Vancouver’s real estate market has been on fire until last year when the air was let out of the bubble. I remember a friend of my wife’s telling us we should buy a house soon and I thought to myself no way. I bought a house in Pennsylvania that cost around 35k, and when I moved here that same house would be over $500,000 here in Vancouver. I thought something is wrong with this picture.

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Wages in Vancouver just haven’t kept up with the appreciation of home values here but people continued to buy, hoping to flip their new purchase making a nice chunk of change. It’s a strategy that’s worked but now the buyers have disappeared and I suspect in a few years my patience will be rewarded as home prices should fall much further than they currently are. I really feel bad for the homeowners who have bought in the last 6-9 months.

clipped from www.greaterfool.ca The greatest bubble economy in history is popping. Trillions of dollars are still sitting on the books of financial institutions in assets which are worthless, or nearly so. The odds of surviving that are slim for many of them. Without government bailouts, today the American banking system – and its auto industry, including three million jobs – would be gone. Sadly, that may still happen. Meanwhile every week Canadians are losing money in home equity, while unemployment rises and corporations shutter. It’s the greatest loss of wealth in a generation.

1 Comment

One Response to “Home Equity Bleeding”

1. 
   Em Says:
   January 5th, 2009 at 11:43 am

   Hi Jeff:

   As a fellow Vancouverite I felt obliged to answer. I can assure you that Vancouver is no Pennsylvania. I have lived in Ohio and I understand the sticker shock when people look at the real estate value in Vancouver.

   I have worked in the Real Estate Industry in Vancouver for over 5 years now and I can tell you that the RE price is not governed by local wages but foreign economies like China and Japan. Almost all the investments in Downtown in exclusively from Hong Kong and China so I would be worried if they are not doing well.

   The more appropriate and just comparison for Vanc's RE would be San Francisco market. I can see a lot of similarities with status of premium tourist destination. Also Vancouver has been in the top 3 best livable city in UN's list for like 7 years now. The highest ranked US city is Honolulu at 25 !!!

   I agree that the price have come down but there is lot of money on the sidelines waiting to buy any dip unlike the forced selling we are seeing in the US.

   Everyone is looking for a crash after the 2010 Olympics but I don't think that is going to happen. With such strong inward immigration, I can only see the prices creeping higher but not down.

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