Ratio of Vancouver Home Prices to National Average

vancouver ratio

In Greater Vancouver, the average residential sale price was about $947,000 in October, and for Greater Toronto it was roughly $631,000. Excluding both areas, the national average price was just over $339,000.
For Vancouver, it amounts to an average home price that is 2.79 times greater than the national average. The October ratio is Vancouver’s second-highest on record, eclipsed only by a peak of 2.91 reached in February of 1995. For 76 consecutive months, Vancouver’s price-gap ratio has run above its 35-year average.

G&M, 18 Nov 2015

38 responses to “Ratio of Vancouver Home Prices to National Average

  1. For long term readers, in the spirit of Froogle Scott a realtor builds a house.
    A sobering read so far.

    http://buildinginvancouver.com

  2. Running above 35 years average stat is meaningless and misleading since we are living in an inflationary world where 0% inflation or deflation is fought tooth and nail. Thus, prices will always be increasing, never meaning reverting. So any long run ratio that don’t take that into account is not valid. As well, ratios between two non-stationary series that aren’t mean reverting / stationary also need to be treated with caution.

  3. So, what you are saying is… we are more expensive than the rest of Canada and we have never been so much more expensive than them. Doesn’t this just prove that whereas the rest of Canada is mostly supported by local incomes, Vancouver is supported by something else all together? How else do you explain that the two tops of the graph basically coincide with two large migrations of Chinese people to the west? 97 was the flight of Hong Kong immigrants before the Hong Kong takeover by China and right now you are seeing the flight of Chinese wealth from China. Until China becomes a democracy, this wealth will always want to leave. But either way, I don’t see how relevant this graph really is.

  4. Space and Brian aren’t very good with actual data. Does. Not. Compute.

    • Haha, I am going to enjoy shoving your predictions back into your face 3 years from now. What was it crash of 50% magnitude 1 to 3 years? At least you finally put your chips down. Let’s see how you do with actual predictions rather than useless theories.

    • here is a tip for you, actually read up a book or even wiki article on time series analysis and learn basic concepts about stationarity, mean reversion, martingale process, unit root process before opening your mouth again to lecture other people on data analysis when you know absolutely squat.

      • Lots of jargon, but not a shimmer of intelligent insight.

      • Say a guy who knows squat about data analysis……

        I guess ignorance is a bliss when it helps you feel smarter and comforting that you are really right, and it’s just other people’s fault that you are wrong in reality.

    • You both missed the point of a really simple graph. It shows massive declines in Van RE relative to the national average. But during those periods, the national average ALSO went down. So the decline in Vancouver prices was actually greater than this visual is portraying.

      Hong Kong and China have virtually nothing to do with it. Interest rates and concurrent speculation have everything to do with it. The run-ups coincide perfectly with periods of falling rates. And the crashes with rising rates.

      • 3 years. Let’s see how right you are. No excuses at that time.

      • You know what else has been going up along with Van RE prices? Stock market! Fed Balance Sheet! And what has gone in reverse? Gold prices!

        geez…learn some fing data analysis….that kind of graph can be made up between Van RE and a lot of other stuff. Without proper data analysis, it means squat.

      • Classic cognitive dissonance from you two.

      • You mean like I’m right and my predictions are right, even when reality is the opposite of what I predicted? which just means I’m even more right??

      • No, I mean your dismissal of evidence that runs contrary to your view. Like the graph above.

        You need to distinguish between being “right” in the short term and being right in the long term. And by long term I’m talking 20+ years. Or whatever the length of the average mortgage. Being right in the short term is the product of guesswork. Being right in the long term is the product of thoughtful analysis.

      • The most popular mortgage length in Canada is still 5 years, and it’s been what? 7 years since the bear blogs started enmass?

        As for the long term, while as Lord Keynes said, in the long term, we are all dead. 20+ years? Really? That timeframe means you can have a kid and see that kid graduate from highschool! Given that most people only work for about 45 to 50 years, that’s half of your working life! Around 25% of your expected life expentancy! Heck, 30% to 50% marriages don’t even last 10 years now.
        If you were wrong for 18 years of those 20 years, and then right the last two years, it doesn’t matter anymore! Having a house price appreciate by even just 5% for 18 years means it would roughly went up 3x already.

      • And btw, as I have repeatedly said which seem to fly totally over your ignorant brain or low intelligence level is that without proper data analysis, a graph is meaningless. Similar looking graph can be constructed using Van RE and a lot of other stuff. Just showing some graph without any analysis is meaningless at best.

      • Five years. Yeah — amortized over 25. In some cases 30+.

        Um, your math is off. That’s 2.4 times appreciation, not 3. (And I’m the “low intelligent one”!)

        Take any rolling 20-year period for Vancouver RE, past or future, and you will find that compound annual rates of appreciation are not anywhere near what they have been for the past ten years. THAT’s my point. Not being “wrong for 18 and then right for 2”. It’s embarrassing to have to explain this to you.

      • So… how much money have you made so far on your 20 year investments? I am sure glad you are not the guy managing my portfolios cause I would hate to have someone who is like, don’t worry, hold this thing for twenty years and eventually this will work. 20 years is half of my working life, we don’t look in timelines that long because it would be retarded for me to wait that long to be right. Judging by how old you sound, you will be retired in 20 years. Again, to your point, I would rather be right in the short term cause guess what? There is something called hedging… There are financial instruments that will allow me to hedge in my gains that I made over the last five years. I am pretty certain hedge funds don’t look at 20 year returns or else they would be out of business. Vancouver was 8% asian in 1980 and now we are 51% asian, how in the world do you ignore such a huge demographic shift exactly? Is your assumption that standard ratios hold the same regardless of demographic shifts?

      • Your theory rests on the notion that Asians are willing to pay more for the same asset as non-Asians.

        If a rational investor is not willing to commit more than “x” dollars to an investment, it’s because a higher return is available elsewhere. These alternative returns are available to Asians and non-Asians alike. Your theory, therefore, presumes that Asians are financially irrational. I don’t accept that.

        And spare us the “cultural” nonsense about owning a home. Everyone needs shelter, period.

      • Actually I don’t believe you understand what my theory is. It is pretty simple, Vancouver is the largest Asian city in the western world as a percentage of total population, it is probably the fastest growing asian city in the western world (outside of asia). More and more rich Chinese people require a secondary residence outside of China, until China becomes a democracy that is going to be true. There will be more rich chinese people. There is a limited amount of single family homes and that number ain’t increasing. Higher demand, limited supply, hmm.. wonder which way prices will go. Is that simple enough? You use your asset theories when there is an abundance of alternatives, in this case there isn’t. Secondary residences require a place that speaks their language and that is a hard place to find in the western world.

      • Simple enough? Yeah, it’s elementary-school simple. And that’s the problem.

      • Geez…congrats on pulling out a calculator to calculate an exponential number, while I’m simply estimating it using my brain.

        Regardless, 2.4x vs 3.0x, don’t really change the equation all that much when you are wrong, and you can’t afford what the existing 1x price now anyways.

      • You know El Ninja, if only everyone has the same info, believes the same, think the same, and act the same as everyone else then we wouldn’t be having this conversation, and frankly stock market bubble/bust wouldn’t even occur.

        You said it’s irrational for Asians to pay more for an asset than non-Asians? How about if Asian places more emphasis on RE? Hell, do you want to get married? Guess what? In China, it’s pretty damn hard if not impossible to get married if you don’t bring an appropriate size & priced condo to the marriage. How much more are you willing to pay for a home now?

        Or how about those Apple fanboys that pay so much extra for iPhones and rest of iCrap when much cheaper and better alternatives exist. Why would they buy the more expensive stuff, that would be like irrational!?

        Frankly, at the end of the day, your “fundamental” analysis has been wrong for years and continues to be wrong, and yet you keep on insisting on you are right, while bashing / denigrating people who have been right. Maybe the problem isn’t the bulls, it’s you. Maybe your “fundamental” model just isn’t right, or are the biggest factors affecting the market.

        And no, I don’t care if you are right after 20 years. I could be dead in 20 years. Hell, in 20 years, I probably don’t even want to live in a house or Vancouver anymore. Your 20 years time frame is irrelevant.

      • Again, tell us, have you made your millions using your 20 year investment theory? Which investment have you held personally for 20 years?

    • One more thing, I bought some US stocks during the financial crisis with a view to get out around 3 years later. I did pretty well, probably should have bought more and got out later, but what the heck, I am not that good of an investor to be honest compared to people with CFA. So does that mean I got lucky because I didn’t look at a 20 year timeline based on your theory?

      • If you think investing is a 3-year game, your are sorely mistaken. That’s speculation, not investing.

        20, 30, 40 years, these are the timeframes over which true wealth is compounded.

      • How many traders on wall street work on 20, 30, 40 year horizons? I guess they are all dumb right? Your 12 month performance trails the market and what you are going to tell your boss, don’t worry, my theories will be right 19 years from now?

      • The only people who cares about 20+ year time frame are pension fund trustee and even then they evaluate portfolio manager performance on yearly basis, and if you underperform for more than 3 years, bye bye. You know why? Cuz if you underperform by just 1% for 10 years, you have to really really outperform in the next 10 years to catch up due to the effect of compounding. Good luck trying to convince people you can do that when you have been underperforming for 10 years. Well, you don’t need to cuz you would have been fired long time ago and face slim prospects of getting hired again.

        You sir, frankly have absolutely no knowledge or experience of how financial industry work or even basic investing principles.

      • btw, 80% of wall street traders wash out after 3 years and the remaining 20% maybe work for longer than 5 to 10 years. However, very few will work 20 or more years cuz you tend to die by stress, hypertension, and just overall bad health before you hit 20 years. As well, most will make enough $$ if they last 10 years to either permenantly retire or do something far less stressful.

        General rule is that for every year you work as a wall street trader, your life expencency goes down by 1 year.

      • Goodness help us. This blog truly is in the death grip of two fatuous bores.

        First, I have held equities broadly over the past ten years. Equities have outperformed Van RE. But whatever. That’s not the substance of my argument.

        Second, I’m not talking about “traders” or “portfolio managers” or being accountable to some imaginary “boss”. This may be your wet dream, but I am talking about everyday folks who are looking to accumulate wealth over their working years and into retirement. If you are trying to accumulate wealth by thinking in one-year timeframes, you are deeply misguided and almost certain to fail. You need to be thinking in timeframes of 20, 30, or more years, in order to benefit from compounding.

        Of course, you won’t get it. How could you? You’re looking at arguably some of the most overvalued real estate in the world, and you think it’s a good time to buy. The greatest of greater fools.

      • So what you are saying is, if you are not a professional, then you must look long term as in super long term, 20 years. Housing is generally expensive from a long term perspective, therefore you shouldn’t buy. Is that your cookie cutter logic here? I am sorry, I get this logic fed to everyone I know by anyone holding a CFP as if they know what they are talking about. You go tell all my friends who hold a CFA this logic and see how they react to you. Real finance professionals laugh at this type of broad stroke way of analyzing the market because this is exactly as you said, it is aimed at people who don’t have any knowledge of the market itself.

        So by your cookie cutter logic, stock market is expensive, should I sale all my positions and hold multi-year put options instead?

      • I happen to hold a CFA and yes, that’s why I’m reacting to El Ninja’s arguments this way….this is way fing ridiculous. And yes, if my only excuse to my boss or clients is that well, if you just wait and give it a 20 years time frame, I would be right, I would be lucky to get kicked out the door with any prospect of future employment.

      • Wow, the CFA designation just lost a ton of credibility in my mind.

      • Wasn’t aware that credibility in your eyes was such an important thing. I don’t have a CFA but I also know how much work is required to get one which is why I don’t have one. I have a few friends who have one and I can tell you how much they love people spitting out cookie cutter logic to the masses. Again, by your logic, stock market is expensive, should I go shorting it? Cause obviously rates will go back up soon, so it should sink the entire market lower right?

      • “Cause obviously rates will go back up soon, so it should sink the entire market lower right?”

        This sentence perfectly captures your foolhardiness. Stock markets are forward-looking, i.e. they anticipate change, and react NOW. Not perfectly, but generally pretty efficiently. Everybody knows rates will rise; it’s priced in already.

        RE, on the other hand, is less efficient in the near and medium terms (none more so than Vancouver RE, where the greed / delusion impulse runs particularly strong). Long term is another story.

      • So it is your belief that at historically accurate rates. Stock market should be where it is? Is that what you are saying? Because stock markets anticipate Change right? And since everyone is looking at historical averages anyways, this should be priced in.

  5. Well some of that can easily be explained by Vancouver’s awesomeness

  6. Anyone heard of enTuch properties?

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