The inevitable FALL of VANCOUVER real Estate

[DavidLin]

We see it in the papers everyday, countless real estate experts being interviewed, giving opinions on how well the Vancouver Real Estate market is doing and the long list of reasons that it will stay that way.

http://www.flickr.com/photos/sporco_macchiato

The above link is a very extensive collection of Vancouver Real Estate news articles prior and during the 80's crash. Look at some of the actual text in the articles. The realtor's of the 80's were using the same damn reasons they've been feeding us today on why Vancouver won't crash. These generic reasons also happen to be pretty much the same load of bull that was fed to people in San Fran, Seattle, LA, San Diego, and quite likely many other markets in the USA, I just only happen to read those regional forums.

Here's a taste of the AMAZING similarities of Real Estate "experts" touting their horns.

August 1981, Wall Street Journal, in the midst of a crash, although I am not sure everyone was yet convinced of this at the time:

Context: Maurice Butler was the President of the Real Estate Board of Greater Vancouver. This guy is on fire, keying in on 3 key mantras of justifying Van RE prices:

... Mr. Butler of the real estate board expects house prices to start going up again by the end of the year, propelled by the same factors that caused last year's increases.

1) no more land:

...limited prospects for new housing imposed by gov't regulations ...
... the physical limits posed by the water and mountains that surround much of the city also restrain growth.

2) Climate

... the city's climate is so attractive compared to the rest of Canada.

3) rich immigrants

In 1980, he says, Vancouver gained 50 000 immigrants, including people from Hong Kong, Germany and Britain, "with suitcases full of money" for real estate

I often wonder about the sanity of the people who can believe that any asset can go up forever. You hear these people go on and on about how vancouver real estate has never fallen, the prices are going to plateau, etc..etc.. Well historically, Vancouver real estate has experienced a bubble and then a collapse 3 times already since 1977. Refer to the chart.

http://jaybanks.ca/vancouverrealestate/vancouver-real-estate-prices-200607-400.gif

This is the biggest runup in prices in the entire history of Vancouver Real estate, what makes anyone think that this time around, we won't have a drop in prices and the market will somehow magically plateau until fundamentals catch up?

 

[bonanzabob]

Interest Rates are the key

If you map out real interest rates (i.e. nominal rate less inflation) over the same period of time, you will see the difference in 1981 (lest we forget---- 18%) versus the present.

As long as we have relatively low interest rates, I don't believe we are in for anything worse than a general softening in market conditions.

The difference between here and the US is that our lending institutions are much better regulated.

 

[Trailblazer12]

If you map out real interest rates (i.e. nominal rate less inflation) over the same period of time, you will see the difference in 1981 (lest we forget---- 18%) versus the present.

As long as we have relatively low interest rates, I don't believe we are in for anything worse than a general softening in market conditions.

The difference between here and the US is that our lending institutions are much better regulated.

I agree completely. Also back in the 80's something like 50% of all properties were being bought as investment vehicles. In 2007 only appox 20% of all real estate in for investment purpose.

A softening in the market, sure, a wholesale crash, nope.

 

[chilli]

We see it in the papers everyday, countless real estate experts being interviewed, giving opinions on how well the Vancouver Real Estate market is doing and the long list of reasons that it will stay that way.

http://www.flickr.com/photos/sporco_macchiato

The above link is a very extensive collection of Vancouver Real Estate news articles prior and during the 80's crash. Look at some of the actual text in the articles. The realtor's of the 80's were using the same damn reasons they've been feeding us today on why Vancouver won't crash. These generic reasons also happen to be pretty much the same load of bull that was fed to people in San Fran, Seattle, LA, San Diego, and quite likely many other markets in the USA, I just only happen to read those regional forums.

Here's a taste of the AMAZING similarities of Real Estate "experts" touting their horns.

August 1981, Wall Street Journal, in the midst of a crash, although I am not sure everyone was yet convinced of this at the time:

Context: Maurice Butler was the President of the Real Estate Board of Greater Vancouver. This guy is on fire, keying in on 3 key mantras of justifying Van RE prices:

... Mr. Butler of the real estate board expects house prices to start going up again by the end of the year, propelled by the same factors that caused last year's increases.

1) no more land:

...limited prospects for new housing imposed by gov't regulations ...
... the physical limits posed by the water and mountains that surround much of the city also restrain growth.

2) Climate

... the city's climate is so attractive compared to the rest of Canada.

3) rich immigrants

In 1980, he says, Vancouver gained 50 000 immigrants, including people from Hong Kong, Germany and Britain, "with suitcases full of money" for real estate

I often wonder about the sanity of the people who can believe that any asset can go up forever. You hear these people go on and on about how vancouver real estate has never fallen, the prices are going to plateau, etc..etc.. Well historically, Vancouver real estate has experienced a bubble and then a collapse 3 times already since 1977. Refer to the chart.

http://jaybanks.ca/vancouverrealestate/vancouver-real-estate-prices-200607-400.gif

This is the biggest runup in prices in the entire history of Vancouver Real estate, what makes anyone think that this time around, we won't have a drop in prices and the market will somehow magically plateau until fundamentals catch up?

And what you fail to see is that after every "correction" prices not only recovered they came back and went to new highs.

I mean you did actually look at the graph you linked right?

Real Estate as a long term investment is unbeatable.

The previous 2 posters are absolutely correct the 1980 "crash" was due to excessively high interest rates, when people's mortgages came up for renewal they simply could not afford their homes anymore.

In the 1990's our whole economy shifted from manufacturing and large employers to a service based economy and more people embracing entrpreneurship.

- it's amazing how many people have forgotten this period, a time when large companies were literally laying off thousands of people at a time. University grads couldn't get jobs.

Things are very different now and our economy is in what I call a "golden age" - if you can't make money now... I don't know when you can.

Real Estate doubled in last 5 years, gold has increased in value by leaps and bounds, unemployment all time low... etc.. etc...

 

[Jumbo Cerutoe]

The previous 2 posters are absolutely correct the 1980 "crash" was due to excessively high interest rates, when people's mortgages came up for renewal they simply could not afford their homes anymore.

I agree with you that interest rates skyrocketed in the 80's but I believe there is one very significant difference between then and now and that is the level of debt a large group of people are carrying. Nowadays it's not unheard of to see people with 800k plus mortgages, 1800 a month in luxury car leases in the driveway and every other luxury on a credit card. It's my belief that the level of debt today being carried wouldn't require a very significant increase in interest rates before many high flyers would see their yacht sink.

 

[poonmiester]

I agree with you Jumbo C, debt ratio in the 80's wasn't as high as today, people today live the high life rolling on the credit line provided by the sudden built equity in their properties, in the 80's the margin wasn't as wide as it is now and as far as debt proportioned to salaries, there is a huge gap.
If the banks were to use the same criterias as in the 80's nobody would be able to purchase a home in Vancouver and that is applying the 25% down payment, and max 32% of gross salary total debt load. So a couple earning each $30 hr.@ 35 hrs a week, will end up with an average of $55,000 after tax disposable income a year to cover all household related expenses, work expenses such as gas, parking, or transit, so if you put these figures in, not enough income to afford a townhouse.
Unless there are older generation money to help out.
Very hard for far too many people.

P.....................................

 

[CJ Tylers]

I believe it's been figured that anything from a 1/2% rise to a 2-3% rise will cause a serious correction, although by no means a market crash. Prices would probably drop 10-20K from what is currently listed.

However, anything more than that and you could have ALOT of people who are floating near their maximum debt threshhold at the moment panic...put their houses on the market to recoupe cash, and then ultimate lose good cash as the prices drop further.

Still, I wouldn't expect anything more than a 50K drop at the worst scenario. There isn't going to be a housing glut anytime soon, at least not for detatched or semi detatched houses. Apartments, yeah, some places are already at the point where supply meets or exceeds demand (but not by much), and it's only going to get more that way. Still, apartment prices haven't dropped to meet the new demand level... and in some places, they are still very much on the rise.

 

[chilli]

All that I can say is that I have been hearing about price corrections and the bubble bursting for the past 4 years now.

it still hasn't happened.

I suppose if you keep predicting it long enough it will happen. Predict it again next year, if it doesn't happen, predict it again the year after.

It still doesn't take away from what I said earlier, housing prices always go back up - if they do crash they recover and history shows us when they do come back they come back stronger than ever.

Meaning that if you are living within your means, if you have a good job - who cares if your greedy neighbour loses 50k or 100k, 200k on his property? You're not flipping properties, just stay where you are and in 5 years the market will bounce back and your house will be worth even more.

As long as the US economy remains in the tank interest rates are going to stay low. The US needs to kick start their economy, their housing market is in the dumpster - so why would they raise interest rates?

So please explain to me why the Canadian Gov't would start to raise interest rates to create this crash you guys keep predicting?

If the Canadian Gov't raises interest rates it only means more people are going to dump the US dollar in favor of the Canadian, further widening the gap between the US dollar and the Canadian dollar.

So please explain to me why the US or Canadian gov'ts would increase the interest rate at this time?

 

[DavidLin]

bonanza Bob said:

If you map out real interest rates (i.e. nominal rate less inflation) over the same period of time, you will see the difference in 1981 (lest we forget---- 18%) versus the present.

That is true, and 18% is incredibly high in todays standards, but lets not forget that prior to the runup to the peak in prices the interest rate in 1979 was already sitting at 14%. Also, as Jumbo and Poon were saying, the general population today is basically riding credit wealth, just a few minor increases by the B of C and these people who are barely hanging on will be pushed into the highway to bankruptcy.

Trailblazer 12 said:

I agree completely. Also back in the 80's something like 50% of all properties were being bought as investment vehicles. In 2007 only appox 20% of all real estate in for investment purpose.

A softening in the market, sure, a wholesale crash, nope.

According to these two articles in the Vancouver Sun and the financial post:

"Speculation is now the key driving force behind the condominium market, according to a survey Re/Max released on Wednesday.

The real estate company estimates that 50% of all sales activity in downtown Vancouver can be linked to investors while the figure for downtown Toronto attributable to new sales is approximately 60% to 85%."

Source:
http://www.canada.com/vancouversun/news/story.html?id=dd8a4835-0050-427f-8acd-8b3423c57629&k=16402

http://www.canada.com/nationalpost/...=11b663fd-84f4-4afd-b601-4d46a0224dbc&k=84965

 

[DavidLin]

I'm sorry, I had to create an all new post to break apart and retort to Chilli's post.

And what you fail to see is that after every "correction" prices not only recovered they came back and went to new highs.

I mean you did actually look at the graph you linked right?

Real Estate as a long term investment is unbeatable.

Indeed if you look at that graph, it would look like real estate goes nowhere but up in the longterm. Problem is, its not inflation adjusted, inflation is EXPONENTIAL. It basically goes like this 2% + 1.6% + 3% + 2% and so on.. Here is a more accurate graph of USA real estate since 1890 put together by Yale economist Robert J. Shiller.

http://www.1stmillionat33.com/posts/06-09-12/house_his.gif

Indeed the USA is not Canada, however, if you compare the original non inflation adjusted Vancouver real estate graph with the USA inflation adjusted one, you will find that EVERY time the USA prices has gone up since 1977, Vancouver Real Estate has followed, every time it dropped, Vancouver also droped.

In the 1990's our whole economy shifted from manufacturing and large employers to a service based economy and more people embracing entrpreneurship.

I'm not sure where you are getting this info from but from what I've read on statcan, the biggest economic driver of the BC economy for the past 5 years or so has been the Real Estate industry and construction. Ironically both of which depend on the Real Estate industry, so, yes if we are able to keep selling houses to each other at progressively higher and higher prices then yes, our economy will keep on going strong. However, since it has gotten to the point that even a person making $100,000 gross income per year won't qualify for a mortgage to buy even a basic house, I'm not sure if this whole jig is going to last much longer.

- it's amazing how many people have forgotten this period, a time when large companies were literally laying off thousands of people at a time. University grads couldn't get jobs.

Things are very different now and our economy is in what I call a "golden age" - if you can't make money now... I don't know when you can."

Everything has been doing good for the past 5 years because of one very basic thing, we were in a credit bubble. Interest rates worldwide were at historic lows, when interest rates are low, the world money supply increases and economic activity artificially increases. People have the illusion that they have more money because they can borrow more and not have to worry too much about the amount of interest they have to pay. This was the main driver of the US economy. Unfortunately, the US economy is on the brink of collapse and the bottom is nowhere in sight. Canada traditionally lags the USA in economic activity by 1-2 years, rest assured, we are goin down with them. You can argue Canada is a different country all you want, but if Canada is an export dependant country (since we lack the population to maintain a decent level of consumption) and 85% of our exports go to our main trading partner (USA) you can be sure that when the US economy is in trouble, we will be too.

 

[chilli]

Indeed if you look at that graph, it would look like real estate goes nowhere but up in the longterm. Problem is, its not inflation adjusted, inflation is EXPONENTIAL. It basically goes like this 2% + 1.6% + 3% + 2% and so on.. Here is a more accurate graph of USA real estate since 1890 put together by Yale economist Robert J. Shiller.

http://www.1stmillionat33.com/posts/.../house_his.gif

Again if you would actually read the graphs that you are referring to : the author clearly states "factoring out the effects of inflation."

In one breath your saying the original graph is not adjusted for inflation so it doesn't count (again you quoted it as an example not me) and now the new graph your using states in it's own notes "factoring out the effects of inflation."

Indeed the USA is not Canada, however, if you compare the original non inflation adjusted Vancouver real estate graph with the USA inflation adjusted one, you will find that EVERY time the USA prices has gone up since 1977, Vancouver Real Estate has followed, every time it dropped, Vancouver also droped.

Then how come Vancouver isn't following the crashes in the states now? You do know that the US housing crisis has been going on for sometime now don't you?

 

[jimbo2006]

Chilli, you are correct in that the Bank of Canada will not increase the short term rate anytime soon, in fact there are those who think the Boc might drop the rate a 1/4 pt some time during the next 1 -2 meetings depending on the type of economic data we see during the next little while. Of course, that affects the prime lending rate, but as I was comparing notes with a buddy recently, there are other more intricate factors at play behind the scenes that most people aren't even aware of.

Mostly due to the US sub-prime meltdown and the resulting credit crunch in the asset-backed paper market, the banks themselves are finding it increasingly more expensive to borrow money on the wholesale level and as a result, interest rates have been on the rise since a few months ago, has really picked up steam recently, and that has had a significant impact on those who decide to stick to the plain vanilla 5 yr fixed mortgages on the residential side. On the commercial side, there has been a much greater impact across the board. You can count yourself as one of the few lucky ones if you bought a pre-sell condo 1-2 years ago in a new development, locked in a rate at the time, and are nearing completion. The bank you got the mortgage from has had to eat that one pretty good, but don't be surprised if they try to find a way out of that deal if there's a delay in completing your project

For residential mortgages, the rise in rates is being somewhat offset by the emergence of the 35 and 40 year mortgages and the teaser rate packages offered by some lenders on the variable mortgages, but variable isn't for everyone.

Whenever rates go up slightly, as they have in the past few months, there's usually a bit of a mad rush where buyers who were already contemplating a purchase decide to dive in head first before rates go up even more. Maybe one of you realtor types on here can provide some recent sales data to see if this is the case or not in the months of Sept and Oct

 

[Smother]

The Vancouver Real Estate Market will not crash for the simple reasons of Supply and demand and the current Economic state which is very healthy. I agree With Chilli.....the current state is strong and the Government will not allow such problems to happen after all we in Canada are shining bright in terms of the economy which matters.

IF you look at the chart though the market did correct about 3 -4 after the Expo. After the Olympics it will be the same. Vancouver is being heavily promoted around the world due to this.

But again I'm with CHilli.....longer terms real estate just like the Financial Markets is a win win game and you shouldn't be looking at the short term.

In all honesty though.......a real estate Correction would be nice and I could see a 10% correction at some point only to move higher again.

Remember people.....nothing and no investment goes up in a straight line. To have higher highs you HAVE TO HAVE pullback in the markets.

Both Financial and Real Estate markets go through it and I'm sure you all agree.

 

[poonmiester]

The annual gross income of the general population of Vancouver at large does not reflect the price of housing at the present time.
The issue here is the work force that is required to keep the economy alive and well can't afford to live where the thier work is.
That being said if you can't find the manpower to operate, as business owner your in trouble. The entire housing market has reached a level where it's almost impossible for a young family to start off in a house like our parents did and their parents did.
All these condos that are being build at $1.2 and $1.5 million dollars are certainly not build for the population in general.
I really can't see Joe working at an electronic store as a manager and his wife as a nurse at VGH afford anything like that espescially if they intend starting a family.
Another example, being a constable for the RCMP in the major part of the country pays well enough to provide a decent living, here in Vancouver, it will allow them to live in a rented basement suite, or they may want to buy a condo, and spend the major part of their income on it.

The issue is not, Real Estate in Vancouver will keep going up or it will crash, the issue is how huge of a gap has been created between the local manpower and the possibility of buying a house and live in it, not simply try to survive.


P......................................

 

[DavidLin]

Again if you would actually read the graphs that you are referring to : the author clearly states "factoring out the effects of inflation."

In one breath your saying the original graph is not adjusted for inflation so it doesn't count (again you quoted it as an example not me) and now the new graph your using states in it's own notes "factoring out the effects of inflation."

Okay chilli, lets break this thing apart so that we may understand each other better. The first graph (the one where it shows real estate continuously going up over time), was done by a real estate agent and was not inflation adjusted. Inflation = the devaluation of money. If you had 100 dollars in 1990, it would be worth less today in 2007 if you just simply kept it in your pocket. Therefore, if a house cost 100,000 dollars in 1980, it would require a lot more money in 2007 to buy that same house, simply because your money today, is worth less than your money in 1980.

The second graph done by Shiller, an ECONOMIST, factors out the effects of inflation. Meaning that he factors out dollar devaluation to get a consistent value for the original dollar worth at the starting point being index 100. This is a very sensible way of doing a graph like this because this will allow people reading the graph to see what the TRUE appreciation of real estate is. If inflation was thrown in there on that graph, you would have real estate jumping by leaps and bounds (Like the first graph by the real estate agent) and giving people the illusion that real estate is a sound investment because it always goes up in dollar value, but what people like you and many others don't understand is that since your money loses its value over time, its not that the house is actually worth that much more, its because your money is worth that much less.

So in short to answer your question, yes I did read the graph I put up.

Then how come Vancouver isn't following the crashes in the states now? You do know that the US housing crisis has been going on for sometime now don't you?

Not all areas in the US fell at once, as a matter of fact, LA county has only just begun to collapse whilst many parts of California has been falling for more than a year now.

 

[DavidLin]

Lets take a look at some of the reasons that support a price correction to Vancouver real estate:

1) The average single family detached house in Vancouver now will cost approximately 70% of the average pretax income of a family (this includes mom and dad)
-this does not leave a lot of room for food and basic life needs.
-this article was in the Vancouver Sun, sorry I lost the link, but I'm sure there are some of you out there that has read it.
2) With current market conditions, it is more financially sound to rent than own.

An average apartment in downtown= $400000
-you put 10% down = $40000
-your monthly mortgage payment is $2600 (based on 5 year locked in rate of 7.34% from RBC)
-about 80% of your mortgage payments goes towards the interest (people don't really think about this fact), so in truth, you are renting your apartment from the bank for about $2000 per month (while say if you rented the same place it would probably cost you $1500 with no maintenance fees)
-maintenance fees - $250 per month

Lets say in 5 years time, the market finally does a 20% correction like those that occurred in the late 80's and 90's.

In five years time, what is your financial standing?:

Total interest paid from monthly mortgage payments: 2000 x 60 months = $120000
Total maintenance fees paid: 250 x 60 months $15000
Total loss from the price correction of your apartment: $80000
Grand total money you spent: $215000

Grand total of money you would have spent if you rented that same apartment:

$1500 x 60 months = $90000

The expression on your face when you realize this fact, priceless.

3) The myth that rich asian people are moving here by the hordes and are buying up houses by the dozen is a myth. Please refer to the Canadian census and look at immigration into the province of BC, it has not increased significantly and is actually lower on average than immigration in the 1990's.

Also, if we are truly being flooded by this massive population increase, why did we only experience an increase of 1.2% in population growth last year? I believe our death rate is higher than that.

http://www.bcstats.gov.bc.ca/DATA/pop/pop/BCQrtPop.asp


4) There has never been a time in history where a housing bubble took place in the USA that Canada did not follow eventually, typically lagging the USA by a few years.
5) If the USA economy tanks due to the real estate crash (which it looks like it will) it will take down the Canadian economy with it, considering more than 80% of our exports are USA economy dependant.
6) Whilst it is true that the BC economy is booming, it is best to look at what exactly is booming. Lumber certainly isn't, our basic service and retail economies are not in a flurry of economic activity. The main industry that is propping up the BC economy is.... real estate. It doesn't take a genius to figure out that a real estate economy can't simply just keep selling to itself and hope it will last forever. There will come a time when there are no more greater fools. Here is an article that better explains the BC economy and why it is not sustainable.

http://www.reportonbusiness.com/servlet/story/RTGAM.20071116.wrbrethour16/BNStory/robColumnsBlogs/home

 

[poonmiester]

Agree with you Davidlin, the way I view the housing market in Vancouver right now, is total opposite of what Henry Ford did to revolutionize the automobile market, his thinking was build a car so that the people working for him can afford it.
Can you imagine what it would of been like if every auto maker back when, would have catered to the rich and famous only, the automobile industry would have been anything but a revolution in transportation and all the changes it brought to all population at large.

Now here in Vancouver lets cater to those whom have plenty of cash whom can afford or are willing to jump blindly in a mortgage with no end.
And the rest well, which represent nearly 70% of the population, ummm sorry, maybe next time.

P............................

 

[ThighMan]

Lets say in 5 years time, the market finally does a 20% correction like those that occurred in the late 80's and 90's.

There was no correction in the late 80s. The correction was in the early 80s and was mostly due to the high (12% - 20%) interest rates. The market was booming from the mid-80s through to the mid-90s. I bought a house in Kits in 86 for about $235,000 and sold in it 89 for over $500,000. Also, the mid to late 90s correction was almost entirely due to he "leaky condo crisis" and it was more of a flat market than a significant price drop. A house I purchased in Surrey in 96 for about $250,000 dropped by maybe 5% by 98 and then started to climb. I sold it in 04 for almost $400,000. Likewise, a house I bought in Coquitlam in 2001 for about $150,000 I sold in 04 for over $300,000. My current house which I purchased in 04 is now worth about 30% more than I paid for it.

As long as interest rates stay low <6%, there will be no significant correction. The market may flatten or perhaps even drop by up to 5%, but in the long run it will go up again. One must keep in mind that Metro Vancouver has a limited amount of land and cannot sprawl like Seattle, Calgary, Toronto and other similar cities. It is a confined metropolitan area, more like San Fransico, New York, Montreal and many European cities.

Getting back to the house I bought in 86 for $235,000. That house is now worth in the $1,000,000 to $1,500,000 range or 2 to 3 times what I sold it for in 89 and 5 to 6 times what I paid for it.

Also, if we are truly being flooded by this massive population increase, why did we only experience an increase of 1.2% in population growth last year? I believe our death rate is higher than that.

Learn math before you quote figures. By definition, population increase is (imigration + births) - deaths, therefore the death rate is already factored into the increase. Thus, your 1.2% increase represents a net 50,000 additional people in BC, half of whom are settling in Metro Vancouver. That is 25,000 new people looking for houses, condos, apartments or whatever. If you think that that has no impact on the housing market, then you are greatly mistaken.

 

[DavidLin]

There was no correction in the late 80s. The correction was in the early 80s and was mostly due to the high (12% - 20%) interest rates.

I bought a house in Kits in 86 for about $235,000 and sold in it 89 for over $500,000. Also, the mid to late 90s correction was almost entirely due to he "leaky condo crisis" and it was more of a flat market than a significant price drop. A house I purchased in Surrey in 96 for about $250,000 dropped by maybe 5% by 98 and then started to climb. I sold it in 04 for almost $400,000. Likewise, a house I bought in Coquitlam in 2001 for about $150,000 I sold in 04 for over $300,000. My current house which I purchased in 04 is now worth about 30% more than I paid for it.

Learn to read before you post. If you check out the graph that was posted earlier in this thread you will notice that there were indeed corrections. I will take the liberty to post it again for your quick reference, so unless Jay Banks (a pretty well known realtor) has some how messed up a graph on historic real estate prices, I would assume you made an incorrect assessment. Also, as we discussed earlier, people nowadays are way more overextended on credit than they were in the 80's, thus minor increases will already push people over the edge into credit oblivion. Further more, in 1979 prior to the start of the massive appreciation in real estate prices, the interest rate was already sitting at 14%.

http://jaybanks.ca/vancouverrealesta...200607-400.gif

As long as interest rates stay low <6%, there will be no significant correction. The market may flatten or perhaps even drop by up to 5%, but in the long run it will go up again. One must keep in mind that Metro Vancouver has a limited amount of land and cannot sprawl like Seattle, Calgary, Toronto and other similar cities. It is a confined metropolitan area, more like San Fransico, New York, Montreal and many European cities.

The prime rate of the BOC right now is 6.25% and the Chartered bank administered interest rate is at 7.39%. Check for your self.

http://www.bankofcanada.ca/en/rates/interest-look.html

As for Vancouver running out of land, if you had read the beginning post and some of the more recent posts, you will find that we discussed that already and it is a fact that realtors in the 80's said the same damn thing and somehow we are still building condos in 2007. Also, even if we were, we would have to have a much higher population gain to actually justify the massive increases in prices in 5 short years.

Getting back to the house I bought in 86 for $235,000. That house is now worth in the $1,000,000 to $1,500,000 range or 2 to 3 times what I sold it for in 89 and 5 to 6 times what I paid for it.

If you had read some of the above posts you will notice that we have indeed discussed this as well, in regards to inflation and of course currently we are at a huge spike in real estate increases, which are very unlikely to hold.

Thus, your 1.2% increase represents a net 50,000 additional people in BC, half of whom are settling in Metro Vancouver. That is 25,000 new people looking for houses, condos, apartments or whatever. If you think that that has no impact on the housing market, then you are greatly mistaken.

I had no idea that half of all our population increases in BC are moving into metro vancouver, where did you get that figure from? Are you just thinking up numbers out of thin air? I have a tendency to try to add a graph or a link to support my arguments, the least you could do is add a little effort to your responses.

 

[wolverine]

if the real estate market does ever bust in Vancouver, let me know so I can buy a place and move there.