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Originally Posted by sonick
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Canadian bubble goes mainstream by Leith van Onselen
Whispers from the Edge of the Rainforest: Macleans Magazine makes the housing bubble - and looming crash - front and centre
Man, they've been saying there's going to be a crash for the longest time. There seems to be a group (usually the media, and realtors, developers, mortgage brokers etc) that always pump up real estate, saying there wont be a crash or correction. They have a vested interrest in Real estate. Look at 24, metro , theprovince, etc. most of the ads in those newspapers are for Real estate or condo developments.
There's also another group who want RE to tank for their own person reasons, either they want houses to drop so they can buy a home themselves, or they want to punish greedy speculators, or they want to create headlines or spark fear by spreading all this CRASH and BUBBLE talk.
Now, my personal opinion is still bearish. But I truly don't think the market is going to "crash" or "pop" - say 40-60% like the states and some other countries. I think the people that are waiting for the market to crash will just be disappointed, or might end up waiting a very very long time.
While I still think buying Real estate at TODAY's prices is a very bad idea, and that historically people think a "soft landing" never happens. I just think that there are factors that will always keep prices in vancouver and area relatively high for the foreseeable future.
--> low interest rates are hear to stay, we are at record low interest rates, no one expects interest rates to go up to the 8-10% historical averages anytime soon.
--> too many house horny people out here in Vancouver. I feel there's a culture in vancouver where everyone wants to own their home for some reason, what's wrong with renting? this housing thirst is not gonna stop anytime soon. it's like if it's a crime to rent. it's become too much of a social status or something. until this mindset changes, people will always buy, so if the market goes down 15%, I can see many people trying to buy again, which will prop it back up. which is why I think the market will only correct instead of crash.
--> foreign money, anyone that works directly in the industry knows about it, there's soo much from china. if you work for developers, land titles, property lawyers, real estate agents, you see it directly, I see it directly, you cant deny it. developers cater and bend over backwards for the chinese now: no number 4s in unit numbers, no 4th, 14th,24th,34th floors, chinese brochures.
now how much of an impact they have on the market is still debatable, but it's no question they are a substantial part of the real estate market in vancouver.
--> expensive housing doesn't matter to boomers or people that bought 10-15 years + ago. if I own a house that's worth $1 million, and I want to sell and buy a nicer home in a nicer location, where the cost is $1.3 million, I only care about the incremental cost, which is $300K, 300K is not a lot of money relatively. This is why you see soo many people selling their 1 million dollar house and upgrading to a 1.2 or 1.3 million dollar house. the only concerns are new or younger buyers who cant afford to save up for the down payment to buy the $1 million dollar house.
realistically I can only see 3 things happening that will cause a crash :
1. major catastrophic event like an earthquake,
2. a deep recession or
3. something happening with interest rates that it to goes up dramatically.
anyways, I feel like im going on longer than needed so I'll stop here.