Quote:
Originally Posted by twdm
It doesn't work like that. The better hypothetical situation is. You bought a $3mil house. It dropped 15% in one year. Do you sell? No. OK it drops another 10% next year. Do you sell? No. It drops another 10% in 3 months. Do you sell? How many people could stomach this situation where they lost a few hundred thousand and wiped out all of their down payment and equity.
In addition, no one wants to buy in a down market. Would you buy a house that has been losing 15% year on year? That's what usually happens just like in a stock market crash. The people who can handle the swings ride it out, the majority gets slaughtered.
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I would honestly buy in a down market (if Vancouver ever reaches that point and if I could afford it) because I believe IF the market ever crashed here that it will go up again in some point. I also believe Vancouver will always be a renters market so I'm sure I can get rental income no problem.
Another point for no one wanting to buy in a down market, when would you expect people who believe the prices are crazy right now get in? Using your situation, if housing dropped 15% next year, I'm sure lots and lots of people would try to get in but we'll hold out. Ok another year and it drops another 10%. Still no one wants in?? When will the people complaining about house prices ever get in??