“There are many young people in Van who have saved up large sums of cash for down payments [for properties] they still have yet to afford. When properly values drop to a certain value, they will fill the void. I’m not saying that we will be able to buy a $600K house (I can’t), but most of us now are beginning to seriously look into starter homes (1 bedroom/den condos). I spent $400K on a 1 bed/den (I’m in my 20′s still), but as soon as prices dip, I will upgrade immediately. And almost all my peers have the same plan.”
- Vinny17, Globe & Mail, 3 Aug 2011, 3:12pm
Doesn’t add up.
Can’t afford a 600K home; buys a $400K 1bed/den. Then, when prices drop, expects to be in a position to “upgrade immediately”?
Surely, with price drop, all equity in $400K property will disappear (if not, why can’t he afford a 600K home now?).
In a crash, almost all move-up-wannabes are frozen in their current properties, with substantially reduced equity in those properties.
Many believe that prices can’t drop substantially because pent-up demand will step in at small pullbacks, such as 10%-off.
We disagree, we believe that demand will drop with falling prices.