Quote:
Originally Posted by Hakkaboy
Let's just agree to disagree because I think that the supply constraint is over-blowned, and that the massive capital appreciation seen previously is driving the demand and FOMO behaviour, which then the current perceived supply cannot meet. Obviously covid has made listings more scarce than before, but let's just talk about just slightly before the listings crunch and into the post-covid world.
Here's a scenario:
If a crappy shack in east van listed for $1.7M, would you buy it? Your answer will probably be yes or maybe if you can actually afford it. Now, let's think about the reason why you would buy it. Is it because you think that if you do not act now, that this same shack will cost you $2M instead? Or do you really think that normal people should be paying $6,000 mortgages for a house that needs a lot of work?
Now, if you know that at most, this same shack will probably still cost $1.75M to $1.8M in 5 years time, will you that change your answer?
I'm willing to bet that answer is yes, unless you are really rich and just looking for a teardown to build your dream house. But let's just ignore those for now and focus on regular joes who will be paying those $6K payments...for a shack.
I mentioned this before, I truly believe that the reason why people are willing to spend these absurd amount of money, or even willing to "slum" it out now by buying a detached now and renting our 3/4 of their place in order to meet the mortgage payments are only doing so because the capital appreciation factor aka FOMO. Take that away, and there will not be as many people trying to rush out and get what they can while they still can type of mentality.
Again, your understanding of economics is sound, but let's just disagree on the fundamentals that I believe this is an artificial demand issue rather than purely a supply issue.
Now, if I really want to make prices go down fast, I would make it a law to cap the maximum total mortgage amount to be at 5 x income. This would suck for current homeowners who bought in the last 5 years, but at least more people will have better disposable income and can spend elsewhere in the economy lol
|
This is such a looney tunes take on the current state of the real estate market I don't where to start beside suggesting you read all the material I've posted - research, news, statistics - that show you're wildly misinformed about the current state of the market.
While there is some supply side "over enthusiasm" with more foreign money and more people leveraging their newfound equity the root problem is supply by many multiples. Any other conclusion ranks next to denying climate change and the science of vaccination.
Vancouver is not the only North American market seeing crazy housing prices but what it does hold in common with markets that are seeing crazy housing prices are that they also has the same supply issues - they have the same crazy residents who do whatever they can to keep housing from being built and they have the same pathetic politicians who can't make bold decisions.