‘Amazon Effect’ Is Causing Housing Prices in Vancouver to Skyrocket
A spate of government policies have tried to temper Vancouver’s housing prices, to little avail. Now Amazon.com Inc. may give Canada’s costliest market another boost.
The Seattle-based company plans to increase its Vancouver workforce five-fold to 5,000 by 2022 – mostly high-tech positions, said Jesse Dougherty, Amazon’s general manager of web services. Dougherty spoke Monday in the bunker-like former Canada Post mailing center that’s set to be re-developed to host Amazon’s new 416,000-square-foot office.
“It’s no joke for any metro when Amazon comes in, especially in a mid-market city,” says Aaron Terrazas, senior economist at real estate portal Zillow Group Inc., which calculates Seattle rental prices increased by 50 percent and home values nearly doubled since Amazon’s start as a bookseller in the mid-1990s.
Seattle was a city of about 3 million people — roughly on par with the population of Greater Vancouver — before Amazon’s workforce exploded from about 5,000 workers in 2010 to about 40,000 today, helping turn it into one of the fastest-growing U.S. cities, said Terrazas.
“It’s the Amazon effect,” he said. “Amazon attracts other companies that also want that talent so they build, have offices next door or adjacent to it – supply becomes a challenge.”
Today, so-called Amazonians occupy more office space in Seattle than the next 40 largest employers in the city combined, according to a study by real-estate data firm CoStar for the Seattle Times last year. Rent increases in neighborhoods that experienced the biggest influx of those workers have risen 65 percent faster over the past five years than areas with the smallest influx, according to Zillow.
Anything similar in Vancouver could create additional pressure in an already strained market. Vancouver’s supply of available rentals has remained below 1 percent for three years in a row. The price of a benchmark home has risen 91 percent in a decade. Government attempts to ease prices — including a 20 percent provincial tax on foreign buyers, a city tax on empty homes, as well as stricter federal mortgage rules — have made little difference: prices are up 16 percent in the past year.