Van Isle Renter at greaterfool.ca 10 Jul 2011 10:17pm -
“I live on the Island. Moved here two years ago. No interest in buying a house. Renting and loving it! Prices are dropping, so why should I buy? Until I see a major re-trenchment in prices (30%+) I’m not even remotely interested. I was a homeowner for 20+ years. Glad to be rid of it.
Spend my time golfing and sipping cappuccino’s while the landlord worries about the property taxes, the hot water tank and the roof. And I’m OK with that.”
When prices are falling, prospective buyers feel no urgency to buy, and sit comfortably on their hands. – vreaa
I’ve got several friends in Silicon Valley with salaries north of $200k. All of them are renting. When I asked them why, the response was essentially: “My ongoing increases in salary are going to outpace the growth in prices, so in a couple of years I’ll be able to buy in cash”.
So, even when prices are not falling but merely stagnating, buyers feel no urgency to buy.
they’re unwittingly destroying their country by not purchasing. I’m sure this is happening all over the US – with the economy grinding to a halt because of the lack of money flow. I expect nothing less of Americans; ask not what you can do for your country, ask what you can do for yourself.
they’re unwittingly destroying their country by not purchasing
This is not realistic … as they were not the ones who exposed that country to this point of weakness.
“Americans who save their money and don’t consume are unpatriotic.” Nice one. =)
???
Money is surely flowing to their landlords and property management companies. Money not spent on mortgage is surely being spent by youngish professionals making 200K. Or maybe its all being saved (money flowing back out as banks make loans), or invested. I’m pretty sure they’re not destroying the country in the way that, say, taking on too much debt on overinflated assets and then walking away seems to have. Well, not destroyed, exactly, but maybe slowed down a little.
Barney you are not making any sense because you must be a real estate agent . The home values on Vancouver Island are over priced and why should anyone buy a house to support the country when people are so far in debt in Canada period especially with credit cards.
Furthermore anyone that’s going to buy a home in Vancouver should wait for housing to drop even further and especially when HST is going to be dropped coming this April 2013, so people should wait at least until then.
Americans are in trouble because they got into a mortgage mess because they couldn’t afford it.
One last thing is I would like to mention is housing prices have sky rocketed for one reason only………real estate agents.
Happy renting people.
I think this also applies when prices are flat. No rush to “get in now”, so why buy?
How about buy now before the prices go up again?? The classic bear trap
Yeah.
We have long anticipated such a trap, and we believe that it will most likely result in a modest bounce at the level of the early 2009 low.
We are now close to certain that that support will at some point be broken to the downside, and that the eventual bottom will see prices far lower… perhaps at 2001-2003 levels.
great! so when prices drop..the mentality is ‘why buy when it will keep dropping’
when prices rise ‘it’s too expensive to buy, let’s wait until prices decline’ some people will always find reasons to never buy.
Homeowner is collapsing two types of buyers: the bear and the herd.
Let’s separate them so that there is no confusion:
At the moment bears are saying ‘it’s too expensive to buy, let’s wait until prices decline’. The herd is still trying to buy. Markets top when everyone who is going to buy under the current premise (“RE only goes up”) has bought.
When prices start declining, it’s the herd who says ‘why buy when it will keep dropping?’… In fact, this herd-voice becomes most shrill at the bottom… when the herd is certain that RE can only go down, that’s when a smart buyer buys. One will never get the timing perfect, but that’s the general idea.. and you only have to get the timing vaguely right to do much better than the herd (buy low, sell high).
Bears (prospective buyer bears, that is) don’t say ‘why buy when it will keep dropping?’… The price descent is the development they have been awaiting… they buy at price levels that make fundamental sense (far below where Vancouver is right now).
The US RE market has not yet bottomed, but you’ll note that we are hearing more and more out of the US that renting is better than buying, that people won’t buy even though the metrics are better for owners, etc etc… when the bottom is reached there will be magazine covers of people tied to houses with chains… then it’ll be a buy.
In sunny Vancouver, even though we do hear some dissent, the vast majority of voices are still singing RE’s praises. Our path down hasn’t even yet begun.
I think that trying to time the real estate market usually doesn’t make sense. When prices approach fundamental value, you would buy (for yourself) because it makes sense. Even if prices fall further, you are getting a good return which compensates for that. However, the current situation is very far removed from fundamentals. I often hear the accusation that one who waits is trying to “time the market”, but that’s nonsense.
For me the prices and leverage involved make the proposition risky. I’m not opposed to risk, it’s just too high. I’ve tried to save more but the risk has not dropped because prices have risen. The fact that this continues is discouraging, but if I add “bubble risk” that real estate debt will take down the economy the situation is now alarming. We had bubble risk in 2007. I was in Calgary temporarily and the price of houses doubled in a year. Clearly there was froth. But the correction came and went like nothing. Our policies and recovery simply amplified the froth.
The fact that Canada seems to have learned nothing from the crisis or the experience of the United States is disheartening. We have now repeated the policies of Alan Greenspan identically. I get flyers every week telling me that I can buy a townhouse and not make payments for a year. That beats renting, right? I see all kinds of cash back offers, where you can skip payments, and blah blah blah because the credit is there but people can’t pay. This is not going to end well even in the normal case where the world economy props Canada up. Never mind if China crashes or something and we are on our own.
For an increasingly large percentage of the population, I see spending but I don’t see income. I see debt but I don’t see wealth. You can not have an economy where nobody pays for anything. What we have encouraged is simply insane.