How to tell if your market is in a bubble or not

[Bojan Kovacevic]

Something I heard a while ago is that if renting a home is cheaper than buying it in an area, then most likely that area is in a bubble. For example in my area a single family detached home (4 bedroom, 2-3 bathroom) starts at around $750,000. The same home rents for approx. $2500/month. Buying the home with a 10% down payment and at an interest rate of about 2.5-3%, monthly payments are approx. $3,000 over 35 years. If mortgage alone would cost more than renting a home, isnt that a sign that the market is in a bubble? What do you guys think?

I live in Vancouver, BC and it is very hard to find a single detached home in the area for less than $700,000. Although I know the area is nice, I still can't see the value in the home or the land. I'm looking to start renovating homes in the area. Would you guys recommend for a beginner to start further out where homes start around $350,000-500,000? Or try to find a private lender and start in a high priced area like Vancouver?