Are we having fun yet?
If you’re ‘in the game’ you know that the real estate market in Vancouver has been a frothy pond of fun for years. If you don’t count transaction and renovation costs it’s easy to get rich flipping condos.
Or if you want to get more meta just resell presales contracts.
That’s right, we have people here who will buy the right to buy a building that doesn’t exist yet!
The funny thing about easy money is that it seems so unreal. This city is filled with people who could easily cash out even at current post peak prices and have a big chunk of real money, but will the majority do that?
Nope. The majority will stay put, renovate, buy back into the same market or turn their home equity into more debt via a HELOC.
In fact the majority couldn’t all cash out even if they wanted, we simply don’t have the buyers to enable that. Even when we had bidding wars we didn’t have enough buyers for a majority to cash out and now that sales have plummeted we really don’t have enough buyers.
A few lucky sellers will cash out and make money off this bubble. Likely because life changes caused them to move on. The majority will keep on paying their mortgages or get foreclosed on. Recent buyers will be paying more to keep their homes and may start to feel a bit trapped.
You saw this here just a couple years ago when buyers were complaining that developers were selling condos in their building for less than they paid and developers were suing presales buyers for money to cover the difference between their deposit and the lower resales value.
But you know what? They’ll be fine, they payed the price they felt their home was worth to them. A market decline doesn’t hurt someone that is happy with the price they payed and can keep paying their bills.
And if rates go up or job losses occur? Well someone without a financial buffer and emergency savings to deal with such a scenario really wasn’t ready to buy a house in the first place.