Vancouver House Prices Predicted To Drop
A report looking at house prices in Canada's nine major cities has found that property markets are overpriced. Using data from the second quarter 2008, researchers at the UBC Centre for Urban Economics and Real Estate predicts Vancouver house prices are likely to fall by 11%.
It notes that Vancouver's average house price is $754,500, having appreciated an average 10.6% a year since 2001. It would have to fall by $85,000 to reach what the report calls a "balanced" price.
Calgary at $456,800 and Toronto at $419,400 are second and third on average price. The report focused on single family detached units in its analysis.
Rent out of whack
Also striking is a chart showing "rent‐price ratios." With average rents of $2,290 (the highest in the country), Vancouver has the lowest rent-price ratio of 3.6%. Way behind other cities which all have rent-price ratios of 5%-6.5%. The report suggests that Vancouver's rent-price equilibrium is 4.1%. Hence home prices are out of balance.
All very well this fundamental value analysis, but the main thing driving real estate prices now is sentiment. Bearing in mind current turmoil in the financial world, a ten per cent drop in house prices looks optimistic.
Comments
US FED RES is now printing billions of US Currencies to buy bond
ALERT MESSAGE TO CANADIAN HOMEBUYERS
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US FED reserve is now printing billions of US Currencies (approx. 10 trillion US Dollars per year) This current activity was made to finance the purchase of bonds. CHINA who has $2 trillion US dollar reserve in their treasury are very much alarmed by the US FED Res move, other countries have greater concern. They warned of global impact on forex and trade imbalances. Just like China, they predicted that housing market may fell further as a result of US and global hyper inflation in the near future.
Seems like the predictions
Seems like the predictions were a little too sanguine - we're already at a 11% drop in real estate prices now...
Predictions are sometimes real
If you have done your homework then you will know what's 11% drop in real estate prices means in comparison with the other provinces. All graphs and charts indicates a re-test of the current price level of a single detached home in BC. If it brakes the current price level otherwise, called the "resistance level", then you would expect a guaranteed further price hike in the coming months. If not, British Columbian homebuyers is going to see another drop in its current value.