Another prediction of doom for Vancouver real estate!
Blog by Patricia Houlihan - Personal Real Estate Corporation | September 9th, 2008
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)