Quote:
Originally Posted by Traum
Using myself and 2 friends as examples, around 10-12 years ago, friend A had the money and the vision to buy himself a property. So his $300k townhouse at the time turned into a $700k asset today. Friend B had a little less money, but nevertheless bought himself a $250k apartment some 6-7 years ago, and now the place is worth close to $400k. Yours truly here didn't have enough money for a down payment until a year or two ago. So if you look at that 10-12 years span, friend A made a $400k profit while friend B still made a healthy $150k gain. And let me tell you, initially, friend A was not $400k richer than I was, nor is friend B $150k wealthier. Essentially, I failed to keep up because of my failure to get involved with the RE market at the time.
Until people start seeing reasons to suggest market downturns, the demand is still gonna be there.
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This is such a ridiculous way of valuing a real estate purchase. Just because your place went up 150k, doesn't mean you made 150k. The money spent on maintenance, interest, taxes, condo fees, etc all play into the equation. As well as the potential premium you have paid over renting a place of the exact same quality. The thing about real estate that makes is such a shit show is people's short sighted view of how they spent their money and the "profit" they invent in their heads to make themselves feel warm and fuzzy. Not saying that your friends came out on top or not, just saying there is WAY more to the big picture than what the average blind investor sees. Also, unless they leave this real estate market, these "profits" don't mean shit, because they still need to go buy a place that blew up as much as their places. It stuns me how few people see the big picture in real estate, because I wouldn't consider myself a very mathematically smart person, but I am rational. Real estate has become little more value to the average person than adding a theoretical value to your "net worth" to make them feel good about themselves. Perhaps I'm being overly cynical because I don't understand why I bothered to get into the real estate market. That 100k down payment could have made me a lot more money somewhere other than a condo. I'm not against the idea of buying a place, but I understand I am paying a premium to fulfil the "dream of your own home".