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How does a real estate bubble or housing crash start?

 
Anonymous Coward
User ID: 27945631
Canada
11/17/2012 01:27 PM
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How does a real estate bubble or housing crash start?
They keep saying 'bubble' in Canada. Ive heard it for years. Especially after the US housing crash.

So what's happening now is the prices in Canada for homes have remained very high. Sales are slow. Prices still are not coming down.

How is it possible for the value of real estate to drastically decline to half the value? I can't see that ever happening.The worst case scenario would be the value of a house going down slightly to the level people can somewhat afford. What would cause a drastic decline in prices? Wouldn't lowering the prices slightly avoid a bubble?

What happened in the US is not happening in Canada. Even though everyone is talking about it 24/7, it's not happening.
Anonymous Coward
User ID: 16782114
Canada
11/17/2012 01:35 PM
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Re: How does a real estate bubble or housing crash start?
Expansion and contraction of the money supply (available credit) affects real estate. If available money goes up, then housing prices go up. Availability of money goes down, housing prices drop. The quicker money becomes available or not, the quicker the prices move. No bubble burst means the avail credit hasn't been reduced significantly.
Anonymous Coward
User ID: 27932416
United States
11/17/2012 01:37 PM
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Re: How does a real estate bubble or housing crash start?
when prices are inflated, where the real value is distorted to be more than its real value
for instance in 1920, one might have paid 10 dollars for a suit. now 500, the suit has the same value for him as it does for me. the only thing that has changed is the price tag.
a cup of coffee was .10cents now 2.30
some say well, it cost more for this or that, raw materials, transportation, etc.
but how did they increase in value, they didnt, same value.
we know from past markets, the more you supply the cheaper it gets.
you cant have it both ways, or can they !?

pre 1964 dimes are worth about 3.00 today, 10 of them are worth 30.00, your dollar is still a dollar, so where did the 29.00 go ? someone got it, and it wasn't you.
the game is rigged, the only ones making money are the criminals. i mean the govt.
so they inflate the price of a house that is worth 50,000, to 150,000, then they decrease the money supply, money gets tight, you lose your house, and they get it back for say 70,000 on their ledger books, and resell it for 70,000. so they get 150 from you
70 as a loss
70 as a sale
plus all the write offs expenses etc
at the end of the day, megatons of profit

just go get yourself a monopoly board, sit down with some friends, and play until you are so mad that you flip the table of the money changers and then you will get it.

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