“I currently rent a condo in Coal Harbour. I’m retired and had a good career and got lucky more than a few times. I can afford to buy a house in Vancouver now, but why would I? I was taught to not throw good money after bad and that I should buy things that are cheap and sell them when they are high. That’s the main reason I was able to retire now at a young age. I have a net worth in the 8 digits which is not relevant here other than the fact that I don’t have to deal with a mortgage when I eventually choose to buy and therefore interest rates take a backseat to the actual price of a home for myself. I understand that most people have to deal with interest rates and mortgages but buying an asset that is overvalued rarely, if ever, makes financial sense. Prices have gotten higher than I could have ever imagined especially when related to incomes. People who have bought recently have extended themselves substantially if they haven’t overextended themselves. Interest rates are increasing and therefore so are costs to service debts. With Canadians (Vancouver residents included – it’s not different here) having record amounts of debt it’s a foregone conclusion that those severely extended and overextended individuals will face serious obstacles in this rising rate future. I believe that house prices have to come back in line with reality. I urge people to have a look at the fundamentals and also look into the past.
What makes people think that housing will continue to rise (even after you account for a ‘correction’) in the next year or two? House prices have taken 7-9 years to recoup values after declining from the peak of the market twice in less than the last 3 decades. What makes people think it’s “different this time” especially given the economic circumstances we are experiencing today with rising interest rates and record amounts of debt? There are only so many people who are willing to commit themselves to the “greater fools theory.”
Personally, I suspect that the overall affordability of houses in Vancouver will be much better in the near future than they are presently.”