Quote:
Originally Posted by burn_this_city
If the government banned foreign real estate investment I wonder if it would deflate the bubble in Vancouver.
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Foreign investment is playing a role and most definately fueling the fire, but I seriously doubt it's the sole driver towards high prices in Vancouver. The number of domestic transactions are still much higher than foriegn in that market. I think it's more of a bandwagon effect where everyone falls for the assumption that prices will escalate above inflation forever and the middle class proceeds to jump in with both feet and with high leverage driven by both fear and greed.
Fear in the sense that they feel now is the time to get into a property before prices rise so much that they will never be able to buy. Greed in a sense where they look to the property market to supplement stagnant incomes (BC is the only province to have a negative savings rate, meaning it's not just rich Chinese that are plowing everything into Real Estate). It's the belief that riding the property wave is the only way to get ahead. Below is an example of the herd mentality surrounding Real Estate. The person's actual financial problem is that they only make $35,000 a year. He's trying to remedy this by house speculation:
http://www.theglobeandmail.com/globe...rticle2357155/