The Vancouver Sun has unexpectedly published a sober and cautious article about Real Estate. This contrasts with years of articles that have most often read like RE promo brochures. The article is from the 20 Nov 2009, Vancouver Sun Business Section, with no apparent byline. Excerpts below, full article is reproduced as first comment in the comment section -
“In B.C., which has the highest prices and biggest mortgages, buyers seem more confident than other Canadians that prices will continue to rise. Even if they are right it would be prudent to remain cautious.”
“Low interest rates have been a godsend for mortgage borrowers, and a curse for savers…. But interest rates can change in the blink of an eye.”
“Financial advisers warn that real estate valuations can go down, as well as up, and people should diversify their investment portfolios, especially in retirement when a house should represent no more than 25 per cent to 33 per cent of total wealth.”
“Would-be buyers should enter the market with eyes wide open and view their purchase first as a place to live, and only second as a store of wealth.”
VREAA editorial comment -
1. What percentage of Vancouver owners are on target to have their house represent no more than 33% of their total net wealth by retirement? Answer: Very few. Currently, for many owners, their home value represents greater than 100% of their net worth in that the outstanding mortgage is larger than their other savings and investments. And rising RE prices have further decreased the sense of need to build savings outside of RE equity.
2. What percentage of Vancouver owners currently view their homes ‘first as a place to live, and only second as a store of wealth’? Answer: Very, very few.