I took a quick look at Canadian housing prices in certain cities over the last 25 years a multiple to the Toronto stock exchange – I took month end data but smoothed the TSX over trailing three months
– I figured that the TSX takes into account, interest rates, earnings, asset inflation,… and all the other factors that trickle down to housing prices.
What I found is that if the TSX doesn’t appreciate.
Vancouver real estate requires (based on comparative multiples):
1) a 10% drop just to be at the normal end of – expensive from extreme expensive
2) a 20% drop to be at the high end of normal
3) a 30% drop to be at the cheaper side of normal
4) a 40% drop to be in line with the lowest multiples we have seen in the past.
But what i am sure about is that there is no way that the multiple can expand anymore.
If I could trade vancouver real estate on an exchange – I would short it and us treasuries.