Blog by Patricia Houlihan - Personal Real Estate Corporation

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Another prediction of doom for Vancouver real estate!

Well not a day goes by without another opinion on what is happening in the current Vancouver real estate market. Today a UBC study by real estate economist Tsur Somerville and others is discussed in the Sun.  It looks at what the "balance point" should be on prices.  The balance point is based on the cost to rent a home versus the cost to buy: this is the balanced price.  It is interesting in a way as it seems to reflect what many of us feel was the situation in the Vancouver market.  I have been telling clients that most listings that haven't sold seem to be about 10% overpriced; this article quotes the study as saying that in the second quarter of this year (Apr-June) prices were about 11% above the balance point.  Of note is that, despite our reputation for being a very overpriced city, the study found that Halifax prices are 20% above balanced, Regina, Winnepeg, Ottawa and Montreal are 25% above balanced. Apparently Toronto is balanced; Edmonton needs its prices to rise 8% to be balanced.  The study's author notes that this factor is not the only one which will affect what happens in our Vancouver market; other factors, such as mortgage rates and economic conditions, are also important. My favorite line in the article is the heading Little evidence of 'calamity' in the market.....I couldn't agree more!

 
(information taken from Vancouver Sun Sept 9/08 Prepare for Home Prices to Drop, Derrick Penner)

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