Quote:
Originally Posted by SumAznGuy
For the people who bought with cash and are not living in their properties while paying the strata fees and/or property taxes, I don't think this drop in the CAD will really make them pull out. As long as they are holding on to the property, there is a chance it will go back up.
The minute they fire sale, they will realize their losses.
But of course, all this is merely speculation, and how many of them bought at the height of the market?
Some of them might have bought when the market was 20% lower than the peak, which is still lower than it is now so their potential losses may not be as great as we may think.
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As you said, many bought these based on speculation and future expectation.
Let's say that CAD will continue to drop (which is likely the case since Fed will likely be increasing its benchmark rate later this year) and no real turnaround until 2016 or later, it means that a Chinese owner who paid for his property in USD back in 2011 not only wiped out any gain it achieved for the last few years but also they'd continue to lose value (USD term).
All it takes is few owners who decides to call it quit (stop losses) and send a shockwave throughout the market. What kind of shockwave? A message that the RE is no longer increasing in value (CAD term), and its value, in respect to the owner's original currency is continuing to drop.
How many will have the financial power and psychological stability (the thought of having his assets to continue to drop) to sit out this wave, which could take years to just recover to its original point? That'd be the question.