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Originally Posted by Winsor_Pilates
Did they? If Vancouver is the most "bubbled" city in Canada, wouldn't NY be the same for the US?
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Just based on my argument regarding getting away from the fundamentals, Vancouver would be more like our version of Phoenix or Miami than New York.
Vancouver deviated from the fundamentals by about the same degree as those two cities, in terms of price/rent and price/income metrics.
Regarding price to rent ratios for example, Vancouver was up to 27 at one point. I'm not sure if it ever ended up going higher than that or not. I'm guessing it may have, since Calgary's peak was close to that at one point.
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By your logic, when this "bubble" bursts, will Vancouver prices drop below Calgary? because we're much further away from the fundamentals you list, and a drop based on only that would put us lower than Calgary.
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No, a 20-25% drop in Calgary would return us to the fundamentals, with median home prices at approximately $315-$330k. I believe for Vancouver a 30-35% drop would bring it back close to their long term price/rent ratio. That still equates to higher home prices in Vancouver than Calgary.
2008 in Alberta might have been a sneak preview of how fast things can change when you get a large build up of inventory, coupled with decreased demand. It will be interesting to see what happens this time around.
Anyways, nobody can say for certain what will happen, and you're right of course that it's not so simple as to point to a few ratios and say this is what will happen. I've just always believed that long term fundamentals are a powerful force to be reckoned with.