economy
PUTTING HOME PRICE GAINS IN PERSPECTIVE The declining and low interest rate environment established over the past year-and-a-half has certainly boosted home values— but, as always and with most things, context is important.
House prices have been rising unsustainably. Not to be flippant, but...what else is new? For many years nowMetro Vancouver has posted out-sized growth in home values. The reasons why have been, and continue to be, debated, but due to word count contraints, we will not be exploring this further at this time. The fact remains, though, that home prices in Metro Vancouver rose considerably in the past 12 months: in the Fraser Valley board area in particular, the median sold price rose 10.3%. Notably, however, this was both in line with
the past 5-year average annual increase of 10.2%, and much more modest than the 31.2% increase in the S&P 500, the 72.2% increase in crude oil prices, the 112.2% increase in bond yields, and the—oh my—342.1% increase in the value of Bitcoin. The bottom line is that loose monetary policy including ultra-low interest rates, combined with generous fiscal supports, have fuelled asset values. Enjoy it, or loathe it, while it lasts, because these extraordinary conditions won’t be around forever.
SHOULD’VE INVESTED SOONER
400%
350%
342.1%
300%
250%
200%
150%
136.1%
112.2%
100%
72.2%
50%
31.3%
16.4%
8.3%
10.3%
10.2%
7.9%
6.5%
5.7%
2.4%
4.1%
0.6%
0%
-6.4%
-50%
GOLD WTI CRUDE BITCOIN CAD USD EX. RATE
S&P YR GOC BOND YIELD
MEDIAN SOLD HOME REBGV
MEDIAN SOLD HOME FVREB
AVG ANNUAL CHANGE, PAST YEARS
PAST YEAR CHANGE
DATA: RECENT CHANGES IN ASSET/COMMODITY VALUES SOURCE: VARIOUS
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