Looking for a house in BC (Fraser Valley) - Half a million for what???

[trilinearmipmap]

In the long run (fifty to 100 year time span) in all real estate markets the price of real estate rises with inflation. There are several reasons for this, including real estate makes up a large part of the inflation index, real estate pricing is related to incomes which are directly related to inflation, etc. This has held up long-term in all markets all of the time.

In the short run (a few years or five to ten years) the market may be far ahead of inflation like it is now, or behind inflation stagnating or even losing value for quite a few years. However if you make a graph, draw a line increasing with inflation over many years, and graph real estate prices on the same graph, the two lines will hug each other over the long term.

Factors in the short term which can make real estate prices surge include low interest rates, a speculative frenzy, a strong economy, and a net influx of people into an area. All of these factors have coincided over the past several years to create our recent classic speculative real estate bubble.

Eight or ten years ago the same thing happened with tech stocks as is happening with real estate now. Tech stocks were going to continue to go up twenty or thirty percent a year forever. Regular average people who had no knowledge or experience at investing put all their money into tech stocks. It was obvious that a crash would happen, the only question was when. And when the crash came it hit people hard. Those who had the foresight to put their money into then undervalued energy stocks did well. Of course this took the insight and courage to go against the flow, and miss out on all those "easy" gains in tech stocks.

I would caution people who have made a killing in real estate to lock in their gains, and those who are considering jumping in to buy what they can afford and what they need, rather than viewing their home as an investment that is sure to make them rich. Most likely, if home prices have appreciated faster than normal the past five or ten years, they will go up less than normal, or go down, the next five to ten years.

Anyway good luck to you all. Fortunately in my depressed area of the province our house is worth the same as when we bought it 12 years ago, I have spent maybe thirty thousand on repairs and maintenance, and our investments and economic future are not tied up in this place.

[andsoitgoes]

well - we'll find out today or tomorrow if we've gotten the house we want under the appropriate conditions - the mortgage company we've chosen allows for a "write-off" of the suite rental costs, but they need an appraisal done to prove that it's worth the amount we're "asking"

If not, we'll probably just pay off a big ol' loan we've got, but we'd rather not be forced into that position!

so by end of day tomorrow, we'll know for certain!

NOw it's time to prepare to move... EVERYING.

Ugh.

[Samw]

I agree with Trilinarmipmap.

[woodcarver]

Good luck Nick

..................... Dave