How the US Housing Market Affects Vancouver

From Vancouver Housing Market Blog:

The US housing market is clearly starting to fall. I'm sure even our resident bulls will acknowledge this fact. (Of course, it could never happen to Vancouver . . . )

As we've often discussed here, this will affect prices in Vancouver through (at least) four channels:

  1. Exports: US demand for BC exports (like wood for houses) will decrease.
  2. Credit markets: As the risk premium gets reintroduced to credit markets, Canadian banks and bonds will be affected.
  3. US investors: Some have said that US investors have been active in the Vancouver condo market. At best they'll stop buying; at worst they'll sell Vancouver to pay off their losses elsewhere.
  4. Psychology: tear-jerker stories of families losing their houses will be all over the US media. Oprah will do shows on it. This will affect the beliefs that real estate 'always goes up'.