I guess is was a case of Déjà vu as I just happen to hit upon an old YouTube clip of a news cast that took place a little over a year ago now. It is amazing just how fast times have changed since then till now? I met the fellow who is presented in this old CTV newscast from back in 2006 when the very first new homes went up for sale in the Bedford Canal Project in Fort Langley, BC. Not that I am going to rub salt into his wounds, but I did make a point of telling him that he was “nuts” to buy a home at such an expensive price. His answer was even more unpredictable at the time: “it is time for a upgrade….”
I remember the other people who were camping in the line up too as they wanted to get the very first sale sitting in front of the Mavis Street office, when they told me that the market was going to last five to seven more years before prices will re-adjust themselves–with extreme confidence. Boy were they wrong! I also remember the uproar of seeing people literally camping in front of the sales office from my neighbourhood as some local residences made complaints. I had to drive by them too as I went back and forth from work.
So whose fault is it with this economic downturn that we are in? Is it all those greedy Bankers from all over the globe who wanted to make record profits for themselves? Was the greedy consumers who took advantage of the super low interest rates and generous credit that was offered to them by the Banks and Mortgage lenders? Was all those who now carry a huge balance from there credit from over spending? Could it be the Government’s fault for not catching this in time, not nipping this in the butt when they had the chance?
I mean we have seen some unbelievable things take place in the last three months. The hard-core conservative U.S.A. government turning into a socialist state with it’s Banks, Corporation and other hands-held-out organizations getting tax payer’s money to bail them out. Can we say, “Corporate Welfare”? I would have never thought that George Bush’s legacy would include a deviation from the Laissez-faire state the he so valiantly and rigidly kept for the last eight years. But that legacy will also include the worst economic collapse since the great depression of the 1930s too. And then seeing more Liberal states going in the opposite direct from their ideologies is another wonder–look at China? Does it get any more weird?
Anyway, the people who bought homes with the record prices of which they are locked into, are they going to be the worse off? In my opinion–yes. Will they be able to maintain their level of income and Will to deal with the new dilemma of deflation that is sweeping the economy? I mean, are you going to be happy with your mortgage of a $500,000.00 home that is now worth $250,000.00 on the current market? There is a huge psychological issue here, isn’t there? Will that drive a person to get up every morning to go to work knowing that they are paying for something that is now way over priced and half its purchased value? I guess we will see.
So, what do you think, are we going to get through this with our wallets intact? Will there be a huge migration of people leaving their homes because they can no longer afford them? Will everyone be rosy, and the markets rebound? I like to hear what you think–what’s your prediction for the next quarter, year, decade?