Originally Posted by 4444
i can guarantee that this will not last forever, and at some point prices will have to come back down to some level of reasonableness for those earning decent salaries in the city - with the fundamental reason being business in vancouver, or there lack of.
we look at high prices in san fran or new york, but relatively, they're not that crazy (SF is kinda, but for fundamental reasons) as they have high incomes, many job opportunities, etc.
vancouver has two problems, one is the ease of foreigners just coming in, dropping coin on real estate (which from the government's POV is not a productive asset), and then getting cheap access to free health care and cheap schooling for their families, the other is stupid people that fall into the idea that if you don't buy now, you will be priced out forever. This is crap as at some stage, BC's politicians will be forced to do something about this issue.
Governments represent the best interest of their constituents. At some point, this will give. You hear all this whining from people that can't afford to buy a house, at some point, those whiny voices will get too loud and will force action.
Either that, or banking regulations will force increased discipline (people say its different to the US case, it's not that different, the banks will loan to anything these days).
this is a mid term phenomenon, one that has surprised me as to its length (surprised me as to people's stupidity, as those buying with high leverage will get fucked the hardest - people can say 'yeah buy my house has gone up $500K in 2 years' - that's great, but can only be enjoyed if the real estate is sold and then you rent, significantly downsize, move away. For those that have bought and sold in 12 months, that's speculation - high risk can give high reward, but can also provide high losses).
People just need to think - only buy things you can afford, and if you can't buy a home, it's not the end of the world, we live to enjoy life, you don't need an owned house to enjoy life. I think the safe level for total housing cost is 30% of your take home pay. The average person that has bought in Vancouver in the last 5 years is probably way above that level, which means they expose themselves to WAY too much risk. Again, you can't talk about price increases unless you are liquidating.
Finally, at some point central banks will have to get off QE, that's going to fuck up the current capital position of the world (most of that capital has gone in global real estate, if you haven't noticed - again, not a permanent factor, so the effect will reverse. Those that win will be the rich, those that lose, will be the highly levered people thinking 'a house is always a good investment' or 'it's better to buy a place for the long term' - facts prove otherwise).
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