itsonlymoney at RE Talks 15 Sept 2010 1:16pm – “So for the last, I’d say, year, year and a half, I’ve been telling my sister just wait..wait..wait before you buy, because there’s going to be price corrections. And for the last year and a half she’s basically been yelling at me, saying that she’s missed out on some good locations because I’ve been telling her to wait. My thought is there’s going to be a big price correction, but I’ll be damned, this stubborn market keeps chugging away year after year, so who knows? With that being said, my sister is now interested in purchasing at the new Uptown development by Concord Pacific (Kingsway & 12th). Its advertising as nearly all units below $350,000.”
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It does feel like this market is stubborn. Although, we are all anticipating a price correction it doesn’t happen overnight or fast enough for our liking. Keep in mind that many people are buying and selling in the same market so are not as impacted as one might think. For example, we bought our house for $700K in 2003 and sold in 2009 for $2M, we are looking at upgrading so even if we buy a place for $2.1M we are effectively paying an extra $100K. We are currently on the sidelines watching closely.
itsonlymoney is giving bad advice. He’s trying to time the market and now has an angry sibling to deal with. Better advice: go ahead and buy now but there’s a very good chance prices will be significantly lower within the next decade. You decide what’s more important.
It’s instructive, though. There is so much pressure to own, even when prices are unsustainably high people will still buy, which is why sales are not zero. Nobody can claim there aren’t warning signs. They just choose to ignore them at their own peril.
he told his sister to wait when a year and a half ago was almost one of the better times to buy the dip. i would be pissed off if i were the sister. but then again the sister was stupid enough to listen to him
I bet sis will be thanking him if she waits about a year and a half.
I think the big problem is that most people seem to think the way this will play out is that one morning you’re going to wake up and the prices are down by 50%.
Obviously that’s not how this will play out. It will drop, then plateau, then maybe slightly rise, then drop some more etc.
For many, the idea of a quick crash is appealing, as the bottom would be found quickly and you could re-enter with confidence.
But the way this will play out will make it worse in the end (and I think many know this), the moment the first friends and neighbours will be wiped out by the changes in markets the fear will set in, both for (wannabe) buyers and sellers and then the real fun will start.
Even when the prices return to normal levels they will continue (in all likelyhood) to drop as by then the confidence in the product will be so greatly diminished that nobody will want to touch it.
We tend not to only overshoot on the up, but also on the way down.
For me, btw, the real fun will start in around 3 years time when many of those dirt cheap 5/35 mortgages are coming up for renewal and many may find out that they owe more than the property is worth. It will be interesting to see how banks will handle this, will they just shrug and renew them anyway (albeit with an interest penalty) or will they demand the difference upfront?
Either way, it will not be good news for anybody who bought in the last two years (or even longer) and suddenly may find themselves with the problem of being underwater.
The ’00 were the runup, the ’10 will be the correction, the ’20s will be flat and maybe in the ’30s it’ll go up again.