From 1991 to 2012, there was a substantial rise in real house prices in Greater Vancouver. Much research has been done to examine house market by assessing the growth of house prices and price-to-rent ratio. However, house prices are not the only expense that people make when buying houses. In this paper, we use user cost of housing to assess house market. The user cost of housing depends not only on house prices, but also on the opportunity cost, property tax, annual depreciation and risk premium. We then estimate the user cost of owner-occupied housing using Greater Vancouver data and Calgary data. We also build up two models to explain user cost of different ways to buy houses. Based on our tests, we found renting, compared to owning, is a better choice for people living in Greater Vancouver for most of the time, while in Calgary people should buy from 2007 and ever after.
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