Vancouver Housing bubble?

According to one of the U.S.’s most renowned housing market analysts, Vancouver’s housing bubble is more extreme today than California’s was a few years ago.

Robert Shiller, co-creator of the Case-Shiller Index, which measures U.S. house prices, told BNN late last week that “Vancouver looks like part of California” when it comes to its housing market.

Both Toronto and Vancouver’s housing markets are now coming under severe downward pressure. Toronto home sales fell 12.5 per cent in August, compared to a year earlier, while Vancouver’s housing market saw a substantial 30.7 per cent drop in the same period, marking its worst month of sales since 1998.

The federal government has tightened mortgage rules four times in recent years, in an effort to cool off what many sees as overheated prices. The most recent changes lowered the maximum amortization period on a government-insured mortgage to 25 years, from 30, and reduced the amount homeowners can borrow against their home equity, from 85 per cent to 80 per cent.

I say that there is no bubble and just a slowdown. I don’t see the comparison to California. Our system does not let people buy a $500,000 house with no money down and no income verification like what happened in the US.

Do you see a major collapse in Vancouver happening?

3 thoughts on “Vancouver Housing bubble?”

  1. I kind of hope for a collapse, mainly because I’m not yet a homeowner but would like to be one day! With prices the way they are it doesn’t seem like I’ll ever be able to own a home with a yard and some privacy in my lifetime.

  2. So here’s a problem I see with your opinion, Canadians were able to get mortgages for 95% of their home prices, at amortization periods of 40 years for a number of years (since 2007). Some banks offered cash-back incentives effectively reducing the 5% you had to put down to somewhere between 5% and 0% (essentially no money down).
    Also, recently people (self-employed, and new immigrants) were able to get mortgages without having to prove their income, this was only decided to be changed back in April, so that they would have to fully prove their income, making it tougher to get the mortgages.
    And there clearly is/was a bubble which is why OSFI and the government murdered the way mortgages were working, dropping the highest amortization period to 25 years, making houses over a certain price no longer able to be covered by CMHC, and lowering the total amount a HELOC could be obtained at.
    They pricked the bubble so it would deflate rather than pop.

  3. US economy falling into recession as we speak.

    China economy nowhere near the govt stated growth of 8%, check utility usage, rail traffic, and other hard indicators and you come to a number between 0-1% growth.

    These two factors, combined with Japan in worse shape than either US or China are hitting Canadian exports, which in turn affect Canadian incomes.

    Yet our illustrious author arbitrarily states he sees only a slowdown. That’s nice, feel what you wanna feel, I’ll stick with the hard, cold facts, and those are far different from your feelings.

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