“Vancouver is cheap in relation to China. It is not cheap in relation to local incomes apparently but don’t be fooled there is a lot of money in Vancouver. My aunt is selling her westside house and that will free up 3 million dollars of which my two cousins will each get a million to spend on the east side of the city.”
- reality check at VREAA 13 Mar 2012 10:13pm
Note how the “lot of money in Vancouver” is completely dependent on the West-side house being imagined to be worth “3 million dollars” and how the east side sales (and imaginary values) will depend on the westside sale.
Also note how those three transactions would result in an injection of millions of previously non-existent dollars into the local economy. They won’t be “freed up”, they’ll be created out of thin air and the belief, the ‘faith’ if you will, that the westside house is ‘worth’ $3Million.
Our city is completely and utterly dependent on the proceeds of the RE fantasy.
All of this will turn on a dime once significant price drops declare themselves.
Deleveraging is the reverse process, where fantasy becomes nightmare.
As we’ve said before, the RE crash will be the defining social and economic event of the next decade.