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Gridlock · 09-11-2013, 08:22 AM

Let's remember here at a high level what forms the basis of the economy.

People believe.

That's it! Yes, we can take any discussion of macro or micro economic principles into a much larger discussion of what makes that happen, and how and get into years of economic research and so on, but the heart and soul of your economic reality is-do people believe?

Money only has value because we assign it value. As does everything else, right on down the chain from a house to a car to breakfast cereal.

So people are rushing around right now buying everything in sight because they believe that the economy is sound, and with the small break on prices, that they believe they are getting a good value for the property at the rates for which they are borrowing the money to pay for it.

But look around, at this point I don't think anyone really disputes that prices are high in Vancouver. I think the "science is settled" on that one. That leaves the question to be , "do they just stay high?"

They could. People in general, could, in theory continue to buy and trade real estate in the price levels it currently does.

But there are a few problems. First, not only is the rule that real estate always goes up(wrong), but its also it kind of always has to. Sell a property...it costs a lot of money. If your property hasn't increased in value, then you are bringing a check to closing.

Maybe we aren't seeing it as much on detached/semis but right now today, people are getting into that reality on townhomes and condos. Because now we've eliminated the supply constraint. You are in competition with your own developers. That is happening in your own backyard. People stuck making decisions based on being stuck owning a condo, recognizing a loss to leave it.

Is that a strong economic fundamental? I can buy a unit (yay!) but I need to cry at night when I realize that I need to take a loss on selling it and would have been ahead on renting the same unit? Do the math on any condo on MLS. Find the same unit for rent on CL, and actually do the math. I did...I'll rent it thanks.

God, I could go on for this for hours. Ultimately...who the fuck knows. Maybe Vancouver IS different. I don't think so.

09-11-2013, 08:22 AM	#1102
Gridlock Banned By Establishment Join Date: Dec 2003 Location: New West Posts: 3,997 Thanked 2,982 Times in 1,135 Posts Failed 284 Times in 109 Posts	Let's remember here at a high level what forms the basis of the economy. People believe. That's it! Yes, we can take any discussion of macro or micro economic principles into a much larger discussion of what makes that happen, and how and get into years of economic research and so on, but the heart and soul of your economic reality is-do people believe? Money only has value because we assign it value. As does everything else, right on down the chain from a house to a car to breakfast cereal. So people are rushing around right now buying everything in sight because they believe that the economy is sound, and with the small break on prices, that they believe they are getting a good value for the property at the rates for which they are borrowing the money to pay for it. But look around, at this point I don't think anyone really disputes that prices are high in Vancouver. I think the "science is settled" on that one. That leaves the question to be , "do they just stay high?" They could. People in general, could, in theory continue to buy and trade real estate in the price levels it currently does. But there are a few problems. First, not only is the rule that real estate always goes up(wrong), but its also it kind of always has to. Sell a property...it costs a lot of money. If your property hasn't increased in value, then you are bringing a check to closing. Maybe we aren't seeing it as much on detached/semis but right now today, people are getting into that reality on townhomes and condos. Because now we've eliminated the supply constraint. You are in competition with your own developers. That is happening in your own backyard. People stuck making decisions based on being stuck owning a condo, recognizing a loss to leave it. Is that a strong economic fundamental? I can buy a unit (yay!) but I need to cry at night when I realize that I need to take a loss on selling it and would have been ahead on renting the same unit? Do the math on any condo on MLS. Find the same unit for rent on CL, and actually do the math. I did...I'll rent it thanks. God, I could go on for this for hours. Ultimately...who the fuck knows. Maybe Vancouver IS different. I don't think so.