Of Bubbles and Olympics

Last week, at two different social functions, I heard more people spewing the same old Vancouver talk about how the Olympics have fueled the rise in real estate prices. One person bought a place the day before the Olympic city for 2010 was announced and that was hailed by another as “the best possible day to buy.” Another talked about hopefully leaving Vancouver right before the Olympics (clearly the best time to sell right?). The funny thing about bubbles is that many people start talking like they are living in one. Well the Vancouver Housing Blogger has a lot to say on the topic (see here and here). You don’t have to be the Vancouver Housing Blogger to figure out that the Olympics have had very little to do with the rise in housing prices in Vancouver. Just look around and get out of your bubble for a bit. Just look at this graph of Calgary’s housing prices since 1970:

Oh right, but their housing boom has been caused by the oil sands right? There’s a housing boom in the UK as well:

Well that’s the UK, everything is always expensive over there, right? We can’t forget about the average US housing prices:

Remember what “average” means. It means it is the average of all cities that are hosting the Olympics in 2010 and those that aren’t. Oh, no cities in the States are having the Olympics in 2010 you say? Then why the housing bubble down there? Hmmm… By the way, Peter Mansbridge said last week on the National (CBC) that US had it’s first downward y-o-y (year-over-year) decline in housing prices following months of decreased sales (I didn’t watch the news until today, had it “taped”) which I thought was an interesting statistic.