It Is Different
If one is to believe in economic theories then accordingly recent activity of detached homes on Vancouver’s West Side have thumbed their nose at theory proclaiming that in this neighbourhood they have their own theories and they are different.
It needs to be clearly understood that I am not an economist. I do remember taking some economic course at U.B.C. for which I paid almost as much the recommended text book as I did for the course. That didn’t make much sense to me then and this casual observation doesn’t make much sense to me now. This LAPS graph shows the number of Units Listed, Units Sold, Active Listings and Average price in a 2 year snapshot. It seems that Vancouver’s West Side detached homes didn’t take the economics course and for all intent couldn’t give a damn about a traditional basic economic premise.
Consider this graph – let’s call it the holy grail of economic theory where there are lines of supply, demand and price in operation over a period of time. The concept dictates that as supply (S) increases and demand (D) decreases then price (P) should reduce. Well — that’s what the economists would have us believe.
If one was looking to raise a little cane against prevailing theory the reality of the LAPS graph is tantamount to the Vancouver West Detached market thumbing its nose at the established holy grail proposition.
On a number of occasions during the past two years that counter culture has rallied in dispute of established theory. It happened in December 2011 and is again taking place now. Supply is way up, demand (read sales) is way down, yet prices are screaming up. That is not what the economists say should happen. No doubt they will tell us it is an anomaly which most of us will understand as – it is different on the West Side.
If you are student of such things then you are probably scratching your head in wonder as you recall things the U.B.C. professor and text book claimed as the holy grail. It’s simply not so and simply doesn’t make sense – at least on the West Side of Vancouver. Which of course leads me to think that this entire market isn’t making a lot of sense. One month were are headed for the tank and the next month it says it ain’t so. Confusing you bet! Does this leave you with an impossible task of making a wise decision – most certainly.
Our Different World
This however, is our world today. Global financial crises, ultra low interest rates, ultra high home prices, relatively lower income levels all combine to say that not much makes sense except that I know it is different.