Spot The Speculator #25 – “Tonight I found out at dinner that a middle class family bought FOUR pre-sale condos. Their first property “investment”.”

serferboy at VREAA 23 Jan 2011 10:19pm“Tonight I found out at dinner that a middle class family (own their own home, have stable jobs, net worth likely less than $2M) bought FOUR pre-sale condos… These are not property developers, realtors, etc. This is their first property “investment”…more like speculation…on 800K+ of condos..  Just another normal Vancouver family….”

5 responses to “Spot The Speculator #25 – “Tonight I found out at dinner that a middle class family bought FOUR pre-sale condos. Their first property “investment”.”

  1. I have a dinner party on friday. Let’s see what crawls out of the woodwork…

  2. Anecdote like this one are very telling. The sentiment of invincibility is so strong you could cut it with a knife. The fact that this is happening so close to the US border is appalling. In hindsight, the economic illiteracy of these “investors” will be evident. They walk around naked but they still don’t know it.

  3. Anecdotes like these really highlight just how poorly educated the general public is about basic finance. I find that a lot of people are afraid to manage their own portfolio of stocks – because they ‘don’t know a lot about that kind of stuff’. In many ways, that’s a prudent decision, and shows that they know what they don’t know. When it comes to houses, however, suddenly, everyone is an expert, because buying a home is something that the majority of people do at some point or another, and is therefore something that they ‘know about’. The problem arises when people extend this confidence into speculation without understanding the basics of investment.

    This is especially evident when I try to have a conversation about time value of money, or opportunity costs. Many people would just tune out, but there are some people who are genuinely happy to be learning about it.

    I guess what I’m saying is, if the general public had a better knowledge of basic finance principles, would this keep examples like that mentioned in the post from happening?

    • People who don’t understand basic finance are just as dangerous to others as people driving cars without a driver’s license. I think the government needs to mandate a “Financial Drivers license” which must be shown before being able to get a mortgage or any other kind of loan product. If the people who sell investments are licensed why not the people who buy them.

      • Yes, we definitely need more certifications in Canada. I believe this ‘House Buying Certificate’ should need to be renewed thrice yearly whether you use it or not.

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