Three months ago:

“And [28 years ago], as now, Vancouver’s real estate was unaffordable. Nothing in that regard has changed.

What has changed are expectations. There are those who feel that the lack of cheap housing in Vancouver is an abomination. They feel that the convenience of a short commute or the proximity to a really good Ethiopian restaurant should be the natural order of things. …

Vancouver, of course, will always be the centre of things in the Metro area. It has history and critical mass on its side.

And by its very nature, it is going to attract people who want to come here and live in the city.

… the market will propel any kind of property here into the stratosphere.”

– ‘Affordable housing in Vancouver? Why bother?’, Peter McMartin, Vancouver Sun, 22 Mar 2012

Last week:

“Be careful what you wish for. Real estate is a two-way street, and while the issue of high housing prices has been dominated by Yellow Peril alarmists and affordable housing advocates, and by those who despair at the effect high prices have had on their neighbourhoods, there are many, many more homeowners, I’d suggest, whose financial security and that of their children are inextricably linked to their homes, and who regard the erosion of their biggest asset with real fear. They won’t care who buys their home, as long as it’s for a good price. And if the projections of the TD Bank’s economist come true [Predicted price drops of 15%. -ed.], those days when an offshore Asian buyer came calling will be remembered wistfully.”

– ‘The housing market is teetering. Happy now?’, Peter McMartin, Vancouver Sun, 22 Jun 2012

—

The speculative mania in Vancouver RE has been caused by locals overextending themselves by overbidding on homes using cheap financing; paying prices far above those supported by fundamental values; speculating that those prices could only go up further.

Any situation where the “financial security” of a large percentage of the population becomes “inextricably linked to their homes” is deeply unhealthy, and should always sound alarms. Such alarms have indeed been ringing loudly in Vancouver, for a good many years, but very few have cared to listen to them.

There are now, unfortunately, many individuals and families at risk of future financial distress as a result of the inevitable unwinding of the resultant market conditions.

– vreaa