A Nobel laureate and economist says British Columbia and Vancouver appear to be resistant to housing bubbles despite high property values in the latter, noting that “all housing markets are regional”.
The 2002 Nobel Prize for Economics winner Vernon Smith said last week that the key indicator is housing starts, as homebuilders are “much more aware and reactive to changes in the market than typical homeowners or buyers.”
According to Smith’s formula for housing bubble-burst scenarios, B.C. and Vancouver are relatively safe. The housing starts in B.C. are up 3.1% from 2013 and may go up a further 1.4% in 2015.
Data from Canada Mortgage and Housing Corp. also said that Vancouver’s housing starts are up 5% from a year ago. The number is expected to fall next year, but should jump to about 3% into 2016.
Smith, 87, was awarded for his work in empirical economic analysis and is now a professor at Chapman University in California. He also leads the International Foundations of Research in Experimental Economics as its president and chair.
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