This from Boom and Bust at Rob Chipman’s blog 05.30.08 at 2:43 pm -
excerpts -
“I’ve lived in San Francisco and New York. I recently returned to Vancouver, where I was born and raised. I don’t think the NY and SF markets can be compared to Vancouver. The former are major financial and industrial centres. NY and SF are full of high paying, professional jobs. Both centres attract immigrants and investors from around the world. Both are bigger, have better dining and entertainment. Vancouver is a place I’ve come back to because I’ve made enough money in the U.S. that I can afford to. Vancouver is a lifestyle city for which you pay a lifestyle tax. I think San Diego and Miami are more comparable cities.”
“This, make no mistake, is a bubble. At the root of this bubble are very encouraging long term fundamentals. Vancouver is a nice place, it is growing, immigrants and Eastern migrants like to live here. However, at the root of every bubble is a good story. I’d bet that 20% of the recent run-up is due to real economic fundamentals. 80% of the recent run-up can be attributed to the great credit boom. Lower interest rates, longer amortization terms, lower credit standards, stated income practices, pre-sales and access to debt led to an amazing run-up in property values. Values have now stretched affordability to its limit even in this low rate environment. Property values, if all else constant, should only increase at the rate of income increases.”
