"Vancouver is different" NOT

Anecdote: Last week I went to look at a Vancouver strata unit, and without being asked, I was told by the very genial Realtor that this unit was going to grow in value and was a very good investment. When I pointed out that every other real estate bubble that we look at globally has blown out, the Realtor responded with, "Vancouver is different.", and then went on babbling about the offshore money flowing in without end.

Give me a break. There is an end date to everything. History confirms that when credit contracts, prices that went up will come down. See California, Florida, Japan, Dubai, Greece, Ireland, Spain etal. Offshore money is not dumb. It may act like it, but when market perception changes, everyone heads to the exit. 

In Vancouver we have had a huge one month spike in Single Family Detached data. In January flippers at the high end tacked on $147,000 to the December price for a one month gain of 17%. Awesome flip dude, let's see you do it again. Cooler heads will note that Vancouver townhouse and condo prices dropped 8.5% and 7.4% M/M (Scorecard), and supply is growing. 

Summary of Housing Price Changes for Major Canadian Cities January 2012  

Vancouver single family detached prices in January 2012 rocketed up 16.6% M/M setting a new awesome price record. The last high was June 2011 and the one before that was April 2010 (Chart). Combined residential prices fell as a result of townhouse and condos plunging 8.5% and 7.4% M/M (Scorecard). You can now swap an average house in Vancouver for 3.9 houses in Montreal. An average Vancouver house increased in price by 209% (19%/year) in the last decade while earnings in BC remain trapped (-3.8%) below the national average (Earnings). As the new Demographia table shows (Q3-2011 data), it requires 10.6 times the Vancouver median income to buy a median priced house. By my calculation (Table), it now takes 4.1 average BC incomes (ménage à quartre) to qualify for an 80% mortgage on an average SFD here in Vancouver. 
 
Calgary detached house prices in January 2012 dropped another 3.3% M/M (Chart) and are down 13.3% below the peak set 54 months ago (Plunge-O-Meter) in July 2007 when the warning showed up in the Gold to Real Estate Ratio (Chart) rising in the summer of 2007 as the Smart Money got out of real estate and moved into gold and oil. In the last precipitous decline that started in the fall of 2007 and bottomed in the early spring of 2009, Calgary shed $92,499 of equity from an average SFD in just 18 months... a boom to bust decline of 18.3%. Alberta has the highest earnings in Canada, 19.1% above the national trend (Earnings) but ranks first as the Canadian city with the biggest losses in real estate (Plunge-O-Meter). 
 
Edmonton detached house prices in January 2012 ticked down 0.5% M/M and are 14.8% below their peak set 56 months ago (Plunge-O-Meter) in May 2007. Edmonton ranks #2 in the race to the bottom with a loss of equity of $63,102 since SFDs peaked and are trading at levels comparable to more than 4 years ago (Chart). The next leg down could be painful; in the last great sell off from May 2007 to February 2009 (21 months), average SFD prices dropped 19% and nearly $79,000.
 
Toronto detached house prices for the GTA in January 2012 ticked up 2% M/M (Chart) after a drop of over 6% M/M the month before. Note: Toronto Data on the chart are average Single Family Detached Dwelling prices in the GTA since March 2009 (when the TREB began reporting GTA SFD). Prior to March 2009, the data are average combined residential prices in the GTA PLUS 24.5% which is the average percentage difference between combined residential and SFD over 24 months from March 2009 through February 2011. Now the new MLS HPI Index is being used.
 
Ottawa detached house prices are not available, instead the chart on this site reflects Ottawa's average combined residential prices. OREB's report is sparse and the CMHC, records for Ottawa inventory remain one month lagging. In January 2012 Ottawa combined residential prices zoomed 5.1% M/M (Chart) and made up for the 4.4% M/M drop in December. Prices remain 1.2% below their peak set 7 months ago last summer (Plunge-O-Meter). The Ottawa employer, the Federal Government, tinkers away on the goal of endlessly rising prices (rather than productivity); their current target (BoC) is to have CPI increase at 2%/yr. So far so good, the CPI print for December 2011 dropped another 6 beeps to 2.3% per year. The drop in CPI combined with an up tick in the treasury rates (Interest Rates Chart) means that "real" interest rates are rising. That's good for savers and bad for rate sensitive assets like real estate and the hunt for capital returns. Figure out if you are getting a return here.
 
Montreal detached house prices for January 2012 ticked up 1% M/M after dropping 3.7% M/M in December. Current prices are 4.5% below the high set in June 2011 (Chart). Combined residential inventory in Montreal is over 11% higher than last year (Scorecard) and has been in double digits for over 12 months. There is no shortage of inventory. According the the new 2011 Census, Montreal added 6.4% more dwelling units despite only adding only 5.2% more people.