Tuesday, January 4, 2011

Total BC Assessment Surpasses $1 Trillion

2011 Assessment Roll Information

The Richmond (Chinese for "Rich Man") area of Vancouver led the charge with a gain of 17.14%.
Vancouver overall up 13.9%

Interesting that farm and managed forest land are down, in some areas, significantly (Peace River is -23%).

Some contextual data on that $1 trillion . . .

GDP of BC (2009) is $191 billion
Total income $157 billion (that's reported income, obvs)
Disposable income per capita $28,000
Total BC population 4.4 million.
1.9 million properties in BC
2.32 residents per property
$65,000 disposable income per property
GDP per capita $44,000 (CAN)

That strikes me as a precipitously high Total Valuation to GDP ratio: 5.2

For a ratio comparison, the total value of the U.S. housing stock is $16.5 Trillion with a GDP of $14.6 trillion.
For a Total Valuation to GDP ratio of 0.88
Also for comparison: GDP per capita of $48,000 (US)

Where is the economic activity to support BC's valuations?


jesse said...

Is there an analogy between asset/GDP ratio and a balance sheet? I'm trying to put it into perspective relative to a company's fiscal health.

GG said...

Vancouver prices are obviously land value, which equates to proximity to something as the underlying basis for the price. The location has to pay out for someone to reasonably invest in a particular proximity. If I were house shopping in San Francisco, which has a GDP per capita of $62,000 (significantly above average) I would expect my personal economic contribution to also be higher, helping make my proximity investment pay out. And indeed SF's housing market has been holding out better than most of California.

The perma bulls insist that Vancouver's location is a luxury good and therefore the issue of proximity to an economic activity isn't at issue. I think the elevated ratio supports that idea. The wealth we see in the total valuation wasn't generated locally. But what that implies (to me) given how high the proximity "surcharge" is relative to expected economic output is that money has to keep coming from somewhere else to support the prices. Once elevated, it's hard to imagine everyone getting by simply selling houses to each other. (and car washes and manicures and restaurant meals . . .)

I just thought the number interesting and I wanted to note it for reference, so this isn't exactly a deep bit of thinking here, I'll confess . . .