Quote:
Originally Posted by asian_XL
you are an idiot...go take some economic courses and read more world news on RE price.
People have been saying the marketing will drop for the past 10 years, like 604STIG said, sadly the constantly low interest rate and foreign demand have driven more cash into the RE market. The current market has accumlated a lot of buying power over the past few years, let's say a 600K apartment drops to 500K, it will fill up the gap much quicker. You can say it will drop 80% all you want if they ban the rich Chinese coming into Canada, the reality is never unless the supply goes up substantially.
In theory, yes, but how likely your boss will give you a 200% raise? by the time you receive 200% raise, then all the goods you can buy out there will raise more than 200%. How about $12 for a mcdonald meal? and everyone will be driving S class and R8.  |
The irony, I have an economics degree, and plenty more business education and experience
If price fall approx 20% by your example, first off, 20% (well, just shy of that, 100/600), that's one fucking big fall, so right there, you have just gone against ur own argument
Second, if prices fall 20%, chances are, emotion will override (real estate is a very emotion based buy for the average person), and accordingly prices will likely fall further - they would then overshoot their intrinsic value, just as they have overshot their true value in this market
People always talk about foreign money (Chinese money), well, if the majority of purchasers were cash foreign money, would the changes to the mortgage rule have a very big effect - logically, no - yet, sales have plummeted since the rules have come in. Prices are starting to creep down, moves in real estate are usually slow and don't turn around quickly (even longer on the way up - just look at US, 2000 to 2008, or now Canada, 2002- 2012
We lag the US a little too eerily by 4 yrs, which makes the impending decrease in values even easier to see
Also, look at fundamentals, housing carrying costs compared to incomes is astronomical in the Vancouver market - this cannot sustain, assets ALWAYS revert to mean
As for your interest rate analysis, it's so out of context, the overnight rte went from over 4% in 2006 to near zero in the aftermath of the financial crisis ( to stop the economy from crumbling, economically sound policy), and now up to just over 1%, still just shy of 1/4 of 2006 rates - they will go up, starting in 2013, yet unlike the US economy which is getting back on its feet, the Canadian economy is looking decidedly weak, manufacturing is dead (strong dollar), and whilst commodities remain strong, they won't be as strong as they were last year and 2010, and oil/oil sands is no saviour, just too expensive to get it out of the ground to spur on a huge boon for the country (will be fine for Alberta, but its not a god send) - without Iran going apeshit on someone, i can't see sustained $100 plus oil over next 5 years
I'm happy to have people disagree with me, assuming they can back up opinion with fact, or provide facts that discount what I believe, but being called an idiot who needs to take an economics course - I just laugh, because that is exactly what I have and then some (plenty in fact)