interested
Senior Member
Guys, discussions have been sidetracked, first by recharts and then by others towards the statistics and away from this thread, that is "Bubble".
Not too long ago, 'bears', ably led by one Interested and fully supported by Daveto, were predicting R/E market bursting and going to the level of 2008 and staying put there.
It has not happened as yet and based upon your reading of the 'Tea leaves" -- that is, statistics --, does any one from the 'Bear' camp still believe that the prices will go down to the level of 2008. If so, then, when we expect that to happen?
I think daveto answered this question very eloquently. I 100% agree with his response. The reality is the unprecendented quantitative easing and flooding of the world with cheap capital has grossly distorted everything including real estate. It is a huge intergenerational wealth transfer from savers to borrowers. If interest rates do finally go up, the shift will go back in favour of the savers. Those borrowers who venture in now into investment real estate may well require more capital and if there is a jolt to the system and sudden spike in interest rates....hold onto your seats because the ride will get very bumpy for those leveraged.
In response to "blahblahblah and chwong" I would ask you to consider that a lot of people in 1990-1994 could not hold on and suffered severe setbacks. While it is true that perhaps your 1989 peak purchase is up 300%, this is not the average for most. Also, how much improvements, capital costs have been spent over 30 years. I am not disputing the premise but just suggesting a fair comparison would have to look at these factors. Also, to daveto's point: TSX in 1989 was 3378. Today 11968. (350% higher). Invested in bonds over 30 years, probably close to the same increase. Of course I appreciate you would have to lower by the amount paid in rent.
My view is that given that the biggest single factor resulting in the price of houses increasing over the past 30 years has been the constant decline in bond rates and therefore mortgages, increasing affordability. I fail to understand why people do not feel that rising rates and hence mortgages, decreasing affordability will not result in price decreases. I do however agree that as a person who invests in some real estate (to a small degree) that it is the rent and the source of revenue which I like.
I personally view real estate revenue as a source as I view dividends, bond interest, and yes even GIC's and cash. I am a believer that I am not smart enough to know what will happen.....learned by having made lots of mistakes over the years. So I spread my eggs and hope that at least one area of my investments will sustain as others fail.
Finally, thank you Ka1 for pointing out yet again my wrong prediction on real estate but I could not have fathomed the massive QE response. I would ask you another question...where do you think real estate would be today if the world were not awash in liquidity looking for a place to settle. Just look today at what happened as the markets digested that Bernanke may in the next few months possibly withdraw some of the stimulus....note they are still talking about buying 65 billion USD/month instead of 85 billion and the mass panic. If people have less money to invest (stocks/bonds etc. worth less) do not house prices eventually have to follow?