Quote:
Originally Posted by Tapioca
It's my humble opinion that the fundamentals have changed: prevailing low interest rates, city in transition, the rise of China, etc.
What is your objective with RE? Speculation, or buy and hold?
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I'd say the definition of "fundamentals" is always on a slow evolution. The prevailing low interest rates is not something I am too concerned about -- as a matter of fact, I find it easier to deal with than the random and immediate adjustments that Greenspan used to pull since there is one less variable. The city is transition bit has also been an on-going theme, but you are definitely correct that the pace of the transition has become a lot faster than it did in the past.
My primary objective with RE is to simply protect my assets / net worth. If I have $2M sitting in the bank right now (obviously I don't), and I can purchase a single detached bungalow today, I want to retain that ability to purchase a similar bungalow 6 months down the road. With the way things are going, that $2M bungalow might be worth $2.5M in 6 months, and $3M+ next year.
My secondary but more pragmatic objective with RE is to actually get myself into a house, and not sink into a negative equity situation should / when the bubble pops. It is probably all but an impossible dream now, but I would like to move back into a house (from my current dinky apartment). My naive and wishful thinking tells me that if I were to leverage myself to the max, and borrow money from parents, family and stuff, it can probably be done. But with RE prices being sky high, the fundamentals completely out of whack, it would be far too big of a risk.
So yes, I am stuck between a rock and a hard place, watching my home ownership dreams runaway while my purchasing power continues to decline.