"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.ca/van/apa/1514543…

"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.ca/van/apa/1514408…

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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Look we can argue what $400K bought you in 2005, and of course it depends when in the year (it was increasing pretty rapidly), in what area, and the condition of the house. In my neighborhood, $400K bought you a decent (not updated) solid post war bungalow in mid 2005.

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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