Nonsense on a few levels.
One, the economy is driven by jobs, not house prices.
Two, house prices are driven by supply/demand, which is driven by population. The only thing that could cause a material decline in home values is basically a mass exodus out of Vancouver and a flooding of homes put on the market. How likely do you think that is?
Both of your points are popular myths.
I don't have the time to write a thesis here, but let's just say that it's my job to analyze market cycles.
1. Price-rent and Price-income ratios are at absurd levels. They've never been this far out of whack and mean-reversion always happens.
2. In the US, prices fell first, driving up defaults, then the economy went into recession. Fannie had record low defaults as late as 2007.
3. Home ownership is at 70%, record levels which have correlated with market tops in previous cycles.
4. Debt-to-Income ratios for Canadians is over 160%, higher than where the US topped out.
5. Lending rules have changed. The OSFI is enforcing tighter lending guidelines now that they are overseeing the CMHC. Proof of income is needed whereas before you could state income, particularly for self-employed. Lending ratios and amortizations have tightened up as well. Basically, banks and the government are worried and lending will be constrained going forward.
6. Over 30% of BC's economy is in real-estate related industries. The highest by far in Canada and completely unsustainable. This sector is cyclical and volatile.
7. Sales are already down 30-50% throughout BC, depending on where you look. Year-over-year prices (HPI) ranges from flat to down 15% in places like Richmond and Van West. The top was in on June 2012.
8. Interest rates have bottomed and have nowhere to go but up. If rates even normalize to 5-6%, the market is screwed.
9. Canadians have no retirement savings and baby boomers are far more likely to sell their homes to fund retirement. This could cause the mass exodus you speak of.
10. Real estate is cyclical, just like any other asset class. And the bigger the boom, the bigger the bust. It never changes. Population is a factor, but a far, far smaller factor than credit.
We might not see a sharp crash like we did in San Diego (Bernanke raised rates to break the market) but a slow grind lower for the next 5 years is a very plausible scenario. There will be significant economic fallout when prices are 25-30% lower than they are today.