The argument for a return to higher prices was made with the 'Momentum Graph' shown below [emphasis mine].
Here's what you use to predict the real estate market future: The Momentum Graph, which shows exactly the progression of an economy and how it eventually impacts the Real Estate Market.This chart was constructed to be used conveniently with the GDP data from royal bank presented later. Putting the two together the reader can predict
The Economic Formula to Predict The Future
In a nutshell this graph states the following:
GDP growth >> Job growth >> Population growth >> Increased rental demand (12 months later) >> Increased rents >> Property purchase demand (18 months later) >> and eventually leads to property price increases.
The Momentum Graph falsely claimed to show "exactly the progression of an economy and how it eventually impacts the Real Estate Market". I will provide some specific examples that contradicts this:
Radley showed that the 2006-2007 price appreciation went over and above any GDP growth here.
Ben at Financial Insights recently compiled a similar chart for the Canadian wide market.
The Edmonton Housing Bust Blog compared local condo prices to rents. In Don's momentum chart it shows that rent increases come first and then lead to higher prices. If this was applicable to the last boom this ratio should have fallen with higher rents initially then increase as prices caught up. Instead prices outpaced rents for the entire boom.
Now consider the Teranet Price Index at 3 points in time after the boom.
1) In mid-2007 there was positive GDP growth, a strong job market, population growth and rent increases. The 'Momentum Graph' would predict future price increases yet they were at their absolute peak.
2) In spring of 2009 GDP was lower after the oil bust and recession, combined with lower population growth and increasing Alberta unemployment. The 'Momentum Graph' doesn't go into reverse for obvious reasons, but if it did it sure wouldn't predict a bounce in prices.
3) In mid 2010 the Alberta economy and job growth have improved yet prices started trending down despite this.
Even if you accept some relation between GDP and house prices it is reckless not to mention that 2006-2007 was an anomaly. Don wants readers to make the connection with the GDP chart and another boom to pump his seminar, while being vague enough to provide future cover. Adding context is not helpful to his financial goals.