Thanks to Roger for providing these great graphs. Clearly from the non-inflation adjusted chart you can see just how out of whack we are right now.
Here's a similar chart expressing housing costs inflation adjusted into 2007 dollars.
If real estate doubles every ten years as our Realtor keeps telling us, where should we be right now? Well, RE didn't double between 1978 and 1988, so I guess you can throw that theory out the window. It didn't double between 1988 and 1998 either, it was a 50% gain during that period--roughly equal to the previous boom period between 1978 and 1982 right before a 43% decline. And then between 1998 and 2007 we've witnessed an unprecedented 85% plus run-up.
CMHC shows that rental rates have increased at a rate of just under 1%/year between 1992 and 2007. I'm looking for a 35%-45% correction in Victoria. The signs are all there if you open your eyes wide enough to see them.
Of course, a good number of househunters seem to still be wandering around with their eyes wide shut. But that pool is getting smaller. Thankfully.