Real Estate Boom – pity the owner.

I think there is a tendancy among people looking to buy in a booming real estate market to think that people who bought several years ago have it easy. If you are out house-hunting, looking at the way prices have risen dramatically over the last couple of years, you probably have a couple of worries: What if I don’t buy and prices keep going up until I can’t afford to buy anything? Or the flip side: What if I buy and prices drop wiping out my downpayment or interest rates go up and I can’t afford my mortgage?

These are all valid concerns, but what about current owners? Owning real estate in vancouver is not the panacea that some might think, and some of the same concerns affect the comfort and security of people who bought years ago. If you own and prices are high your money is only paper-wealth. Until you sell and actually capture that money it merely means that your property taxes are higher. I suppose it also means that you can take out multiple mortgages based on the paper value of your property, but that’s just more debt, not more money.

So what do you do as an owner after seeing prices rise like they have? If you sell and grab the cash what do you do with it? Buying another home in Vancouver just means you’re buying at current values, which doesn’t add anything to your bottom line. With the high Canadian dollar and market starting to falter in the US it might be a good time to think about investing there, but do you really want to move? Do you rent and wait to see if prices drop or level off?

Either way it’s a gamble. Bubbly real estate markets can be emotional rollercoaster for owners as well as sellers and buyers. What does the future hold? We’ll just have to wait and see.

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the pope
the pope
14 years ago

Does anyone know where to get the Canadian stats on HELOCs, ARMs and (worse) the CHIP mortgages?I havent seen those numbers anywhere, but if you find a source for them let me know. I have a feeling that we're not as deep into the 'exotics' here, but then again the debt/saving ratio is pretty lousy in BC.

bc_cele
bc_cele
14 years ago

Does anyone know where to get the Canadian stats on HELOCs, ARMs and (worse) the CHIP mortgages? The numbers in the US seem to be printed everywhere, but I have trouble finding them here.It would be interesting to see how many people are using them to draw equity out of their homes, esp in the higher markets.BTW notlikely, does your post imply that you've taken one out?

Capnjack
Capnjack
14 years ago

anon-The similarity between vancouver housing and ATM machines is just in their size. Many vancouver condos just feel like you're living inside an ATM machine.

Anonymous
Anonymous
14 years ago

According to Capital Direct, your increased house value is not just paper wealth. Haven't you heard their commercials? "Time to give up the toys…"(…pause…)"I DON'T THINK SO!!!"I wonder how many of Vancouver homeowners are treating their house as an ATM?

notlikely
notlikely
14 years ago

Boo-hoo. What ever shall I do with all this money?give me a break.