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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Actually...most people will hold until they can no longer afford it...human psychology.
and like going to a casino, you never know when prices will raise or drop the next day.
remember back in 2008-2009 after the financial crisis, the housing price in Vancouver only dipped slightly. Many people including a friend of mine were standing on the side line waiting for price to drop further (it only went down like 5-10%)
I was expecting a much steeper decline like in the US. (maybe not 30-40% like in the US, but 15%-20%)...well that didn't happen, and who would've thought prices would increase so drastically over the next few years...