“Some people claim that they don’t care if prices go down since they are buying a ‘home’ and not an investment, but I doubt they know what the reality feels like.”

“We had lived here in Squamish for about 14 years when we bought a townhouse at Highland Glen. Almost as soon as we bought, prices went down to the point where we had lost the deposit that we had paid and would have had to pay out of pocket for any realty fees if we had sold. I hated that feeling of having overpaid. Even though we had just bought and had no intention of selling it used to eat me up that we were for all intents and purposes underwater. Some people claim that they don’t care if prices go down since they are buying a “home” and not an investment, but I doubt they know what the reality feels like. Personally I’m glad that we had that experience, it gave me a short, sharp lesson in the fact that real estate can go down as well as up.
Five years later we saw that things were on the up swing and decided to buy a house. By this stage prices had recovered to the point that we would be able to sell for the price that we had bought five years earlier. By some stroke of brilliance/luck we decided to keep the townhouse and rent it out when we bought the house. That year house prices went up 28%, a very nice year to own two properties. A year later we sold the townhouse and reinvested in another property outside of Squamish that had a better cash flow. Renting the TH for 1 year resulted in a capital gain of $100k- Lesson number two: House prices can go up as well as down.
Over the next seven years the value of our house increased rapidly, more than doubling. Our investment property also doubled and I saw that we had likely maximised the short term capital and decided to sell- Lesson three – paper gains are just that until you sell. This set us up to being open to sell our principle residence when we saw that the market was declining. If we had got super lucky we could have made another 100k by selling a bit earlier.
Many of our friends thought we were mad selling the house, I think they are mad not crystallizing their once in a lifetime capital gains. What can’t continue won’t continue. Anyway we are happy renting for now and will continue until it makes sense to buy, which I don’t see happening any time soon.”
– <a href="http://vancouvercondo.info/2012/03/friday-free-for-all-195.html#comments”>Bailing in BC at VCI 4 Mar 2012 at 1:38am
[Part of Bailing’s story has previously been told on this site. -ed.]