this dataset. One further clarification is worth noting: as new developments (i.e. new suburban subdivisions, entire condominium apartment/townhome developments) are usually sold exclusively through the development company and their agents,MLS services are usually not employed. Therefore, these new developments would not be included in these statistics, with the exception of units purchased and turned over relatively quickly onto the resale market. 8  1 am grateful for Dr. Larry Bourne, University of Toronto, for pointing this out to me  40  assessment records and/or newspaper listings could have compensated for these constraints on accuracy, these methods were quite simply too time consuming and costly to be included within the scope of this investigation. Questions also arise with respect to the usage of nominal versus real prices in this study; key advantages exist with the employment of both. While prices expressed in real terms (nominal prices calibrated to account for inflation using a set base year) allow for overall comparisons over time (1971 to 1994) and space (prices are adjusted according to each centre's respective CPI for the given year), practical reasons exist for looking at nominal prices. As Maher (1994) asserts nominal prices remain extremely important as the figures with which the housing consumer is constantly confronted, that they most readily comprehend, andform the basis on which many decisions to buy and sell are based (8). Yet along with this reality, many homeowners overestimate their gains in the housing market and do not really consider the real costs or real gains embodied within their perceptions of the growth in equity in their homes. For these reasons, I have opted to use both real and nominal comparisons in my analysis. While I understand the need to harmonize the data to account for inflationary gains, I am in agreement with Maher with his insistence of using nominal prices to gain insights into the understandings of the (average) common homeowner. For overall comparison purposes, real prices have been examined, however, when comparing the annual change in average residential prices, nominal prices are used with the reasoning that overall annual inflationary changes (for all goods) are not readily acknowledged by the sellers and purchasers of housing. What is immediately addressed by this same population is the increasing (or decreasing) value of their homes, even within a matter of weeks. Media reports are consistently laden with  41  stories of windfall profits, as well as devastating losses, for homeowners. This is coupled with the fact that housing is usually the largest holding of equity for the majority of the home-owning population which serves to create a climate of obsession for owners to know the value of their dwellings . Their innate need for accurate information is 9  essential when dealing with the fiscal and investment health of the metropolitan economy in question. The figures arising from this information are stated in nominal terms, and this is the information these owners (and buyers) are confronted with. Therefore, when I am discussing the annual changes in residential prices for each centre, I am referring to nominal prices. 3.2 Interurban Results The annual average price of residential properties for eight selected C M A s for the period from 1971 to 1996 are listed in Tables 3.1 and 3.2 and are illustrated in Figures 3.1 and 3.2 respectively. Cities were chosen to include the nation's four million cities, the major regional centres of Calgary and Halifax, and the satellite cities of Hamilton and Victoria. Both tables display the same data with the latter adjusted to constant dollars using the 1986 Canadian Price Index as the base year in order to separate broader inflationary movements from real house price gains and losses. Distinct advantages exist for both data sets: the employment of a constant dollar data set allows for the overall comparison of price movements from the beginning to the end of the study period while the nominal data set provides accurate annual averages with the opportunity to extract annual rate of change figures and other fruitful manipulations of the data.  Personal conversation with Dr. John Miron, University of Toronto.  42  Table 3.1: Nominal House Prices, Selected Canadian Cities, 1971-1996  . Halifax 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996  Montreal  23904 25003 26586 31167 38326 41806 44160 46012 47154 48951 59365 61778 70251 78473 79350 85037 89013 92204 93444 97238 99332 99975 102500 103579 103011 105869  Ottawa  23693 25030 26385 28036 32716 36404 39070 41691 45490 49419 55004 54454 55748 64437 70564 78136 92292 104071 110015 111956 114379 113688 114293 114093 109929 108020  Toronto  29619 32303 39309 47231 49633 54623 57032 59134 61897 63177 64854 70971 86608 102083 107640 111925 119613 128351 137456 141562 143379 143869 145612 146925 143127 140513  Calgary  31822 34078 44105 56121 58181 62805 67014 68913 73992 75621 90202 95496 101631 102350 109094 138301 189105 229635 273698 254890 234313 214971 206490 208852 203028 198150  Vancouver Hamilton  23641 25284 31256 36936 48341 64810 66428 75511 82428 93977 107739 106311 98793 86724 80462 86482 93102 100687 112827 128484 128255 129506 133998 134302 132114 134643  26471 31465 41505 51758 57765 62258 64556 66244 70889 100065 148861 107830 115818 113722 112852 120036 132659 160376 209671 226385 221874 245560 279758 302435 307747 288268  Victoria  24758 27434 33615 42528 45103 49729 50386 52201 53795 54835 58509 58663 64015 65995 72972 89079 114626 135221 163249 165742 160954 151038 143433 147068 141109 142267  23620 25610 32373 45900 52301 60062 61674 62911 66973 85338 123983 97378 97515 90970 88451 95633 102040 118728 141909 160743 169516 194666 210650 219890 210669 211602  Sources: Canadian Real Estate Association, various years. MLS Annual Report. Ottawa Canadian Real Estate Association; Canada Mortgage and Housing Corporation. 1995. Long Term Changes in Average Resale Home Price. Ottawa, Canada Mortgage and Housing Corporation.  43  Table 3.2: Real House Prices (1986$), Selected Canadian Cities, 1971-1996  Halifax  Montreal  Ottawa  Toronto  Calgary  Vancouver Hamilton  Victoria  1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996  73101 72895 71854 76577 85549 86198 84436 81726 76923 72093 78215 74252 79290 84836 82058 85037 85920 85851 83061 82266 79402 79219 80455 80356 78936 79841  74506 75392 74324 70798 74524 77786 77061 75802 75817 74651 73831 65607 63639 70577 74044 78136 88318 95918 97101 94798 90133 87926 87180 88239 83596 80793  91417 95009 107109 116333 111285 114035 110100 105221 101304 94154 86472 86130 98530 110599 111892 111925 115013 118514 120894 118860 113883 112750 111580 112156 106099 102639  100703 102645 123198 142078 132833 133628 132439 125525 123320 114404 121402 115473 115885 111371 114235 138301 179077 207065 232144 206556 182203 165745 156669 158221 150169 144109  71423 73075 84705 90975 106713 132265 124865 131095 131674 136001 137598 121221 107853 92358 83294 86482 89694 94453 101921 109255 102933 102538 104686 103628 99483 99294  81701 92273 113402 126858 127236 125268 121118 115408 114522 147806 192576 126117 128401 121239 116583 120036 128670 150165 188046 192504 179365 192747 211938 224358 223005 207238  78348 82882 94424 107666 102975 105806 99185 94396 89065 82335 78430 71021 72993 71734 76171 89079 109064 122928 140248 135854 126139 117084 109324 111924 104914 104149  72901 75103 88451 112500 115200 120849 115711 109601 108195 126053 160392 113892 108110 96983 91375 95633 98972 111169 127273 136686 137038 152799 159583 163123 152659 152122  1971  1.09  1.08  1.12  1.43  1.39  2.54  1.33  2.09  Sources: Canadian Real Estate Association, various years. MLS Annual Report. Ottawa, Canadian Real Estate Association; Canada Mortgage and Housing Corporation. 1995. Long Term Changes in Average Resale Home Price. Ottawa, Canada Mortgage and Housing Corporation.  44  45  46  A n initial examination of Figure 3.1 reveals that the period of the 1970s was characterised by a low range in price between the eight cities with slight and steady increases experienced by all centres, though in relative terms year to year price increases of over 20 percent occurred at least once in almost every city in the early part of the decade. In real dollars, however, Figure 3.2 illustrates a more accurate reading of the same price movements with a larger range in price and a more dramatic price increase in all cities (except Montreal) in the mid-1970s with an initial slight (and, in Ottawa, Hamilton and Halifax, drastic) fall towards the end of the decade as the country moved into the devastating recession of the 1980-81 period. A readily apparent anomaly to the trend is Calgary with its dramatic surge in price as a result of increased demand for housing associated with the oil boom. The greatest increases for Calgary transpired between 1974 and 1976 with a stabilisation beginning to surface by 1978. In consequence, by the end of the decade Calgary moved ahead of Toronto to assume the position as the Canadian locale with the highest home ownership costs. As the Canadian economy moved out of the recession, the mid-to-late 1980s was characterised by recovery increases in Ottawa, Halifax, and Montreal followed by a very stable period in prices going into the 1990s (Figures 3.1 and 3.2).  By 1982, the Calgary  boom had reached its climax as the housing market took a sharp downturn that lasted until 1985. At this point a convergence of prices occurs between Calgary, Halifax, Montreal, and Ottawa. While absolute differences in price between places differed, these four places became more similar in their rates of change especially throughout the late1980s and into the 1990s. The period of the late-1980s onwards is a time of unprecedented stability for these four cities with Halifax in the lowest position and  47  Ottawa in the highest - the range between them being only $ 43,346 in 1994 (compare this with the Vancouver and Halifax difference of almost $200,000!) (Table 3.1). Toronto, Hamilton, Vancouver and Victoria are exceptions to these trends; not only are they unique in the timing of their respective waves of growth and decline, but the amplitude of these waves also deviates from trends observed in the other four cites. While the fluctuations in Victoria and Hamilton are not impressive when directly compared to the dynamics of the Vancouver and Toronto markets, they do exhibit the same tendencies which appear to be "shadow" effects of the trends in the larger two C M A s . The strengths of these two relationships are confirmed through Table 3.3 where a correlation matrix of the annual rates of house price inflation demonstrates positive correlations of .93 for Toronto and Hamilton and .89 for Vancouver and Victoria. Both of these relationships are very high, but assume even more significance when compared to the relatively weaker relationships for the other six cities. To be sure, we can not assume causality from correlation analysis, but it does introduce some potentially interesting variables into the house price equation, such as the influence of proximity to a larger C M A , the composition of the local economy, and the desirability of place . Table 10  3.3 also gives insight into the regional effects of house price change. Looking at the strongest correlation relationships, shadow effects within regions can be observed with moderate to strong relationships in western Canada between Victoria, Vancouver, and Calgary, and with similar relationships in central Canada between Hamilton, Toronto, Ottawa, and Montreal. This idea of regionality of house price fluctuation is enhanced  Because of the strength of these two relationships the price fluctuations for Hamilton and Victoria will not be explicitly discussed. Therefore, when the situations in Toronto and Vancouver are discussed, it should be inferred that the general trends are, for the most part, applicable to Hamilton and Victoria (except where otherwise noted). 10  48  Table 3.3: Correlation Matrix for Annual Rates of House Price Inflation (n=25) Calgary Calgary Halifax Hamilton Montreal Ottawa Toronto Vancouver Victoria  1.00 0.41 0.35 0.35 0.10 0.33 0.47 0.62  Halifax  1.00 0.26 0.50 0.45 0.29 0.32 0.46  Hamilton Montreal Ottawa  1.00 0.53 0.55 0.93 0.37 0.40  1.00 0.27 0.54 0.29 0.26  1.00 0.47 0.12 0.14  Toronto  1.00 0.42 0.42  Vancouver  Victoria  1.00 0.90  Sources: Canadian Real Estate Association, various years. MLS Annual Report. Ottawa, Canadian Real Estate Association; Canada Mortgage and Housing Corporation. 1995. Long Term Changes in Average Resale Home Price. Ottawa, Canada Mortgage and Housing Corporation.  49  when we look at the weakest correlations with occur between western and central Canada. Together, these correlations suggest a clear east/west divide in Canada's house prices and the influences upon them. The average residential price (in 1986 dollars) of a home in Toronto in 1971 is reported as $100,703. In the span of only four years, this average increased by $ 42000 and remained relatively stable for a decade (keeping in mind any general inflationary increases have been controlled for). During this time, Toronto's top position in the Canadian ranking of house prices was displaced by petrodollar demand in Calgary from 1978 to 1982, and also by speculation practices in Vancouver in the early 1980s. B y the mid-1980s, Toronto regained its primacy as the leader in housing prices with a boom that can only be described as phenomenal: between 1985 and 1989, average real prices increased 103 percent from a 1985 low of $ 114235 to a high of $ 232144 in 1989. With a booming economy, heavy in-migration, and a strong demand for new homes outpacing supply, the upward spiral in prices created a frenzy as sellers and buyers rushed to strategically profit from the seemingly unstoppable surge in prices. Unfortunately, price booms are intrinsically destined to bust, and such was the case in Toronto: the four year period following the peak of the 1989 boom was characterised by drastic price declines with a decrease in average prices by 37% between 1989 and 1993. However, further investigation reveals that prices were still relatively high when compared to pre-boom prices in addition to prices reported in the rest of the country (except for Vancouver and Victoria) . 11  " For a good discussion of the dynamics of boom-bust periods and their effects, see Whitehead 1996 (Calgary), A R A Consultants 1988 (Toronto), Daly 1982 (Sydney) and Harris 1986 (Toronto, Montreal, Vancouver).  50  A look at the Vancouver situation is also enlightening. With prices following general trends in the early 1970s, the period between 1979 and 1981 saw Vancouver's prices quickly accelerate upwards with increases of 68% (real dollars) in the span of only two years. Yet again, as we have observed in the Toronto boom of the late 1980s, the prices experienced a spectacular fall with a decrease in prices of 35% in one year. Chalked up to speculation by individual investors (as opposed to large development companies) and characterised as an anomaly, this unusual boom still surfaces occasionally in the city's folklore with stories of riches gained and lost through unscrupulous speculation practices (Skaburskis, 1988). After this intense but short-lived boom, home prices in Vancouver witnessed a four year period of stability. However, as was the case in Toronto, 1985 signalled a turning point for Vancouver's housing markets. This year marked the beginning of a long price boom, a force that remained intact until 1995. While the increases were substantial, prices did not initially increase as dramatically as in Toronto (with increases of 65%> in Vancouver between 1985 and 1990). This less precipitous intensity of price increases may have contributed (although not entirely) to the insulation of Vancouver's markets from the devastating effects of the recession in the early 1990s. After a slight decline of only 2% between 1990 and 1991, Vancouver's prices took-off in 1991 and accelerated at an increasing rate until 1993 when lower rates of increase continued up to 1995 which brought about a peak in the boom; prices then started to decline in what many presently regard as the onset of a lengthy market correction. Unfortunately, an "accurate" national average figure, weighted to account for the differences in the number of units sold, was not available in a format compatible with the  51  employed data sets. If available, this would have allowed us to investigate the shifting distribution of average house prices and position of each city relative to a Canadian average . Nevertheless, I was able to calculate the average house prices of Halifax, Montreal, Ottawa, Calgary, and Vancouver as percentages of the Toronto average for the entire study period (Figure 3.3). Given the common perception of Toronto as having the nation's highest costs of living in terms of housing, it is interesting to note how Toronto has only held a truly dominant position in the Canadian housing market in the mid- to late-1980s, and, to a lesser extent, in the early 1970s (a period of stability with little variation in prices between areas) so that Toronto's higher housing prices are really not all that remarkable. The ascendancy of Calgary during the oil boom is clearly illustrated, as is the speculation-driven boom in Vancouver of the early 1980s. The succession of Vancouver in 1992 to the leading position in the ranking of these six cities is even more incredible when one considers the impacts of the 1991 recession and the ability of Vancouver's markets to resist and overcome that recessionary pressure. As of 1995, Vancouver held the leading role in the ranking of the six cities with prices more than 50% greater than the Toronto average. In a simpler rendition of the same results, Figures 3.4 and 3.5 illuminate the widening gaps between nominal house prices for the eight cities at five year intervals. Figure 3.4 exhibits a period of low variation at the beginning of the 1970s (with the 1971 range between high and low only $8,181). The next five years saw increases in average prices for all eight cities with Calgary and Victoria experiencing extreme increases relative to the other six centres. Figure 3.5 aptly represents this with Calgary moving  This process is also problematic as a national average of house prices is useless given the differences in age, styles, and building materials in every city across Canada.  52  53  CD  c  alifa ontr eal Ottaw Dron alga ancc amil ictor  >  ro o  -t—1  X  o  ,ro  -t—•  o > X > E3 • 0  • • • • •  o o o o LO  CO  o  o o o o" o  CO  o o o o" m  C\l  o o o o" o  CN  o  o  o o  o o  o vf)  o o  i-  o o o o 10  t-  aoud  54  eal  o ro  ro i _ ro 1 03 O) c re o ro o ro -4—<  X  O  I  in  <D U  o  ro  O CO  3  <D  ro .52 .2 ^ x B E S> =  ~ro Io- > ro O.y > Xro O ro X  D5  ro  re  Jr  1  —  -  > < >>  O c re  •5 re c re O  T3 O +J O  _a>  o  <0  O)  c c re  U)  o 3  ro <o  c  o  _i  ro  0 D) CO  o  ro •o ro c ro  O ro"  a) ro ro  CO  o  o o o  ti 8-  O X  oo  ^ .ro £r 2 ro x S ro § ° S I roil  CO o  ro  c oo o o ~ ro ro>.y c > Oro h- oO4Xro Xro ro > ro c o c ° E o o if X .a SQ) » o 8roro <0 (D  3  ro  'k_ CL  <  0  CO  <  a:  ro a) ro "co ro i UJ to > ro w < S ro  CO CD  CL  CD  CO  c ro a: c co T3 ro c ro ro ro c  ro O . . ro Ois to co roco ro o c/> Oo> a. 28  55  into the first rank in 1976 from a rank of seventh in 1971 and Victoria's promotion from the last position to that of fourth in only 5 years. These variations in price, however, are minimal when compared to the events of the next twenty years. The five years between 1976 and 1981 saw the gaps widen to form two grouping of the eight centres with Vancouver, Victoria, Toronto, and Calgary as the first, and Hamilton, Ottawa, Halifax, and Montreal being the second (Figure 3.4). During this period the relative positions of the eight centres continued to fluctuate (with the exception of Montreal and Ottawa), most likely due to recessionary impacts, the resulting volatilities of local economies, and their consequent spin-off effects into the residential housing market. The recession of the early 1980s seemed to have separated the diversified, and hence, self-sustaining centres from the weaker centres; by 1986 Vancouver and Calgary had dropped in status, while Toronto and Ottawa made gains. The next ten years sees more stability in terms of the hierarchical status of the eight centres (Figure 3.5) however the already broad range between the eight centres grew dramatically: by 1996 the distance between the two extremes was $ 182 399 which is quite remarkable when compared to the same range in 1971 (an increase of 2129%). Overall, there is sufficient evidence to conclude that the dramatic price increases (and declines) in the 1980s and early-1990s have drastically changed the relative positions of Vancouver and Toronto compared to other C M A s . While the plotting of absolute changes in average price is interesting, additional information emerges through the examination of the annual rates of change that reveal how the price fluctuations vary through time and space. Figure 3.6 and Table 3.4 depict the annual rates of house price inflation (in nominal dollars) for the same eight cities where it is apparent that there are three distinct periods of volatility: the first between  56  Table 3.4: Annual metropolitan rates of house price inflation 1971-96 Halifax  Montreal  Ottawa  Toronto  Calgary  Vancouver Victoria  Hamilton  1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96  4.60 6.33 17.23 22.97 9.08 5.63 4.19 2.48 3.81 21.27 4.06 13.72 11.70 1.12 7.17 4.68 3.58 1.34 4.06 2.15 0.65 2.53 1.05 -0.55 2.77  5.64 5.41 6.26 16.69 11.27 7.32 6.71 9.11 8.64 11.30 -1.00 2.38 15.59 9.51 10.73 18.12 12.76 5.71 1.76 2.16 -0.60 0.53 -0.17 -3.65 -1.74  9.06 21.69 20.15 5.09 10.05 4.41 3.69 4.67 2.07 2.65 9.43 22.03 17.87 5.44 3.98 6.87 7.31 7.09 2.99 1.28 0.34 1.21 0.90 -2.58 -1.83  7.09 29.42 27.24 3.67 7.95 6.70 2.83 7.37 2.20 19.28 5.87 6.42 0.71 6.59 26.77 36.73 21.43 19.19 -6.87 -8.07 -8.25 -3.95 1.14 -2.79 -2.40  6.95 23.62 18.17 30.88 34.07 2.50 13.67 9.16 14.01 14.64 -1.33 -7.07 -12.22 -7.22 7.48 7.65 8.15 12.06 13.88 -0.18 0.98 3.47 0.23 -1.63 1.91  18.87 31.91 24.70 11.61 7.78 3.69 2.61 7.01 41.16 48.76 -27.56 7.41 -1.81 -0.77 6.37 10.52 20.89 30.74 7.97 -1.99 10.68 13.93 8.11 1.76 -6.33  8.43 26.41 41.78 13.95 14.84 2.68 2.01 6.46 27.42 45.28 -21.46 0.14 -6.71 -2.77 8.12 6.70 16.35 19.52 13.27 5.46 14.84 8.21 4.39 -4.19 0.44  10.81 22.53 26.51 6.05 10.26 1.32 3.60 3.05 1.93 6.70 0.26 9.12 3.09 10.57 22.07 28.68 17.97 20.73 1.53 -2.89 -6.16 -5.04 2.53 -4.05 0.82  1971-96  342.89  355.92  374.40  522.68  469.53  989.00  795.86  474.63  Source: Canadian Real Estate Association, various years; Canada Mortgage and Housing Corporation, 1995.  57  a6ueu,o |enuuv  58  1972 and 1975, the second between 1979 and 1982, and the final from 1985 to 1991. With the exceptions of Calgary and Victoria, the first period of change is characterised by oscillations of relatively similar magnitude for each centre. In the second period, however, there is evidence of a movement beyond the ranges of the 1970s towards more differential rates of inflation (and deflation). Those cities experiencing profound increases in their average prices also experienced the largest decreases in value (i.e. Victoria, Vancouver, and to a lesser degree Calgary). The remaining five centres also experienced a wide range of fluctuations in the 1980s as is evident in Table 3.4. These trends continue throughout the 1980s until the third major period of volatility when the average prices in Calgary, Ottawa, Halifax, and, to a lesser extent, Montreal rise and fall at relatively the same time and rate. While inflationary rates in these four cities have started to stabilise in the early 1990s, Vancouver, Victoria, Toronto, and Hamilton continue to fluctuate in extremes. By the end of the study period, it is apparent that a "cooling o f f in terms of change has been initiated with the range of change between 1995 and 1996 topping off with a high of only 2.8% in Halifax and a low of -6.3% in Vancouver. A n examination of the overall rates of change for the entire study period confirms the volatility of boom and bust conditions with the median annual change being fairly uniform between all eight centres, while the variability of change is much larger in Calgary, Toronto, Vancouver, and Victoria (see Figure 3.7). This is confirmed further by the ranking of those cities with the top ten positive and the top ten negative price oscillations: Calgary, Toronto, Vancouver, and Victoria monopolise both categories (Table 3.5).  59  CM 00 OJ  0 0 IS  I  I  O CO oo I CT> OJ  CO  S  in  0)  o o  CM  o >  oo I  O 03  c o CO o CL o  o  O  OJ <  CD c '(/> o  X  "O c CD CD CO CD CO •t: o  m L_ CM  o  CO "D CO c CO  o  e  h•CM  O  CO CD >l C/> 13 O 'i— CD  > C o  -4—'  C M <  C oO o w </>  < 0)  TO  CM  CM  o  o  M-  O CO  o  CM  o  CM  o  <  5  -i—CO  c LU IS) o CD '•+—' <D CO CC3 c o CO CO T3 o CO w c co o O x: ^—« =3 CO CD sn o uo 1 — cn o CO CO  60  Figure 3.7b: Annotated Sketch of a Boxplot  Values more than 3 box-lengths from 75th percentile (extremes) 0  Values more than 1.5 box-lengths from 75th percentile (outliers)  T-  Largest observed value that isn't outlier 75th PERCENTILE  f 50% of cases have values within the box  MEDIAN  25th PERCENTILE •J-  Smallest observed value that isn't outlier  0  Values more than 1.5 box-lengths from 25th percentile (outliers) Values more than 3 box-lengths from 25th percentile (extremes)  Table 3.5:  Top Ten House Price Oscillations (1971-1996)  Positive  Negative  Vancouver (4) Victoria (2) Calgary (2) Toronto (2)  Toronto (3) Calgary (3) Vancouver (2) Victoria (2)  Sources: Canadian Real Estate Association, various years. M L S Annual Report. Ottawa, Canadian Real Estate Association; Canada Mortgage and Housing Corporation. 1995. L o n g Term Changes in Average Resale Home Price. Ottawa, Canada Mortgage and Housing Corporation.  Those areas which encountered extreme fluctuations, experienced them in both the positive and negative directions thereby illustrating the extremely unstable and volatile housing markets in these four cities. Overall, those areas that experienced boom and bust conditions over the 25-year study period had greater ranges of annual price change than did those centres with less severe and more moderate price gains and losses. Nevertheless, these four cities (with the addition of Hamilton) had the highest real price gains by the end of the study period thereby contributing to the housing wealth of those who were fortunate to own property. 3.3  Explaining the Trends in Toronto and Vancouver CMAs A prominent and highly regarded Canadian financial analyst has recently stated  that "housing sales and prices are intensely local, affected by the migration of people, the local economy, supply and demand" (Turner, 1997).  These four explanatory factors  may be adequate in those towns and cities where house price fluctuations have remained relatively stable over the last 25 years. However, these seemingly simplistic reasons become highly controversial and politically charged in major metropolitan centres where  62  home ownership becomes more than just a matter of comfort and shelter. In these higher priced centres, boom and bust periods dictate, in a matter of months, the net worth of much of the population through a widening of the gap between the "house-rich" and the "house-poor". This being the case, a fuller investigation is needed to help unpack what is meant by the above four factors and to challenge the common perception that the dynamics of house prices are local in all places at all times. The stories of Toronto and Vancouver will be explored in depth in order to discuss the specifics of price influences and the various and intertwined scales at which they occur.  3.31.1 Metropolitan Toronto: Canada's Economic Engine Having always been an important player in the Canadian urban system, Toronto gained prominence in the 1950s when it displaced Montreal as Canada's centre of economic power and growth (Bourne and Olvet, 1995) though it took another twenty years for Toronto to become the nation's largest metropolitan area. Further, over the last 25 years, Toronto has continued to evolve from the role of a regional and national economic centre into the primary Canadian node in the global flows of capital, people, goods and services, and information., Therefore, in addition to working within the local contexts that have theoretically predicted and accounted for price movements, this section will attempt to illuminate the national and global forces that, I believe, also impact the ebb and flow of Toronto's house prices. 3.31.2 The Simple Explanation Explored: Interest Rates, GDP, Employment At a very basic level, low interest rates are often cited as one of the main incentives for the initiation of the home buying process. The need to secure financing  63  that is of a favourable term and rate is of the utmost importance in terms of affordability for most of the home-buying population. Under Canada's chartered bank system, various mortgage packages with differing conditions and terms are determined by each of the major Canadian banks, as they respond to the national benchmark of the bank rate. Hence, many believe that under the right conditions low interest rates initiate booms in house purchasing and conversely, high rates signal the beginning of a market downturn. Figure 3.8 charts out the changes in the bank rate for the entire study period. When compared with Toronto's price activity, it is evident that as a direct causal factor, the link between price movements and interest rates is weak. According to correlation analysis, an overall relationship between interest rates and house prices in non-existent (Table 3.6). However, if the study period is broken down, we can see a moderate and positive relationship at 0.69 between 1971 and 1985, and a slightly less strong relationship between 1986 and 1996 of 0.51 (Tables 3.7 and 3.8). One interviewed respondent validated this perception that the influence of interest rates on house price is overrated. When asked whether interest rates were an important determinant of house price change in Toronto, he replied: / think the health of the local economy is very influential ...the biggest boom that we had was in the late 80s and interest rates have been lower since then so if interest rates have been lower than in the late 80s, why hasn't the market escalated? I think what it goes to is job security and the health of the local economy...if the health of the local economy is good and people are secure in their jobs, the difference between paying a 6% mortgage and a 9% mortgage is irrelevant (Toronto Real Estate Agent, Interview, May 1997). Gross domestic product (GDP) and the unemployment rate are most common measurements of a particular region or county's economic health. Figure 3.9 illustrates  64  Si  o  ro rT.  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CD CD C O C 3 'L_  O  X  o  3  o>  CO CD ^_ O CO CL CD o  to 3 O  X  _  c CO co  CD  co ra o <o ~  o  CO I  CO  O CD  £ o Q  *= 5 2 .-cS! -S  c  — o c CO  "53  J*  c CD  co  CO c CD t CO CO  CD  >  o  0  C  CO CD  cn co ra  c •e CO o CD  £ o D_  o O  co O) > 3 co" O TJ X CO C T3 CO C  o  O  X  T -  o  CO CO CD I >. o CO D_ i g  CN  LT) CD CD  CO c  3  5 JS  Ra  .=•  I  co  c o  ye  re 2  O  CD  co O co" U  s «  o  d  d  cn  CD L _ O CO CO  CL  «!  CO XI CO o c c CO o  O  CD o  c o  3 <  0_  m ro  .8 CO  CL  a o  y  CO  C o ro CO O 3  68  69  these two indicators for Ontario plus the bank rate 13. As expected, the growth in the GDP is at its minimum during the two recessionary periods of the early 1980s and the early 1990s, but higher rates of growth occurred in the prosperous 1970s than at the peak of the housing market in the late 1980s. If we examine the difference between the rates of growth for Ontario and Canada together, it is evident that after the 1980s recession, a switching occurs as Ontario's growth exceeds that of Canada by as much as 5 percentage points in 1986 (Figure 3.10). While this trend coincides with rising housing prices, note that while Ontario's GDP is surging ahead of Canada's from 1983, it is only in 1986 that price takeoff occurs. With the onset of the early 1990s recession, there is a reverse switch when Ontario's rate immobilises and Canada's rate moves ahead to exceed Ontario's by 2.3 percent. From Ontario's unemployment rates we can see that, as expected, the rates are the highest for the recessionary periods and dropped to lower levels in the mid-1980s. But again relations with house prices are imperfect; there is no house price response to the recession of the early 1980s, though unemployment is falling steadily through the decade as prices inflate, and rises sharply with the collapse of the market in the early 1990s. While recovery in GDP levels starts to take hold after the early 1990s recession, unemployment levels remained relatively high suggesting jobless growth for the Ontario economy. These events also emerge when we compare the Ontario with Canadian rates. For the last 25 years, Ontario has had lower unemployment than the Canadian economy as a whole; however, the difference between the two has not been constant.  During the  Ontario data were used as annual GDP and unemployment figures for the Toronto C M A were not available. 13  70  71  1980s Ontario was out-performing the nation by about two percentage points (Figure 3.11). However, in the recession of the early 1980s and again in the 1990s, this gap shrinks substantially. With respect to the connections between the health of the local economy and the dynamics of the housing market, it would seem that there is a direct relationship i f one considers low unemployment and a high GDP to influence consumer confidence, job security, and the level of spending in the economy: the oscillations of GDP growth and unemployment seem to correspond with the onset of Toronto housing boom and bust periods. This is confirmed by the strong and positive correlations between GDP and house prices for the entire study period (0.95) and the moderately strong and negative correlations between unemployment rates and house prices lagged by one and two years (-0.72 and -0.77). We could perhaps even account for the higher rates of price change during the boom and bust periods if we assume that the differences between Ontario and Canada's GDP and employment rates are indicative of a stronger-than-average Ontario economy and hence, its predisposition for enhanced inflationary and, conversely, recessionary impacts . However, the relationship is not this simple. The workings of 14  the local economy do not function in a vacuum. Measurement of employment and GDP  Despite public perception that speculation was the driving force in the 1980s housing boom in Toronto, an extensive study involving statistical analyses, focus groups, and individual interviews of those involved in the housing sector during the boom concluded that speculation played a very minor role in the price increases ( A R A Consultants, 1988). They attributed the principal cause of the boom to classic factors of "supply and demand" which included the health of the Toronto economy, Toronto's internationalisation, baby boomer demand, rent controls, homes as investments, land shortages, and offshore money. Unfortunately, these influences on house price change are merely listed and were not explicitly discussed as the study focused mostly on the incidence of speculation activity and the effects of a proposed speculation tax. 1 4  72  73  are proxies for many different variables that interact at a variety of spatial scales. Although it may not be causal, it is interesting to note the strong and positive relationship between GDP and levels of international migration (0.85), especially after 1986 (0.93, the 1971-85 relationship is weak at 0.2). Therefore, to assume the label "local economy" inherently implies only local factors is naive and, in this current era of globalisation, scarcely tenable. In order to draw a valid historical picture of what exactly these statistics represent, we must look more carefully at the complexities of growth and decline, and the geographical scales within which they operate.  3.31.3 Complexity Component One: Demographic Change On the major plunge in Toronto's real estate in the late 1980s, a University of Toronto economics professor states: Real estate is about places for people to work and live in. That's why real estate is driven far more by demographics than by economics. A growing population requires more goods and services and more people to provide them... the late 1980s and early 1990s were years when the new entrants to the labour force were the "baby busters " those born after the baby boom ended in 1966. There are fewer busters than boomers...Because most of the needs of the boomers arefilled,real estate is no longer a growth industry (Foot and Stoffman, 1996: 36) 15  While Foot should be commended for his lack of economic determinism, he should also be scolded for his essentialist definition of "demographics".  As classic  components of the housing supply and demand scenario, it cannot be denied that the demographic variables of population growth and rate of household formation do have an impact on the direction of the real estate market. However, Foot is making an erroneous  Foot is the professor at the University of Toronto.  74  assumption that the root of these two important demographic variables are indigenous to the region under study. The existence of the baby boom population cohort is a phenomenon throughout North America and Western Europe and while they (the baby boomers) influenced the Toronto housing market during the last two decades, Foot fails to recognise the impact of an international group of migrants that arrived in Toronto during the same period. Foot contends that the housing boom of the late 1980s was largely a result of baby boomers moving into the housing market, a situation marked by large demand with little supply and/or supply that lagged in production. According to his scenario, household growth in Greater Toronto (Figure 3.12) has been driven by this group. However, an alternative assessment of boom activity attributed the increased demand to pressures arising from in-migration to the Greater Toronto Region (GTA), (Figure 3.12) which likened the G T A to a "magnet" for thousands of domestic and international migrants (Report on Business Magazine, 1988:40). This is further validated when we examine the actual components of population growth for the G T A during the same time period (Figure 3.13). From the mid-1980s onwards, the influx of international migrants to the G T A is phenomenal: net numbers increased from 16,668 for 1985-86 to just over 62,000 between 1989 and 1990. While this initially tells us nothing about the outcomes of this immigration "on the ground" of the G T A housing market (given differential rates of homeownership and market power between immigrant groups), we can draw some connections between immigration and housing using the findings of a study compiled under the auspices of the Canada Mortgage and Housing Corporation.  75  c o o c o  +3 CO  i_  O)  E  •a c ro  o  o V) 3  O  lO O)  8! ? i <  "S ° (1)  J3 E 3  C  C  o </) 'C ro Q. E o  O CN CO  0 3  O)  aoud asnou. /uojiejBiiu ;eu  76  ^  CD  CD  CO c  o  o  aS z -z. Z .re re c  c  .2 o> >o rot:!-:  C *CD  •4—•  c  Cl  C  0  -t—<  c  Q. CO  u-  -t—'  c  03  OJ  < O c o  OJ (0 OJ 1—  o  OJ  c o 03  cn OJ  to OJ  Q. >• CO CO  2! 3  O)  3  o  CO  uoueindod jau  77  Using detailed housing and immigration data, the C M H C study found that the overall housing impact of boom-period immigration was not all that significant. However, they did conclude that the boom of the late 1980s was in part a result of a group of immigrants entering into homeownership who arrived in the late 1960s and early 1970s (Lapointe Consulting and Murdie, 1996). It was revealed that while most Toronto-bound immigrants have high desires for ownership, most encounter financial constraints upon arrival which prescribe a waiting period of 10 to 15 years until they acquire sufficient capital for a house down payment. If we examine the immigration statistics for Toronto in the 1961-71 period, we can see that this was an era of high immigration (immigration to Toronto numbers rose from 308,975 between 1951 and 1960 to 365,225 between 1961 and 1971). As of 1991, ownership rates for those who immigrated to Canada between 1966 and 1980 were higher for those between 15-64 years of age than the ownership rates of non-immigrants in the same age group (Table 3.9). This roughly corresponds with the figures for median household income (for Canada) which also show that for the 25-64 age group, median incomes were higher for those who immigrated between 1966 and 1980 that the median incomes of the nonimmigrant population (Table 3.10).  Further, ownership rates and median incomes for  those who immigrated to Toronto between 1986 and 1991 are lower than both the nonimmigrant and immigrant households overall for all age groups. This suggests that although the ownership and income levels were lower for the most recent immigrants to Toronto (in this particular study, those arriving between 1986 and 1991), the housing market of the 1980s was impacted greatly by the movement of a group of those who immigrated in the late 1960s and 1970s into home ownership at a time when they had the  78  en  re 13  cn cn  re c re O c o 2  c o o  o  H  E E  tn o  JZ  o in  O 'C 0)  3 O  a.  x m  o  •a c re  C M CM N  m m m  £  m  0)  co m U I s CM c ^r» co <D O) S re CO CD h-  'S  T CO cn oo  CD U  CO  5  o .c  re +  U  0) CO 3  o x o  cn < T3 C  CN o co + r~ 00 00 CM CM cno CN CO CO 00 CM CM CM •<r CO CM o 00 CM CM CM CM CM CM  N O ) ic m <N T - ri d 6 CD CD CD CD  LO CO  re k_ D)  ^ c n o r - T - T - c M L o m c o n m  s  ra  s  E E  ID i o i n f  S  :  ,  re c o  re* CO  o •o o a> a. >.  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T - T - T - T - T -  O  CO  .InwMtuicointDN "JoOCOCncDCMCMCD'^-O co CO-r-CD^fOOOOLOO^T•cOT-too^-cocnt-~co  0)  .a  cn cn  SCO'*CO'<t'*'>l-'^-COCM oiOSIDfCMOMO CN,  T f O C D O < 0 0 00CMI-~Tc M ( \ i T - i n 3 ^ ' 0 ' , ' r n o Z ( O S S O ( D " " C M C M O L O C N ' - O C D *~ CN CM CM CNCNCMCMT0  0  < ed  •ZNOJ^-tni-mNCMCD ,3cnLocncDT-'si-->3--<-co O ' - N t f t ' n s c o i i _ c n o o - < - c n t - c o c o o o r - ~ o c o i f c o i n i - ' ^ n N c o O  CD  roCO 3  •*LOOO^LOOCO-*-<-  >  o Q. o vn  LO O CO CD  co — i CD LO  £ o  co co cn  oo o £ S S O L O  CL L O  T -  0 0 Ol IO r ffl r IO (O S S 0 0 0 0 o o cnTcn cn Z < D. cn T - cn ^ -  ro o  stability, the equity, and the income to sustain a mortgage . 16  This aspect of housing  demand in the 1980s was compounded by the high levels of immigration into the G T A that placed a strain on the rental sector and perhaps persuaded others to move into the housing market because of the fear that boom-induced price gains could render ownership forever unattainable. Note that 2-bedroom rental vacancy levels in the Toronto region fell steadily through the 1980s from 0.5% in 1982 to 0.1% in 1989, before rising to a high of 1.7% in the recession that followed (MetroPlanning, 1995: 3:13). Correlation analysis reaffirms this idea when the relationship between house price and international migration is temporally broken down: the relationship between 1971 and 1985 is moderate and negative (-0.37), the 1986 to 1996 relationship is moderate and positive (0.49), but the overall relationship between house price and international migration is strong and positive (0.81). Of course, these are very general trends that have specific and uneven spatial results on the urban landscape. Indeed, certain neighbourhoods in Toronto have been greatly impacted by particular immigrant groups who immediately move into ownership upon their arrival to Toronto, while other areas have had great influxes of an immigrant population who rent either from the private market or the state (see Chapter 4 for a fuller analysis of globalisation and its intraurban effects). Overall, however, we can discount David Foot's exceedingly simplistic thesis. With his discussion that focuses primarily around the entrance of the "baby-boom" cohort into a financial space where they could  However, we should note that although an ownership rate of just under 30% for recent immigrants (1986-91) is lower than the other immigrant arrival groups, the immigration numbers for this period were quite high. Proportionally, then, the impact of this group within the housing market was still very significant. 16  80  attain ownership, Foot neglects the many other aspects of Toronto's population dynamics that ultimately had their origins outside of Canada.  3.31.4 Complexity Component Two: Toronto As A Global Node There's a perceived value of being in Toronto as long as Toronto is a thriving city, and there's no reason for it not to continue to be—it's the place to be. (Toronto Real Estate Agent, Interview, May 1997) Toronto's surging real estate market reflects a fundamental and permanent change in the city's status in relation to the rest of Canada... within the last 15 years it has become Canada's undisputed financial and commercial capital, a seat of concentrated corporate power and growing political influence (Report on Business Magazine, 1988: 40) By the mid-1980s, Toronto had solidified its position at the top of the Canadian urban hierarchy (Bourne and Olvet, 1995). The economy was then strong and the population felt prosperous as Toronto entered into the ranks of the "global cities".  A  Swiss survey which assessed the most desirable places to live in the world according to 42 quality of living factors ranked Toronto fourth after Geneva, Vancouver, and Vienna (Corporate Resources Group, 1995 in www.metrotor.on.ca/fact/facts.html). Toronto is also considered to be the world's eighth best business city (Fortune Magazine, 1995 in www.metrotor.on.ca/fact/facts.html) and the fifth most desirable location for international headquarters (PHH Fauntus, 1995 in www.metrotor.on.ca/fact/facts.html). As both a cause and effect of its new role, Toronto's degree of "international openness" grew as it evolved into Canada's meeting and control centre for the flows of goods, services, people, and information. As testimony to these changes, various measures of internationalisation verify Toronto's global role: in 1986 the number of international  81  travellers arriving in Ontario jumped dramatically to levels not seen before in the study period (Figure 3.14); activity at Toronto's Pearson International Airport displayed similar trends as the percentage of international passengers increased during the late 1980s (Figure 3.15); economic and employment growth was concentrated in the tertiary and quaternary sectors with significantly less growth in the number of manufacturing jobs (Table 3.11)  Further proof of the Toronto region's hub-like position in the Canadian  urban system can be read from convention statistics: between 1984 and 1996 the Metro Toronto Convention Centre hosted over 7000 events with approximately 24 million people in attendance of which the direct and indirect economic impacts totalled in excess of $1450 million (M.T.C.V.A., 1997). Other social and cultural indicators of an international climate in Toronto include its six world-class performance centres, three major universities, its professional sports franchises, including a new N B A franchise and the recognition of winning baseball's World Series, the presence of "ethnic" neighbourhoods both in the downtown core and in distinct suburban enclaves, and its location as a headquarters for many national radio and television broadcast facilities as well as Canadian corporations. The above indicators, combined with others, create an urban atmosphere conducive to a certain segment of the population who, through their employment, investment, and lifestyle decisions, orient themselves globally. Michael Goldberg writes extensively on the globalisation of real estate markets. Speaking of the commercial and industrial real estate sectors, he states The integration of global capital flows cannot be separated from other international investment flows even in areas such as urban property markets, long thought to be insulated from global forces (Goldberg, 1992: 5).  82  83  84  i ^ r ^ c n c o ^ c o i r i L n i r j - s r i n c b L O c o -sr d 10 d c o "tf CO CN CO CM T T-  T-  -3- i n o TN CN CM T -  co T (D CO T-  00 i - CM CO "3' ^ CO CO h— CN CD CM ^sT CO CN 1- CM CO CN CO T— CN CO  co r- I -  ^ in  o i n c o c o c o i n C N ^ o i N ^ c d m c o i i d c d ' i t i r i i N ^ c d o '  LO  r-  1  CO 00  [\i  1  cn  CD CO CO CO  s^  s  C\i CN O  T-  LO Ifj  N  5 oo o  CO T -  I - o s  in N p i T - CO CO CN CO  oi d CNI  r-  CO CO  cn co  CO 00 CO  i o LO N CO N O) c o -3O LO T-  o O) o I LO CO s  o o LO co in s O co h CO CO  O LO LO O LO cn co ^ LO i O CO LO LO O CO CN CD T - CM T CM CN  LO CD CO CO I-  LO LO O CO T O LO CO CO CO O CD  O CM CO T S  LO CO S CO CO  O LO LO CO CO CN CO t= CN CO CO T - CM CO O) O T T - CN  LO •<*• CO CN CO  LO t"Sf CO CD  s  O LO CM r CO CO CN  OO CO CD CO CO  co  CD  O  n Q.  CO Q. 3 O O  E >. o E  LU  oo CO  o  LO MTCO CD CN  LO N CO CD CO  LO (D ^ O  O O N O (D CD CD r-N  L O O L O O O O L O L O O C N C M C N L O T - M - C D C O C O C N O i o c o m i n o j N O T - I - O T - C N U I C N N ' C O S C N C O C O C O O i n N  O CD CM O CO  O LO T - LO CD CO N - LO LO -"3-  LO CN LO CO CM  LOLOOLOLOLOLOLO OCO-itNCOCJICNCO T-T-COCNLOCMCOLO L O T - O O T - O C O C O TCD LO 00 LO "tf CN  .Q  o o c o  o>  o  O O L O O O O L O L O L O O O O O O C M ^ T - l O c n N h - T - O C O C O C D L O L O T - i o o o c o T - c M - ^ r c M L o r ^ t - i ^ c o " * ^ • ^ • ^ T - t M C O N m o o C N i - O J S O l ~.'d-T-CN'^-'<-N-CN'<--<- ( B O N CN T - T T-  LO ICN CO S  s  o  CO CO TCN  CD CO CD  c o  CO  c re  -C  o  c E >. o Q.  E  UJ CO  .n 03  CO c o "co T3 o_ CD 3 o CO ±3 o o T3 * - CD T3 c CD CO -w JO CD > CO c cu CO - -C c ±± C COD O CO 0J CC O O O CD c CD C CO '(j CD JJ X3 _ c m <0 ° D) ( 0 D) CO — J C o CO != CO "O co co o a, » Z CO  CO O.  .15  o  CO CU  CO o  m c g • ' •-» (0 Q.  o u  o  * 1 1•o  1I •S 3 ro o  r-  " "5  C  CD O CD  I>£ "~ J3  S -3 o 2  s -5 CD c O CO  SCW C O ro =  '•E .22  < o  CO CD  o o o "D Q) jo  CO c g  E  >>  CD CD  c  9 ro cn c  CD . "O c <° CO — c  '  •I  CD 10 CO CO  ro CD Q.  CO CD -I—' c CO c5 % CD 3 13 T3 ^ T3 CJ o o. CO o i= ro <  CO  .2  ro  c  ro  o o O  o -<=  £• E 2 co  O  t c  o . tn •- CD (U > CD o CD CO -£= O  CO u. O  LX  CD " t  b  d.  TJ  o. °  Q) • £ JS CD CD p  cz ro c  £ <o ^  (0  o . ro o C  CD  CO  CO ro ro o  "O  CO c CD  o  CD o  £3 •s i Hro2 ro O 2  0-  o  o  o CO  Undeniably, the same global dynamics that affect the commercial and industrial markets also impact the new and resale residential market, albeit in slightly different ways. Looking again at the price trends of the Toronto experience, the positive correlation between the price fluctuations and global factors are strong (Figures 3.14, 3.15), especially during the last 10 years of this current phase of globalisation . As examples, the correlations between house prices and international airline passenger numbers and overseas tourism are both strong and positive for the entire study period (0.91 and 0.87 respectively). Consequently, the residential real estate market in Toronto no longer operates solely within the local, regional, or even national sphere—local transactions are now deeply implicated in the globalisation process. However, the workings of the residential real estate market differ from the commercial and industrial markets in that the effects of globalisation were, at first, spinoff effects in contrast to the intentional and direct foreign investment of commercial and industrial real estate. More specifically, the mid-1980s globalisation of Toronto's housing market was initially a response to the internationalisation of information, goods, services, capital, and people—Toronto did not at first orient itself to attract global investment to its resale residential market. To suggest this is to assume that a specific type of transnational actor—the very mobile and successful business immigrant—was the main impetus behind all the initial price increases. This notion disregards the heterogeneous nature of globalisation and its manifestation in particular places at particular times. While it is agreed that high immigration beginning in 1986 did put pressure on a limited housing stock, as I have previously noted, the upward movement of  86  prices was a result of the coming together of several different push-pull factors working at a variety of spatial scales: an increase of 35% of Ontario's construction costs between 1985 and 1988; the influx into Toronto of lower and middle income migrants (both domestic and international); increased rates of household formation for a section of the baby-boom cohort; renters on the cusp of ownership reconsidering the cost-benefit ratio of renting; immigrants who arrived in the late 1960s acquiring sufficient capital for a house downpayment; a superheated Ontario economy and growing consumer confidence; the October 1987 stock market crash where people moved their money out of stocks into real estate with the hope of quick-flip gains (although studies have since shown this was not as influential as once thought); and media hype and psychology (during boom periods the media often purports the idea that an upward spiral in prices is infinite which initiates panic buying). Not one of these ingredients of the late-80s boom operated independently of the others: the scales within which these factors operated varied from the local to the national to the global. Consequently, the interplay of all the above manifested itself on the local landscape to produce price fluctuations at a scale never before experienced in Toronto. Once in motion, the process was supplemented by the activities of a group of individual and corporate actors who quickly moved to capitalise on the global flows impacting the Toronto housing market. Tapping into these flows became a lucrative business: those in the areas of immigration law, finance, insurance, real estate, and cultural integration found themselves in favourable positions as many of the wealthier immigrants needed local help for their settlement and ownership goals to be realised. As more and more of these types of global-oriented businesses emerged on the social and  87  business landscape of Toronto, the now globally oriented housing market itself became part of the globalisation process, not merely an end result. At this point, the housing market started to play a more active role—it was no longer a passive actor in the globalisation process. What was once a reaffirming of older social and cultural linkages now became intrinsically linked to the newer movements of capital and information. 3.31.5 The 90s Crash: The Downside of the Global With the onset of the 1990s recession, Toronto's house prices suffered severe plunges with prices dropping from a high of $273,000 in 1989 to just over $200,000 in a span of only four years. If we compare the price declines in all eight C M A s , we can see that the recession throughout the western world impacted Toronto's local housing scene in ways not experienced elsewhere in the Canadian urban system. The events of the bust period raises questions as to the nature of Toronto's globalisation and the resulting vulnerability these connections place upon its economy and population. As we shall see in the following section, Vancouver is Canada's other major globally linked metropolis. Vancouver's price movements during the recession were, however, drastically different from Toronto's. These differences in recession responses can most likely be attributed to particular manifestations of globalisation in these very distinct and different economies. As already discussed, the classification of a centre as a "global city" is ambiguous if not contextualized: the term is not fixed in meaning and is fluid both spatially and temporally. While Toronto may be the national centre for the conglomeration of global flows, Vancouver's global outlook is orientated more towards the Pacific Rim economies which were relatively unaffected by the recession. Further, the population flows to Vancouver and Toronto also differ. While Toronto numerically  88  receives more immigrants, Vancouver attracts proportionally far more of the business classes, especially the investor/entrepreneurial immigrant categories. At the end of the day, this resulted in very different situations in the housing markets of the two C M A s . A n economy that is globally based loses some of its autonomy and ability to insulate itself from global recessionary pressures. In the process of propelling itself into the ranks of the "world city", Toronto's housing market became vulnerable not only to domestic economic changes but also to the dynamics of the global economic sphere. Just as the 1980s housing boom emerged from a combination of local, regional, and global factors, so too was the following 1990s bust. 3.32.1 Vancouver: The Newest Asian Capital on the Pacific Rim? Probably no other city on the continent—possibly except New York during its great waves of immigration early in this century—has been asked to be so many things to so many people from so many places (Jones, 1996: 99). The rapid reorientation of Vancouver from a resource-based regional service centre to its increasingly important position as a major node on the Pacific Rim, has resulted in various economic, cultural, and social responses at a variety of geographical scales. While Vancouver has experienced the same broad processes (e.g. immigration, fluctuating interest rates, economic sectoral changes) as Toronto, its particular manifestation on the housing landscape has been markedly different. This section will examine the movements of Vancouver's housing market and the politically-heated debates that surround this activity.  3.32.2 Contextualizing the Trends  89  A recent business publication has determined that the fundamental underpinnings for the strength of British Columbia's real estate market can be categorised under the broad headings of demographics, immigration, quality of life, and transportation. The author continues with his assertion that "The health of our B C real estate market will find its vitality from the above four factors. Certainly economic environment and interest rates play a key role as well, but they are the results not the drivers" (Ferster, 1996: 39, emphasis from quote). However, in order to make sense of how the economic environment and interest rates have lost their key place as determinants of house price activity, we must trace the evolution of Vancouver from its status as "the village at the edge of the rainforest" to "world city" (Ley, Hiebert and Pratt, 1992). The last 25 years have seen high levels of growth in most facets of Vancouver's economy (population, labour force, investment, output, and trade). As testimony to these changes, between 1984 and 1994, Vancouver's growth has exceeded that of Toronto (and, by far, Montreal) to a point where experts now estimate the Lower Mainland's population will reach 3.3 million in 2021, from its current (1997) level of just under 2 million (Bellett and Munro, 1996; Report on Business, 1997: 42). Since its establishment in 1886, Vancouver has fulfilled the specialised role of a service centre to its hinterland However, the shape of that role and the location of its hinterland has changed  '  dramatically over the last century. As a place, "Vancouver", started as a colonial outpost, from which it evolved into the western terminus of the Canadian Pacific Railway. These service functions and its accessible location aided in Vancouver's domination of the region as a primate city of British Columbia's resource-based economy—by 1900 Vancouver surpassed Victoria to become the highest-order service and resource-  90  p r o c e s s i n g centre, a status f r o m w h i c h it exercised considerable control over its resource hinterland. V a n c o u v e r ' s most recent transformation was initiated b y its hosting o f E x p o 86, the same year the city celebrated its 1 0 0  th  birthday. A c c o r d i n g to m a n y , E x p o 86  o f f i c i a l l y put V a n c o u v e r o n the trans-Pacific m a p as the city was suddenly thrust into a g l o b a l spotlight:  / think that in my world, which is to spend a lot of time travelling around the world, I don't run across anybody who doesn't know where Vancouver is now. Prior to Expo, you could go to New York, and they wouldn't know where Vancouver was. They do now. Expo did that. Expo helped the city grow.— J i m Pattison, former E x p o 8 6 C h a i r ( M c M a r t i n , 1996b: D 4 )  Expo's legacy was its ability to be a catalyst at that time for change in Vancouver... catapulting Vancouver into the rank of international cities. — Patrick R e i d , E x p o 8 6 A m b a s s a d o r and C o m m i s s i o n e r - G e n e r a l ( M c M a r t i n , 1996b: D 3 ) . T o d a y , V a n c o u v e r maintains its role as a service centre for B C ' s resource industries, but the importance o f this resource-based role is d i m i n i s h i n g w i t h V a n c o u v e r ' s d i v e r s i f i e d specialisation into the a d v a n c e d services ( H u t t o n , 1994:219). Sectoral a n d o c c u p a t i o n a l change have been the result as V a n c o u v e r has b e c o m e a service-based export-focused e c o n o m y w i t h a distinct reliance o n an A s i a n market ( T a b l e 3.12). W i t h its service-led growth, V a n c o u v e r has b e c o m e a "crucible o f p r o d u c t i o n , trade, service, a n d i n f o r m a t i o n flows, and cultural i n n o v a t i o n and d i f f u s i o n " ( H u t t o n , 1994:229).  O n e needs o n l y to examine the f o l l o w i n g "vital statistics" as testimony to  V a n c o u v e r ' s specialised regional and g l o b a l niche: V a n c o u v e r is the head office l o c a t i o n for most o f the 446 B . C . - b a s e d c o m p a n i e s a m o n g C a n a d a ' s 1709 p u b l i c a n d active c o m p a n i e s i n c l u d i n g M a c M i l l a n B l o e d e l L t d . and the H o n g K o n g B a n k o f C a n a d a ; i n  91  vOT-r-COT-tMrMCM  CN T - O CO CO CM T — O LO CO LO O) T — CN CO  CN  1  to 00 en  0 » - C O ( l l ( O C O * ^ O N i - * C N i n C N t N N f f l T^^I^CTlCNLdCNCNCXJCOCDCbcNlricXJ CD COCO T - -5T CNCNCD  o CN  cu co  CO oa o SX - C N O O C O C D C D T - L O o ) 4 N O) o c ) (D i n q M O) n ro ^t^COOCD'oCJLO^ ^ u i r i N L O N t D O i ^ o i ^ O J - t CO-^-CNCN ' T - T - T - T T C N C O CO Lot^cocoLocorocD  O LO  LOOOLOOLOLOLOLOLOLOOLOOLOLOLOLOOOLO  o CD  2 i-.  cn cn V-  ID  co cn  cn cn T-  c o c o c o ^ » - ' - 0 ) ( D c o a j < O K i - C N ^ ' i D O ' * 0 ) ( O T r i n T - c n c D O ^ m a j c o t c o c M i - c o o N o o i N N N C M o i n o r - T f t o c o i o r o c o n c M i N T - T - ^ T - C D C D C O  CO 4 v - N O) r - r -  OCOCN  W  4 i n CM <-  oo oo co  co co  to 00  co  c o ro a. 3 U  c cu E >> o CL E  o o >  O O O L O L O O O O O O L O L O O O O cMoinic)T-cDNcoracNO)inciio)in't o c M i n - ^ O j O i N N c o T - C N T - n N c o m c o s r - i n s ^ - c o T - c o c M r M C M o 0 0 CN ••N (O v 4 (O O r  O O O fO)oo c o c D >- o T -t  O O L O <-v-cM o i i n f O ) o N i n in CM r -  L O O O O O O O O O L O O L O O L O O O L O L O L o r o r M ^ i D C M s m n i n o r o N n ^ c n p p o m v - N O C M r o O C M C O n i D C M C M r o ^ O N N cNLOcNx-incNOcoLocncn^cM 2 r:  mcNr-  CD  CM n  o LO o I O i n co T 0 5 CO O CM • » N TCN T -  >  o u c co  t  N co  CN t -  i n L Oo i n m o CO T4 CO O i n ' - l D O N D N N N Tc0 0 o L iO n cLoO N  O O O o ' j n C M n N id ^  CN  m o o L O ' T L O o o m o ) 0 ) C O C O O ) C O ' < f S C [ ) C ) f ) r - n N O ) ' r ' - e O N r - c M T - i D T -C cMo C cOMT o- mT i-n  LO CM in CN  in  CM 1^  CD CO  cn CD o co  >  co oo cn  CD  o> c co .c  "O a> to £ a) co  o 4-*  c CD E > o a. 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TJ  |rosr  (0 c  CD  <u  E £ CO  CD ra  9 'ra  3 -s 8 -o •M <D CO 8 c nCO -rj c co 8 £ §.=5 g> jo m <= c» ro*: -o c r  to  CO  CO CO  c cn O T>  c o ro lo S °.2 3  *— CD CO E C 01 ra o CD — "O ^ CD CD CO ' o o £ c: to „ _ (D co ~ co CO ™ o" co ro *= co ro to 8 § J t  •a  CO  CO  co cn  CO c  co § co c E>CD £ P CO  §1  LX 2  O  t - c ro g. co o  g to CD ro co ± ; H 2 O  -2  3  92  1987, Vancouver's International Finance Centre (IFC) was established, with Montreal, as two international banking centres in Canada; the Vancouver International Airport (YVR) is the second busiest airport in Canada and has recently undergone a major expansion with the construction of a state of the art terminal—so efficient is the new airport that American Airlines has recently chosen Y V R as its principal gateway for flights to the Pacific Rim (Jones 1996). Business has expanded so rapidly that after three years the new terminal is almost at capacity (Figure 3.16): Serendipity places Vancouver about 90 minutes closer by air than San Francisco and Los Angeles to the major airports of Japan giving Vancouver a shot at becoming North American's principal airline gateway to the Pacific Rim. (Jones, 1996: 101). The Port of Vancouver is Canada's largest key port for bulk commodities (largely coal, grain, and forest products) and in 1996, 67 of the 72 million tonnes of cargo handled in the port were of foreign traffic, the bulk of which were Asian (Report on Business, 1997: 42; Vancouver Port Corporation, 1997) (Figure 3.17). Meanwhile, tourism and convention activity is now BC's second-largest industry behind forestry, including several global events such as the 1993 Yeltsin and Clinton meeting, the 1996 International Conference on AIDS, the World Chinese Entrepreneurs Convention, in August 1997, and the A P E C meeting in November of 1997 (Figure 3.18). The increase in the numbers of overseas visitors to British Columbia is staggering: not including visitors from the United States, the total number of overseas visitors has increased 285% since 1985. Aiding quality of life perceptions, the Geneva-based Corporate Resources Group, assessing quality of life according to 42 criteria, including political and social environment, security, culture, health and recreation, ranks Vancouver second, behind  93  CD  o  C o  94  95  >. c CO  M  rm  c  CD Q. CD  CD  CD  M  CO C  o C  o X  CD "CO CD  "55  <  M  o I—  T  .2 !5  |  £  —'  (8  O co O "o  m  | 2 2 <0 S 2 i: ° O  3I >  s  =  CD ~ (0 o  "g 8  O 2. oo  CO <D  3  D) CO  ro -4—  1  o o o o o C O  o o o o o •<*  o o o o o C M  O O O o o o  o o o o o 00  o o o o o C O  o o o o o  CO co"  o o o o o C N  T3 CO C CO  O  hi  o CO  aidoad jo jaqiunN  96  Geneva and ahead of Toronto (fourth). Reinforcing the image of fashion and glamour, Vancouver's role in cultural communications is growing and it is now considered North America's third-largest film production centre after Los Angeles and New York: the Walt Disney Company is opening one of its two Canadian animation studios in Vancouver; and ninety minutes to the north is Whistler, now frequently ranked as North America's top ski resort (Report on Business, 1997). Perhaps the most visible change to Vancouver's socio-cultural landscape has been the changing nature of its immigration flows. Until the 1960s, those of British and European origin comprised the majority of Vancouver's immigration. In the mid-1960s, Canada's immigration policy was changed from one that favoured European applicants to one based on a points system with a consequent shift in immigration from a European to an Asian domination of the flows (Figure 3.19). In order to attract immigrants that would be beneficial to the Canadian economy, the entrepreneur class was created in 1978 with the requirement that immigrants must bring in a minimum of $250,000 with which they were to create employment for one or more Canadians and to make a significant contribution to the economy. The investor class was introduced in 1986 by the Conservative federal government to attract people with superior investment skills and resources. In order to qualify for this category, a promise to invest between $150,000 and $350,000 (depending on the province of destination) in ventures that the government deemed beneficial to the economy had to be adhered to—they also had to show a net worth of $500,000 (Paris, 1988). Since the beginning of the program, B C has been the most favoured location for settlement due to its established cultural networks as well as its proximity to the Pacific Rim—BC receives annually between 40 and 60% of all  97  98  Investor Immigrant landings in Canada since the programme's inception, the majority of these immigrants originating in Hong Kong (Figure 3.20) (BC Stats, 1997). Vancouver itself received 30 percent of all business immigrants entering Canada in 1992 making it the most popular destination (Ley, 1995:191). Noteworthy in Figures 3.19 and 3.20 is the massive growth of Asian-origin immigrant landings after 1986 - corresponding with the growth of international tourism. The economic ramifications of Vancouver's globalisation are illuminated through Figures 3.21 and 3.22. Figure 3.21 compares GDP data for Canada and British Columbia. From the mid-1970s onwards, the growth of BC's GDP was higher than Canada's reflecting the then-healthy resource-commodity sector. However, the beginning of the 1980s saw BC's resource industries and Vancouver's resource-based services seriously hurt by commodity price shocks resulting in Canada's GDP growth exceeding B C ' s by just over 5% in 1982. BC's recovery to pre-crash levels did not materialise until 1987, the year after Expo when BC's growth figures were once again higher than Canada's. With the influx of capital and population into B C during this time, the province was able to maintain its relatively high levels of economic growth until almost the end of the study period. The prolonged early 1990s recession that hit central Canada had much slighter effects on the West Coast. The same trends can be observed through unemployment data (Figure 3.22). Until the early-1980s, the B C and Canadian unemployment rates were relatively similar. However, after 1981, B C ' s unemployment rate surged past Canada's with a gap between the two that ranged from between 2 and 4 percentage points during the recessionary years. Although rates declined for both B C and Canada, the gap between the two was maintained until the 1990s recession when  99  100  101  102  Canada's rates started to exceed BC's. The province was not impacted to the same extent as the rest of the Canadian economy thereby giving us tentative evidence that Vancouver's restructuring and reorientation to the Pacific Rim helped insulate the B C economy from one of the worst recessions since the Great Depression.  3.32.3 Vancouver's Housing Landscape: Response to Globalisation or the Ageing of the Baby Boomers? Real estate markets are becoming linked along lines that were so clearly noticeable in financial markets. As information becomes global, cities are being forged into an extraordinarily powerful network offinancial and managerial functions, financial and economic information flows essentially instantaneously among these cities. As more transnational corporations, especially international banks andfinancialfirmsand their clients, locate regional and branch offices in global cities, information about the cities themselves and their property markets is poured into the information networks linking global cities. This free flow of urban economic and property information combines with the freeflowof capital that was so essential to the globalisation offinancial markets to create the basis for a truly global property market (Goldberg 1994: 2) ...people now look at this city [Vancouver] in a global context whereas 10 years ago only western Canadians were considered potential purchasers. Vancouver Real Estate Agent (Farrow, 1989) The last ten years have seen a great deal of controversy brewing surrounding the inflationary spiral in Vancouver's residential housing market. If we compare the classic determining factor of interest rates vis-a-vis house prices, we can observe no consistent pattern that spans the entire study period (Figure 3.23). Therefore, in order to make sense of the relationships between housing prices, interest rates, the state of the local economy, and globalisation, and how these relationships have changed over the 25-year study  103  c c: ro ro > CD  II  ajBJ O  C O  C O  ^  C M  o  104  period, three correlation matrices were constructed: pre-Expo (1971-1985), post-Expo (1986-96), and one for the entire study period (Tables 3.13, 3.14, and 3.15). Perhaps the most interesting and most indicative results from this analysis are the relationships between house prices, GDP, and net international migration. GDP has had a positive, almost perfect relationship with house prices for all three correlations, with the strongest during the post-Expo period (0.98). Even more interesting is the growth in the positive relationship between net international migration and house prices: the pre-Expo relationship is moderately strong (0.68), however, the post-Expo relationship is near perfect (0.98). Overall, the house price/net international migration relationship at 0.96 is still remarkably strong for the entire study period. As an additional measure of globalisation, the relationships between tourism and house prices were calculated with the pre-Expo and post-Expo relationships positive and strong (0.92 and 0.84 respectively). Despite the assertion that incoming inter-provincial migration (especially from Ontario) has been a major push factor in Vancouver's house prices, the correlations between house price and net domestic migration reveal that pre-Expo figures are positive but very weak at 0.15, and, surprisingly, the post-Expo relationship is strong but negative (-0.81) which leads to the conclusion that as prices were increasing, the domestic population was deciding to leave the Vancouver C M A (see below for a critique of a major study asserting that inter-provincial migration and the ageing of the baby boom cohort were the major causes for the rise in Vancouver's house prices in the late-1980s). Counter-intuitively, the overall relationship between interest rates and house prices is weak (-0.12). The mystery deepens when the same relationship broken down into the two time periods, revealing a strong, but positive pre-Expo relationship (0.86), and a  105  g  ro o o  O O  CO CO  Q. 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CD Co D  x^  cn re CD O re QL  CD CO 3  CD >»  O  3 x 3  CD  d  00 CD  £ ro cn O 55 fcf o ro X c  w ro o CD '= S co co >  5  CD  -e  ro o "a ^ ro c ro ro "a O {3  ro  c CD 4—'  re  c re m  co c CD o E o a re <D  ~  S  c  ro CO co ro  CD  c — o c co z S  co re E o co co .Si.' > o O H  E o a  o Si  c re Z> 0£  O  CO CD  0_  Q CD  3  CD >> CO  o  o CO  108  moderate (and more conventional) negative relationship for the post-Expo period (-0.53). It would seem that the mid 1980s represent a significant breakpoint in the behaviour of the residential real estate market.  3.32.4 New Asian Immigration and Real Estate: What is going on? Not surprisingly, the high rates of Asian immigration and the rapid inflation of house prices in Vancouver led to a mix of responses from various Vancouver communities. Those in business welcomed the opportunity to market their goods and services to the new population with the hope of profiting nicely from the new source of wealth. Others were not so enthusiastic. One Vancouver construction worker expresses his increasing irritation and frustration at the class tensions between established Vancouverites and the new immigrants: There's no way in the world my child will ever he able to buy a home—unless he wins a lottery. The Chinese are coming over here and jacking up house prices....The Oriental kids stay in their homes until they are about 30, so they have money to go out and buy a Trans-Am... When my son comes in and asks me why he can't have a Trans-Am, I say, "I can't afford it. I'm poor". (Wong and Netting, 1992:119) Other Vancouverites perceived the new Asian immigrants as rich and greedy speculators who invested in real estate with the sole purpose of securing a Canadian passport and making more money with no benefits accrued to the local communities: These people come here with money and they've got nothing to do. They play golf and tennis, they play mahjong and they buy real estate. It's very passive investment which is bad. It doesn't add anything to the economy, it doesn't contribute anything to job creation. So you buy a building. Big deal. You create employment for a lawyer and  109  accountant and that's it. Ronald Shon, Vancouver land developer (Report on Business, 1989: 129) The goals of offshore investors are diametrically opposed to those of the average Vancouver resident. They don't want housing for average people. They want maximum profit. City of Vancouver Alderman (Gallagher, 1988: 15 in Wong and Netting, 1992: 119) Other neighbourhoods experienced more of a cultural clash with the "monster house" issue where older homes and large trees in established neighbourhoods with harmonious architectural styles were torn down and the site cleared to make way for very large and boxy homes which many perceived as being of very poor taste and completely out of place—most of these homes were bought by new Asian immigrants (see Ley, 1995 and Mitchell, 1993). By the end of the 1980s, a clear conflict was emerging between the economic and cultural responses to immigration. While the influx of new Asian wealth was a direct boost to the B C economy, the socio-cultural changes occurring in certain Vancouver neighbourhoods were not so readily embraced. So real was the tension that the conflict in particular neighbourhoods was conflated by the media to be occurring in the Vancouver C M A as a whole. Business groups and those concerned with the investment climate were quick to refute claims that Asians were causing price increases and attributed the increases to provincial in-migration and ageing-baby-boomers. To this day, a clear picture of what actually contributed to Vancouver's rising house prices over the last ten years is fuzzy at best.  110  3.32.5 Asian Investment in Context Asian interest in Vancouver's real estate market is not a phenomenon linked solely to the 1980s—there have been two distinct waves of investment. In the late 1960s, Asian investment was passive and was limited to the purchase of strip plazas, apartment buildings, and office buildings. As Gutstein has put it, "hundreds of millions of dollars poured into Vancouver and Toronto but raised little interest because the money was quiet, conservative, and anonymous" (Gutstein, 1990:100). However, with the commodity price crash and the recession that hit the B C economy in 1981, overseas investment ceased. It was not until 1986 that Asian activity in the real estate market resumed with the security and convenience Vancouver offered for those seeking a safe haven in light of the repatriation of Hong Kong to China in 1997. With the changes to Canada's immigration policy, the nature of Asian land investment began to change, taking a more active form with development and construction proceeding at very high and rapid levels. This activity was accelerated once Hong Kong tycoon L i K a Shing won the development rights for the former Expo86 lands after the closing of the fair. The arrival of L i on Vancouver's development scene legitimised investment by Asians in Canada and gave investment in Vancouver the credibility and respectability needed to attract sizeable Asian investment (Financial Post, 1993). However, besides the much-publicised purchase of the former Expo lands by L i Ka-Shing in 1988 (representing one-sixth of downtown Vancouver), it was (and still is) very difficult to determine to what extent Asian investors were actually buying real estate:  111  It is almost impossible to estimate total sales of commercial, residential and industrial properties because the market is so vast and most purchases are done by numbered companies. The directors of a numbered company in Ontario or B. C. may well be acting for foreign investors, or may be related to someone with a lot of money in East Asia James Lee, director, Asian business development, Royal LePage, Toronto (Gutstein, 1990: 99). However, other investment professionals were not so undecided. When asked whether he thought Asian investors were driving up house prices in Toronto and Vancouver in the late 1980s, Carl Beigie, chief economist with investment dealer McLean-McCarthy Toronto replied: Absolutely...I don't have any qualms about saying that. And the response of the general public is bewilderment and increasing irritation (Toronto Star, 1989). The degree of Asian investment into the residential housing market is very difficult to determine for two main reasons. First, statistics that record the ethnicity of the parties involved in real estate transactions are not officially compiled. Second, while the census records can tell us the areal change in ethnicity between census periods of those living in a particular census tract at a particular point in time, it does not render satisfactory information to determine the percentage of Asian homebuyers, especially during the 1980s boom (the census was taken in 1986 and 1991). Wyng Chow, a columnist for The Vancouver Sun, did some independent research in which he examined data obtained from the land registry office. Here, samples of sales to people with Chinese surnames were the basis for his determination that non-locals were a major influence in the Vancouver housing market with his headline "Asians buying most Vancouver $1-million homes" (February 1996). Problems with methodology aside (e.g. the assumption of citizenship status from surname only), this  112  type of reporting fuels the flames for anti-Chinese sentiment stemming from poor research methods, unscrupulous media practices, and anecdotal evidence. When asked about the relationship between house prices and immigration in Vancouver, Chow maintains his position: It is known that Asian money has kept our economy and real estate prices up as they have huge spending power...roughly two-thirds of all business immigrants choose to live in the Greater Vancouver Area so that's really driven the real estate market here because these people come in and buy homes (Interview, May 1996). One agent, however, did report 16 sales of $1 million-plus homes, most of them to Asian buyers, in 1995 (Chow, 1996b). The media, however, neglects to clarify the geographically specific nature of this investment and its unevenness throughout the Lower Mainland, with the end result of the conflation of many urban problems with immigration per se. At the height of the hyper-inflation of Vancouver's housing market, The Laurier Institute was formed in 1989 with a statement of activities that claimed that: The Institute is a non-profit educational organisation concerned with fostering an understanding of the economic and social implications of cultural diversity in Canada (Schwann, 1989, iii) A six-part research investigation was initiated with the first phase of the work released once month after the formation of the Institute. The first report, by Vancouver demographic and economic forecaster David Baxter, was concerned mainly with the relationships between population and demand for housing in Metro Vancouver over the 1951 to 1986 period. The report concluded that Regardless of the level of migration assumed (none, normal, or high) and regardless of the level of household  113  headship rates assumed (constant or increasing), it is the demographic process of the ageing of the post-war baby boom into the 35 to 44 age group (1986 to 1996) and then into the 45 to 54 age group (1991 to 2006) that will determine the characteristics of changes in housing demand in metropolitan Vancouver in the future....If we seek someone to blame for this increase in demand, we will find only that the responsible group is everyone, not some unusual or exotic group of residents or migrants (Baxter 1989 v). It is not too difficult to deconstruct the main reasons for the study from the language of the first few pages of the document. Even with the stressing of the study to be a longterm analysis, the rhetoric embodied within the text was loaded with codes of persuasiveness and a desire to neutralise the nativist overtones that were infiltrating the investment climate of Vancouver in the late 1980s (Mitchell 1993; Ley 1995). Besides Baxter's discursive strategies, the research methods employed for the study were inherently problematic for several reasons: the regional scale (metropolitan Vancouver) was too aggregated to permit any precision or to capture the specific manifestations of Asian investment in particular places (particularly, in Richmond and Westside Vancouver); the data used were limited to census data from 1951 to 1986 — this overlooked the impact of the investor immigrant class which as we have seen was not introduced until 1986 - while the results were extrapolated to post 1986 conditions; Baxter has a limited view of what contributes to housing behaviour as he considers household formation and behaviour to be synonymous with the added "clarification" that "much of human behaviour is related to age" thereby concluding that the increase in the number of households in Vancouver is "not the result of change in the size of the population, but rather of change in its age composition" (Baxter 1989: 25); Baxter does not examine any of the socio-cultural changes that have contributed to the increase in  114  households (increased immigration, smaller households, more singles, higher divorce rates) — where immigration is mentioned, Baxter deflects the pace and nature of immigration change in the 1980s by referring to the higher rates of immigration 80 years earlier at the turn of the century and that immigration is a "natural process"—he does not take into account other factors that could influence the immigration such as major world events (e.g. 1997 Hong Kong) or changes in Canada's immigration policy. In the end, Baxter's lack of geographical specificity and limitation of demographics to births, death, and rates of households formation produced a publication that was statistical and dense without much substance. In a more recent newspaper article, Baxter inadvertently contradicts himself by ignoring the role of income on housing choice and exposes his limited knowledge of why people do not choose to live in Vancouver: /find it instructive that more than 28 million people in Canada have chosen not to live here. They could; there's nothing stopping them. But they prefer to live where they are rather than here. Because they like where they live. (Baxter quoted in McMartin, 1996, B2) With her critique of the Laurier Institute and the report itself, Mitchell sums up its mandate: "Baxter makes it clear that the report is not so much concerned with showing the possible reasons for price increases as showing what are not possible reasons" (Mitchell, 1993, 284). The ideology behind the mandate becomes ever clearer when the corporate sponsors are revealed: major players in Transpacific finance, real estate, trade and transportation (Ley, 1995). Clearly, the Laurier Institute had its biases and a desire to keep the investment climate of Vancouver "healthy" at a time when reports of antiAsian sentiment were contributing to the pulling out of Asian investment in Sydney Australia (Ouston, 1989). However, despite sloppy research and a clear lack of  115  objectivity, these reports (especially Baxter's) were frequently cited to support claims that "there is no evidence" that the dramatic influx of Asian immigrants was a contributing factor to the now-expensive housing market in certain areas of Vancouver. Other members of the Vancouver real estate and development community echo this type of argument. For example, when asked whether the determinants of house prices in Vancouver had changed over the last 10 to 15 years, the manager of a prominent Westside Vancouver realty office replied: No, I don't think it has changed. We have a few different players in the market but the basic things that drive the market are confidence in the economy, interest rates, confidence in job security, and what direction the economy is going...ifyou actually looked at immigration statistics by household as opposed to individual, and then look at how many real estate sales there's been - it's a minuscule percentage, and Ijust don't believe that small a percentage can drive a whole market (Interview, May 1996). Because of the flawed nature of the Laurier Institute studies as well as the sensationalist headlines of the Vancouver media (i.e. The Hong Kong Connection: How Asian money fuels housing market (1989), New foreign money buying into our real estate (1989), Asians buying most Vancouver $1-million homes (1996)), we are still left with no absolute conclusions as to what exactly was the impetus for the most recent housing boom. However, the correlation data from the earlier section in this chapter points to a strong positive relationship between house prices and international immigration. Baxter's assertion that an in-coming domestic population in conjunction with the ageing of the baby boom generation has been fuelling the price boom does not hold up with the same correlation calculations (a negative value of -0.37 against domestic migration). Figure 3.24 illustrates this positive influence of net international migration on  116  c o 5Cn _ I 9? E  g  o o  T3 C ro  CD  CD  Q .  CD CO 3 O CD 05 CD  i_ CD J3  co  E  > CO  3 c  aoud asnoL|/sp|OL|3snog jo jsquinu  CO CD O CD CO 3  co  O  LO  CO  ?  32  CD CO 3  o co > cf o ro 'o o co  '  O hi 0) 3  T -  <  CO  <  o  co a> to co  LU ~~  Si •2 °5  1 0  ,  .2  CD Qi  ro  CO  =5  Q_  'is  O g  O ! O  o"  «  |  §  .<2 "J »- ro ro «Q. O)  I - T3  CD CD  C CO  CD CD  CD CO  O  CO CO  •a ro c  CN  CO  CO CD  O  3  CO  u.  CO  CO ro"  "O CO  o o o o  o o o  LO CO  o o o o  CO  o o o  LO CM  o o o o  o o o  CM  LO  o o o o  o o o  LO  c  o o o o  CO  O  CO CD O  uoiiejOjuj }3U  L.  3 O  CO  117  cn •c o  Vancouver's average house price—the incoming 1990s migrant flows to Vancouver are dominated by those of a foreign origin. A more recent C M H C study has found that the ownership rates of "recent immigrants" to Vancouver are disproportionately higher than those of Toronto, Montreal, and for Canada as a whole with rates that have increased from 38% in 1986 to 51% in 1991 "reflecting the impact of the wave of immigrants in the investor and entrepreneurial group from Hong Kong" (Lapointe and Murdie, 1996: 35). The study also discovered that ownership rates for all immigrants are higher than non-immigrants with rates of 66% and 54% respectively. A multivariate analysis from the same report furthers the validity of the above statistics with its finding that the odds of homeownership among immigrants from Asia (excluding South East Asia) are twice the level among Canadian born—a finding that confirms the strong desire of immigrants from Hong Kong and other areas of Asia to attain homeownership. 3.4  Conclusion: Comparative Overview of Toronto and Vancouver To conclude this chapter on Canada's inter-urban house price differentials, I want  to briefly compare and contrast the Toronto and Vancouver housing markets and the variables that influence them. The preceding discussion has illustrated how, over the last ten years, both cities have experienced a transformation towards "global-city" status which has manifested itself in very distinctive ways on their housing landscapes. Consequently, the house price dynamics of Vancouver and Toronto have been more aligned with those of the world's other global-oriented cities than "at-home" with other large centres in the Canadian urban system. However, the particular outcome upon each city's house prices has been dependent, in part, on the nature of the global flows that converge in the spaces of Toronto and Vancouver. As we have seen, the process of  118  globalisation has been very different in both places. While Toronto's international business scene in more in tune with the workings of the North American and Western European economies, Vancouver's outlook is more narrow with its specialized position as a major economic node on the Pacific Rim. On the ground, this has resulted in both cities experiencing extreme house price fluctuation in both the positive and negative directions, but at different times over the last 15 years, While both cities underwent huge boom periods once globalisation started to take hold in the mid-1980s, only Toronto encountered a housing bust in the early 1990s in response to the devastating recession experienced throughout the western world. During the Toronto bust, Vancouver was somewhat insulated from the negative effects of the economic downturn, most likely due to its ties with the relatively healthy Pacific Rim economies. As a result, Vancouver's prices continued to accelerate upwards until 1995. Not suprisingly, with the present downturn in the Pacific Rim economies, the present outlook for the Vancouver housing market has been grim with the decline in demand for B.C.'s resource commodities generating negative ripple effects for the Vancouver economy (Lamphier, 1997; Poon, 1997). Again, the behaviour of each city's housing markets are not only linked to their economic flows, but also to their population flows. As we have seen, although Toronto and Vancouver each attract a large percentage of the international migrants arriving in Canada, the predominant type of migrant attracted to each of these cities differs. While Toronto received a larger share of immigrants, Vancouver attracts the majority of business class immigrants. Because of this, the Vancouver housing market has been kept buoyant with the great influx of Asian wealth whereas the much larger Toronto market has been only slightly affected by this new type of immigrant. A n interesting post-script  119  to these tentative conclusions of the global influences on house prices has been the connection of the latest house-price decline in Vancouver to a federal proposal announced in 1996 that immigrants must report their foreign assets for tax purposes. A recent newspaper article quoted one Vancouver realtor as he expressed his frustration with the decline in the real estate market: "If you ask me why, it's the offshore disclosure law. People are hesitant to invest here. The federal government will have to do something" (Chow 1997c). In a different article another Vancouver broker-owner of a realty office has noted that the Greater Vancouver housing market has not been Asiandriven during the recent downturn: "It's not a speculative market right now. It's a local owner-occupier's market" (Chow 1997d). At the same time, if this is true, it is because of the recent disengagement by a number of East Asian investors. The problems inherent in the Laurier Institute studies and other public commentaries on the globalisation of the Vancouver housing market demand a more indepth investigation into the uneven spatial impacts of immigration and a service-based urban economy on the residential real estate market. The following chapter responds to this need, as I explore the specific intra-urban effects of global flows and networks on the housing landscapes of Toronto and Vancouver.  120  Chapter 4 Intraurban Study: A Closer Look at Toronto and Vancouver In order to bring the discussion of the connections between globalisation and metropolitan housing markets into the local, intra-urban realm, it was necessary to disaggregate the C M A market boundaries into smaller geographical units.  This task  required the employment of real estate board data which, despite imperfections, yielded some interesting observations. The Toronto Real Estate Board (TREB) record consists of average price data from 1971 to 1996 for all of Metropolitan Toronto plus the outer Greater Toronto Area (GTA). It is divided into small geographical areas which are very roughly defined by their similar housing and/or economic populations (but are, for the most part, arbitrarily drawn according to municipal boundaries and major cross streets). The data include all sales of single family residential dwellings that are sold through the Multiple Listing Service . Because the TREB boundaries and numbering system had changed 17  considerably over the course of the study period, some areas were amalgamated with their average values weighted and recalculated according to the 1971 boundary 18  definitions for the sake of longitudinal comparability .  ' ' As such, homes that are sold directly by a developer, those sold privately by owners, and those sold through auction or other alternative arrangements are not included in the data. To be sure, the category of single family residential dwellings includes detached single family dwellings, semi-detached dwellings, condominium apartments and townhomes but not duplexes, triplexes, or other multiple buildings that are sold as a building and not as individual units. 18 Also because of the changes in the TREB data, some areas were renumbered, and several regional subareas not included in the T R E B jurisdiction until later in the study period were not used as early data from the regional real estate boards were not available.  121  Obtaining suitable price data for Vancouver was more difficult. While the Real Estate Board of Greater Vancouver (REBGV) does have average price data for single family detached homes for the years 1971-1996, this data is of larger geographical units than the Toronto data. Because of jurisdictional regulations, not all municipalities in the Greater Vancouver Regional District are included in the R E B G V data. Therefore, in order to complete the Vancouver price series, the Fraser Valley Real Estate Board price data was also consulted. The single family detached data for the Vancouver suburbs of Surrey, Langley, North Delta, and Abbotsford, were derived from this data source. Unfortunately, the data were available only for the study years between 1979 and 1996. In order to obtain a fuller picture of the micro-scale dynamics between the housing market and socio-economic change, census analyses at the tract level were performed for both Toronto and Vancouver for the census years of 1971, 1986 and 1991. Tract level data for 1986 and 1991 were obtained from a Statistics Canada C D - R O M database while data from the 1971 census were derived from a more primitive database on microdata magnetic tapes. Again, in order to execute a longitudinal comparison between the three census records, the 1991 and 1986 tract areas were amalgamated to the 1971 census tract definitions . While the variable definitions between the 1986 and 19  1991 census were unchanged, a few discrepancies arose when compared to the 1971 variable definitions:  1986 and 1991: AVERAGE VALUE OF DWELLING Question asked on the census: "Ifyou were to sell this dwelling now, for how much would you expect to sell it? " (asks for a stated dollar amount)  In addition to the amalgamation of the tracts, a number of tracts were removed from the analysis because they were institutional and/or lacking in population. 19  122  1971: MEDIAN VALUE OF DWELLING: Question asked: "Ifyou were selling this dwelling now, for how much would you expect to sell it? " (categories to choose from: under $3000; $3000-7499; $7500-12499; $ 12500-17499; $17500-2249;,..; $5250062499; $62500 or more) IMMIGRATION: 1986 and 1991: specific immigration variables; 1971: the category of those BORN OUTSIDE CANADA was used The census tracts chosen for the Toronto C M A were limited to those areas that overlapped with the TREB data. The following Toronto areas were selected for the census analysis: Metropolitan Toronto, Richmond Hill, Vaughan, and Markham (total 344 tracts). A l l 185 census tracts for the Vancouver C M A were included. Several correlations and simple regressions were conducted using all of the data for each of the cities.  4.1  Toronto: Results and Interpretation Figures 4.1 and 4.2 illustrate the price movements experienced in the Toronto  housing market between 1971 and 1996. Both figures are testament to the assertion that, like the inter-urban scale of analysis, growth has been experienced everywhere yet it has been incredibly uneven. Strong compactness and centralisation are evident with the highest ratios of increase all located within the central area of Toronto moving north up the Yonge Street/subway corridor into North York; a pattern that strongly coincides with Toronto's existing high-middle income sector. Smaller offshoots of this growth have also occurred in the gentrified east Toronto area known as "the Beaches" (district E2), and in the outer-suburb of Vaughan (N8). The suburban story is less dramatic with very modest price increases in Metro's east and west sectors and the remaining outer-suburbs. This growth is highly polarized with only 9 districts in the top 2 price ratio classes and 27 in the bottom 2, clearly indicating that rapid growth has been selective and limited.  123  124  co  CD >^ CO  o  co >  CO." LU  DH I-  CD O  O CO  eajv  125  Temporal movements of the Toronto housing market also vary spatially (Figure 4.3). Here, the price movements are homogeneous in the East and North Districts with slightly more variation within the West District. Most remarkable, however, is the amplitude and the diversity of change within the Central District. Particularly noteworthy are the increases and decreases in price during the two boom periods of the early- and late-1980s in the areas of the Bridle Path (CI 2) and Rosedale (C9) — both of which are the highest income areas in Toronto, with Rosedale housing the established elite and the Bridle Path associated more with the "nouveau riche". Indeed, these boom and bust movements are recorded in the mapping of the top 20 positive and top 20 negative price oscillations for the study period (Figures 4.4 and 4.5). With only a couple of exceptions in the outer-suburbs, most areas with the top 20 price oscillations are in, or close to, the central areas of Metro Toronto with Vaughan (N8), Rosedale (C9) and South Central/West downtown (CI) each appearing twice in the top 20. Generally, the same scenario emerges when we examine the top 20 negative oscillations—most of the areas in the negative top 20 are in the same areas that encountered the top 20 positive fluctuations. Adding to the argument that the most expensive areas experience the largest fluctuations in house price, it should also be noted that seven of the areas in the top 20 oscillation category are in the top 10 price areas for 1996, as are six of the top 20 negative oscillation areas. At this level of detail we cannot see any districts as "leaders" in the house price movements as change is simultaneous throughout the entire urban area, at least in terms of annual data. However, correlations of the annual house price change percentages do  126  OOLld 3L1BJ3AB  <"'•">  3  S  n  0  l  <  a  B  e  J  a  ^  127  128  129  give some indication of the cohesiveness of the price movements between the TREB areas. Table 4.1 illustrates how the annual price changes for the entire study period are highly correlated within and between Toronto's east, west and northern suburbs with all relationships positive and greater than 0.70. While the relationships are also positive in T R E B ' s Central District, they are noticeably weaker than relationships within the suburban areas. Most striking is the independence of Rosedale where price change correlations with the other TREB areas range from a low of 0.38 ( with W5) to a high of only 0.71 (C8, the area immediately adjacent to Rosedale). Area rankings in five-year intervals reveal the complexity and disorder that are emerging as signatures of the Toronto market (Figure 4.6). A brief examination reveals that 6 of the top 12 areas in 1971 have maintained their position in the top 12 of 1996. Overall, the greatest rearrangement in the rankings occurred in the first 15 years of the study period from 1971 to 1986 with less divergence from 1991 to 1996. It is in those first 15 years where we see the western and eastern suburbs of Toronto drop significantly in rank, and see a corresponding increase in rank of the northern suburb of Vaughan/Woodbridge and the north and central inner suburbs of Metro Toronto. Most noteworthy within the top rankings are the top two positions of the elite areas of Rosedale (C9) and The Bridle Path (CI2) which have remained constant throughout the study period—after 1991, The Bridle Path replaces Rosedale as the area with the highest house prices. Forest Hill (C3), the other "elite" area in Toronto does not enter the top ten until 1986 which may be due to the mix of housing types in the area. Of the top ten areas in 1996, three particular areas have made significant jumps throughout the study period to their top ten positions: Leaside(C10: 18th to 3rd), the Annex (C2: 26th to  130  *~  o  s  CO d d CO ICD D d0 *~ C 0 Id d d 00 dD C O o CO CO CO C CD CO d d d d C N d o o C M CO CO d CO Ol Id- d CO CO CO O C CD D d O C CO od C d r- d d d I d C N CO CO CO CO d rd d C dO d CD CD CO s  *~  CD d  CD CO CD  CO D C CO d d CD LO  *~  I-  d  d  s  d o  s  s  Ol LO CO I- d d r- d d CD CO C CO CO L O CO dCM D Ol Ol d d d d IdC O D C O o d CO CO CD C CO CD d C dD d CD d d d •qCD CD m CO CD T d in d d d d I- drOl CO o C CD D CD T r- CD in *~  s  s  o CD d m CD d CO CO  cn CO d cn o rCD d d CO CO r- d d d C CD D 01 CO CO d d d CO C O CD CO in d d d CO CM o C CO O CO d d d CO CD CD  CM CD  C CO D  *-  CO CO CO  Q CO LU  CD d *-  *-  co cu  d  *-  T-  I_ (U  0.  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Gentrification seems to have been a strong feature in the rankings up until 1986. However, its impact has been more modest since as is the case with the Beaches (E2: 38th in 1971, 22nd in 1986, and 18th in 1996), and High Park (W2: 32nd in 1971, 23rd in 1986, and 19th in 1996) and indeed mixed, as we can see in Toronto's remaining gentrified areas: Cabbagetown (C8: 35th in 1971, 5th in 1981, 23rd in 1991, and 28th in 1996), South Central/West downtown (CI: 29th in 1971, 18th in 1981, and 26th in 1996), and Riverdale (39th in 1971, 33rd in 1981, 27th in 1991, and 29th in 1996). Furthering the price polarization argument, eight of the nine top price ratio areas are in the top ten rankings for 1996, with the two elite areas of the Bridle Path and Rosedale being in the top ten for 1971 suggesting a reinforcement of wealth in established elite areas over the study period (Figure 4.2). The ten areas with the lowest price ratios are all located in the suburbs with seven of these areas in the bottom ten of the 1996 price rankings. Interestingly, none of these areas with the lowest price ratios were in the bottom ten of the 1971 price rankings while three were in the top ten of the 1971 price rankings (Mississauga, E5, and W9) suggesting that while these areas did not experience relatively large movements in price, many other parts of the Toronto market did, with the end result being the fall of these areas in rank. This also reveals that a high ranking in the beginning of the study period did not necessarily result in a continuation of that rank through to 1996, the end of the study period.  4.11  An Attempt at Explanation: Socio-Economic Change Given this enormous complexity of Toronto's sub-markets, it is difficult to  provide a simple explanation of the factors which shape the spatially distinct nature of the  133  price movements. However, an examination of the general socio-economic changes experienced in the Greater Toronto Area (GTA) over the past twenty years can illuminate or extinguish possible avenues of explanation. Recent work by Larry Bourne on the outcomes of social change in the G T A leads to this comment on the evolving urban landscape: "Toronto has become not only large and massively complex, but predominantly a suburban metropolis, with the City as its downtown and Metro as its extended inner city" (Bourne and Olvet 1995:50). Bourne's referral to the older suburbs as an "inner city" has far more relevance than a geographic location alone. Redevelopment in the city core and waterfront areas in conjunction with the rapid development of the outer suburbs, has resulted in the G T A being split economically and spatially in the middle—the effects of which inevitably play themselves out on the various landscapes of the housing market (the exception, of course, being the wealthy sector rising north along Yonge Street). Factors and indications of this "soft in the middle" phenomenon are many and varied. It is well documented that the connections between labour and housing markets are strong. Areas of prosperity, wealth, and high employment levels typically have higher house prices while areas of stagnation and unemployment tend to have repressed dwelling values (Ley, 1997). Toronto is no exception. Employment figures released in 1996 have shown that the recession of the early 1990s hit the inner suburbs of Metropolitan Toronto particularly hard with unemployment rates higher than the rest of the GTA. Recovery since has also been very slow: as of the third quarter of 1996, the unemployment rate of outer Metro was high at 12.7% with much lower rates in the City of Toronto and the rest of the G T A (7.7% and .7.5% respectively) (Spears 1996). This  134  geographical split is mirrored by employment data from 1981 to 1991 which indicate that job growth in the outer Metro has been negative while growth in the City and the outer suburbs of the G T A have been positive (Table 4.2). Even more interesting is that postrecession job growth has been entirely driven by employers in the outer G T A resulting in increasing numbers of Metro inhabitants making a daily commute to the outer suburbs (Spears 1996b). As expected, income distribution figures mirror these employment trends. In a 1993 study, Bourne examined the changing local distribution of income in Metro Toronto between 1950 and 1991. He concluded that the combination of inner city gentrification and investment, the suburbanization of social housing, and the migration of low to moderate income groups (including new immigrants) from the City to the inner suburbs have had the net effect of lower than average income figures in the mature suburbs relative to the rest of the GTA, including the City of Toronto (Bourne 1993). While the historic locations of wealth and poverty have remained somewhat intact within the G T A , the emergence of suburban pockets of poverty is significant in the new distribution of wealth in Toronto which has led Bourne to conclude that poverty has "left the inner city for the suburbs" (Bourne, 1993:1311). Clearly, the combination of high unemployment in the older suburbs, the resulting lower incomes, and the migration of lower income groups to these areas (voluntary or not) have had a negative effect on house prices vis-avis the central city and the outer suburbs of the GTA. In line with the maturation of Metro's housing stock, owner-occupancy rates have declined since 1961 (Table 4.3). While the decline between 1981 and 1986 was not significant in Metro, ownership actually increased in most outer suburbs of the GTA.  135  Table 4.2 The Changing Spatial Distribution of Employment Within The Greater Toronto Area, 1981-91  Change  Employment  1981  1991  1981-1991  Sub-area  000s  % of totals  000s  % of totals  000s  %  Central Core  351.1  19.1  423.5  18.5  72.4  20.6  Rest of City  140.8  7.7  167.0  7.3  26.2  18.6  Subtotal: City  491.9  26.9  590.5  25.8  98.6  20.1  Rest of Metro  778.1  42.5  769.5  33.6  -8.6  -0.6  Subtotal: Metro  1270.0 69.6  1360.0 59.4  90.0  7.9  Suburban Ring  560.0  930.0  370.0  66.1  Total GTA  1830.0 100.0  460.0  25.1  30.4  40.6  2290.0 100.0  Notes: 1 Percentages may not sum to 100. 2 Totals for the suburban ring (Peel, Halton, York, Durham) are estimates Source: Bourne and Olvet, 1995.  Table 4.3 Owner Occupied Units as a Proportion of all Occupied Units - Toronto CMA  Toronto CMA City of Toronto Core Inner Residential Outer Residential Etobicoke York North York East York Scarborough Oakville Mississauga Brampton Caledon King Township Vaughan E. Gwillimbury Newmarket Aurora Whitechurch-Stouffv Richmond Hill Markham Pickering Ajax  1961  1981  1986  1991  70  56.5  58  58  56.3  40.7  40  37  na na na  36 22 45.8  27 21 45.2  26 22 42.4  77.1 63.2 71 68 82  58.9 51.7 51.9 48.7 61.3  59 50 52 48 62  57 46 49 45 59  79.1 81.8 75.2 86.6 82.7 84.4 88 77.4 73.6 79.4 84.8 83.4 78.7 76.3  70.6 63.6 75 86 83 86.6 88 77 73 78.6 74.8 82.9 85.6 76  74 64 73 87 84 90 90 78 77 80 78 86 84 80  76 65 73 86 84 90 87 77 77 78 77 84 84 81  Source: Harris and Pratt, 1993; Census, various years.  137  The effect of the late-1980s boom, however, was more spatially uneven: by the end of the bust period, most of Metro's older suburbs experienced a 3% drop in their owneroccupancy rates while the effect in the outer G T A was negligible. Furthering the stability of high ownership rates beyond the Metro boundary, the G T A areas that serve as spatial extensions of Metro (most prominently, Vaughan, Markham, and Pickering) have maintained very high ownership rates and show no immediate signs of the decline. A possible explanation for these accelerated rates of tenure conversion in Metro could be the after effects of boom speculation activity which left property owners unable to sell. In order to cover some of their losses, these owners decided to rent out these dwellings during a time of high immigration into the Metro area, a period when demand for rental accommodation was high. Obviously, these changes in unemployment, employment and income distribution, and housing tenure do not occur without influential effects of population change and growth. Population growth rates for the first 20 years of the study indicate that by the early 1980s the majority of growth has been concentrated primarily in the four outer G T A regions with lower rates of growth in Metropolitan Toronto (Figure 4.7). While the suburbanization of Toronto's population during this time period is not unusual nor unexpected, the origins of this population growth are surprising. Charting the flows of migration in and out of the Toronto C M A , the picture emerging is one of an increasing international component in population growth (Figure 4.8). In fact, since 1988, domestic migration for the G T A has been negative while immigration has been positive. And while the majority of immigrants settle within Metro, there has been a significant increase in the numbers of recent immigrants in the outer regions of Peel and York (Figure 4.9).  138  C  "  N <-  O  """"  C  O  C  D  ^  C  S  I  O  C  N  -  ^  -  qyvuxiB uoi}E|ndod |enuue %  ^  P  o  139  c  o o  I-  c  o  "•£3 CO  i_ O)  1  •o  c CO 0)  u a a>  CO 3  O  U)  cn  CO CO  -a  o si 0)  w 3  •  r--  cn  <  o sz o o 1_  Q>  . Q  E 3  C  4-  o c o (/>  "LI CO a  E  o o CO •<*  a> L.  3  iZ  aoud asnoii / U O U B J B I U J jau  140  Q  Iton  rha  E  CO  m  I  •  i  O  CD  o 0)  > E3  w  • •  c (0  o Q.  o 1_  +-< CD CO T~  oo  CO  g>  £<  wo CO c > o E o  <  r-  O ro *- co  § • 2 ^  =? S  m  CD CD  c c o .2 £ c CO  CD E  co Q .  1_  CD -t-> C  0  Q  CD  c 'c c: ro  OO 0)  o  1_  3  D)  c CO  -»—'  o QL  o o o o o C D  O O O o" 0 0  o o o o"  o o o o* co  o o o o" in  o o o C O • 5 T  O o o o" C O  o o o o" C M  o o o o"  0 0  o o CO  141  Given that ownership is the primary form of tenure in these regions, this suggests that these wealthier immigrants progress immediately into ownership which may have contributed to rising house prices in some areas. Even with the tendency among recent immigrants to rent in Metro, the housing demand associated with increased rates of immigration inevitably places pressure on the housing market - both owner and rental tenure (as discussed in the previous chapter). 4.12 Further Exploring the Relations with Immigration At this point in the analysis, the specific relationships between immigration and housing markets remain sketchy. A comparison of Figure 4.1 with the map of Toronto's 1991 immigrant population (Figure 4.10) reveals that the central cluster of high house price increases coincide with lower levels of immigrant population. Similarly, many tracts with a large immigrant population experienced very modest increases in house prices. However, because the geographical units of the TREB data are quite large for some areas that contain many census tracts with much variability in their immigration numbers (for example, Markham), much of the comparability between the TREB lists and census tract data is "lost". For this reason, various correlation and regression operations were executed using census tract data in order to isolate the effects of immigration and other socio-economic variables on dwelling value. From the 1986 census, the most prominent observation is the negative relationship between dwelling value and immigration (Table 4.4). Immigrant population as a percent of total population has a negative and moderate relationship with dwelling value (-0.39). Domestic migration, however, has a positive relationship with dwelling values with a positive relationship between interprovincial migration and dwelling value  142  Figure 4.10: Percent Census Tract Population Immigrant, Toronto CMA, 1991  Source: Ley, D. and Smith, H., 1997.  143  Table 4.4: Correlation of Average Value of Dwelling 1986 and Socio-Economic Census Data Toronto CMA Average Value of Dwelling 1986 Average Value of Dwelling 1986 Median Value of Dwelling 1971 % change 71-86 average value of dwelling total popn 1971 Population, 1986 % change 71-86 total population Total immigrant population 86 1986 immigrant pop as % of 1986 total popn Total Born Outside Canada 1971 1971 Immigrant population as a % of total 1971 population % change 71-86 total immigrant population Immigrated before 1946 Immigrated 1946 - 1966 Immigrated 1967 - 1977 Immigrated 1978 - 1982 Pre 83 immigration Pre 83 immigration as % of total imm pop Immigrated 1983 - 1986 Immigrated 1983 - 1986 as % of total imm population Migrants From same CMA or CA From same province From same province as % of total pop From different province From different province as % of total pop From outside Canada1986 From outside Canada1986 as % of total pop total External migration 1971 1971 external migration as a % of total population % change 71-86 external migrants Total number of dwellings Constructed before 1946 Constructed before 1946 as % of all dwellings constructed 1946-70 constructed 1946-70 as % of all dwellings Constructed 1971 - 1986 Constructed 1971 - 1986 as % of all dwellings Total number of private households Owner one-family hhlds without add. persons Average major payments for owner (monthly) Owner's major pay. >= 30% of hhld. income Average income  1 0.70 0.72 -0.16 -0.11 0.04 -0.17 -0.39 -0.24 -0.22 -0.04 0.03 -0.15 -0.16 -0.19 -0.17 0.15 -0.16 -0.02 -0.06 -0.03 -0.05 0.05 -0.01 0.15 -0.14 -0.09 -0.19  -0.12 0.00 -0.08 0.05 0.08 -0.08 -0.03 -0.07 -0.07 -0.08 -0.04 0.74 -0.07 0.86  Source: Canada, Statistics Canada, Canada Census, 1971, 1986.  144  (0.15) and a weaker but positive relationship between intraprovincial migration (0.05) and value. The relationship between household income and dwelling value is strong and positive (0.86), as is the relationship between average payments for owners and dwelling values (0.74). The relationship between income and percent immigrant population is negative and moderate (-0.50), a result which combined with the above income and value relationships further reinforces the validity of the negative relations between 1986 dwelling value and immigration. For the first fifteen years of the study period, the change in dwelling value was positively correlated with population growth (0.15) which, when further broken down by the migration source of the last five years, reveals that dwelling value change is related positively with both sources of domestic migration (intraprovincial (0.19) and interprovincial (0.34)), and was negative with both measures of immigration (-0.12 with percent change 1971 to 1986 total immigrant population and -0.20 with total external migration 1971) (Table 4.5). It should also be noted that a high average dwelling value in a district in 1971 did not necessarily dictate higher percentage increases between 1971 and 1986, with only a modest positive relationship of 0.22, lower than might have been expected. Of special interest is the positive relationship between change in dwelling value and the percent of old housing stock (built before 1946: 0.21) lending some support for the inflationary impact of gentrification on dwelling value. Moving further ahead to the 1991 census (Table 4.6), we can see that value of dwelling in 1991 was again negatively correlated with immigration (measured several ways: -0.42 with 1991 total immigrant population as a percent of total population, -0.26 with external migration 1986 to 1991) and that immigration and income were also  145  Table 4.5: Correlations of % Change in Average Value of Dwelling (1971-1986) and Socio-Economic Census Data ~ Toronto CMA  % change 71-86 average value of dwelling total popn 1971 Population, 1986 % change 71-86 total population Total immigrant population 86 1986 immigrant pop as % of 1986 total popn Total Born Outside Canada 1971 1971 Immigrant population as a % of total 1971 population % change 71-86 total immigrant population Immigrated before 1946 Immigrated 1946 - 1966 Immigrated 1967 -1977 Immigrated 1978 -1982 Pre 83 immigration Pre 83 immigration as % of total imm pop Immigrated 1983 - 1986 Immigrated 1983 - 1986 as % of total imm population Migrants From same CMA or CA From same province From same province as % of total pop From different province From different province as % of total pop From outside Canadal 986 From outside Canadal 986 as % of total pop total External migration 1971 1971 external migration as a % of total population % change 71-86 external migrants Total number of dwellings Constructed before 1946 Constructed before 1946 as % of all dwellings constructed 1946-70 constructed 1946-70 as % of all dwellings Constructed 1971 - 1986 Constructed 1971 -1986 as % of all dwellings Total number of private households Owner one-family hhlds without add. persons Average major payments for owner (monthly) Owner's major pay. >= 30% of hhld. income Average income  % change 71-86 average value of dwelling 1.00 -0.25 -0.23 0.15 -0.30 -0.39 -0.27 -0.16 -0.12 -0.07 -0.29 -0.27 -0.29 -0.30 0.07 -0.27 -0.06 -0.14 -0.08 -0.09 0.19 -0.05 0.34 -0.26 -0.13 -0.19 -0.09 -0.09 -0.17 0.21 0.21 -0.20 -0.11 -0.16 -0.16 -0.18 -0.17 0.62 -0.15 0-54  Source: Canada, Statistics Canada, Census of Canada, 1971, 1986.  146  Table 4.6: Correlations of Average Value of Dwelling (1991) and Socio-Economic Census Data -- Toronto CMA Average Value of Dwelling $ Average Value of Dwelling $ Population, 1991 (2) % Population Change 1986-1991 1991 Total immigrant population Total Immigrant Population - Change 1986-91 Total immigrant population 1986 Total Immigrant Population % Change 1986-91 1991 total Imm pop as a % of total pop Pre81 Immigration Pre81 Immigration as a % of total Immigration 1981-1987, period of immigration 1981-1987, period of immigration as % of total immigration 1988-1991, period of immigration (16) 1988-1991, period of immigration as % of total immigration Intraprovincial migrants, 5 yr. mob. Stat as % of total population Interprovincial migrants, 5 yr. mob. Stat as % of total population External migrants, 5 year mobility status as % of total population % change 86-91 in external migrants with 1986 external migrant base Before 1946, period of construction as % of occupied private dwellings 1946-1970 period of construction as a % of occupied private dwellings 1971-1985 period of construction as % of occupied private dwellings 1986 - 1991, period of construction as % of occupied private dwellings Average major payments for owners (26) $ Average major payments for owners $ change 1986-91 Average income, household income $ Average income, household income $ change 1986-1991  1.00 -0.01 0.04 -0.02 -0.01 -0.02 0.01 -0.42 -0.01 0.30 -0.02 -0.21 -0.02 -0.32 0.06 0.05 -0.26 -0.06 0.10 -0.05 -0.13 0.05 0.51 0.15 0.88 0.72  Source: Canada, Statistics Canada, Census of Canada, 1986, 1991.  147  negatively correlated (-0.45). However, the relationships between dwelling value and domestic migration were inconsequential which differs significantly from the earlier census analyses. In terms of change between 1986 and 1991 (years marking the beginning of the housing boom and the end of the bust period respectively), we can see that change in value and change in population were positively correlated during this period (0.21) lending some general validity to the supply and demand argument of house price increase (Table 4.7). Again, domestic migration and its impacts on price change are inconsequential and immigration and value change are again negative. Average household income and price change is strong and positive (0.78) and, as we would expect from the above immigration correlations, income and immigration are negative and strong (-0.51). The preceding results may led us to conclude that immigration has not played a major role in the dynamics of house prices in the Toronto C M A over the past 25 years. Indeed, the regression of the 1986 to 1991 change in dwelling value with external migration supports this claim (Figure 4.11). Yet we should not forget that during the boom period (1986 to 1991) net domestic migration was negative, and therefore a deflating factor in price movements, while the price relationship with population growth was positive during the same period (0.21). This brings us back to the components of population growth and their origins: despite the failure of statistical analysis to attribute price increases to the influx of international immigrants at the census tract level, the demand effects of heavy immigration on the housing market are nevertheless significant, not least because domestic migration was consistently negative. Without immigration, the collapse of the Toronto housing market would have been catastrophic. In addition to  148  Table 4.7: Correlations of Change in Average Value of Dwelling (1986-1991) and Socio-Economic Census Data -- Toronto CMA Dwelling $ Change  1986-91"  Dwelling $ Change 1986-91 Population, 1991 (2) % Population Change 1986-1991 1991 Total immigrant population Total Immigrant Population - Change 1986-91 Pre81 Immigration Pre81 Immigration as a % of total Immigration 1981 -1987, period of immigration 1981-1987, period of immigration as % of total immigration 1988-1991, period of immigration 1988-1991, period of immigration as % of total immigration Intraprovincial migrants, 5 yr. mob. Stat as % of total population Interprovincial migrants, 5 yr. mob. Stat as % of total population External migrants, 5 year mobility status as % of total population Before 1946, period of construction as % of occupied private dwellings 1946-1970 period of construction as a % of occupied private dwellings 1971-1985 period of construction as % of occupied private dwellings 1986 - 1991, period of construction as % of occupied private dwellings Average Average Average Average Source:  1.00 -0.01 0.21 -0.02 -0.01 -0.01 0.29 -0.02 -0.21 -0.02 -0.30 0.08 0.09 -0.27 0.12 -0.04 -0.19 0.08  major payments for owners $ major payments for owners $ change 1986-91 income, household income $ income, household income $ change 1986-1991 Canada, Statistics Canada, Census of Canada, 1986, 1991.  0.46 0.23 0.78 0.71  149  o  CO  CM CO  150  missing the pressure low-income immigrants place on the rental market (which indirectly has demand effects on the ownership market), the analysis of census data underestimates a significant group of immigrants that have a greater impact on the housing market in certain areas than their initial numbers might indicate.  4.13 Ownership and location: recent settlement patterns of wealthy Asian immigrants The study of the price changes in the G T A opens the door for a more in-depth analysis of the changing ethnic composition of those neighbourhoods that have experienced the most dramatic changes in house price. Therefore, in order to address the complexity of the Toronto housing market, interpretation now turns to the less numerical but ultimately more fruitful discussion of newspaper articles and interviews conducted by the author. This will help to explain what is happening in the outlying census tracts of Figure 4.11 — areas which, over the last ten years of the study period, have had specific relationships with a new type of immigrant. Immigrants with the wealth and the knowledge to move into the ownership market upon first arrival to Toronto tended to concentrate in specific neighbourhoods. And while the clustering of immigrants in specific neighbourhoods in large cities is not of course new, these traditional locations of initial settlement shifted with the change in the class and type of immigrant that started arriving in Toronto in the mid-1980s (Gutstein, 1990). Toronto's Asian population has traditionally settled in one of two downtown "Chinatowns": areas of low rent housing which have the resources and institutions that cater specifically to the Asian community. In the 1970s, however, large numbers of these Chinatown populations started to migrate out of the downtown core - a  151  migration that resulted in the establishment and concentration of an Asian community in the north Scarborough area known as Agincourt (E5 on Figures 4.1 and 4.2). While the first wave of out-migration to the suburbs was indicative of the changing patterns of immigrant settlement in Metropolitan Toronto, the most significant settlement of Asian immigrants has been the second wave of immigration that started in the mid-1980s; a group of newcomers with more wealth and education than their suburban predecessors. This group bought large homes and settled not only in Agincourt, but also in Willowdale, Don Mills, and farther north in Markham and Richmond Hill. This settlement started to change the composition and appearance of these neighbourhoods at a rate the established communities did not embrace. This concluding section of the Toronto analysis will consider these Asian settlements, in particular the elite segment of recent immigrants and their rationale for not choosing to live in the traditionally elite central Toronto neighbourhoods of Rosedale and Forest Hill.  4.14 The North Toronto Sector—The New Immigrant Mecca? Unionville has been bought up by the Chinese. Now more recently we've had a lot more of the Chinese going over to the centre core of Toronto like Richmond Hill...they like large houses... they like lots of space... so with the money they have they want to get the most they can in a house... they seem to want to stay in the centre core where transportation and access to the centre of the city is very easy. (Markham real estate agent, Interview, May 1997) Moody's, an American agency that rates the investment quality of corporate and municipal bonds, has concluded that the economic strength of York Region can be attributed to Richmond Hill's solid financial position (Ferenc, 1995). Richmond Hill has been billed as Canada's fastest growing municipality with a population that increased  152  110% b e t w e e n 1985 and 1994 (45000 to 94500). T h i s p o p u l a t i o n g r o w t h has been m a t c h e d b y the establishment o f m o r e than 3000 businesses i n c l u d i n g major national and international corporations over these same 10 years.  M u c h o f this p o p u l a t i o n and  e c o n o m i c g r o w t h has b e e n o f A s i a n origin. O n e R i c h m o n d H i l l entrepreneur c o m m e n t s :  / think a lot of Chinese people are attracted here because it's a place to grow. You don 7 look out at wall to wall buildings in a concrete jungle like Hong Kong or New York where it's hard tofinda blade of grass or trees. (Ferenc, 1995) Further east, another m e m b e r o f the C h i n e s e c o m m u n i t y explains his rationale for l i v i n g in M a r k h a m :  The Chinese population is sizeable enough that Markham is a place I can feel comfortable in...in terms of living, the houses are potentially nicer for what you get. Taxes are lower. The air is cleaner and you 're not far away from anything else. ( K r i v e l , 1995: A 7 ) A N o r t h T o r o n t o real estate agent w h o s e p r o m o t i o n a l brochure highlights his successful n e t w o r k i n g w i t h i m m i g r a t i o n lawyers and accountants and his " c o m p r e h e n s i v e c u s t o m tailored advertising p r o g r a m s in both the E n g l i s h and C h i n e s e media", gives his i m p r e s s i o n s o f A s i a n settlement i n N o r t h T o r o n t o :  Bayview is the prime prime prime street in Toronto and most people here and in Hong Kong and in Taiwan know that street... they are two streets they know in Hong Kong, if you land at the Hong Kong airport and you walk out and you go "Yonge Street", they know Yonge Street...you 'd be surprised in Hong Kong how aware people are of the two cities. All I'm saying is, when you start talking about Markham, Unionville, they know. The tie between Canada and Hong Kong is so deep and so long... the awareness is strong (Interview June 1997). In a d d i t i o n to c o m f o r t level o f the n e w immigrants, n e i g h b o u r h o o d reputation is, i n large part, dependent u p o n the educational facilities i n the area. T h e same agent c o m m e n t s :  153  Why do they come? Because of the children, their grandchildren, the future, the next generation. Because of that it ties into the neighbourhood because schooling and education is very important so they want to get into good areas where the neighbourhood is good and the schools are typically better. Such as here. The school that is most famous around here is Earl Haig which is arguably one of the top 10public schools in the country. At least, that's how they publish it when it is translated in the Chinese media, and that's how this area became what it is (Interview June 1997). Not only was the ethnic composition of these areas changing, but the primary form of housing was also transformed with the influx of this new immigrant group, a process that could perhaps have been the most political facet of these new settlement patterns. The demand for the large executive two-story home, according to one Toronto home builder: ...spawnedan edifice complex centred in Southern Ontario. Drive through the Bayview and 16 Avenue areas of Markham, north of Metro Toronto and you '11 see proof: block after block of massive homes from 4,000 square feet to 7,000 square feet, with three-car garages, Scarlett O 'Hara staircases, huge lobbies, built-in wet bars, and master baths with whirlpools and bidets. Tract builders launched—first tentatively, then almost with abandon— whole subdivisions of estate-style homes...infill builders were transforming central North York and North Toronto neighbourhoods. (Weiss, 1991: 59) th  Interestingly, the same desire for large homes is being used by some to keep the new populations out of their areas.  A Markham real estate agent speculates on this  mechanism of exclusion: Some people don't want to move here because they feel that the Chinese are going to take over like they did in Agincourt.... Some of the new building going on in town has taken on a new program which came up from the States and they 're building houses with the garages at the back and laneways, back to the old country-type thing (the proposed  154  community of Cornell). So this is changing a little bit of what is going on here now because people are looking at these, the Chinese are not fond of it, they don't like garages at the back, they like garages at the front of the house. So they 're tending not to buy. So you 're tending to get more of the people in town buying into the new homes because they feel this is going to keep the Chinese out, I think, in a way. It won't keep them all out, but it does make it look like the market is going in a bit of a different direction (Interview, May 1997).  4.15 The New Elite and the Establishment—Neighbourhoods of Comfort Perhaps the most poignant example of immigrant preference for a particular neighbourhood arises out of an examination of the two areas that experienced that largest movements in price during the Toronto boom of the late 1980s: Rosedale and the Bridle Path. While both these areas have remained in the top two positions in the house price hierarchy for the entire period, only the weave of the Bridle Path's ethno-cultural fabric has changed to reflect the reality of Canadian multiculturalism. Despite the population influx of the wealthy immigrant class since the mid-1980s, Rosedale has remained primarily a neighbourhood for the old and established Canadian elite. As one Canadian builder commented in 1987, "Rosedale is for the Anglo Saxons...York Mills and Bayview is for the rich immigrants" (Gutstein, 1990:205). The area popularly known as "The Bridle Path" is located off Bayview Road and consists of just 106 properties on four streets: High Point Road, Park Lane Circle, Post Road, and The Bridle Path. A 1996 assessment of the ethnic composition of homeowners on Park Lane Circle determined that six homes were owned by those of Chinese origin, three were owned by Russians, and six were for sale. Of the fifteen properties on The  155  Bridle Path, twelve were owned by those of Chinese origin, and two were for sale (Wong 1996). The impact, therefore, of immigration on this neighbourhood in undeniable: Over the next few years, the neighbourhood could be completely transformed. About one in five Bridle Path properties are for sale. While the vendors are mostly Canadians, the buyers are mostly foreign (Wong, 1996). According to one real estate agent, the appeal of The Bridal Path is related to the large land holdings of each property: Rosedale is for people who want charm and proximity to downtown. Forest Hill is more for families. But I don't think there is another place in North America (speaking of The Bridal Path) where you can be 15 minutes from downtown and still live on a two-acre estate (Wong, 1996). Yet in an interview I conducted with a North Toronto real estate agent whose clientele has a large immigrant base, the relationship between The Bridal Path and wealthy immigrants was less tangible. According to this source, the appeal of The Bridle Path has more to do with the neighbourhood's openness to change—even the architecture was more "contemporary". Newcomers do not feel welcome or accepted in Rosedale or Forest Hill, neighbourhoods of the old establishment. In essence, the history of The Bridle Path is such that it is not, and has never been, the location of a specific ethnocultural group which ultimately translates into a more accepting environment for anyone with the desire and wealth to live there. These sentiments were echoed by another agent who serves the central Toronto housing market (including Rosedale and Forest Hill). When asked about the effects of offshore money on areas like Forest Hill and Rosedale, he replied: / don't know if offshore money is affecting it as much. I think that every once and a while you will get somebody who is cognizant of the fact that if they want to make a  156  social statement that they have to buy in Rosedale or Forest Hill, but I don't think that is where the influx offoreign money is going. I think those are still bastions of Canadian and Toronto conservatism.. An Rosedale there's a certain amount of ethnicity that is common to Rosedale, fortunately or unfortunately...I think certain neighbourhoods can still be deemed to have certain social characteristics and Rosedale is one of them. (Interview, May 1997). 4.2 Vancouver: Results and Interpretation Using a combination of the Greater Vancouver and Fraser Valley Real Estate Board data which include all new and older houses on the M L S register, Figure 4.12 displays, by area, the nominal price trends for detached single family dwellings in the Lower Mainland for the 25 year period between 1971 and 199 6 . Unfortunately, these 20  districts are larger and fewer than the equivalent districts in Toronto, so some detail is lost. General trends identified are an overall price increase in all areas between 1971 21  and 1981, and marked rises between 1986 and 1995, sharp decreases between 1981 and 1983, and periods of stability between 1983 and 1986, and after 1995. In terms of areal difference, it can readily be seen that the areas with the greatest increase in dwelling values, in terms of absolute numbers and rate, are those of West Vancouver, Vancouver Westside, and to a much lesser extent, North Burnaby, South Burnaby, Richmond, and North Vancouver. The remaining areas plus the graph of the "outer suburbs" of the Lower Mainland show that both increases and decreases in price are relatively modest  z u  For the sake of simplicity, the terms "Lower Mainland" and "Vancouver C M A " will be used  interchangeably. Because of this problem, the type of analysis differs slightly between Toronto and Vancouver. For example, when correlations of house price percentages were conducted for Vancouver (like those in Table 4.1 for Toronto), no area in Vancouver was independent of the others in terms of its price movements (which was expected). I am assuming here that this is because of the detail that has been lost in the Vancouver data. 2 1  157  158  compared to the more central and existing elite areas of Greater Vancouver . Particularly noteworthy is the "take-off from the mid-1980s onwards of West Vancouver and Vancouver Westside, where prices quadrupled in a decade. While these areas have always been at the top of the price hierarchy (see Figure 4.13), the gap widens somewhat during the speculative boom in the early 1980s and more considerably after 1986, the same year that Westside Vancouver surpasses West Vancouver as Vancouver's most expensive area. The same figure also illustrates the upward mobility in rank of the older suburbs of North Burnaby, South Burnaby, and East Vancouver, as well as the entrenchment of the price patterns in the 1990s indicated by the relative stability of the hierarchy after 1991. While temporal changes are both interesting and informative, ratios of price change give us an even greater indication of the magnitude of change which allows for better comparison between areas. Derived from the same data base, Figure 4.14 illustrates the average house price ratios for the beginning and the end years of the study period (1971 to 1996). Here, the spatial unevenness of price increases is even more pronounced within the Lower Mainland with the concentration (and centralisation) of the largest ratios in Vancouver's Westside; an area of established elite and, in some cases, gentrified neighbourhoods in close proximity to the C B D with an extensive amenity base (for example, beaches, parks, and mountain views). While this concentration is impressive in its own right, even more revealing is the distance between the price ratios  Historically, certain areas in Vancouver Westside, West Vancouver, and to a lesser extent, North Vancouver, are considered to be comprised (with some exceptions) of sought after housing for higher income groups. Vancouver Eastside is associated with ethnic and working-class populations (although this is changing in parts through gentrification), and Richmond and Burnaby are considered to be "inner" suburbs due to their relatively short commute to the central city. The remaining areas are regarded, for these purposes, as "outer" suburbs. 2 2  159  cu •g CD j2 co a;| —  cu  | I 1| K |  E ro CO > • '5 E c? E « o 3O CCO DC w 5Q -c i _ cr ~ ^ — _  x: E x: >— -JTT — c tu - C O =irc0<Dc0OOCD . o — ? 3CO Oo.—D?COH Z S LSU Q U J Q . O Z Z C L C O ra o o cu . -  JZ  •a >.'a: B.2 5i  <U ; xt .— c o ™ E §„ o il T3 co .g-E « S | 1S S i 8roS co O >- 2 « § . "^2 •« co a>s r £ £ E » > ro _ 'S =u iu O -g, «> O O ° * - - "• a! cu ZO CO z £ g c 3 ? 3 ? o ! §co S « t " tcsujoujioz - — 05  si  | I  •  Q  cu >  o u c  CO > CO cu  o CO > c  C O C U > cC U o >  ••-»  cn b >.  o m m o: « ™ jj 3 o £ ™> | 4 ! r o o o < u . y o o i o .roroo ">  £ CO <  n  in  0i CD  CD o cu  C O 3 O o  C O CO 01  » x x - 5 ^ ±: t cr o) co cuo.idoooraco QzorcozoiuLU t  £  CO c c  !2  CO  cn cu  3 CD  iZ  160  T3 C  _co rz  "ro CD  CD 0  o  CD o  </3-  "O  -t—'  1_  C  CD  CD  s_  O  La  CD  o  5 2 ro  oo" CD  o  w HI  OJ CO  a:  "ro co  w  o  ro 0 >^  X  OJ CD  13 o  ro  ro >  CD  ro o  CO  CO  0  ro -i—»  cn  T—  LU  h-  C O  * ro  T—  CD CO CO co  CD CO OJ CN X—•  CD =3  LL  ^_  00  CO CD CNJ T—  co  co  CD ^r  LO CM CD CO Tf T—  | 3  ro CD > CD  O  0  ^  CO  > 0 >  n o o c co  CD  ^—'  CD  CO >  161  of the Westside in comparison with the rest of the Lower Mainland—there are no areas in the second highest price classification category while only two areas, West Vancouver and Burnaby, are in the third category, with the rest of the suburbs (7 of them) in the lowest price ratio category. Even with the completion of the price database (starting in 1979 using F V R E B data, see Figure 4.15), the Westside maintains its prominence as the only area in the highest price ratio category with Eastside Vancouver, South Burnaby, and White Rock creeping up into the second highest category. Despite significant price gains over the study period, the ratios of change for Richmond, West Vancouver, and North Burnaby are not as telling with their inclusion in the third price category along with the rapidly redeveloping New Westminster. The rest of the 9 areas, predominantly in the outer suburbs, are in the lowest category (9 areas). As indicated in Figure 4.12, 1986 marks the beginning of a substantial change in the annual rate of house price increases in the Lower Mainland. A mapping of the price ratios between 1986 and 1996 gives an indication of the spatial differentiation of price increases in the span of only 10 years (Figure 4.16). Clearly, the highest price gains relative to initial price were in Westside Vancouver and Burnaby, with Eastside Vancouver, West Vancouver, White Rock, and Richmond occupying the second price ratio category. Even more significant are the gains in the relative positions of Burnaby, Richmond, and, to a lesser extent, Eastside Vancouver in this 10 year period: when compared to the overall study period ratios, we can see that the price gains were not only spatially distinct, but they also varied temporally with the last 10 years being very significant in terms of price increase for these three areas. Again, the outer suburbs round out the last two price categories with the movement upwards of Surrey, Langley,  162  163  North Vancouver, Port Moody, and Coquitlam into the third price category and with Delta, North Delta, Port Coquitlam, and Maple Ridge remaining in the lowest ratio category.  4.21 Explanation: More Evidence of Immigration Pressures on the Vancouver Housing Market Like the Toronto study, correlation analyses were conducted at the census tract level using dwelling value data and various socio-economic variables to indicate possible contributors to house price change in the Lower Mainland.  The results were quite  remarkable considering the "messiness" of the Toronto data and the complexities inherent in house price studies. Note than the migration data refer only to moves undertaken between the census years. The relationships between the 1986 to 1991 changes in dwelling value (the boom years in Vancouver) for 185 census tracts are negative and moderate with all forms of domestic migration (intraprovincial at -0.50 and interprovincial at -0.26) and are positive and moderate with external migration (0.35) (Table 4.8). The same pattern emerges when looking at the relationships between the 1991 absolute value of dwelling and migration data (intraprovincial migration (-0.49), interprovincial migration (-0.19), and external migration (0.34)). While the relationship between external migration and household income (-0.32) may seem to contradict the strong relationship between recent immigration and higher house prices, this relationship is consistent with findings by a C M H C study which concluded that, despite lower reported incomes, high ownership levels of recent immigrants are due to their offshore assets and the non-declaration of this wealth to the Canadian government; assets which undoubtedly finance these Vancouver house purchases (Lapointe and Murdie, 1996).  165  Table 4.8 Correlation Matrix - House Price and Socio-economic Census Data: Vancouver 1986 and 1991 1 1 Average value of dwelling $ change 1986-91 2 Average value of dwelling (26) $ 3 Population, 1991 (2) 4 Population percentage change, 1986-1991 5 Total immigrant population 6 Total Immigrant Population Change 1986-91 7 Total Immigrant Population 1986 8 Total Immigrant Population Change % 1986-91 9 total imm pop as a % of total pop 10 Pre81 Immigration 11 Pre81 Immigration as a % of Total Population 12 1981-1987, period of immigration 13 1981-1987, period of immigration as a % of total immigration 14 1988-1991, period of immigration (16) 15 1988-1991, period of immigration as % of total immigration 16 Intraprovincial Migrants as a % of Total Population 17 Interprovincial Migrants as a % of Total Population 18 External Migrants as a % of Total Population 19 % change 86-91 of external migrants with 1986 external migrant base 20 Before 1946, period of construction as a % of occupied private dwellings 21 1946-1970 Period of Construction as a % of occupied private dwellings 22 1971-1985 period of construction as a % of occupied private dwellings 23 1986 - 1991, period of construction as % of occupied private dwellings 24 Average major payments for owners (26) $ 25 Average major payments for owners $ change 1986-91 26 Average income, household income $ 27 Average income, household income $ change 1986-91 Source: Canada, Statistics Canada, 1986, 1991, Census of Canada.  2  1.00 0.96 -0.28  1.00 -0.28 -0.16 -0.16 -0.11 -0.16 -0.03  -0.21  -0.12 -0.09 -0.12 -0.06  0.27  0.21  -0.17  -0.02  -0.20 -0.14 -0.11 0.08 -0.06  0.00 0.44 0.10  0.03 0.43 0.05  -0.15  -0.06  0.10  0.18 -0.50 -0.26 0.35  -0.43  -0.18 0.22 0.10  0.69 0.32  166  0.17 -0.49 -0.19 0.34  -0.41  -0.12 0.32 0.03 0.72 0.27  The scattergraphs of these relationships give a more precise account of the locations where the interconnections between price and migration activity is most pronounced (Figures 4.17 through 4.20). Although both slopes of domestic migration sources and house price change are negative, it is clear that these two sources of domestic migration impact Vancouver's housing market in very different ways: there are far more census tracts with higher percentages of intraprovincial migrants than interprovincial migrants. However, the negative correlation between intraprovincial migration and price change is stronger than that of interprovincial price change, a finding that is in need of further study. Turning to the external migration figures, the positive relationship between this migration source and house prices is immediately evident. Further, when we compare the 1996 immigrant population map of the Vancouver C M A (Figure 4.21) to Figure 4.16, those areas with higher price ratios during the last 10 years of the study period (the period of high immigration) bear a strong resemblance to the areas with a higher immigrant population, especially in East Vancouver and Richmond. The price ratios in Richmond, however, are lower than we would have first expected given the media attention given to the immigration and consequent redevelopment processes experienced in this municipality over the past 10 years (see Ley, Hiebert and Pratt 1992; Halseth 1996; Ray, Halseth, Johnson, 1997). It may be worth noting that Richmond is sited on the unstable silt of the Fraser Delta and could be vulnerable to flood and earthquake hazards. Prices have stalled more than once following extensive media attention to earthquakes, notably in California. However, according to 1991 census data, many more Chinese immigrants reside in the City of Vancouver than in Richmond: 100,000 Vancouver residents self-  167  168  169  o  CO CD  i--  CO  +  X CO CO  ro  T—  c t<D  LO  CM d  ii or  CM  •*->  X CU  T3 C ro  „,  Ui c  >  a> o ro k.  —  +->  -a  •*->  o CD 3  ro  >  (0 3  CO  c CD U  o>  o C7> Ui CD ro 00 sz CJ) T-  c  o c CD  CD  i  O  CD  CD SI Q.  > 3  o c ro  !E > C/) c o o c "-3 o-> ro '•4 CD  a:  a>  *•  ro  Ui  E  "«* CD L_  3  Ui U_  o o o o o CO  o o o o o LO  o o o o o  o o o o o CO  o o o o o CM  o o o o o  o o o o o  l>66l>986l> Bu!||9Mp jo en|BA in oBueip oin|osqv -  o CO  170  171  Figure 4.21: Total Immigrant Population, Vancouver CMA, 1996 (Base Population: total 1996 population)  Percent Immigrants 50.0 - 100% 44.0 - 50.0% 38.0 - 44.0% 32.0 - 38.0% I 26.0 - 32.0% 20.0 - 26.0% 0 - 20.0% No data  Source: D. Ley, 1999.  172  identified their first language as Chinese, compared to 20,000 in Richmond. The Richmond data from the 1996 census, however, are expected to be dramatically higher with the rapid population growth Richmond has experienced since 1991. Evidence supporting this can be seen through English as a second language (ESL) enrolment: in 1991, 16 per cent of the Richmond school population were enrolled in an ESL program, a number which had increased to 41 per cent by 1995 (Hogben, 1996). Also note the surge in Richmond's house prices between 1992 and 1994 (Figure 4.12). Reading the same map data, it would initially seem that immigration is not as much of an influence in Westside Vancouver given that there are fewer areas of high immigration than in Eastside Vancouver and in Richmond. However, in terms of the connections between high house prices, house price increase, and areas of immigration, further investigation reveals that there is another facet to the house price equation, a facet that might very well be distinct to Vancouver. Unlike the domestic migration scattergraphs, the majority of the outliers above the regression lines in both Figures 4.19 and 4.20 are in the higher ranges of the independent axis. Cross-referencing these points with the census tract map of Vancouver reveals that the majority of these outlying tracts are located in the elite Westside neighbourhoods of Shaughnessy, Oakridge, Southlands, Kerrisdale, and Point Grey: neighbourhoods which have been the subject of much debate in both the private and public realms since the mid-1980s (Mitchell, 1993; Ley 1995). In other words, a number of Westside tracts where price rose by at least $250,000 between 1986 and 1991 also recorded a significant level of immigration between these dates. Because of the desire to understand and confront changes in these neighbourhoods, many residents encouraged by the popular press, conflated the issues of  173  immigration, rapid ethnic change, rising house prices, and local control issues which resulted in a debate centred largely around Asian immigration and investment (particularly from Hong Kong and Taiwan). The issue of immigration pressures on housing prices was hotly contested by pro-business players including several municipal politicians who saw Asian immigration as a boon to strong economic growth, job creation and higher tax revenues. Others saw offshore investment as contributing to the deterioration of local neighbourhood cultures, traditions, and urban design exemplified by the "monster house" debate (see in particular Majury 1990, Mitchell 1993, Ley 1995). The following section will explore the prevailing facts, figures, and opinions regarding this issue and will consequently bring to light some of the misconceptions, myths, and realities of the Westside's housing market since the mid-1980s. 4.22 Looking for Clues: "Evidence" from the Westside The centralisation and concentration of house price increase in Vancouver's Westside are undisputed. The most significant increase in price began around 1987, one year after the introduction of Canada's revised immigration policy and the investor immigrant category. Anecdotal accounts of rising house prices were common in local folklore which ranged from relatively benign stories of the economic increase in the value of a Westside home (for example, the Kerrisdale real estate agent who relayed to the local media her account of the 100% increase in a South Granville bungalow which was being sold for $250,000 in 1987 and increased in price to $500,000 just one year later (Gutstein, 1988)) to other accounts that described Asian buyers as visa-hungry speculators motivated by profit and a Canadian passport. The following are samples from several published sources:  174  ...a businessman bought 16 houses in a Vancouver suburb for about $160,000 each. He then resold the houses in Taiwan to people who had not seen the properties and had no idea ofproperty values, for about 10% more, earning a gross profit of about $275,000 (Gutstein, 1990: 196). [An Asian client] spent 10 minutes inspecting a $475,000 house in the exclusive British Properties district and said "I'll take it and I want to buy everything in it, furniture, everything". He's never set foot in the house since...he just bought it as insurance. (Gutstein, 1990: 196) [A local home builder] remembers an affluent Hong Kong investor who wanted the keys to a house the same afternoon. "He brought two million dollars into the country the following day, paid cash for the house, and opened a business of some kind" (Keast, 1988: 26) Because most of the emerging stories were personal accounts of events that seemed too outrageous to be the norm, the assertion that wealthy Asian immigrants were driving up house prices was easily dismissed by those in the capitalist sphere who saw Asian-origin investment as beneficial to the British Columbia economy (and themselves). Fearing the investment withdrawal experienced by Australia (see Ouston, 1989), there was a push to decry the "blaming" of house price change on Asian investors. As was highlighted in Chapter 3, The Laurier Institute is one example of an institution that succeeded (at least, through the media) in its strategies in extinguishing the flames of discontent surrounding immigration and neighbourhood change. Other members of the business and political community also spoke out:  We are not talking about very many people.. .perhaps hundreds ofpurchasers, certainly not tens of thousands and not nearly enough to have an impact on the market (Michael Goldberg as quoted in Gutstein, 1988: 143). The people who have come have increased economic opportunity and we just didn't have housing stock ready for  175  an influx of31,000 people in one year, so the prices have risen dramatically (Mayor Gordon Campbell quoted in Shaw, 1989, attributing rising prices to inter-provincial migration) No one knows the extent of residential purchases in 1988 by Hong Kong immigrants.. .industry estimates run from a low of five percent to a high of 12 percent. What we do know is that rising house prices are more a result of a shortage of supply, a buoyant economy and interprovincial migration rather than Asian immigration or foreign investment (M. Campbell, 1989: 27). However, later in the same article the objectivity of the author becomes suspect with his statement For those who think that Asian investors are impervious to the negative messages directed at them through the media and various anti-immigration groups, the Australian case is instructive (M. Campbell, 1989: 32). Even after the price increases levelled off towards the end of the study period, these kinds of statements continued illustrating the importance and commitment the pro-growth faction attached to the idea of a "healthy" business climate. In a 1995 interview published in B C Business, a monthly magazine for those involved in B C ' s business sector, David Baxter (the author of the first Laurier Institute report referred to in Chapter 3) was asked about home affordability in Vancouver. He replied: The average wage can afford the average home. In 1991, the average home in the Vancouver CMA was worth $244,000. According to Statistics Canada, the average household income (for homeowners) was $63,000. The proportion of household income spent on shelter actually declined in Vancouver,from16 per cent in 1981 to 14 per cent in 1991. House prices are high here because wages are high here (Haslam, 1995). Of course, this statement is loaded and misleading. House prices in 1981 were at their peak (Figure 4.12) following speculative activity in the Vancouver C M A , an event that  176  ended one year later. Therefore, a comparison of 1991 housing affordability to 1981 levels without mention of this event as a short-lived anomaly is distorted . In a 1996 interview conducted with a Westside real estate agent, I was again presented with a view that denied any impact of immigration on house prices: ...the whole of the Westside of Vancouver is our trading area...now, I don't think you can say "Oh yes, well that's an Asian area " as it has become more integrated and because you couldn't have just one neighbourhood in isolation where the prices went up astronomically because there was a demandfromoffshore. All the areas are interconnected because these people are movingfromthe areas that perhaps have the pressure on it and they are moving into other areas (Interview, May 1996). When asked what accounts for the price increases in the Westside, she promptly replied with specific reference to a local population and the pressures they place on the market: Perceived desirability. [Westside Vancouver and West Vancouver] have always been perceived as the nicest neighbourhoods with the best schools, the best recreation, and closest to the business district. So you have people in those markets that are able to trade up. Once you've bought in a particular area, it's easier to trade up within that market. So the people in that area are selling their three bedroom bungalow on a 33-foot lot and after they have built some equity they are able to move up to a five bedroom executive house on a 55-foot lot. So the market has been able to sustain itself (Interview 1996). Kathryn Mitchell (1993) explored the discursive practices of those involved in Westside Vancouver's "monster house" debate which revealed the complexity of politics and power involved. Mitchell purports that Canada's policy of multiculturalism was used in the "capitalist's" rhetoric to imply that those contesting change in their neighbourhoods were xenophobic, and in some cases, racist.  As is the aggregation of the Vancouver C M A as one entity - we now know from our data that house price change in the C M A is highly uneven across space. Any conclusions drawn from an average based on  177  ....(the) shining concept (of multiculturalism and Canada's cultural mosaic) has been politically appropriated by individuals and institutions to facilitate international investment and capitalist development in Vancouver...As racism hinders the social networks necessary for the integration of international capitalisms, it has been targetedfor eradication. (Mitchell, 1993:265) Therefore, any dialogue that investigated any contentious housing issue in the Westside was seen as having some sort of racial agenda and often resulted in silence or denial. The power of these strategies is illustrated by the veil of secrecy and the legacy of silence in those I interviewed after the prices had levelled off . 24  As Mitchell succinctly states  Those who perceive Vancouver's integration into the global economy as a positive move facilitate the transition by presenting the issues ofprogress, growth, internationalism, world class cities, Pacific Rim investment and racial diversity in a positive light. Those who believe the integration to be harmful emphasize concepts of conservation, environment, nationalism, localism, neighbourhood, and control. Interrogating who is claiming what become imperative to discover some of the motives and rationale behind each particular skirmish. (Mitchell 1993,272) Despite the barriers confronting me as a researcher examining an issue surrounded with distortion and secrecy, the facts uncovered undeniably confirm the media's assertion that immigration has put upward pressure on Vancouver's housing market. However, the pressure is limited to particular places at particular times. The concentration of price increases in Vancouver's Westside have been, in part, the result of the desire of a distinct immigrant group to reside in a particular place; a place with a  this scale of aggregation are shaky if not false. M y own attempts to gather a time-series of Vancouver's house price data at a disaggregated level was very difficult; a process that, I believe, was connected to the politics of this data. Unlike the Toronto data, the Vancouver data are not published in a monthly report that is available to the public. I was granted special access to the data only after my purpose for using the data was stated (which, at the time, was to investigate what I saw as a misleading and racially-loaded series of reports in The Vancouver Sun). 2 4  178  finite supply of suitable housing and land. Although specific statistics for Asian-origin immigration and investment activity are limited, several other proxies indicating the origins of change do point to this group. First, the most recent price increases started in 1987, the year after Vancouver hosted the world's fair (Expo86), the year after the change in Canada's immigration policy, and the beginning of a new period of high immigration of a group that was distinct from past immigrant flows into Vancouver. David Ley (1995) describes this group and their locational preferences for settlement: Clearly the new Transpacific immigrants are very different from earlier waves of visible minorities entering Canada. Their economic resources and attention to investment opportunities have led many awayfromthe traditional lower-cost immigrant corridor, and into prime real estate territory, notably the old Anglo-Canadian upper class and upper middle-class neighbourhoods of Shaughnessy and Kerrisdale. They have bought into a new landscape aesthetic that accompanies their economic vigour. This group favours new, large houses on a cleared lot, usually more than 4,000 square feet in area (191). A l l of the studies and statements from those wishing to preserve the opportunity for investment by this group ignores the spatiality of their participation in the housing market. In her Ph.D. thesis in the U B C School of Planning, Barbara Pettit (1993) examined the connections between ethnicity and house-buying patterns. She interviewed many real estate agents in the Vancouver C M A and found that ...buyingpatterns change relative to the city centre with Asian activity highest near the city centre and Caucasian activity increasing with distancefromthe city centre (145). According to the area realtors in her study, 90 per cent of new Eastside homes, 50 per cent of used Eastside homes, and 80 per cent of new Westside homes were purchased by those of Chinese origin. "Caucasians", on the other hand, predominated in the used  179  Figure 4.22: Average Value of New and Traditional Houses in Kerrisdale Compared with the Vancouver Mean  1400000 -  Annies  Source: D. Ley, 1998. 180  Westside market except where builders bought older homes for demolition. Similarly, in Burnaby and Richmond, Chinese buyers bought 80 to 90 per cent of the new homes built in this area. In contrast, Caucasians bought the majority of both new and used homes in North Vancouver and West Vancouver and in the outer suburbs. Further investigation by Pettit using a sample of assessment data and telephone interviews with those at the corresponding addresses confirmed that the majority of new home purchasers in the Westside were of Chinese origin, two thirds of whom were in Canada for ten years or less, and most were actually in Canada less than five years. The relationship of this to rising house prices is clear when we examine Figure 4.22 (from Ley, 1998). A sample taken from assessment records in the Westside neighbourhood of Kerrisdale confirms the price impact of the new homes built primarily for Chinese buyers: the new homes cost more than the used homes, both of which are more expensive than the average house price for all of Vancouver. Upward pressure on the Westside average is the result. The late 1980s saw the emergence of new real estate companies whose clientele were comprised mainly of the new immigrant population (Ley, 1995). Existing agencies also made a move to hire Mandarin and Cantonese speaking agents so they too could expand their market reach (Ley, 1995).  In a study of the Portuguese community in  Toronto, Teixeira (1995) concluded that the sharing of ethnicity between the real estate agents and their clients is not only a profitable endeavour for the company, but also a coping strategy for the new immigrant as They may be seen as "culturalfilters" (intentionally or unintentionally) of housing information in a way that suits the housing needs, aspirations, and life-style orientation of Portuguese homebuyers...some companies recognize that specific ethnic submarkets can best be penetrated successfully by hiring real estate agents from the  181  community itself; these agents serve as "insiders " who share the same ethnic background, language, and cultural values as their clients (179). In Vancouver, the practice of pairing agents and clients with a shared ethnicity has been successful and profitable, especially in areas of high immigration. Indeed, this is clearly illustrated by G V R E B data: from 1989 to 1994, the top selling agents in Eastside Vancouver, Westside Vancouver, and Richmond have had Asian surnames; prior to 1987, the top selling agents for these same areas had non-Asian surnames. Grace Kwok, the 1995 winner of the M L S Medallion Club's top realtor award for dollar and unit sales, is a prime example of the success that excellent marketing skills combined with extensive Asian connections can bestow to the beholder (Ridson, 1996). Born in Shanghai and educated in Hong Kong and Vancouver, Kwok has a solid knowledge of three Chinese dialects plus English. Since the formation of Vancouver-based Anson Realty in 1980 with her husband, Stephen, the company has grown to become very successful, mainly in part to their introduction of the Asian concept of "pre-sale" marketing where condominium units are sold through display suites, often before construction begins. While many of their units are sold to local buyers, a great number are sold overseas, especially in Hong Kong. In 1995 alone, Kwok sold more than 450 residential units on the Vancouver M L S . Most of these units were for The Pinnacle, a downtown Vancouver condominium project. Of the units sold, approximately 15 percent went to offshore buyers. In her resale pursuits, Kwok concentrates on the Vancouver Westside but does sell homes all over the Lower Mainland. Her largest deal in 1995 was a West Vancouver penthouse which was sold to an Asian purchaser for $2 million. Other top realtors of Asian-ethnicity for 1995 were Patsy Hui and Judy Chai, both of which work  182  out of Richmond and had $34.5 million and $28.57 million in sales respectively (Chow, 1996a).  While these sales figures in themselves do not implicate immigrants for rising  house prices, it does give us an idea of the ethnicity of the buyers and the magnitude of the real estate volume being traded in areas popular with Asian purchasers. More concrete statistics are available towards the end of the study period. A study released in early 1995 reported that recent immigrants "...accounted for one-quarter or more of all new home buyers in Richmond and the City of Vancouver, but less than 5% of new homes in outlying areas" (Real Estate Weekly, 1995). Peter L i (1994) showed that in Shaughnessy, until recently heavily Anglo-Canadian, a third of homeowners with the most expensive houses in the early 1990s had Chinese family names. Wyng Chow, a Vancouver Sun writer, has done a series of reports relating Asian immigration to price activity in the Westside.  For example, in the second quarter of  1996, Chow determined that those with Asian surnames bought 61.5% of homes in Richmond, 60.5% in Eastside Vancouver, 50% in Burnaby, 43.5% in Westside Vancouver, and 37%) in Coquitlam, and avoided areas such as Delta, North Vancouver , Maple Ridge, New Westminster (Chow, 1996f). In a 1996 interview with Chow, a Vancouver real estate agent gave her reflections on the relationship between the housing market and ethnicity: For the last few years, Greater Vancouver's 250,000 to 300,000 Asians, who make up 15 to 20 per cent of the population, are responsible for 60 to 75 per cent of all transactions in my neck of the woods, mainly the Eastside, Westside, Richmond, and Burnaby (Chow, 1996f). Also in a 1996 published story, Chow reported that his investigations of land registry data show that more than 80 per cent of high-end properties in Westside Vancouver are  183  purchased by Asians, while in 1995 one Asian agent, Manyee Lui recorded 16 sales of $1 million-plus homes, most of them to Asian buyers (but see Chapter 3 for a cautionary note on Chow's methods) (Chow, 1996b). Perhaps the best approach to discover how Vancouver's housing market was impacted by Asian immigration is to look at what has happened most recently. Figure 4.12 illustrates the levelling off of the rapid increases in price from 1995 to 1996. Only with time and future study could we determine if this is the end of a cycle and the beginning of a downturn in the market, a short break in the increase of prices, or if this is the beginning of a new series of processes impacting Vancouver's housing market. Initial evidence, however, suggests that this plateau in prices is the beginning of a new phase in the dynamics of the market brought on by events external to the "natural" ebb and flow of house prices in Vancouver. In July of 1996, the federal government announced the introduction of legislation (passed into law April 1997) which would require all Canadian residents to declare all overseas assets, including bank accounts, joint ventures, real estate holdings, shares and other investments (Chow, 1997a). Fearing higher rates of taxation, and encouraged by economic trends in Asia, many recent Chinese immigrants decided to return to their country of origin; a move that had again impacted the housing market. This time, however, there has been no attempt to distort or cover-up the origins of the latest phase of housing market activity. Those involved in the real estate market attribute most of the 1997 decline in house prices to the new legislation and the now faltering Asian economy.  The same agent Chow interviewed in 1996 feels  the housing market is now driven by local buyers as opposed to wealthy immigrants from Hong Kong or Taiwan:  184  There are now more local buyers who want to upgrade from Vancouver's Westside and Richmond because Westside prices are really reasonable (Chow, 1997a) Other agents have also freely expressed their impressions of the 1997 housing market: What's happened is the high-end, single family housing market can no longer be pricedfor the offshore buyer...it's now correcting itself to where it's priced for two high-end income earners (Chow, 1997b). Sales of new homes geared toward the Asian market are down. What's been selling are 33- or 50-foot lots, older homes renovatedfor the local market, and more inexpensive products that are interest-rate driven, rather than by the immigrant marketplace (Chow, 1997b). In another story published at the end of 1997, Chow examined B C land title records to determine the vendor ethnicity of the homes that were, at the time, on the market. He found that of a total of 475 Westside homes on the market ranging from new to 10 years old, 90 per cent of the vendors were Asian (Chow, 1997e). There has not been, to date, any orchestrated move on the scale witnessed in the late-1980s and early-1990s to denounce the assertion that the latest round of falling prices have been due to the outward migration of Asian owners. In fact, their decisions to return back to their countries of origin have been highlighted by many pro-business members in their own protests that the foreign assets reporting law is hurting the British Columbia economy. According to this group, if residency cannot be established easily, there is less probability that offshore investment will be captured by the Canadian economy. These latest events illustrate the politics and the fluidity of the various strategies interested parties will employ in order to make a persuasive argument.  185  4.3 Conclusion In conclusion, the data and testimonies uncovered point to the influence of a specific population in the dynamics of house prices in Vancouver's Westside. The movement towards central city living has been extensively examined in both the Vancouver and Toronto contexts (Ley, 1992, 1996; Mills 1989).  Less examined,  however, is the desire of offshore populations to live in more centralized and elite (or redeveloped) areas of Canadian cities. Further, the preceding discussion has shown that wealthy immigrant populations are locating in very different "elite" areas in Toronto and Vancouver. The traditional Anglo-elite areas in Toronto have not been significantly infiltrated by offshore money, while the less-traditional Bridle Path area has. In contrast, the traditional elite areas of Vancouver have experienced the most visible (in terms of a new housing aesthetic) and economic changes as a result of this wealthy migrant group.  186  Chapter 5 Conclusions and Suggestions for Future Research This study has been the first comprehensive attempt to catalogue and explain Canadian house price dynamics over the last twenty-five years. In the process, the need to explore the complexities of demographic, economic, cultural and political determinants of house price change and the intertwined spatial scales within which they occur has been highlighted. The stability of Canadian housing markets in the 1970s and the extreme price volatility and growing gaps between centres in the 1980s and 1990s confirms the assertion that the attribution of house price change must move beyond the local and regional parameters of interest rates, local employment, and the health of the regional economy. The spatiality and scale of house price movements is a major component of any attempt to explain the dynamics of change in a particular place. Without a doubt, certain segments of both the Toronto and Vancouver housing markets have been placed on a "global" real estate market since the mid-1980s. As I have shown, however, the particular manifestation of this "global" market varies enormously between the two places as their positions in the global economy are very different. This is another consideration that must be taken into account in any further research: just as the label "The Canadian City" is too general and misses important nuances between Canadian centres, we must not mistake the "The Global City" as a homogeneous and static classification. Furthermore, their placement within the ranks of the world city hierarchy does not necessarily guarantee strong positive returns to homeowners as the volatilities of the late 1980s (in the case of Toronto) and the mid1990s (Vancouver) have shown. While the participants within their housing markets  187  have reaped great benefits during periods of boom, bust conditions have left many in a precarious state often where their mortgages are higher than the worth of their homes. This work has also highlighted the often assumed yet unexplored notion of the regionality of house price movements. In addition to the "shadow" effects of centres in close proximity to each other (i.e. Toronto and Hamilton, Vancouver and Victoria), it is clear that there is a divide between Eastern Canada and Western Canada with Toronto and Vancouver representing the respective hubs of price activity. However, the underlying currents of these price dynamics requires further investigation that may be hindered by the data collection methods and formats that differ between metropolitan centres. At the intra-urban scale of analysis, the concentration and centralisation of price movements has been an overriding theme. Between the two cities, however, the unpacking of the interplay of local, national and global influences on this centralisation of price has been difficult. The complexities of immigration flows into Toronto has proven to be an obstacle to the telling of a complete story. Yet this investigation has shown that "immigration pressures" on house price are not limited to the immediate flows of people. As the case of Toronto in the late 1980s has demonstrated, these immigration pressures may stem from the arrival of international migrants from earlier time periods who, en masse, enter into homeownership at a later date (in this case, 10 to 15 years after initial arrival). For the Vancouver study, the attribution of house price change and the centralisation of price to flows of wealthy immigrants into the prestigious neighbourhoods of Kerrisdale, Oakridge, and Shaughnessy has proven to be a successful  188  line of inquiry, especially given the current return of wealthy immigrants to Hong Kong and Taiwan and the subsequent drop in Westside Vancouver house prices. These findings point towards new directions for research to investigate exactly why the transnational flows of populations and capital have manifested themselves differently in these two urban landscapes. Possible research questions include: Are foreign capital and population flows more extensive in Vancouver than in Toronto? Is it just a question of supply and demand? Do the traditional elite areas in both cities portray different images overseas? How are these images received overseas? How powerful are real estate agents in this process? What kinds of information are they giving their clients and do they have an influence in locational decisions? What role do local zoning and design aesthetics play in the two cities? If the larger housing built for this population in Vancouver's Westside was not permitted under local zoning regulations in the late-1980s, would the new migrants choose to live there? Are the zoning laws stricter in the City of Toronto and less-so in the City of North York (where the Bridle Path is located)? What will be the fate of Vancouver's "monster" homes if outward flows of Asian immigrants continue? Will these homes go the route of the "Vancouver Special" and be subdivided into smaller units? While the completion of such studies can build on the results uncovered in this research, extensive qualitative work in the form of interviews, surveys, and focus groups with a diversity of actors will need to be facilitated. For future quantitative study, the only avenues left unexplored in this research are the sampling of assessment records and the use of enumeration area census tract data. Unfortunately, until data collection processes are harmonised between regional real estate boards (and made accessible), assessment and census data are the only suitable sources. Smaller geographical units of data collection would also benefit future study, at least in the Vancouver case. In doing so, however, caution should be exercised to ensure individual privacy is not violated.  189  Overall, this research demonstrates the need to incorporate local, regional, and global events and issues into the calculation of housing value. As the interconnectedness of global communications, populations, and capital continue to expand, so too do the spheres of influence on local housing markets. It is hoped that this research will be a contribution not only to real estate studies, but also to the growing body of globalisation literature which, at the present, concerns itself mainly with commercial and retail real estate investment along with urban "megaprojects". As we have observed in the case of the Laurier Institute, these developments are not politically mute. With the globalisation of residential real estate, the resulting opportunities and controversies have moved beyond corporate boardrooms and trading floors to the kitchen tables and front lawns of ordinary people in real neighbourhoods.  190  BIBLIOGRAPHY  Adolph, C. 1989. "House prices rising? Don't blame Asians". The Toronto Star. March 4, 1989: B1,B2. Anderson, K . 1991. Vancouver's Chinatown: Racial Discourse in Canada, 1875-1980. Montreal, McGill-Queen's University Press. Anonymous. 1988. "Hot, Hot, Houses". Report on Business Magazine. August 1988: 3446. Anonymous. 1989. Report on Business Magazine. 129. 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