experts: real estate column Thursday, August 11, 2005

Of Cabbages And Kings ... And Bubbles!

The 'bubble' analogy in real estate doesn't hold water...

By Alan  Skinner

There, I've used the "b" word! You could in fact say that I have been "bursting" to discuss this one. The sentiment expressed in "Spinning Wheel", the Blood, Sweat and Tears 1960/70's hit, the oft quoted "what goes up must come down" is likely at the root of this "logical" fallacy. It is simply wrong to use the "bubble" analogy, which is pertinent for the type of intellectual "commodity" or the paper profits of the stock market (e.g. Nortel, Enron and the like). We know that supply (homes in specific geographic areas e.g. Vancouver, e.g. Dundarave, e.g. Edgemont Village) is a limited (and slow growing) phenomenon. Demand for these homes, on the other hand, is a strong and growing one. I often plead with those arguing the bubble theory to give me a good reason why buyers (demand) will suddenly (or gradually) stop wanting to own. Aside from a somewhat unfounded fear of "rocketing" mortgage rates, I can only see a major natural disaster (or unnatural one, heaven forbid) as giving cause for this demand withdrawal. Yes folks, I know nothing is impossible, but, if we focus on the probability (likelihood) of these "acts of gods!!??", it is very difficult to build a credible case for bursting. Alas, I have found among these "Bursting" proponents a surprising number of non home owners (who, you would figure shouldn't particularly care) and, dare I say it are possibly indulging in "wishful thinking".

Zoom in now to our beautiful, sunny North Shore - land of high demand and limited supply.

Number of N/Van detached sales down 3% from the same period last year. Average prices +9% and inventory down 28% over last year (supply still dropping). On the attached (t/home) front, sales numbers up 22% while apartment sales show increased growth of 9%. Average prices up 9% (t/ hse) and 16% (apt). Inventories at -36% (t/hse) and -51% (apt)! Demand here (buyers) remains strong and inventory clearly shrinking.

W/Van detached continues its YTD drop in number of sales (-12%); average price maintains its rise at +7% and inventory down 24% from 2004! The condo picture remains mixed - attached (t/hses) down 21% in number of sales; average prices still strong (up 37%). Active listings similar to last year at 42 units. Apartments show 150 sold vs 108 last year (+38%); also increasing, average prices up 27% and active listings now at 81 vs 54 (2004) reflecting new building activity.

A moral this month? : Caution should never be thrown to the wind where investing is concerned but question the fundamentals of "bubblist" type arguments.

Remember that is the place to visit for North Shore R/E information. This work in progress strives to be the "go to" site for North Shore Real Estate analysis. A jumping off point for FULL market listing information, it also offers a "no obligation" estimate of value for your personal Real Estate. Please use it and continue your valuable feedback.

Questions regarding the market, decisions, contemplations, opinions of my musings, are welcomed via e-mail (or phone) - hey, pop-in and say "Hi" to me at an open house - I'd love to see you.

E-mail this story to a friend    Print this story   Save This Page to

Recent Articles by this columnist:

Keeping Realtors Honest
Tuesday, August 12, 2014

How well do we stack up?
Tuesday, July 29, 2014

Resistance to change and compliance delay
Wednesday, June 04, 2014

Of urban planning and municipal wisdom
Thursday, April 17, 2014

Yes, it's official - demand is rising
Tuesday, March 11, 2014

All articles by Alan  Skinner

Related Links:

Alan Skinner

Related Articles:

Have you tried these JUROCK.COM FEATURES?



Subscribe To Our Newsletter

Check out this week's Jurock Real Estate Insider Special deal


Gibsons waterfront


Don't Worry About Greece ... Worry About The EU



   Privacy | Security | FAQ | Site Map | Masthead
Contact Us   
Copyright © 2014 Jurock Publishing Ltd. All rights reserved