I'm reading all these posts of people saying the market is tanking, or the market is going to the moon.
Its funny because it reminds me of something my uncle told me once. He was a really successful business man who has since retired and who made a lot of his money in grape farming and retail stores in the USA, and of course real estate. (networth was over 15 million and he made approx. 100k a month in positive passive cash flow. I read his finical stamtements because i didn't believe it)
So I asked him that day, how the hell he made so much money. His response shocked me. It wasn't one real estate play, stock play or even what I was expecting hard work. He told me that he surrounded himself with the smartest people that worked for him and WHO HAD A POSITIVE ATTITUDE. That wasn't the thing that really shocked me. Any business man will tell you that. The thing that shocked me and stuck with me since is that he said he's willing to take a risk. An educated risk, but a risk never the less. His most trusted employee was his accountant, according to my uncle this guy was one of the most brilliant man he ever met. So I assumed this guy but be rich, but nope he worked his regular 9 to 5 job and made a great living but was never wealthy. Why? He was to caught up in the numbers and worrying what others were doing and reading exaggerated news reports and never stepped up to the plate. I think I was about 24 at the time, and I had just finished my accounting designation (CMA at the time). My goal at the time was to find a job somewhere and make 150k a year as a CEO or CFO etc. That one conversation changed my life.
Why am I telling you this?
We have 2 extremes on this site, the sky is falling and the real estate market is going to the moon.
It doesn't matter where the market goes, there is money to be made. The market in Vancouver is going up. Sales have already picking. Prices are starting to move. The reason sales have gone down is the media reports and smart investors trying to time the market hopeing that prices would fall. I don't have a crystal ball, I've been around long enough to see that we are starting to level off or move up. Before people jump all over me and call me a shill, or pump and dumper or a real estate agent trying to prop up the market just know that I don't care.
Personal story, Back when I was 26ish I told a friend of mine (a doctor) that I was leaving finance and going into construction. He laughed at me right in my face. Didn't try to hide it. If I had listen to him or people like him I wouldn't be where I am today. Now the same guy asks me for advice.
I don't believe anybody is saying the sky is falling, the bulls are saying it's going to keep going up from around these prices while the bears are saying it's going down in the short term before it resumes going up. But in the time frame of 10 to 15+ years, the market is headed up - this is agreed on by everyone.
Your uncle is a smart man, you need to take educated risks
if you want to get ahead - no risk no reward is completely true.
The risk is there for a lot of buyers in Vancouver, but lacking on the educated part. Nobody is valuating the Risks because it's assumed that these prices will keep going up, if prices are going to keep going up there is no risk. Is there a chance that it's going to keep going up? Of course there is, but what are the probabilities compared to the probabilities of prices going down, Should you chose to buy now and weather the storm if it goes down, what's the opportunity cost?.
Where are the interest rates likely headed, Where is the dollar likely headed, is Chinas money going to keep flooding here at the same rate?
For the risk to be educated, these questions need to be accounted for and one must look at the underlying fundamental forces that are pushing this market up - are they going to be here for the long term? Who is going to support these prices at the fundamental level? These are all questions that one must put into account to truly valuate the risk involved.
These are probability based, so you can chose not to valuate the risk and purchase anyways and look like a genius if prices keep going up. Just like in poker texas holdem, you can go all in with a pair of 5s and someone calls you with a pair of Aces, but you end up winning because a 5 comes out on the turn - did you make a bad play? yes, but did you get rewarded for it - yes. To drive the point home, on the example above, this is assuming the money between the players are similar. If the player with a pair of 5s had 10 times the money that of the player with a pair of Aces, the person with a pair of 5s made the right play in this case - why is it different than the initial case? Because the RISK is much less (only 10% of his money oppose to 100%)
I believe you're a renter like me, the hidden advantage of renting right now is that we are NOT taking on that risk. Risk has a dollar value, it's just not obvious to most.