“As the negative real estate headlines are now appearing daily, it seems that I’ve become the “go to” guy when it comes to discussing real estate with the people around me (friends or at work).
A couple of anecdotes showing that panic among sellers has already started…
#1. I told you about a good friend of mine who bought 2 townhouses, along with his dad who bought 4 of them, in Langley earlier this year. They bought these places because dad’s very good friend advised them to do so (great location (Langley???), great price, great potential for future price increase, and all the usual BS…). It turns out that the “good friend” is also a realtor and “helped” them close the deals (they didn’t even got discount on the realtor fees!!!).
After talking to me a few times, and I guess after countless of sleepless nights (my friend is currently unemployed and has not been able to get a new job in the past couple of month), he has decided to put one of his two townhouses back on the market, hopeful that he can get a good price for it. We’ll see what happens, but if he loses quite a bit of money on it, I wouldn’t be surprised if he and his dad put the other 5 units on the market as well… How many people are there like them in the lower mainland?
#2. A colleague at work (late 20s) bought a townhouse in Ladner a couple of years ago (5%/35y) with his wife. After several discussions with me, he’s decided to put his property for sale (for $10K more than they paid for…) and move to a condo in Richmond, closer to work, bigger, cheaper. I think they’ll lose quite a bit in the process, but all in all, it’s a wise decision to make and they’ll recover fast. What made them change their mind? The fact that so little of their monthly payment went to pay for the principal and so much went to pay for the interest. I could see the disgust on his face when he saw the numbers after I did a simulation for him…
I’m really surprised at people’s ignorance regarding the costs involved when buying a property and how little they know about the market in general when they decide to speculate.
Anyway, I can see the general mood is shifting. I no longer hear around me the classic “market only goes up in Vancouver” and that alone is good news!”
Lower prices will beget selling, and lower prices still.