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.