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.
Kevin Oke had a Vancouver millennial’s dream job, working as lead designer at a video-game company whose clients included Atari and Ubisoft Entertainment SA, 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 Interactiveafter moving to Victoria 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.
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 home rose 21 per cent to $775,300 in January from a year earlier, according to the city’s real estate board. That compares with a 14 per cent increase to a US$1.1 million median in San Francisco, according to residential-data website Zillow. 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 per cent is one of the lowest in the country, and the average monthly rent of US$937 for a bachelor suite 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 twenties and thirties 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 Inc., 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 (186-square-meter) 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, Kelowna and 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.”
Why aren’t they staying? Because it’s too expensive. Vancouver is going to lose its tech edge.
One of the main recipients of the brain drain is Victoria, or “Tectoria” as it’s sometimes known, which opened a tech incubator in 2014 to accommodate the growth of what’s now a $4-billion industry in the city 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.”
“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 123,000 is in the midst of building a six-story innovation centre for startups and Accelerate Okanagan, an organization that supports local tech companies.
Karen Olsson, chief executive 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 in Squamish, a suburb 45 minutes away from Vancouver, for a 5-acre (2-hectare) farm in Kelowna that was $200,000 less and closer to downtown.
Now that he’s in Victoria, Oke, of LlamaZoo, said he misses Vancouver’s “shiny bustle” — until he leaves his apartment, a five-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.”