Walter Block points me to a Forbes article written by Bob Haber.
The essay discusses what appears to be a speculative bubble in the Vancouver real estate market.
Haber correctly explains the bubble in terms of Austrian school business cycle theory:
The Austrian von Mises/Hayek theory defines speculative bubbles as a government increase in money supply (Global QE), resulting in unnaturally low interest rates. The reaction to manufactured lower interest rates results in entrepreneurs investing in capital intensive or durable goods versus consumer goods. Instead of capital flowing into what an unfettered market would dictate, it flows into speculative investments. The longer this continues, the bigger the speculative bubble. Just look at past bubbles and the theory holds true – stocks, bonds, real estate, art or even tulip bulbs. https://mises.org/library/blowing-bubblesHaber reports:
According to the Real Estate Board of Greater Vancouver, single detached homes in Vancouver (on a local currency basis) have risen from approximately $400K CAD to $1.75 million CAD since 2002. That’s a 337% increase in 15 years. With incredibly fast rising prices, a large portion of the population is engaged in real estate brokerage, real estate development, construction, renovations, and everything that goes along with that. The echoes of Phoenix, Las Vegas, and San Diego from 2006 cannot be ignored.-Robert Wenzel
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