It takes investor mindest FROM THE PAST into account and then infers that past performance is an indication of future performance. Maybe. Maybe not. Note Somerville's past performance data includes a generation of disinflation baked into the appreciation numbers. That period is now pretty much over.

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Patriotz, of course it is. It humours me to see how some posters can take such strong exception to it.

But it’s true. If you buy something cheaper, then your expectation of price appreciation is clearly higher than if you buy it at a more expensive price. That’s the difficulty in using Tsur’s formula. It’s hard to put a number to an ‘expectation’ because expectations change depending on various factors. I think his formula is a more accurate predictor of real estate prices because it takes investor mindset somewhat into account. In contrast, price to rent ratios only seem to be able to predict pricing maybe 10% of the time, which is market bottoms. That’s great if you want to wait out a bull market and sit on the sidelines for 10 to 15 years, but it isn’t so great for those who want to be in the market.

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Well yes that's tautological. If I expect the benchmark house in GV to be worth 800K in, say, 2020, that's a higher appreciation from a market bust price of, say, 400K in 2012 than the market top of 771K in 2008.

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"I think you must also consider that lower prices create an expectation for higher price appreciation in the future."

Does make sense however only from an investor perspective. The problem with this logic is that the investment numbers currently dont make sense for investment – especially if you rule in the possiblity of a 30%+ plunge. As well pressure from this point of view wont help with just a 10% drop… 30% definitly.

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Of course only the price/rent of local markets is relevant. Greater Vancouver runs from the high 200s to as high as 500.

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Darn, another silver medal. According to the OECD's June 2008 Outlook, Annex Table 60, Canada's Price to Rent ratio is 190 second only to Spain at 198. But, we are far above the average of 144.

Who came in last…that former real estate hot spot Japan at 69. Hmmmm…..

Unfortunately, there is no link available, but the report can be purchased from the OECD web site if you are really interested.

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I'm surprised they didn't hire him.

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Judging from the fact that sales this year will be around half of what they were last year, and the Greater Vancouver listings:population ratio is about 1:78 I would expect a 40% drop within the next 2 years. Could be more, could be less.

As far as rents are concerned, until the speculators start caving rents will be way to high for the salaries in this city.

Good evening to you.

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Now that the US is cratering, any thoughts of when it will filter up here in terms of RE? 1-3 years?

Also what about rents coming down due to the slowdown/inventory/etc?

I've recently noticed people renting places offering cash bonuses to rent apartments downtown..just wondering if this is the beginning of a trend. on the other hand i went to look at a place today..1350$ for 421 sq feet..in a crappy building.

happy sunday to all.

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