Don’t let anyone tell you Vancouver isn’t special – According to this article in Forbes we’ve got the 6th most overpriced real estate in the world!
The rankings were compiled by calculating an effective annualized rate of return on a property based on annual cash flows derived from renting and adjusted for capital gains tax, transaction fees, operating costs and maintenance, appreciation and inflation. We then flipped the return rate to resemble the more familiar price-to-earnings (P/E) measure.
Representing North America in the world’s top 10 were Los Angeles (5th place at 26.88) and Vancouver (6th at 26.81).
Thats a .07 difference between us and LA, almost seems like a currency fluctation could switch up those places and give us the coveted title of MOST OVERPRICED real estate in North America!
And tell us Forbes, why does the relationship between rental yields and housing costs matter?
The relationship between rental yields and housing costs matters because a low rental yield is a good indication of a stretched market–one that has a bubble–since these markets are more likely to face downward price pressures or grow at a slower rate.