Yes, I know I missed the top with that disposition but trying to catch the market top exposes one to the dramatically increasing risk of being caught long on RE when the bubble finally and dramatically bursts.
Or do you subscribe to the quaint notion that because this this bubble has now been inflated so much further than anybody guessed, that is proof that it can never burst?
Ladies and gentlemen place your bets, the clock is ticking.
Prices might go down but every single bear on these boards was crushed by the machine that has become Vancouver real estate. You can keep calling for your psuedo-bubble to pop, Geyser, but, face it, the bulls won this race. Hands down. Absolutely no debate about it.
Until a few years ago I was very bullish on Vancouver, but there comes a point when the bubble gets so big the eventual bursting appears to be getting much closer. Most rational observers accept the fact that the RE market moves in cycles, history has proven that point many times and in many places, including Vancouver. Trying to guess exactly when it will burst is a mug's game which was Taipan's gig, not mine.
I will happily admit that it has gone on much longer than I and many others expected, but if you study the history of bubbles, that's often the case. The fact that it has now inflated to extraordinary proportions does not mean it can't ever burst, it is far more likely to mean that the inevitable "pop" is getting closer and closer. Does that mean it will happen within the next 6 months or much later? I don't know, and I'm not stupid enough to try and put an exact date on it.
It amazes me that so few people seem to be aware of this type of bubble happening in Vancouver before. I've repeatedly mentioned the 1982 collapse when prices dropped between 40% and 50%, only to be greeted by claims that "it's different this time". Well okay, what about the 1911 bubble, when our local property prices dropped by as much as 90%? It was different that time too!
Vancouver 1911 bubble
Average SFH price was $887,000
By 1893, a lot in the same area sold for $1,100, and, by 1900, an adjoining lot went for roughly $4,250. Incredibly, by 1912, – at a time when wages were roughly 50 cents an hour, and a tailored suit cost less than $40 – a lot in the very same area was worth $725,000.
However, the prewar boom was not to last. Between 1913 and 1915, following the U.S. stock market collapse, and resultant worldwide depression, Vancouver’s real estate bubble burst for the first time; suddenly, commercial rents declined by 50%, and ordinary working people, no longer able to meet their obligations, defaulted on their loans. The city of South Vancouver went into receivership. The market was decimated. In fact, there is one recorded instance of a corner lot on Cambie and Broadway being listed for $90,000, and eventually selling for less than $8,000.
- See more at: http://thedependent.ca/featured/land-de
Of course, that can't happen today, personal and government debt levels are so low, interest rates can never go back to historic norms, the population is happy with our current affordable price levels and the global economy and the Canadian economy are all in such great shape. Move along folks, nothing to worry about here.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.