Our View: Property prices like tulips

Another study has failed to find a cause for the skyrocketing house prices in the Vancouver area (and by extension across the Lower Mainland).

The City of Vancouver commissioned a study to count empty homes. Rather than rely on fallible human testimony, they used BC Hydro data and looked for houses that saw no peaks or valleys in power consumption – a sure sign that no one was coming home and running the washer, dryer, and PlayStation.

The study turned up almost no change from years past. About five per cent seem to be unoccupied, only slightly higher than in 2002.

While there is no doubt that a vareity of factors have driven up local home prices – a still mostly solid economy, the low Canadian dollar, offshore buyers using real estate as an investment opportunity – it is also possible that a good portion of the insane price increases are caused by ordinary local buyers and sellers.

Metro Vancouver real estate may be a form of tulip madness. Back in the 1600s, Europe went mad for tulips. Rare varieties were bought and sold in the Netherlands for prices that would make royalty and merchant princes gasp in shock.

One day, the tulip madness simply stopped. Everyone realized that they were buying and selling flowers. Just flowers.

Is it possible that local speculators, including homeowners, realtors, and property developers, have been behind a good chunk of the spiralling prices? The bubble may burst, but only if we prick it.

– M.C.

 

 

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