Quote:
Originally Posted by azndude69
Your analogy of the stock market may be somewhat correct, but here's the thing, 20 years is a long time. What if you were to purchase the Nikkei back in 2000 or even about during japan's asset bubble during the late 80's early 90's? Your portfolio would have had negative returns for the last 10 years. If you didn't need that money then yes that's great, but for regular folks that's time value of money.
Same thing with people in the USA that bought their homes RIGHT before the last recession, how long does it take for the real estate prices to go back up to the prices that they purchased at? Yes it may go up back to that level again in 20-30 years, but that may just be just due to inflation. The guy in the US is losing lots of money holding that property due to opportunity costs (not to mention holding costs such as mortgages, property taxes, maintenance etc).
Your analogy is more like inflation, yes overtime, everything in general should go up. But what if perhaps there are signs that are pointing to a chance of a market correction in a certain market? should you jump in? or just buy the underlying asset (be it a business, corporation, real estate, stocks, base metals, commodities etc) cause you know over time all things in GENERAL will keep going up.
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Yes that was my intention, however, I did not correlate it directly to Vancouver's housing "bubble", just providing my opinion on everyone's growing optimism of a bubble about to pop. Supply and demand are principals of any tangible good. To see a crash, supply would have to logically exceed demand, however, that is in a perfect market where extrinsic variables don't come into play. Using the U.S RE market as an example, right now there is growing speculation of housing recovery and a supposedly exhausted supply. 1.6 million properties are being listed on the market right now, however, over 9 million properties are not owned, and there are over 15+ million vacant properties. How is this possible with nearly 9%+ homes vacant? Because the banks know if they release all these properties, american real estate will plunge and the economy will take a heavy toll, thus cornering the market. Likewise, Vancouver has been a juicy place for real estate investors in the past decade and I'm not talking only about the people that own one or two properties, I'm talking big wig investors who control a portion of the market.