I think we’ll correct much more than 20%, and I agree with AWUM that this is an unprecendented run up in prices (both real and nominal). You yourself said “breakeven at 25%-40% downpayment” or “rent multiplier of 150 to 175″. What has to happen to prices or rents for the general market to come even close to that? I’d said-at the very minimum-a 40% price drop for the market to return to those levels. Rents could go up, but rents are harder to move than prices.

To be honest, I hope that the coming crash isn’t too much worse than ‘81-’82. Have you viewed that “housing prices as a roller coaster” video? I know it’s american prices, but geez…the run up leading into 81 was a mole hill compared to the current run up in prices.

When I think bubble/crash I think ‘81/’82. I was around then, so its a memory for me, instead of a legend. The results had large, tangible effects on my daily activities for several years after. Things changed in a big way. The value both arrived very quickly, and disappeared very quickly. We’re five years in to the current price run up in local RE.

When I think “correction” I think of something less than “crash”. 20%, say, or a return to ‘05 values. After a 20% correction (should we see it) I don’t see things changing in the same way. If I heard someone call a 20% correction a crash I’d assume that they really didn’t have a lot of imagination. (BTW, we could see less than a 20% drop).

awum:

Vive le difference, my friend. In terms of unprecedented length of time of upward movement, could we not consider ‘86-’90, or ‘91-’95? Is it worth considering that ‘94-’03 saw virtually no price gain? This has been a good run, and I’ve said as much, but it might already be over, and without a crash.

I’ve been in real estate a long time. Its always been called an investment, and that aspect has always been huge. To go further, Vancouver real estate and “speculation” have long gone hand in hand. We really are the wild West in that regard. Its not new.

Ownership has always, in my experience, carried a premium. Like geezer, I could share stories of how hard it was for me to buy when I began, but those stories are always dismissed by current non-owners as ”it was uphill both ways” sort of scenarios.

Do I underestimate the downside of the current market? I’m not certain I’d agree. Wealth fluctuation is a given in any market. I tend to think bankruptcies and foreclosures are signs that the system is working and keeping people honest. My goal is to avoid being a bankrupt or being foreclosed on, not avoiding bankruptcies or foreclosures for everyone. Is that cold hearted? I don’t think so. First, I can’t control those things. Second, I don’t think the capitalist system would work without a real spectre of loss. Third, in a world where genocide is a daily occurrence that goes by largely ignored I think the costs of a local real estate downturn have to be kept in perspective. Do I want widepread foreclosures? No, of course not, but I don’t think they are a danger right now (mind you, the duct tape on my crystal ball may be obscuring my vision !

On the other hand, I’ve seen little evidence that you are especially pro- or anti- bubble or that you even really see things in those terms. You are a bit of a cheerleader at times, maybe, but that just makes you a good old-fashioned capitalist. A true believer. No shame in that.

Frankly, I think its the real shame is that real estate has gone from being about home ownership, to being an investment vehicle, to being a (mostly) bad investment. What I really mean is, I’d like to own my own home, but the metrics are just too stupid to swallow. Regardless of how well my investments are doing, the (virtually inevitable, I think) correction can’t come too fast or too deep for me. I don’t believe in a bubble so much as I want a burst.

I appreciate that you do what you do. I haven’t met you, but you strike me as honest — I would count you as one of (very) few real estate agents that I like. Wait, “like” may be a strong word…”respect” maybe…

However, what you’ve wrote here is pretty much what I’ve pegged you for. If the numbers make sense…buy, if not…don’t.

I agree with you that it is really hard to time the market.

I kept an open mind and kept looking even though I felt prices were too high. When a great house in an excellent location came up I decided to purchase it. I am very happy with my decision, even though I am sure prices will drop in the coming future. How much? No idea.

My reason for buying back in was based on the property and not the market. It is extremely hard to get what you want and when it shows up you have to go for it.

Your balanced veiw point is fine. Let the numbers do the talking. Right now they are saying “shoulda bought”.