Sunday, June 19, 2011

What's wrong here...

Above is a Global TV story which argues that Vancouver home prices are the most expensive in the English speaking world when compared to the income we make. 

And the underlying reason offered is that the infamous HAM (Hot Asian Money) is the cause of the explosion in housing prices.  Wealthy foreigners, with ample cash, are driving up local real estate prices with their Tsunami of purchases in the Village on the Edge of the Rainforest.

The argument offered is that comparing the insane local real estate prices to local incomes in not an accurate measurement of the market.  Vancouver's growing reputation of a 'world class city' is altering the dynamic and that prices are an accurate reflection of the moneyed demand for real estate from Asian buyers.

But, at the same time, local realtor Larry Yatkowsky releases a Greater Vancouver Real Estate Board monthly survey of Realtors which tells us something entirely different is going on.

The survey provided by Yatkowsky covers 1246 sales over Jan-May 2011 and concludes that more than 80% of buyers are locals.  Of those buyers who did come from outside of the Greater Vancouver area, about 15% come from outside of the Lower Mainland. And a little more than half of those from outside the Lower Mainland came from outside the country.

So... only 7.5% of buyers of Vancouver real estate are wealthy foreigners from outside of Canada.

That means 92.5% of the buyers are Canadians. And it means the concerns about the gigantic level of debt being assumed by Canadians combined with the concerns from Carney and Flaherty about the impact of a bursting bubble on our citizens are more than justified.


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