“I think Phoenix and Vancouver can’t really be compared.” – comment by ‘Homeslice’, VREAA, 2 Oct 2011
PHOENIX
2001 – 110 [Case Shiller Index; from SFH data]
2006 – 228 [peak, May 2006]; run up 108%
2011 – 100 [July 2011: 99.8]
VANCOUVER
2001 – $385K [ave detached home price, REBGV data]
2011 – $1,223K [peak, May 2011]; run up 218%
2016 – ?
‘Homeslice’ is correct, it is unfair to compare Vancouver with markets like Phoenix or Las Vegas – Our speculative mania is far WORSE than anything that happened in Phoenix or Vegas, the price run up has been TWICE as great here as it was there. – vreaa
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‘LAS VANCAS’: Click Chart to see large version:
REBGV average nominal price chart 1977-2011, for detached, attached and apartments, overlaid with a semi-opaque insert of this Las Vegas house price chart, for the purpose of absolute price comparisons 1987-2009 (scales are the same; but there is no correction for currency exchange fluctuation).
The Vegas chart was overlaid such that the y axes were identical in absolute dollars (such that the curves could be compared/contrasted: there was no attempt to fit the curves).
The whole exercise (imperfect, because of the lack of currency fluctuation effect) was to show how small the Vegas bubble was, in absolute terms, compared to ours.
- from ‘Vegas Versus Vancouver, 1987-Present’, VREAA, 11 Mar 2011
Imagine the average SFH coming back to $385k? Vancouver would become so much more affordable and therefore enjoyable… I really hope this will happen…
I can see it happening. Why not? My significant other often tells me of in the early 2000s when relatives were buying crap houses in East Vancouver for around $325k-and everyone thought they were nuts and paying too much.
Flash forward to today-suddenly if you buy a crap house in East Van for $800k you are “smart” and “going to be rich.”
Just wait, when houses are cheap, nobody will want them (and people will realize that these ugly houses are actually well, ugly.)
Yes, it actually could happen (about 66% off).
And, yes, it will be remarkable how readily a gloriously warm wealth generating home becomes a dank moldy financial ball-and-chain.
See below link to newest chart of Vanouver average house prices from January 1977 to September 2011. Notice SFH price now down 11% from May 2011 all-time high. If/when it approaches the 20% drop like in 2008 then the real panic sets it. In 2008 the Gov’t. cut interest rates from 4.25% to .25% to pump this 2nd leg of the bubble. Now with rates at 1.0%, 70% ownership, prices 15X avg.annual income, and 154% debt-to-income ratio, I’m interested in seeing what the Gov’t will do to pump the 3rd leg of the bubble. Maybe pay people 3.0% to borrow money to buy a house sounds about right. Vancouver is so screwed.
http://www.yattermatters.com/2011/10/vancouver-average-price-thinning/
so Vancouver is the new Phoenix? LOL
No, there are many, many differences between the two cities.
But one similarity is that they both suffered giant housing bubbles, and these bubbles always end in the same way.
Two other things should be compared: price/rent ratios & average salaries.
but, otherwise, yep – could happen.
The articles on:
canadabubble.com
are not only increasing in number, but the authorship of the articles is also shifting. Many more banks are now writing about how “Canada will have a soft landing” with any real estate market correction. These are the same people who vehemently claimed over the past two years that we do not and would not have a housing bubble. So…what will these bankers be saying a year from now? They basically operate a year or two behind the curve of common knowledge.
Just like any business, mortgage lenders and banks will preach what’s best for them until it would be absurd for them to continue trumpeting on their message and risk coming across as totally out of touch and without the ability to at least allude to some thoughtfulness towards the consumer. I don’t find that unreasonable to expect.
Too bad there’s no such thing as a soft landing. This has been proven over and over again with many, many different bubbles. It never, ever happens.
Oh but Vancouver is “different”.
I remember the “soft landing” talk when I was living in the Republic of California.
Say, how did that work out for them…?
Look at 2008 on that chart… I remember driving by all the for sale signs they went up but did not come down…
I bought a Gastown loft in 1998, brand new, 800+ sq feet for $144k. I lowballed on it and the developer accepted because nothing was moving (I think it had been listed at $169K). Due to circumstances beyond my control, including the fact that I actually hated living in that addict riddled neighborhood, I ended up renting it out only because I couldn’t sell it without losing money and with student loans, etc… I just couldn’t afford more debt. I subsidized my first renter about $100 a month for a year. Then I basically covered my mortgage/ maintenance for the remaining years. In 2003 I moved back in but quickly realized I still hated the hood (and the strata and my neighbours, yeesh). At this point I put it in on the market and sold for $198K. Enough money to pay off the mortgage, my student loans and credit cards and put $10k aside for a rainy day.I thought I was a freaking genius until the woman who bought my place did a few renos and sold it 2 years later for $400k. Ouch. What’s my point? Hmmmm, I was just lucky but she was clearly luckier (or connected). I’ve been a renter since 2003 because I thought the market was insane then. Whodda thunk we’d be here in 2011?
A final note: I was in that hood again a few weeks back. It has finally transformed into the yuppie paradise the developers knew it could be. And my old building is now wrapped in tarps. I wonder if the current owner is feeling lucky?
Check out prices in different parts of Phoenix. Some have dropped significantly more than others. The bubble is still deflating. Same goes for the Bay Area, San Diego, and LA.
Yeah, the US probably has at least 20% more to go.
Certain areas have more than that. That’s part of the point; some properties I see are still 40% overvalued, buoyed by low UE and low interest rates in desirable urban cores. No doubt stories of Asian capital inflows are making the rounds, maybe not to the degree of Vancouver though.
I think that vreaa and Jesse could be helpful in shaping the upcoming occupy Vancouver pre planning process, even if they are not into camping.
It is likely to be all about real estate here. The well intentioned occupiers need you.
Canada’s Best Places to Live 2011: http://list.moneysense.ca/rankings/best-places-to-live/2011/Default.aspx?sc1=0&d1=a&sp2=1&eh=ch
Vancouver is on a nice 29th place
A miniature PostCard… From a DistantBlastRadius. Everything you need to know about Arizona RE encapsulated in one deliciously ironic semiotic (even if I do say so myself)…
http://tinyurl.com/6ydu2lu
yeah, it should go back to 66% off cuz it’s all VREAA can afford!
Yup Fred. VREAA and the rest of us are just poor renters who are bitter because we missed our chance to buy a decade ago. You’ve got it nailed. There is no growing unrest amongst young people trying to make lives in this city. There is no way that people who are just starting out with skills any city would value are asking themselves more and more whether Vancouver is worth the hyper-inflated cost of living. Everything is going to be okay. EVERYTHING IS GOING TO BE OKAY!