Is Vancouver in a housing bubble? It’s a question I’ve been asking for over five years now, and despite the majority of people saying yes, we have yet to see the kind of correction usually associated with housing bubbles when they burst.
That leaves us in one of two places; either we have yet to reach the peak or the limit of the bubble or housing prices in Vancouver still have room to grow.
I think it’s time we face the music and realize we are at the former.
Watch as I lay out my case, which includes the point that with an election only five months away, the last thing the BC Liberals want to see is for that bubble to burst since it would almost certainly cause them to be defeated.
Late last week the BC government announced a new program that would allow first time home buyers struggling to put together a down payment, to get an interest free, or sub-prime, loan, that would match their down payment up to $37,500 or 5% of a $750,000 property.
While this program isn’t as crazy as the kind of policies we saw down south over a decade ago, it is awfully suspect and if there is a major price correction I wonder how many defaulted mortgages the taxpayer will now be partially on the hook for?
Will this policy do anything to help the average Vancouverite struggling to enter the real estate market for the first time?
Sure, but at what peril?
At the peril of expanding the Vancouver housing bubble just a few more months to ensure an election win while making the inevitable correction that much more painful it seems.