Real Estate

Vancouver housing bubble?

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Deal Fanatic
May 1, 2012
8359 posts
5711 upvotes
Markham
cstca wrote:
Mar 24th, 2014 3:49 pm
I admire your tenacity to prove you are always right. You are at the point where regardless what other people are saying or showing, you will say the RE market is going only up. From my limited knowledge of market, in general, I don't know any asset going just up for a very long time (>30 years). You have to admit that RE, like any other asset, will go up and down during our lifetime. The fact that someone was able to buy when prices were low is just pure luck. In life, some people are luckier than others...
Now take me easy, I don't want to offend you.

I don't think I said any of that sort. I am merely stating that unless the poster is accurately predicting a peak, the statement that waiting a few years is not only unhelpful, it's quite financially damaging.

I don't think RE will go up indefinitely. I do think that going up 30% and then regressing 15%, is still a net loss financially.

The take home message is that you should buy when you can buy. If you try to time it, you will most likely lose instead of gain... and lose a lot.
Jr. Member
Oct 17, 2007
126 posts
25 upvotes
sunshinemoonlight13 wrote:
Mar 24th, 2014 3:56 pm
You are missing the bigger theme. The take home message is buy when you need it. Don't try to time the market.

If you can afford to buy, need to buy, but choose not to buy to time markets, you might lose. Case in point, RE kept on rising.

Even if RE falls, how deep will the correction be? Its entirely possible any dips will be shallow, and its very possible the rock bottom will still be at a price that is higher than if you had just purchased RE when you needed it.

Nobody can time markets. So don't bother.
"Buy when you need it" is very subjective. I need to buy a lot of things right now but I'll wait for better times (I'll have to win lotto first ;) ). Top of the list is a Ferrari :D
Deal Addict
May 17, 2013
1775 posts
279 upvotes
cstca wrote:
Mar 24th, 2014 4:36 pm
"Buy when you need it" is very subjective. I need to buy a lot of things right now but I'll wait for better times (I'll have to win lotto first ;) ). Top of the list is a Ferrari :D
Ferrari is a need?

Ok, waste of time here guys. Nothing to see here. Just another sour grapes.
Deal Addict
User avatar
Aug 23, 2007
1378 posts
190 upvotes
Vancouver
Here's a simpler question that is related to the last few posts:

I am going to purchase a property, for principal residence, investment, or other. When should I buy?

I doubt anyone can answer that with complete confidence. If we go back in time and examine the market, of course we can adjust our answer accordingly. But it should be apparent that we can't make the inference of what prices are going to be tomorrow, next week, next month, or next year.

If you can, hats off to you and your crystal ball.
Banned
User avatar
Feb 15, 2008
26318 posts
3198 upvotes
Calgary
bigsky2 wrote:
Mar 24th, 2014 4:53 pm
Here's a simpler question that is related to the last few posts:
I am going to purchase a property, for principal residence, investment, or other. When should I buy?
When nobody else wants to buy, and prices are significantly below long-term average multiples of price to income, price to rent, etc. Probably co-occurring with a bubble in some other asset class.

Can't give you an exact time or date, of course, but you will have an excellent buying opportunity at some point in the not-so-distant future.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
Jul 21, 2011
1724 posts
221 upvotes
RMB
sunshinemoonlight13 wrote:
Mar 24th, 2014 4:43 pm
Ferrari is a need?

Ok, waste of time here guys. Nothing to see here. Just another sour grapes.
He just doesn't have the cash.
Deal Addict
May 17, 2013
1775 posts
279 upvotes
zilber wrote:
Mar 24th, 2014 5:04 pm
He just doesn't have the cash.
Just like all the sour grapes: "RE is a bubble because I can't afford it"
Deal Addict
May 17, 2013
1775 posts
279 upvotes
bigsky2 wrote:
Mar 24th, 2014 4:53 pm
Here's a simpler question that is related to the last few posts:

I am going to purchase a property, for principal residence, investment, or other. When should I buy?

I doubt anyone can answer that with complete confidence. If we go back in time and examine the market, of course we can adjust our answer accordingly. But it should be apparent that we can't make the inference of what prices are going to be tomorrow, next week, next month, or next year.

If you can, hats off to you and your crystal ball.
Exactly. People with families who want their son/daughter to grow up and integrate into a community (to have a sense of home) won't even be questioning the merits of home ownership when they can afford it.

These trolls yapping on and on about bubbles and investment properties are just sour grapes.
Deal Addict
User avatar
Aug 23, 2007
1378 posts
190 upvotes
Vancouver
Mark77 wrote:
Mar 24th, 2014 5:03 pm
When nobody else wants to buy, and prices are significantly below long-term average multiples of price to income, price to rent, etc. Probably co-occurring with a bubble in some other asset class.

Can't give you an exact time or date, of course, but you will have an excellent buying opportunity at some point in the not-so-distant future.
And this is the issue that many buyers/potential buyers are experiencing.

Your statement in bold is proof that no one can time the market. If someone is prepared to buy, no one can tell them when they should buy.
Only the buyer can decide, and in its purest form can be stated as "buy when you need".

Yes, we can examine the past RE market performance to determine when "nobody else wants to buy, and prices are significantly below long-term average multiples of price to income, price to rent, etc." but this is moot when someone is looking to buy next month, next quarter, next year.

We only have a clear sense of what has transpired in the market after the fact. Trends and predictions are just that, nothing more.
Banned
User avatar
Feb 15, 2008
26318 posts
3198 upvotes
Calgary
bigsky2 wrote:
Mar 24th, 2014 5:13 pm
And this is the issue that many buyers/potential buyers are experiencing.
Of course, as many lack the will-power to stay away from the bubble valuations. They get caught up on sell-side dogma such as "buy now or be priced out forever", "raising a newborn in a rented apartment is child abuse", or "renting is just paying your landlord's mortgage off or throwing away money". That's what makes bubbles so pervasive. You look like a total looser nay-saying them until they pop, and then you become a hero (or at least much wealthier if you positioned yourself accordingly!).
Only the buyer can decide, and in its purest form can be stated as "buy when you need".
No, that's the "close your eyes and just buy, price be damned" philosophy, which is quite dangerous to one's financial health/wealth especially on such a large purchase as a house.

The difference between buying at today's prices, and buying even at long-term historic averages in Vancouver is literally many hundreds of thousands of dollars for most. That's a college fund for the kids. That's yearly vacations. That's so much consumption that will be gone foregone over the time to pay top dollar in a bubble for that 'instant gratification'.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Sr. Member
Jan 30, 2006
853 posts
286 upvotes
Anikiri wrote:
Mar 24th, 2014 3:23 pm
So those who waited in 2011 to buy in 2014 would have saved > $150k and bought today at better prices?

How many people here thought buying in 2014 instead of 2011 is a great idea, in hindsight of course. How many (if you wanted to buy) would jump at the chance to buy in 2011 (provided you can travel back in time)... if given the opportunity?

That statement only works if you intend on predicting a peak, a peak that is going to happen very soon. Otherwise, it's going to cost you lots of money.
staying in rent will not cost a lot of money comparing to owning

even better it will save a lot of money
given that majority of homeowners never take profits on their so called house investment there is just no point to argue - everyone chooses what he wants and noone wins except for realtors
Deal Addict
User avatar
Aug 23, 2007
1378 posts
190 upvotes
Vancouver
sunshinemoonlight13 wrote:
Mar 24th, 2014 5:07 pm
Exactly. People with families who want their son/daughter to grow up and integrate into a community (to have a sense of home) won't even be questioning the merits of home ownership when they can afford it.

These trolls yapping on and on about bubbles and investment properties are just sour grapes.
RE bear/bull/crash/nocrash/troll discussion aside, this question of when one should buy has no real applicable answer.

Even Mark77 reply has no application because you only know how the market is behaving or reacting after the fact. How is that useful to a buyer who is looking to purchase in the future - not the past?

Just because anti-crashers don't believe in a crash of XX percentage or more, it does not necessarily follow that they believe RE will appreciate indefinitely. Conversely, crashers who believe in a crash of XX percentage or more cannot accurately predict when it will happen or transpire or explain why prices rise.

Of course the answer "buy when you need" is subjective, - it's very subjective to the buyer.
Banned
User avatar
Feb 15, 2008
26318 posts
3198 upvotes
Calgary
bigsky2 wrote:
Mar 24th, 2014 5:26 pm
Even Mark77 reply has no application because you only know how the market is behaving or reacting after the fact. How is that useful to a buyer who is looking to purchase in the future - not the past?
Well metrics such as cashflow, earnings, etc., are reasonable predictive tools, when compared to historic data, as to whether an asset is over or underpriced.

Certainly housing being priced at 6-7X income is a much greater predictor of poor performance, than housing being priced at 1-2X income. This should be pretty obvious.

I agree, most won't be able to time the top, nor will they be able to time the bottom. But if one buys even at a long-term average (which is closer to 3X income), compared to the contemporary valuations, the statistical probability of better long-term returns from the asset will be much greater.

Now, if one is wealthy enough that housing can be bought without credit, and one doesn't mind poor performance, then fine, go out and buy that house. But for most mere mortals, for whom housing is much of their net worth and when large amounts of credit is involved, asset pricing is very important.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
May 17, 2013
1775 posts
279 upvotes
bigsky2 wrote:
Mar 24th, 2014 5:26 pm
RE bear/bull/crash/nocrash/troll discussion aside, this question of when one should buy has no real applicable answer.

Even Mark77 reply has no application because you only know how the market is behaving or reacting after the fact. How is that useful to a buyer who is looking to purchase in the future - not the past?

Just because anti-crashers don't believe in a crash of XX percentage or more, it does not necessarily follow that they believe RE will appreciate indefinitely. Conversely, crashers who believe in a crash of XX percentage or more cannot accurately predict when it will happen or transpire or explain why prices rise.

Of course the answer "buy when you need" is subjective, - it's very subjective to the buyer.
Yeah exactly. But "buy when you need" is still right. Because the 'need' part is subjective depending on the person. And if you are in a life situation where you think/feel owning a home is something thats right or good (maybe you have a family), then you've got the 'need' part down already. Those trolls arguing whether somebody ever needs to own a home are as useful/useless as someone arguing the merits of marriage. Its like, please, if ya don't wanna get married then don't, we don't need to hear it.
Deal Addict
User avatar
Aug 23, 2007
1378 posts
190 upvotes
Vancouver
Mark77 wrote:
Mar 24th, 2014 5:23 pm
Of course, as many lack the will-power to stay away from the bubble valuations. They get caught up on sell-side dogma such as "buy now or be priced out forever", "raising a newborn in a rented apartment is child abuse", or "renting is just paying your landlord's mortgage off or throwing away money". That's what makes bubbles so pervasive. You look like a total looser nay-saying them until they pop, and then you become a hero (or at least much wealthier if you positioned yourself accordingly!).
Bubbles or no bubbles, we have to work within the framework and market of today and now.
Mark77 wrote:
Mar 24th, 2014 5:23 pm
No, that's the "close your eyes and just buy, price be damned" philosophy, which is quite dangerous to one's financial health/wealth especially on such a large purchase as a house.
I disagree. It's not close your eyes and just buy, price be damned.
It's buy when you need, and if you have the financial means - for me. Buy when you need is very subjective, subjective to the buyer.
Mark77 wrote:
Mar 24th, 2014 5:23 pm
The difference between buying at today's prices, and buying even at long-term historic averages in Vancouver is literally many hundreds of thousands of dollars for most. That's a college fund for the kids. That's yearly vacations. That's so much consumption that will be gone foregone over the time to pay top dollar in a bubble for that 'instant gratification'.
Welcome to Vancouver.

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