Smartinuk at talkvancouver.com discussion thread on affordable housing in Vancouver, 17 May 2011 10:18am – “I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation. The housing situation in Vancouver seems to be a simple result of supply and demand.”
No, it isn’t, it’s the result of a speculative mania, driven by cheap money and local buyers prepared to overextend themselves to nose-bleed levels based on their fear of being ‘priced out forever’ and their greed regarding the promise of preternatural profits. Once gravity reasserts, things will return to normal range. Even graduate students may be able to afford to buy something, if they care to, at some point in future. – vreaa
As long as your graduate program isn’t Fine Arts, you should be able to afford something in Vancouver once prices revert back to the mean… If you are in Fine Arts, you probably should Google “reversion to the mean”…
oh please, are u telling me that you can’t afford a 1 bedroom condo used condo? or do you feel a sense of entitlement to must have a brand new home?
Give us some examples of condos you see as good deals.
The condo I’m renting would cost $500k to buy. I rent it for $1350. If I put down $50k, mortgaged for 30 years at 5% it would cost $2415 per month. Plus strata. Plus property taxes. This means that this condo would have to appreciate by more than $1000 a month every month for 30 years in order to be even somewhat of a good deal. And interest rates would have to stay 5% for 30 years. I just don’t see why anyone would buy this place (I don’t like Kraft dinner that much) when you can rent and save the difference.
KD is for white trash
real property moguls eat rice twice a day. that’s how you stay virtuous.
yes, there is a glut of condos in this market. You can buy or rent one any day of the week and there’s one for every income class. This is not the property class that’s going bonkers. What’s your point?
Actually, the original poster is correct. In an unregulated market (i.e. one without price controls), supply and demand dictates market prices, even in a speculative mania. Supply and demand includes demand by speculators.
I wish real estate was an unregulated market… It’s hard to make that case when CMHC will ensure anyone with a 6 month credit history and a pulse… That’s not surprising when you look at the composition of CMHC’s board of directors… developers and industry association executives abound… Can you say “conflict of interest”?
realist -> Thanks for the comment.
The point is that it is always true to say “the housing situation in Vancouver seems to be a simple result of supply and demand”. It is a ‘truism’. You might as well say of the market, “remember, all the buyers and sellers are breathing oxygen”. It doesn’t help a whit with prognostication, which, after all, is the point of market discussion/analysis in the first place.
Yes, we know, many who are bullish Vancouver RE point to ‘limitless demand’ as an argument that prices will always go up (so much so that we have a sidebar category for those arguments ‘20. The Limitless Demand Argument For Ongoing Market Strength‘).
It is our opinion that this is not a sound position to take.
Remember, in every prior mania that ever took place, on the way up one could always say that the price action was the result of ‘supply and demand’. That didn’t help with identifying the action as that of a bubble market.
The fundamentals (price:rent, price:income; price:GDP) tell you this is a speculative mania; the ‘supply:demand’ statement tells you nothing about market health or future direction.
Price collapses are the result of supply and demand too.
Exactly. And the buyers and sellers are still breathing oxygen.