Can 300 paper millionaires cash out in Victoria?
According to Investopedia, a paper millionaire is defined as a high net worth individual as a result of the large total market value of the assets they own, despite not yet actually realizing any gains, because the investments involved have not been liquidated (yet). While holding such assets creates a large amount of "paper profit", the paper millionaire's riches aren't safe, if they fail to liquidate the assets involved at an opportune time.
Okay, to the point, there are now more than 300 paper millionaires in Victoria. That's how many million dollar plus properties are listed for sale right now. There are probably loads of other millionaires, and loads of people who could sell fantastic Victoria properties for a million dollars, but the three hundred referred to here are the group who are trying to cash out right now. If they all manage to cash out as expected, they're all millionaires (at least until they pay whatever other debts they owe).
But are all these potential paper millionaires ever really going to see the money? There are a lot of very saleable properties in Victoria, but how many local buyers can afford or want to buy all those properties right now? Are enough of us trading spaces, swapping up the food chain to let the top dogs all cash out?
If these wonderful properties are not all bought, what sort of adjustment process will sellers have to go through? Can they all afford to wait for a sale? A funny question to ask a near millionaire, but there it is. Can you afford to wait? And if you can, for how long? There is around an 11 month supply of such homes at the moment. What if you need some money right now?
And what happens to sellers if they don't get the money they expect? Will some of these guys or gals be able to handle never receiving the millions they thought they deserved? Hundreds of thousands just isn't the same. Can any of the 300 absorb an ego hit like that? What if they took out home equity loans from the Bank of Montreal or RBC or Scotiabank or TD and can't pay back it all without receiving the expected hefty property windfall?
What is the best exit strategy for might not be richer than you think property paper millionaires in a falling market?
Maybe nobody else cares about them, but at Cheaprealty, we just wanted to offer a little sympathy during these potentially trying times. Good luck, we can always count on Alberta buyers, Americans and Saudi Oil Sheikhs to take care of these small problems.
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I JUST looked at those 300 million-dollar plus homes. Just chop 50% off to see the true value, and what they'll eventually sell for, if they're LUCKY. The ones at the top of the food chain, like Villa Madrona that's been on the market for more than two years now, and the far less pricey 4.2 million "castle" with the $1.50 plastic chairs on the deck in the virtual tour; they'll NEVER sell. Availability of these waterfront "wonders" FAR outstrips demand, and the rich are the cheapest of all and will never buy until the market bottoms out. How do you think they got rich in the first place?
All the houses floating between 1 and 2 million... laughable. Ridiculously outrageous. Million dollar houses with basements suited out "for mortgage helpers." I'm sorry, my live-in maid doesn't need her own kitchen and living room. Now a completely separate guest house, that's a different story. Victoria will be extremely lucky if prices don't merely return to 2000 levels, but fall far below them to 1980 crash levels as formerly kept-up ancient neighborhoods fill with foreclosures and "walk-aways" and fill up with broken windows and crackhouse squatters. And those empty condo hi-rises by the hundreds? Call them "the projects". Million dollar houses. Give me a break. It wasn't true in LA, it wasn't true in Las Vegas, it wasn't true in Miami, it's not true in Seattle where sales are down 33%, and it sure as heck isn't going to be true in Victoria. It just takes a bit longer for reality to sink into the thick skulls around here. When the only sales that happen are where a distressed (or sane) seller drops the price 40% to beat out the neighbors, sense will start sinking in. As for those paper millionaires? Don't count on it for a second.Interesting, "paper millionaires"! I just learned a new term. I think this can definitely be looked at in a positive light, but it's unfortunate how long it takes for most people to reap the benefits.
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