Higher fuel, living green and a new normal for home prices?

Over the past few years, many urban residents have become increasingly interested in more sustainable as well as more time efficient lifestyles.  Thousands (even millions worldwide) are choosing to live closer to work, even if it means a smaller home–whether to save money, spare the environment or save time (or all three).

Simultaneous with the above there has been a significant escalation in housing prices in the older, urban cores of Toronto and especially Vancouver (much more than in their auto-centric suburbs).  (I’m still working on finding electronic stats showing the price shifts–post some links if you have them.)

Some argue this is a bubble.  Maybe.  But at least in my neighbourhood I don’t see one sign of bubble froth–speculation.  Families are buying these houses to live in, themselves, and to raise their children.  Flippers and speculators are rare.

Prices are quite possibly at a cyclical high (different from a bubble) and will ease off as mortgage rates start to rise.  But it’s also possible that Toronto and Vancouver have become New York and San Francisco North.  These US cities are places where geographic constraint combined with strong desires by millions to live there have pushed housing prices well above the national average and outside “normal metrics” of affordability.

As a result people live in smaller homes, rent out rooms or suites in larger homes, and accept the fact that more salary goes into housing than it would elsewhere resulting in other “sacrifices” like foregoing car ownership (or 2nd car ownership), or certain material expectations.

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