Quote:
Originally Posted by photon
Their real worth IS the current market price, by definition. How much a house is worth on the market is how much it will sell for, and is defined by the supply and demand.
If prices go down, I don't think it's because the "real worth" is drawing it down, it's just because demand is softening and supply has increased.
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Yes and no.
Semantics aside, the 'real worth' i am talking about is its life time year by year value. There will be peaks and valleys in its market price, but behind that will be a 25 or 50 years trend.
Your realized market price in one moment of time means nothing relative to that larger trend over time.
Putting it another way, there is market value and market price. Just because i pay $450,000 for a $250,000 house does not mean i got good value.
At some point something has to give. You may find someone willing to give you $500,000 for it (with them starting the same scenario over at a yet even higher price), you may wait long enough that inflation builds that $250,000 value to match your $450,000 price, or you may absolutely need to sell that asset at some future point and only get an inflation adjusted $240,000 for it. But it doesn't change the fact you paid $450,000 in market price for something with only $250,000 of long term market value.
You believe that fundamentals have driven 100% of the price growth and i just find that hard to believe. I don't think OUR prices will crash, but i think that when you look around the world and see a real estate bubble in virtually every country on earth, with 2/3's of them crashing, you have to think that speculation and a bubble is part of the reason.
There were plenty of reasons that there was price growth in Calgary but all of them have to do with SHORT TERM scarcity in labour, land and materials. Disturbing to me is that not a single one of those exists as a long term restraint to supply in Calgary.
Virtually every city on earth with prices comparable to Calgary have long term/permanent restrictions on supply and thus scarcity, particularily in land.
Claeren.