Over the last 30 years, the Vancouver real estate market has been through some ups and downs and I wanted to look at historical price changes in several Canadian cities, including Vancouver, to see if history could teach us something about the current real estate market. Here is a chart graphing inflation adjusted real estate price changes since 1978.
By far the most noticeable event in local real estate prices was 1981. There was a period of extreme price appreciation from 1979 to 1981, followed by a drastic correction that ran its course until 1986. 10 quarters of price increases and 15 quarters of price declines.
1986 through 1989 witnessed big price increases which fizzled through late 1990 and 1991 causing prices to fall 25%. 18 quarters of price increases and 3 quarters of price declines.
1992 through 1995 witnessed another price run up, although more subdued than the previous two run ups, and that culminated in a long period of prices declining through 2001. 15 quarters of price increases and 26 quarters of price declines.
The current cycle started in 2002 and YOY price increases will be evident through at least the first half of 2007 for a total of a 22 quarters of positive price changes. How long will the declines last this time after the longest run up in prices in recent history?
What does the data from the other cities tell us?