Considering the rising real estate prices in Vancouver, Calen recommended “some sort of screening process for the legitimacy of the buyer” in his blog post. Despite this constructive recommendation, I personally believe that the pros and cons should be considered thoroughly in the long run.

• Analyzing Using A Demand-Supply Curve

Using the tool of economics, I drew a diagram of the possible tendency of supply and demand, based on both facts and assumptions. The demand curve has been shifted out due to the influx of Asian investors. Since the supply is constant, which means the number of estates is unchangeable in a short period of time, the price will rise dramatically from P1 to P2. However, considering the effect of time, the supply will be more elastic, which means more estate will be built in the long run in response to the increasing demand. Consequently, the price will drop to P3, somewhere between P1 and P2.

• Development in Real Estate Industry

Although the money flow from the Asian investors jacked up the house prices, it accelerated the development of the real estate industry in Vancouver. In the meanwhile, more tax revenue was generated by the trading of luxury houses.

Therefore, I think there is no need worrying too much about the rising house prices in Vancouver.