The crash will be catastrophic. This is not a wish, nor is it stated with malice. It simply is the way in which bubbles have to play themselves out. Once a large group paints itself into this kind of market corner, there is no ‘nice’ way out. – vreaa
bullwhip29 at vancouvercondo.info 9 Aug 2010 3:37 pm & 4:18 pm -
“A RE crash in Vancouver would be catastrophic. Practically everyone I know has all their net worth tied up in RE. Any significant change to this would most definitely affect how they spend in the future. The recent financial crisis and resulting steep discounting we saw with many of the retailers is a classic example. To this date, people are not willing to pay full retail for anything and it will be quite some time before that appetite comes back.” … “The current bubble is one of epic proportions that has caused a wealth effect never seen before. Unfortunately for many, owing [sic] a million dollar home doesn’t mean you’re a millionaire (although many feel and act like they are…well, at least for now). What it really means is that you OWE your bank a lot of money, perhaps more than you (can) payback in a lifetime. That’s what differentiates this bubble from others in the past and why we’re in for a much harder landing this time around.”
patriotz adds an opinion, at 3:54 pm -
“You’re talking as though a crash might not happen. This fake economy simply cannot continue indefinitely.
RE crashes are the inevitable outcome of RE bubbles. And every time someone buys RE at an inflated price they are throwing away future purchasing power – no matter how long the decline takes or when it starts. But the faster the bust goes and the sooner it starts, the fewer people will buy at an inflated price.
The crash of the early 80’s wasn’t “catastrophic” at all. It was necessary to get skilled workers and real investment into the city to build a real economy. Just like the upcoming crash.”
Everyone I know not only has all of their net worth in real estate, they also have all of their INCOME tied up in real estate.
What happens when you spent a million dollars on a house you can’t sell because no one is buying million dollar houses and your livelihood depends on people buying million dollar houses?
Realtors, contractors, suppliers of construction materials, surveyors. Could get ugly, very, very ugly.
I thought this video made a lot of sense. They discuss how lower interest rates doesn’t have as large an impact on buyers. People purchase when they think that prices will rise – they sit on the sidelines when they think that prices will fall.
http://www.cnbc.com/id/15840232?video=1563427021&play=1
Asked what it’s going to take to get a buyer off the fence, “Nothing short of a guarantee that the value of the home isn’t going to drop once they buy.”
This is what we have in store in Vancouver. When the politicians can’t fake a strong economy, this spells a long, drawn-out decline in home prices. It doesn’t matter if prices are affordable – people still won’t buy.
This is exactly what I have been pestering my friends about for the last few years.
I have a paid for 3200 sq. ft. house in Abbotsford but it only represents about 35% of my net worth.
As above I know many people where the house is probably 95% or more of their net worth.
I can’t see this ending well.
“They discuss how lower interest rates doesn’t have as large an impact on buyers.”
Tim, I think buyers in Vancouver didn’t get the memo