“You can buy one of these:

2216 W 21st, Vancouver (Arbutus area, Vancouver westside)
3100sqft SFH; 50x122ft lot (6,100 sqft)
Asking price: $2,498,000

Or move to Maui and buy *two* of these:

40 Hale Alii Place, Kihei
5071sqft SFH; 14,422 sqft lot (0.33acres)
Asking price: $1,249,999

The former is a 3100 square foot house on a 6000 square foot lot in the world class neighborhood of Asthma Flats, err, Arbutus. It’s only an hour’s walk from the beach.
The latter is a 5000 square foot house on a 14000 square foot lot in Wailea, and 500 meters from the beach.
I’m sure these Vancouver prices are *perfectly* sustainable. Arbutus is the new Wailea, right?”

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Our Comment: The attraction of the Arbutus property, to some buyers [and all it takes is ‘some buyers’], would simply be that prices on the westside of Vancouver have been consistently rising, whereas the same buyers are likely deterred from purchasing the Maui property on the basis of the fact that prices there have been dropping.
Yes, we know this makes no sense, the buyers are being attracted to buying high, rather than looking for good value.
That is precisely what momentum investors do, they like prices that are going up, and they dislike prices that are going down… they pay no attention to the concept of value as determined by fundamental measures. By all such measures (price:rent, price:income) the Arbutus property is greatly overvalued when compared with the Maui property.
This is what happens in speculative manias, prices run away with themselves because of momentum players. Once prices turn, the momentum can be just as ferocious on the way down.
We suspect that prices on Vancouver’s westside are still going up solely because of the false belief held by some that this is one of the only RE pockets on earth where prices are immune to a serious pullback. The belief is fallacious, and we foresee price drops of about 66% for some of the properties now exchanging hands. Homes like the headlined property, for instance, will very likely change hands for $1M or less by the time we hit a trough. And, by global standards, and fundamental value, they will still be richly priced at those levels. Vancouver buyers are currently overpaying by ludicrous amounts. – vreaa