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Originally Posted by Winsor_Pilates
Don't know enough about San Fran or most US cities to comment on it, but the USA in general went through something very different than Canada due to it's mortgage issues. Will Canada end up with these same issues? that's another debate.
Did San Fran resist the burst better than other US cities? Did Manhattan?
My guess is yes, they did for reasons similar to why Van resists better than Calgary and individual reasons for each city as well.
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Yes, but the values in NY or SF only deflated by a lesser percentage than say, Phoenix or Las Vegas, because the values bubbled by a lesser percentage as well.
Atlanta fell about 8%, compared to around 38% for San Francisco, and I don't think anyone would point to Atlanta's high desirability or lack of land as reasons they didn't fall further than other U.S. cities. Same goes for Charlotte, Dallas, and other cities that didn't bubble up from their fundamentals as dramatically as the rest.
However, the correlation between how far the values fell (percentage wise) with how far they got away from their fundamental values (price to income for example, or price to rent) is very strong.
The 'desirability factor' and the fact that a city has a higher density is already priced into the market in either direction. So it just doesn't seem to make for a valid argument regarding a bubble deflating slower, faster, or not at all if one does believe there is a bubble to deflate.
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Another huge reason Vancouver resists more is the massive foreign investment. The housing prices are inflated by wealthy Chinese buyers, and this is unique to Vancouver over other cities.
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But wouldn't this higher demand for housing not also lead to higher rent prices? Which would then keep the price-to-rent-ratio on an even keel, rather than skyrocketing?
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Agreed, and Vancouver is certainly not immune; I've never claimed it to be. Just more resistant than Calgary. Vancouver prices did go down with the rescission, and I think will go down some more in the near future.
(But, apparently according to many here, no Realtor has or will ever say that )
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I guess that's just where I disagree. From what history has seemed to prove time and again with markets that have bubbled, the only real predictor of how far they drop is how far they got away from their underlying fundamentals in the first place. In that regards, Vancouver is truly in a league of it's own.