“You haven’t presented any facts. Just hypothetical numbers.” — I’m not sure what passes for ‘facts’ in your world, do they have to pass your ‘confirmation bias’ filter? Oh wait, here comes a fact…
“A whole house in E. Van for $1500/month” — A single data point from Craigslist, that’s your case? First of all, it’s listed as $1600/month, not $1500, so it’s an incorrect fact right off the bat, but that’s ok, not a big deal. Secondly, I’d bet dollars to donuts that this place is a dump at this price, not a ‘benchmark’ E. Van house. But of course there’s no further information provided about the place to verify. But since we’re trading facts, I did find a fact of my own for $2400:
http://vancouver.en.craigslist.....43795.html

“Now either rents are the same today as in 2005, which means your estimated rent is too high, or they’ve gone down” — So, let me get this straight, based on a single data point for a home we can’t verify as to age, size or condition, you are able to discern rental price trends for all of E. Van over the past 5 years. That is spectacular analysis of the facts and surely proves your assertion that everyone who bought in 2005 is dumb, how could I have not seen it sooner. I will humbly retract my shoddy ‘hypothetical’ analysis in favour of your elegant single data point. Well played sir, well played.

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Here’s a fact for you. A whole house in E. Van for $1500/month:

http://vancouver.en.craigslist.....08362.html

Now either rents are the same today as in 2005, which means your estimated rent is too high, or they’ve gone down. Either way you’ve lost money.

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But anyways, lets use the benchmarks you linked to. The benchmark ranged from 430K in Jan to 523K in Dec of 2005.
Keeping our down payment at 25K, and assuming you qualified for a mortgage that large, the revised montly carrying costs (with above assumptions) range from $1900 to $2300. Again, rent for a whole house was around $2000. So it doesn’t really change the outcome that much, some deals were probably losers and some were winners, why can’t you just accept the facts?

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I really do fear you could be right – from a fundamental standpoint things are grotesquely out of whack in Vancouver, and in Canada overall to a lesser extent.

All the same there’s obvious lack of trust in market fundamentals now by the Powers That Be – nothing can be allowed to fail, needed contractions can’t happen, etc. They may well game the system for years to come to prevent any corrections.

One of the few barometers I still kind of trust is POG – the price of gold is telling us that things are profoundly unwell (and that’s coming from a non-goldbug).

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I agree that one of the problems with looking at housing as a normal investment decision is difficult due to the massive government intervention in the markets. Basically, it is politically safe to try to keep housing prices inflated when 70^% of Canadians are “homeowners” (some say “debtowners’, but why quibble on semantics). However, I also see that massive government incentives in the US didn’t help their market recover. I also see rates in Japan having been at or near zero for decades and their housing is still half of what it was at the peak.Perhaps our politicians are smarter than in the US and Japan but I doubt it.

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He’ll be reporting more on this on his show at 5:30.

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Like I said, an average house in E. Van was ~400K. (in 2005)

No it wasn’t, that’s what you would have paid for a teardown, probably on a substandard lot. I.E. the very bottom of the bunch.

Historically the average house in E. Van has sold for about the UBC (Sauder) benchmark. In 2005 that was about 500K. An independent data point is the REBGV benchmark for E. Van, which was $478,500 in June 2005.

http://www.rebgv.org/housing-p.....2005-06-01

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Yes there are, but they appear at an insufficient rate. That’s why the bubble is unsustainable.

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The endless prosperity engineered by government manipuation of the markets. Interest rates will never rise. Mortgages rates will go down to 0.25 percent as the government buys bonds on the market (financed by BOC printing presses) to keep yields low.

Lower rates cause higher prices. When prices appear to stall at a 0.25 mortgage rate, mortgage interest will be made tax deductible. Prices will rise more.

When the price boost from interest deductibility peeters out, the Gov will dish out new buyer tax credits or other subsidies and prices will go up even more.

All the while, all the Gov printing will cause inflation, which will do its part to push prices up.

It is easy to see this taking 10 years to play out. The Gov is not out of bullets yet. Not by a longshot.

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If this is happening, then who do the “dumb” buyers of today sell to in 2 years? Are there even dumber people out there? Is there a never-ending supply of dumb people?

Just wondering…

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“The reason I don’t take you seriously is that I was involved in the market in 2004 and I could see that buying was more expensive than renting even then.” — That’s a silly statement, because YOU couldn’t find a deal that worked for you, that means there were no deals that worked for anyone? Total rubbish. A lot of us were in the market in 2004/05 who found deals that worked out well based only on cash flow.

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Oh Supraboy…posting under another name because you have been kicked around hard a few discussions ago….keep the dream alive in your parents basement

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I assume that it refers to standard deviations away from the mean price/income ratio over the whole period.

No it can’t be that, because the real price peak in 1981 (which was also the price/income peak) was not surpassed until 2006. Compare to the real price graph:

http://cuer.sauder.ubc.ca/cma/.....couver.pdf

Note that real incomes have been pretty much flat from 1980 to today.

That graph makes no sense to me whatsoever, particularly the peak in 1988.

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I’ve shown a scenario where in fact you would be cash flow neutral having bought in 2005 vs renting,

No you haven’t. You’ve just pulled some numbers out of the air. Show us price, rent, taxes, and mortgage rates for an actual property and we’ll start listening.

The reason I don’t take you seriously is that I was involved in the market in 2004 and I could see that buying was more expensive than renting even then.

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http://www.vancouversun.com/Gl.....story.html

Maybe it’s the one where 35 year olds are bidding 8x annual income to buy a shoebox, because they can’t borrow 30x to buy a house.

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