“I live in Vancouver and own a condo in the heart of downtown. Bought it for $515K and only seen a slight increase in value in two years. Quite depressing… If what you say is true about a 30% reduction, I would indeed lose almost all the equity I have which is made up of my down payment and two years of mortgage payments.
Is it a stupid idea to buy another property, maybe sub-500 sq ft for roughly $280K to rent out, with a 20% down payment and a locked in 3.29% 5-year fixed rate? With rate and market adjustments to come, if I am not borrowing 95% (though still 80% debt), am I in the same risk category? Or should I just wait until 2015 to snatch something up when prices are down?”
– Sharon, as quoted by Garth Turner at greaterfool.ca 1 May 2012
Yes, it most likely is a “stupid idea” to buy another condo.
But that’s what a bubble does, turns the citizenry into lunatics.
No profits on first condo, let’s increase our exposure!
Even the experience of the condo not rising in market price can’t erase the monomania acquired when all you hear is talk of ever rising prices.
PS (‘pre-empt scriptum’):
1. To pre-empt the inevitable one or two commenters who will say that Garth makes these anecdotes up, we say we disagree, and ask, why would he possibly do that?
2. To pre-empt those who say “yes-condos-will-go-down-but-detached-is-bullet-proof”, we politely disagree. All sectors are interdependent and will go down together; different precise paths, perhaps, but same destination in the trough.