Real estate roller coaster video warns of bubble
Real estate investing can be filled with highs and lows. Now, a Vancouver blogger has created a YouTube video that depicts Vancouver's turbulent real estate market as a roller coaster ride.
The video, entitled "Vancouver BC Real Estate Market Roller Coaster," puts viewers in the front seat of a roller coaster that rides along a graph of 35 years worth of Vancouver real estate data.
The roller coaster begins in 1975 then slowly rises before dropping for the next few years. The coaster ascends from 1979 to 1981, then plummets again before racing up and down until the real estate boom of the last decade. The video ends with the coaster leveling out in 2009 high above the Vancouver skyline. As it moves into the future, it plummets into Burrard Inlet.
"Vancouver Real Estate is the only coaster that's best to exit at the top," the video says. "And buying at the wrong time can quickly find you underwater."
The anonymous creator of the video, who also runs the website vancouvercondo.info, created the video using an online roller coaster simulator program. He was inspired by a similar video that tracked US real estate prices.
The blogger said the video was designed to illustrate that, despite what some investors might think, real estate prices don't always go up.
"Some people seem to truly believe that Vancouver is a special market where house prices can rise indefinitely without concurrent increases in rents and incomes," he told ctvbc.ca.
"Record low interest rates and CMHC-backed mortgage policy has created an environment of rising prices that is financially risky to extrapolate for those stretching to buy before interest rates return to historical norms."
Tsur Somerville, Director of the UBC Centre for Urban Economics and Real Estate at Sauder School of Business, said the video does a good job illustrating the risks inherent to the real estate market.
"The only thing I had a problem with is that [it implies] what really is going to happen is we're going to fall off the roller coaster and sink into the water," Somerville told ctvbc.ca.
"Investments are volatile. If you want low volatility then buy low-volatility GICs."
Last week, The Real Estate Board of Greater Vancouver reported that the benchmark price for all residential properties in April was $593,419, an 18.9 per cent increase over this time last year.
This isn't the first time that someone has used the web to illustrate Vancouver's wacky real estate market. Vancouver's Petr Postisil recently created the website Crack Shack or Mansion?, which asks users to distinguish overpriced local real estate from suspected drug dens.