As the price of an average house in the beautiful city nears $1.3 million Canadian, young tech workers are moving out, leaving worried business leaders behind.
Kevin Oke had a millennial’s dream job in Vancouver, B.C., working as lead designer at a video-game company whose clients included Atari and Ubisoft Entertainment, but he still couldn’t afford a house. So he left his native city.
“Housing in Vancouver is insane — it was insane when I left and it’s more insane now,” said Oke, who co-founded educational-software company LlamaZoo Interactive after moving to Victoria, B.C., in 2014. “If you’re trying to do the startup thing full time, it would have been really difficult with all the expenses.”
Oke, now 33, is part of the millennial retreat from a city where housing prices have skyrocketed at a faster pace than even in San Francisco, another North American technology locus. Rising costs are putting Vancouver’s vaunted growth engine at risk as the city hemorrhages people employed in tech and new media for more affordable locales, including Victoria and Kelowna.
The flight of millennials from Vancouver is similar to trends found in other cities with soaring home prices.
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Vancouver was ranked the third-least-affordable housing market in the world this year, after Sydney and Hong Kong, by consulting firm Demographia.
It was the eighth straight year the city occupied a top-three spot.
The price of a typical Vancouver single-family house rose 26 percent to $1.27 million Canadian (about $960,000 U.S.) in January from a year earlier, according to the city’s real-estate board. Condos rose 16 percent to $443,400 ($334,000 U.S.). That compares with a 14 percent increase to a $1.1 million median in San Francisco. And in King County, the median single-family home sold for $514,975 last month, a 20 percent jump from a year ago.
Vancouver home prices have risen partly as a result of foreign buyers — from China and elsewhere — investing in property.
Rentals are hard to come by, and just as unaffordable. The vacancy rate of 0.8 percent is one of the lowest in the country, and the average monthly rent of $937 Canadian (about $700 U.S.) for a studio apartment is tied at highest with the cost in Toronto, according to Canada Mortgage and Housing Corp. Rents for newly built units and renovated basement suites are pricier.
As housing costs have risen, so have the number of people in their 20s and 30s leaving the city. The net number of people age 18 to 24 added to Vancouver’s population was the lowest ever last year, at 884, and the number of 25- to 44-year-olds decreased by about 1,300, the biggest decline since 2007, according to Statistics Canada.
That’s led startup leaders, including Ryan Holmes, founder of Vancouver-based Hootsuite Media, to lament the loss of talent.
“Unaffordability is emptying Vancouver of one of its most valuable assets — young people who grew up in the city and who are invested in it,” Holmes wrote in a Financial Post Op-Ed in February.
Along with Ontario’s Waterloo region, Vancouver is often likened to Silicon Valley, San Francisco and Seattle for its startup scene. The city’s tech industry employs more people than oil and gas, forestry and mining combined, and it’s set to help lead economic growth among Canadian cities for the next four years, according to The Conference Board of Canada. Mayor Gregor Robertson created an agency to tackle the housing crisis, with a goal of delivering 2,500 low-cost units by 2021, among other targets.
That driver of growth may evaporate as talent exits Vancouver, said Christine Duhaime, founder and executive director of the Digital Finance Institute, which supports Canada’s financial-technology industry.
She’s having a tough time filling a 2,000-square-foot open-concept office for startups in Vancouver’s historic Gastown neighborhood she opened this year because potential tenants say they’re leaving the city for Victoria, heading 240 miles northeast to Kelowna or even going as far away as London and Singapore.
“We’re banging our heads on the wall,” she said. “Why aren’t they staying? Because it’s too expensive. Vancouver is going to lose its tech edge.”
South to “Tectoria”
One of the main recipients of the brain drain is Victoria, or “Tectoria” as it’s sometimes known.
The city of about 80,000 — on Vancouver Island some 70 miles south of Vancouver — opened a tech incubator in 2014 to accommodate the growth of what’s now a $4 billion industry in Victoria employing about 23,000 people.
Billionaire investor Terry Matthews has injected capital into startups on the island, once known as the home of “newlyweds and nearly deads.” More than 340,000 people live in the greater Victoria area.
“Interest from Vancouver has hit an all-time high for us,” said Dan Gunn, head of the Victoria Innovation, Advanced Technology and Entrepreneurship Council. “People in Vancouver are starting to look around and realize, ‘I may not be able to afford a home here.’”
Kelowna is another city seeing a recent flow of millennial housing refugees from British Columbia’s biggest city. The town of about 120,000 is in the midst of building a six-story innovation center for startups and Accelerate Okanagan, an organization that supports local tech companies.
Karen Olsson, chief operating officer for Kelowna-based software company Community Sift, says it’s getting easier to recruit people from bigger cities because they’re drawn to the lifestyle that includes farm-to-table dining, hand-roasted organic coffee and local beer.
“Kelowna is much more affordable — it’s a big piece of the sell for sure,” Olsson said. When she and her husband moved to Kelowna in September, they traded a 2,700-square-foot, $800,000 house (about $600,000 U.S.) in Squamish, a suburb 45 minutes north of Vancouver, for a 5-acre farm in Kelowna that was $200,000 less and closer to a downtown.
Now that he’s in Victoria, Oke, of LlamaZoo, said he misses Vancouver’s “shiny bustle” — until he leaves his apartment, a 5-minute jog from the beach, and walks only 10 minutes to his office in space above a coffee shop that also houses a dozen other startups.
“I don’t know how many more good things I want to say about Victoria,” he said after ticking off myriad benefits of living in the city. “Then more people will come and push housing prices up.”