Quote:
Originally Posted by Digitalis
So you being a numbers guy and all, tell me.... short of a dirty bomb or earthquake. How is the projected population increase of 1.2M in vancouver/surrey/burnaby/tricities in the next 30 years going to make house prices drop?
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Honestly, if we are going to talk about long term like 30yrs, how is this even a question?
It's all about affordability. A decent income (say 130k pre-tax?) couple can afford what? Maybe 1M mortgage (roughly 3k/mth in payment and another 1~1.5k or so for property tax, insurance... etc) at 2.8% interest rate, a relative historic low.
This is a stretch already. Let's assume the couple has 8k/month after tax. You take 4k out of that equation, the couple is left with 4k to bring food to the table, child care, and every other expense for the family.
Let's just assume that NOTHING changes in the next 30yrs except the population for simplicity sake. Unless all 1.3M new immigrants to BC are all multi-millionaire or all CEO who gets paid 500k+ per year, I really don't see how much further can the real estate go. No matter how you justify the pricing, it can only go until people simply can't afford anymore.
For the price to continue growing, Vancouver's economic has to have a major transformation. We cannot sustain the RE pricing with RE industry as the main contributor to GDP. There has to be a similar growth in wage, job opportunities or if we want to cater rich foreign investors, a devaluation on CAD in similar percentage to the RE growth... all which simply mean the loonie in your hand would worth less (inflation).