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I live in a housing bubble city (Vancouver, BC) where a 90 year old "character" home in a decent neighbourhood runs for about C$600,000 (or higher if it has more than 3 bedrooms). Yeah, crazy.

Luckily my townhouse has gone up too.

My question on a housing bubble is; what happens when it bursts? I just can't see these homes dropping $100-200,000 ever. The people with the $500,000 homes (and $400,000 mortgages) just aren't going to be able to afford to sell their homes. To me that means less homes on the market and still elevated housing prices.

Simon

PS: Good article again Whitney.
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