“I live in mid Vancouver Island (on one of the Islands). People are getting older and some I talk to want to cash out of their ‘million dollar homes’ for various reasons but the young potential buyers can barely afford the cheap rent here… I rent a $700K home for $1200 a month and there is a lot of rental inventory to choose from. Americans aren’t coming back for a long time and Asians don’t seem to like living on rural ‘islands off islands’. The Alberta people might come back but for these prices they could go to the US and get castles… Vancouver Island north of Victoria seems to have a minimum of 25-50 years supply of million+$ homes. No MSM or local paper will even touch this story but it’s obvious we here are in a very depressed market.”
- JPG101 at greaterfool.ca 14 Apr 2011 1:18pm
1. Rents are still relatively low.
2. The price/rent fundamental ratio on properties like these indicates a massive, massive speculative price bubble. The ratio is 583/1 in this case, indicating this house’s market price is about three times over fair value.
3. The US comparison remains very important: Sell your BC home, buy 4 or 5 equivalent homes in California, live in one and retire off the rent from the others. Such market irregularities can’t last. Only when that kind of cross market osmotic-pressure returns to zero, will our market have finally equilibrated. It’ll occur at prices far below current levels.
4. Most interesting, note the older home owners who are expecting to be able to cash out of their ‘million dollar homes’ whenever they like. These shadow speculators will add their homes to the market once prices have dropped 10% or 15% or 20%, as their paper profits (and their retirement plans) evaporate. That added supply will take prices below the 2008-2009 trough lows and then the wheels will really come off. We’d be very surprised to see BC price lows higher than 50%-off, and they could well go lower.