“My friend wanted to trade up from a $400k condo to a $900k house. I helped to convince her that the market was likely to go down. Disaster averted.
Next thing you know, she’s borrowed $45k from her father and appropriated $5k from her unwilling but helpless husband to buy a presale for a $450k condo that “should be available for move-in by August.” (It’s a bit bigger and nicer, but it’s North Vancouver instead of Downtown.)
They’re trying to sell their downtown condo into a weakening market. The “price” has declined 5% in the last two months, but now they’ve doubled their exposure. A few months ago it would have taken more than a 50% decline to wipe out their equity (their entire net worth, of course) but today it would take just a little more than a 20% drop.
Remember, she agreed that prices were likely to decline. Her justifications for going ahead with the condo aren’t in any way rational, and amount simply to the “because I want it” logic of a four year old. She dismiss any opinions that didn’t support the outcome she desired, even going so far as to threaten her marriage.”
- Rick at VREAA 3 May 2012 9:07am
Just regular Vancouverites doing regular things with real estate.
If you had to try to do the same thing with any other asset class, you’d be laughed out of your bank.
How much they’ve all been gambling will only be widely apparent once the market reverses.