Quote:
Originally Posted by Hehe
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.
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Yes, but you are talking about value decreasing in relative to another currency. If inflation does not creep up sharply, then purchasing power still remain the same within Canada. I can see your argument to be valid for foreign investors whom are seeing their investment diminish relative to their home currency, but in a broad assumption that those investor would be cash positive enough to ride the waves or hedge against other investment vehicles.