The red line on this graph is the Royal LePage benchmark price of a "Standard Condominium Apartment"* in the "Vancouver West" neighborhood:
Here is a map of Vancouver West with condos priced around the Royal LePage benchmark.
Also shown on the graph in blue is the then-value of $300,000 in 2008 dollars.
This was derived from historical Consumer Price Index data courtesy of statscan.
In yellow is the yearly rent for the same Condo also provided by Royal LePage. I multiplied it by 15 so it would be more-or-less equal to $300,000 for comparison purposes.
The green line is the median after-tax income for non-elderly Vancouver families (2+ people). This data is available also from statscan. Once again I multiplied the income by a constant, 5, to get it into the $300,000 range (the point here is to show trends).
Here is the data behind that graph.
This is the same table, but with my guess as to what will happen to prices in this town over the next three years. It's definitely not bullish on prices, but neither is very bearish on rents (it assumes rents will stay even on a dollar-basis rather than dropping through the floor as a potential depression takes over).
Here's a graph of what my guesses look like:
A huge drop is coming. That much I feel sure about. The reason is simple: if real estate costs a whole lot more than 15 times annual rents it becomes a bad investment. If rents don't go up, prices have to come down. Rents can't go up unless income goes up, and that's just not going to happen.
Now we're coming to the game: how much is that red line going to fall? Perhaps it will fall to hit the blue $300,000 line it has in the 80's, in 1991, 1995 and 2000. Bearish people would tell you it will crash far below the blue line for the first time since the depression, bullish people will say it's going to moderate and stabilize for the next ten years until everything catches up. I think perhaps it will come in for a smooth dip above the blue line like in my graph.
This is a graph that has a big gap between now and the end of 2011:
This one's a little squiggly because it's based on quarterly data instead of yearly.
As the data comes in over the next 13 quarters I'll be filling it in and we can see how my predictions match up.
* A two-bedroom apartment with a living room, a dining room (possibly combined) and a kitchen, in a high-rise building with an inside floor area of 84 sq. metres (900 sq. ft.). Amenities include standard broadloom, 1 1/2 bathrooms, 2 appliances, a small balcony and 1 underground parking space. Common area includes a pool and some minor recreational facilities.