Vancouver RE Bears are having their faith tested and their feet held to the fire. And some are beginning to doubt themselves. Sign of a market top? This from skiff at vancouvercondo.info September 29th, 2009 at 6:42pm -
“A co-worker just bought a 600sq.ft. apartment downtown for $360k. He is thrilled that his mortgage will only be about $1500/month with a 35yr, 3.7% 5yr fixed. Although he plans to live in it eventually, he hopes to rent it out for a year at $1500/month.
Another co-worker is in the midst of buying an apartment in the suburbs, and it turns out there is a bidding war on the place she likes. She goes to co-worker #1 and asks advice (since he is so experienced), and he says “if you like the place then add $10k to your offer! That’s only, like, $5/month over 35 years! It’s not an investment, but a place to live. And don’t think about the total amount or total interest. You’ll never own it, but in a few years you can sell it and make a bit of money and get a bigger place if you want. Now is the time to buy though!”
I think that pretty much sums up who is buying right now. If you are only concerned with your monthly payment, believe that real estate always goes up overall, and that what’ll happen in five years is so unknowable that it’s not worth worrying about then this market is for you! I’d have spoken up, but since I am the only person at work who still rents and isn’t actively looking to buy nobody wants to hear it. And besides, I’m not so sure anymore either.”
This anecdote, purloined from Garth Turner’s ‘GreaterFool’ blog post (22.Sep.2009) has a ‘Top of the Bubble’ ring to it -
“My wife and I, in our mid-40s, have never bought real estate, as a result of either being in the wrong place at the wrong time (essentially moving to insanely expensive areas where we were pretty much priced out from the moment we arrived–we lived in Silicon Valley during the boom, for instance), or being naïvely bearish on real estate (when we moved back to Vancouver in 1999 I was convinced the dot com bust was the beginning of a disastrous period for real estate, never mind everything else). If we bought today, we’d be over 70 by the time a 25-year mortgage was paid off. We have about $200K to put down, and a household income about double the Vancouver median. The bank will rent us far more money than we would dare spend, but a property around about $700K would result in payments a little shy of 50% of net income, which is significantly less than other Vancouverites are paying. Yes, I know there’s a possibility that we’d lose the downpayment in the first couple of years if prices turn around. But any formerly rational person would, at this point, have to admit that in this city there’s starting to be a very strong possibility that we wouldn’t, and they won’t. Talk of “new paradigms” and “it’s different here” begin not to sound quite so insane, because there’s really no other solid explanation offered, except maybe grow-ops, which I don’t buy. Yes, I know fundamentals are out of whack. But they have been for ages. Renting, at our age, has moved past tired to exasperating. Essentially, we either buy now or we never do. Don’t try to tell me that prices will fall 40% after the stupid Olympics; I’m no longer buying it. 5%? Yeah, maybe.“
This from hal smith at Garth Turner’s Greater Fool blog, on 09.17.09 at 11:30 pm -
“I had an interesting conversation with four “twenty something” kids last night. We exchanged views on real estate and the economy. Their views are buy now, it’s your last chance, rates will never be this low again. Real estate will only go up in value. This is what I learned about them from the conversation:
1. They are young testosterone driven optimists and
they are greedy.
2. They have parental backup.
3. They have no fear of debt.
4. They have no fear of risk.
5. They have no fear of lifetime mortgages.
6. They have no fear of unemployment.
7. If things go into the dumper they will inherit their
way out of trouble.
This is what they told me: ” Your views are well thought out and all that but you are wrong. That can’t happen.”
Wanna hear something even funnier? One of them is unemployed , one is in the forest industry,and another one is maybe 20 or 30% underwater on his Kelowna townhouse and heloc since he bought it in 2007. It could get real ugly out there………”
This from Lender at vancouvercondo.info on Sept 9th. 2009 at 9:26pm -
“I have been a regular visitor of this website (http://vancouvercondo.info) for more than two years now. I was alone since 2005 and insisting the house bubble would burst very soon until I found this website. I think my mind started changing slowly to believe the possibility of a perpetual Vancouver housing bubble. I am a lender working for big five with two professional designations. I am familar with all the bearish arguments and totally agreed with them. We all here are being rational. I also have first hand knowledge how irrational the current buyers are. I have client buying a place for $600K which they can rent out for $1500 per month and deeply believe they got a bargain. I have client doing landscaping bought million dollar home with 10% down. I have client without any other income bought three rental properties. It seems in metro Vancouver, we will never run out of great fools. I am giving up.”