Accounting 12 - Chapter 11

http://www.canada.com/victoriatimescolonist/story.html?id=728a00b3-77a3-4d66-80c5-703d63118480

Summary:

Studies have shown that 2 out of the many major cities in Canada have house prices that are overpriced by atleast 7% and up to 20%. This article was researched by researched at UBC. It showed how the house pricing in Canada had rose drastically starting from 2001. The house pricing many major cities in Canada, like Vancouver, Calgary, Montreal, Ottawa etc..., have been continuing to raise over time. Now that the prices are so high, there are many houses that are unsold or empty new housing. This is caused by many things, the first is obviously the increase in price, the other thing is that The employment rate, especially in Victoria (3.2% scoring at the lowest rating in all of Canadas major cities.), have been dropping. There are 4200 new jobs created locally so far this year to try to up the employment rate. Studies have shown that, many of these emptied out houses are bought by investors or merchanters, who want to make big money when the market goes up, which in time causes so many unsold or unoccupied houses.

Connection:

The connection here in the article is the supplies they have. They have their sale prices so high that no one is buying them, which in a long run, kills their income. Because the prices are so high, and no one is about to be ready to lose some money, the supplies just keep piling up. Soon they will have a hard time to keep track of them. The studies have shown that, some cities have to lower their prices by as much as 20% to have a balance in house prices and rents. If the price of the houses drop, then they will make less profit or might even lose money, but little amounts of money is better than to pile up supplies that are unused and just sitting there wasting.

Reflection:

I think that everyone in Vancouver knows that buying a house in Vancouver costs a fortune. Because of the employment rate dropping, I think that house prices should drop as well, or else they will no longer be demands. If a house costs so much, I would rather just live with my family instead of going out to buy a house for myself to live. It is just not worth it. I think I would consider to live in Edmonton because the house price there is 8% underpriced. But unless I go there for a job, or for school, i would like to live in Vancouver more.