The largest investment in the entire process of purchasing real estate is the emotional investment.
Emotion drives the market, not low rates, not foreign investors, not sharks ‘shadow’ flipping assignments. Emotion!
What kind of emotion? Love. Or the loss thereof.
Marriage, births, promotions, raises, along with divorces, transfers, retirement, and a thousand other events that trigger an emotional desire to buy, sell, and maybe buy again.
Want to see where the market is going?
Look at ‘new household formation’ data.
Look at migration data (April 2, 2016 – 20 degrees and sunny in Vancouver, zero degrees and snowing in Toronto).
Look at immigration data (Vancouver – arguably the best climate in the best country in the world).
Home ownership, owning a piece of land in Canada, is something we all have a powerful emotional response to.
Is there logical math that supports the market movement? Yes!
Does it matter? Not really.
Emotion drives all our decision making.
The reality is that people who buy homes here clearly can afford them. Look no further than the month-after-month record sales volumes in all categories and in all areas of the Lower Mainland.
What is ridiculous is to use a metric for commentary such as home-price-to-average-income in a city in which 47% of homes are mortgage free, and for those with a mortgage, have an average balance close to $420,000.00.
Perhaps a median-income-to-median-mortgage-balance metric should be considered.
Some might suggest I am simply trying to fuel a market for my own gain. This makes little sense. I am not a Realtor and need zero price appreciation and zero purchase/sale activity to earn my living. Refinance transactions at renewal time alone keep me busy.
I have zero interest in selling any of our own properties, as cashing out has always proved to be the worst plan. I like cash-flowing assets. Especially ones that I can leverage… to buy more cash-flowing assets.
Do I think people should buy Vancouver Real Estate? Yes.
Do I think people should ever sell any of their Vancouver Real Estate? No. Never.
Next post: Sustainability in the Vancouver Market.