Passthedonuts
Registered User
As for the US - yes, people did move. Detroit's a good example - check out their population trend over the last decade. Phoenix and Vegas were examples of overbuilding - a problem that Vancouver can't have, due to geographic constraints. BTW, are you aware that mortgage rules in the US allow that homeowners can walk away from their mortgages, at any time, without penalty? This is the critical rule that does not exist in Canada, and it's why so many Americans just decided to walk away from their homes when they dropped in value and suddenly they owed more than what they were "worth" (an ever-changing figure). In Canada, that can't happen. Obviously, this makes our RE market exceedingly more stable.
1. Geographical constraints. Geographical constraints are only part of the equation in driving house prices. This tends to impact raw land prices more than finished real estate product, like condos. As Vancouver has chosen the high density model, and now that over 50% of new housing starts are multi-family units - there are no geographical constraints if you build into the sky. Japan has faced a decades long price correction despite much more serious geographical constraints than Vancouver.
2. Mortgages - You've oversimplified the explanation of US vs. Canadian mortgage law. Every jurisdiction (province and state) has different rules regarding recourse vs. non-recourse mortgages. A recourse loan allows the lender to sue the debtor in the event that the sale price of a foreclosed home is not sufficient to cover the amount of an outstanding mortgage. However, a debtor can still file bankruptcy and this debt would be included and discharged.
Some recourse jurisdictions: BC, Ontario, Florida, Georgia.
A non-recourse loan allows a debtor to walk away from the debt entirely if the home is sold via foreclosure.
Non-recourse jurisdictions include: Arizona, California, Alberta
Recourse loans did not prevent certain states like Florida from having complete real estate meltdowns.
I'm not saying Vancouver is due for a cataclysmic real estate meltdown (I generally avoid making predictions) - but mortgage law and geographical restraints are not exactly pillars for a strong argument.