Vancouver’s real estate market has been on fire until last year when the air was let out of the bubble. I remember a friend of my wife’s telling us we should buy a house soon and I thought to myself no way. I bought a house in Pennsylvania that cost around 35k, and when I moved here that same house would be over $500,000 here in Vancouver. I thought something is wrong with this picture.
Wages in Vancouver just haven’t kept up with the appreciation of home values here but people continued to buy, hoping to flip their new purchase making a nice chunk of change. It’s a strategy that’s worked but now the buyers have disappeared and I suspect in a few years my patience will be rewarded as home prices should fall much further than they currently are. I really feel bad for the homeowners who have bought in the last 6-9 months.
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The greatest bubble economy in history is popping. Trillions of dollars are still sitting on the books of financial institutions in assets which are worthless, or nearly so. The odds of surviving that are slim for many of them. Without government bailouts, today the American banking system – and its auto industry, including three million jobs – would be gone. Sadly, that may still happen. Meanwhile every week Canadians are losing money in home equity, while unemployment rises and corporations shutter. It’s the greatest loss of wealth in a generation.
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