Misallocation Of Human Capital During Speculative Bubbles – “What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

JRoss at VREAA 29 May 2011 11:50pm, in response to a comment suggesting that a couple who are both academics at UBC looking for accommodation in Vancouver shouldn’t have an attitude of “entitlement and elitism” and should consider “some homes in Renfrew area that require some elbow grease for <700K with revenue suites" -
“I lived on < $900 month from a TA at UBC in Point Grey for several years so I could obtain an advanced degree. My wife did same. Why would I or anybody else do that if there were not the potential (potential, not promise) of some future reward? That is not entitlement. That is a meritocracy.
Question for you my obtuse friend – What do you call societies that depart from meritocracy? What tends to happen to them in the long term? And just exactly who are the 'elistists' in same?
You seriously think that is is entitlement for the dentist who fixes your kid's teeth, or the doctor who treats your wife's cancer, or the lawyer who writes up your real estate contracts, or the CA who does your taxes, or the pharmacist who had the misfortune to graduate 25 years after you, or the professor who teaches all of them, to want some chance at a reward commensurate with their efforts? Seriously, what is wrong with you?
You do realize there are very nice places in the world where people who EARN such qualifications are afforded a better life than an 80 year old house in a marginal neighbourhood with strangers in the basement? Why would anybody who is possessed enough of their faculties to EARN one of the aforementioned careers not question what it has bestowed on them and realize they might be better off elsewhere?
You seem to think that we should all just accept the status quo and sign up for a lifetime of debt that will fund your retirement with wealth that came your way mostly because of the accident of the timing of your birth and you actually have the balls to call ME entitled."

Very, very eloquently put.
A speculative mania in real estate causes misallocation of resources. JRoss highlights how people with skills useful to a society can be forced away because of a profound perversion of normal reward dynamics. People are avoiding Vancouver because of these forces. The detrimental effects on our society are mostly hidden during the boom leg of the bubble, but will almost definitely compound other negative aspects of the inevitable deflation.
Forcing hard-working, talented and useful members of our society to avoid Vancouver is just one aspect of this misallocation of human capital. Other manifestations include (1) young people being drawn into short-term-attractive construction work (rather than studies or more sustainable lines of work), (2) professionals decreasing their hours worked or retiring early (as a result of perceived paper profits in RE), (3) people in useful professions selling their homes and leaving the city (because the capital accumulated in their home has hit life-changing levels), etc. We personally know of individuals in each of these categories, and related personal stories have appeared on these pages. People do unusual things in unusual times, and we’re living through unusual times in Vancouver by virtue of our overly-expensive real estate. – vreaa

72 responses to “Misallocation Of Human Capital During Speculative Bubbles – “What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

  1. It’s interesting that the Communists in the former east bloc had the same attitude. Proletariat was supposed to take over the world while the educated “elitists” were pushed to the lowest lewels of society. This attitude went so far that only someone with working class background, preferably without university education made it to the top in the Communist Party and from there into the government. One of these uneducated non-elitist “real” working class people ended up banging his shoe at the UN general assembly…

  2. Yes, a doctor should be able to afford a home in Vancouver, but anyone with an average income should be able to buy the average home. The “unfairness” of high real-estate prices exist not just for the PHDs,MBAs,CGAs but for everyone. The mailman, the police officer, the teacher, the chef, the auto mechanic, the reporter, the barista: everyone is affected. The real-estate market only cares about one thing, and it’s not some ideal of merit.

    The market for free hold housing is pretty simple. If you have the money or credit you can buy a home. Merit has no place in this transaction. Show up with a bigger cheque than everyone else and it’s yours; nobody is going to look at your GPA or profesional designation.

    Holding something that doesn’t value merit at all as a meritocratic “reward” seems insane: the cake is a lie.

    • This is more about attitudes – Demanding “elbow grease ” from doctors and professors is equivalent to asking the average construction worker to teach physics at the university. Idiotic attitudes like this are one of the direct consequences of this bubble.

  3. NM -> If we have understood you correctly, we’d like to clarify: we don’t believe that JRoss expects anything for nothing, nor does he expect anything simply by virtue of some form of qualification. Note that he states that he (and others) educate themselves for the “potential, not promise” of future reward.
    Also, we are in complete agreement with you regarding the idea that the bubble detrimentally effects people of all education and income levels; that has always been our concern: people from minimum wage earners deciding to go east or south, to surgeons deciding to leave because they cannot buy a house commensurate with their levels of skills. All of this is bad for the broad community.

    • no, but JRoss expects for society to maintain the long held status quo – that academic elite are provided with luxury homes, status cars, high salaries, vacation homes, etc. JRoss also refuses to acknowledge that wealth is created by other channels that don’t support his claim to “merit” – he believes his way is the proper way to obtain social status (i.e. one cannot come from another country where wealth is accumulated and stomp on his personal claim to wealth). And what of our lowly high school drop-outs who just happened to have been “lucky” enough to have owned for 15+years? Is their home ownership not “merited”
      What an elitist bunch of B.S.

      • You’re completely misinterpreting JRoss. See further discussion below.

      • No I believe in fair society that rewards those that work hard, regardless of social stature. Advanced education is one such avenue. So is apprenticeship in a trade. (My brother is a master carpenter, so up yours).

        Profession requiring advanced degress should reward people because of the barriers to entry, not because of the social status that some, not me, ascribe to such positions.

        A fair society should reward those who strive for its advancement. How exactly does owning a house and doing nothing more than crapping in the toilet twice a day for 10 years benefit society?

  4. meritocracy is just another word for entitlement.
    And what of folks who bought their Vancouver home 10 years ago but don’t have advanced degrees and simply work hard? Are they to vacate their home because it is not “merited”, because they are not the social elite?
    And what of the people with money that are now pricing you out? Do they not “merit” ownership from the work they’ve done to earn the money they spend?
    Give your head a shake buddy. No-one is going to give a hot damn that you can’t buy your west side mansion just because you and your wife spent too many years in school earning your advanced degrees.
    Here is some excellent commentary on the “myth of meritocracy”.
    http://www.ncsociology.org/sociationtoday/v21/merit.htm

    “…many of the arguments suggesting that “merit” is behind the distribution of income and wealth also make the case that merit is distributed “normally” in the population. That is, that the shape of the distribution of merit resembles a “bell curve” with small numbers of incompetent people at the lower end, most people of average abilities in the middle and small numbers of talented people at the upper end. The highly skewed distribution of economic outcomes, however, appears quite in excess of any reasonable distribution of merit. Something that is distributed “normally” cannot be the direct and proportional cause of something with such skewed distributions. There has to be more to the story than that”.

    “we argue that meritocracy the idea that societal resources are distributed exclusively or primarily on the basis of individual merit is a myth. It is a myth because of the combined effects of non-merit factors such as inheritance, social and cultural advantages, unequal educational opportunity, luck and the changing structure of job opportunities, the decline of self-employment, and discrimination in all of its forms.”.

    • someone has an ax to grind… Vancouver’s entitled elite are here for you, Rusty. Don’t hate the player, hate the game.

    • Hey idiot, can you read? Nobody says that “societal resources are distributed exclusively or primarily on the basis of individual merit”. This is your straw man. As someone else said, academics have better things to do than scrape paint from dingy basement walls. If you force them to spend time fixing up run down properties because you feel entitled to high and ever rising housing prices, then the whole society will go to shit. Vancouver is already turning into a city of sociopathic speculators and construction workers with big egos.

    • LOL. You replied with the first article that comes up under a google search of ‘meritocracy’ (I know cause I checked) and then you picked a passage that you think supports your argument but actually does not.

      Sharp like the edge of town, you are.

      • Ya, seriously. The explanation at the end for the incredibly skewed distribution of wealth turns out to depend on, among other things: “luck, inheritance, discrimination, unequal social and cultural advantages”. Which doesn’t sound like your defense of those who simply “worked hard for 15+ years”. In Vancouver, it’s not the “worked hard”, its the 15 years.

        But I really don’t get why you’re so defensive. If the present market pushes even some of the young, bright, hard-working out, then this is a bad thing for those who stay, and those who hope that the city remains a vibrant and prosperous place 10, 15 years down the line. Or maybe I’m not reading you right. Maybe your rants are really aren’t any more thoughtful than another tired echo of classic ‘fuck you, got mine’. Crap basis for a society, though.

    • If you really want to understand about the distribution and scalability of incomes (I suspect you do not), then you should read this

      http://en.wikipedia.org/wiki/Fooled_by_Randomness

      In your case the title is particularly aprapos.

    • Just wait until your grandkids can’t get treated for a broken leg or a disease(God forbid) because all of those idiots hooked on the idea of “meritocracy” have left for greener pastures. Just wait until your grandkids get taught by a bunch of third-rate academics at UBC because talented professors don’t want to commute in from Langley.
      Meritocracy is a bitch… I’d rather have a pediatric surgeon living in a 2 Million dollar mansion than some douchebag real estate developper who reaps all the benefit of real estate speculation when times are good and who conveniently declares corporate bankruptcy when times are tough.

  5. Good comments. If Vancouver is truly interested in becoming a “world class” city, it needs to stop putting the cart (high house prices) before the horse (incomes of its citizens).

    I think most people who understand the problem — an addiction to real estate speculation — also understand what needs to be done — addiction treatment. But let’s face it, it’s very difficult to treat addicts who refuse to even acknowledge their addictions, never mind them willing to follow through with effective treatments with the attached requirement to permanently change behaviour afterwards.

  6. Rusty ->

    1. “meritocracy is another word for entitlement”
    That’s an Orwellian statement if there ever was one.
    JRoss is talking about appropriate reward for valued work; not some kind of gift because of ‘station’.

    2. Nobody is implying that anybody should “vacate their home because it is not ‘merited’” .. do you see that being said anywhere? What people are objecting to is that the speculative mania in homes is ‘valuing’ common abodes in such a way that hard working folks are unable to afford homes commensurate with their contribution to society (and thus income).

    3. Regarding the last two paragraphs that you post, we’d agree with them (and we suspect that JRoss would agree, too). Do you realize that they are arguments for MORE meritocratic forces rather than a criticism of meritocracy? The statements point out that in actual fact societies don’t come close to being true meritocracies. Too often, too many get too much for nothing (eg hedge fund manager making $1.5B per annum; [insert own example of RE-related industry profit in Vancouver here]), and too many are not rewarded for actual contributions (eg pair of hardworking surgeons leaving Vancouver). That’s the point that the passages you quote are making. The problem with an asset bubble is that it makes that effect even worse, it skews the contribution/benefit dynamic even more. We agree.

    • VREAA,
      Vancouver property with land is extremely limited. Besides evicted folks without merit from their homes, how do you propose to create this magical environment where everyone who wants one can have one?
      Also, are you aware of how this works in large, well-established European cities? Property is passed along by birthright. There is no consideration given to Physicians, Pharmacists, Academics, etc. when pricing real estate. Welcome to the new world order.

      • And I suppose none of those places have an estate tax either?

      • “Besides evicted folks without merit from their homes”
        Idiot. Who is proposing anything like this? Stupid troll.

        “how do you propose to create this magical environment where everyone who wants one can have one?”
        Another straw man from idiot troll.

      • The new world order is asset deflation… including real estate… Look at USA, Britain, Spain, Japan… Almost everywhere except here… We didn’t avoid asset deflation, just late compare to everywhere else.
        But then again, Rusty, you’re the perfect Vancouverite… Parochial, insular, smug and your head firmly planted up your backside. Read something other than the Vancouver Sun and watch something other than Global and you might see what’s happening in the rest of the world.

  7. “meritocracy is another word for entitlement”

    HAHAHAHAHAHAHAHAHAHA I pissed myself laughing at this one!! BWAHAHAHAHH!!! I seriously can’t stop lauging. o man.

  8. JRoss,
    So what are the remedies? Do we need to restrict Vancouver home ownership to 1 person:1property? What kind of government intervention are you advocating?

    • I believe Jesse has offered several viable solutions on this forum and others. I don’t believe I can improve on them and won’t try. They are there if you choose to look.

      • I’m sure you can improve on them. Everything is up for consideration. Here’s one: every foreign real estate investor pays $500,000 non-refundable casino cover charge. Half the proceeds are distributed to affordable housing projects and the other half are given to me for the IP rights. Good suggestion? Heck, what do I know?!?

        PS I’ll settle for 25% but don’t tell anyone.

    • Another straw man from Rusty…

      How about removing the existing government intervention first? Abolish the CMHC.

      • Exactly.
        As jesse and many others have noted, stopping the government funded speculation would be a good start.
        Let risk be priced by the market (according to the loanworthy ‘merit’ of the borrower!).

    • I just want to remind everyone that RUSTY was busted WIDE OPEN by vreaa for lying on many posts; stories changing; personal details changing,etc…

      So just keep that in mind when you try in vain to have an intelligent conversation with that thing who posts here 9 to 5 monday to friday.

    • Remedies:

      1) shorten amortization

      2) raise interest rates a bit

      3) And most of all — CMHC stops backing jumbo mortgages. Any mortgage over, say, 400K. Make the banks put some skin in the game.

  9. My wife and I were one of the “entitled” ones or were we?? We did not leave because of the high housing prices as we left 8 years ago for Calgary, but rather because we both have post-bachelor degrees, my wife being a doctor, could not find work in our fields in Vancouver. Why would we stay in Vancouver and work in something totally not related to our degrees, get paid less etc?? People need to do research. Look at other cities and how much people get paid compared to vancouver. Most other Canadian cities pay more, have better working conditions etc. There is no entitlement in wanting to have a satisfying job and lifestyle. The housing costs in Vancouver have just made people with higher degrees think outside the box and look at alternatives.

    • yes. speaking of finding work in one’s field, and of the brain drain: This city rewards only the grifters, the landed gentry (those with home equity to their names) and the electricians and other trades needed to propel the new Lords to their riches. I find it hard to believe that any new brains will come and take the place of smart, young, hardworking professionals. Those that try to, will almost certainly be forced to leave. From personal experience: I came here at the wife’s behest in 2004 with a bachelor’s degree in Chemistry from a top ten UK university whose chemistry department has two nobel prize winners to its credit. My degree was graded First class, (the highest grade possible) and I had AAA at A-levels. People from the UK will know that this combination is Willy Wonka’s Golden Ticket. It guarantees a job interview with every graduate recruiter in a wide variety of fields. I had several offers standing and waiting for me to return from my “year off” teaching English in Japan. I came here instead, assuming things would be the same. I applied to the local branches of the same multinationals that had made offers in the UK. I still remember the wording of my first rejection letter: “Dear Loser,
      We know that finding work is very difficult. We understand that it can be extremely hard. And so we want to thank you for having the balls to apply. Welcome to Vancouver.” or something to that effect. I did not even get an interview as a lab technician. Not one interview using the same resume that had a higher than 90% success rate in the UK.

      So yeah, conditions here are a little different. Being a resourceful individual, I found self employed and other work that allowed me to support my wife through school while having two kids along the way. Now she is working in her field and I am waiting for the kids to hit kindergarten before going back to school here for some qualifications that have any meaning here. Why didnt we go back to the UK? I don’t know, quite honestly. To quote Froogle Scott, it’s probably because “I have yet to find a brick wall that I didn’t enjoy banging my head against.”

      • I like this story. A few of my friends’ then 20something parents moved to Canada in the ’70s, so the story goes, with no more than $50 in their pockets. Through hard work and a few false starts they moved their way into good paying jobs and have been successful. This is the “Canadian dream” and it did happen. These people expound the virtues of this dream to everyone they meet. Canada did not let them down.

        Your story is somewhat on the other side. Is this the norm, and has it always been that way? There are data to suggest that, yes, immigrants generally earn less than incumbents and this gap has been widening in recent years. It is difficult to say if this is due to demographic shifts — language/cultural shifts towards non-Western-European immigrants or a decreased relative education level — or due to a shift towards Canadian firms exerting prejudice towards all immigrants for whatever reason.

        In any case, it should not be surprising that many recent immigrants return to their COOs if their experiences finding work mirror yours.

      • Many local companies require canadian experience – an euphemism for “no immigrants wanted”. When I came to Canada, this was the answer I heard from almost every employer. I ended up working for another immigrant. Now, I have my own business and don’t discriminate between Canadians and immigrants.

      • Well, my experience may not be typical, because I was a fresh graduate with zero experience of any kind. But it was a bitter pill to take, that I would have to build up again, when in contrast to get on to the career ladder would have been so easy in the UK. With even a year of experience I am sure something would have come up.

        The wife was not the wife back then and it was not yet decided that we would be thus, so she enrolled for a professional designation to replace her equally useless UBC biology BSc and her Business Admin Diploma from BCIT. Despite her Canadian degrees, she couldn’t even get a job in a call centre upon returning from Tokyo. So… we kind of went along with the path she chose. We both worked toward her professional designation. Both of us tutored once I got my work permit. Money was too tight for us both to go to school, and then we had kids. I became a tutor and editor on evenings and weekends, and in the daytimes worked in a warehouse unloading containers, for a few months. When not taking care of the kids I have also driven materials around in a truck/trailer, installed railings in highrise developments at UBC, drawn shop drawings using CAD for structural steel, operated a CNC machine, and installed glass canopies. The usual stuff a chemistry grad gets busy with.

        In regards to living the Canadian Dream: I seriously should not complain. We have a fairly high standard of living. 2 cars, 2 kids, house with a view (technically 2.5.5.5 cars counting my projects). I am not too picky about earning loads of money, but when you get kids it becomes more important to do that, hence the intent to requalify later. I like the opportunities I have had to try my hand at new things, do physical work instead of all the bookwormery, papershufflery and labratting I would otherwise be exclusively engaged in. We have saved up a fair chunk for a downpayment, considering, and our savings obviously have only just begun stacking up since the wife began her career. We could not make any savings on her salary alone, so I work most evenings and weekends, and a few days in the week when we can get a relative to care for the kids. I have a flexible work schedule. We go camping.

        So, yeah, I would say I am living the Canadian dream. Arrive with nothing; work hard at menial jobs at first; get somewhere eventually. We just wanted a modest home we could be stable in, instead of battling millionaire Land Lords against increases in rent and lack of action on repairs, but you can’t have everything. We are getting used to being Renter Class.

        I guess ignoring the house factor and our initial inability to find even a sniff of work commensurate with the potential our qualifications gave us elsewhere, I do honestly feel that we are making it here, slowly. A little harder than I expected, but hey, you have to earn it, right? No entitlement. I doooo often complain about Vancouver but that’s mainly because everyone thinks it’s ALL THAT and I say it’s just ok. Good in some ways, less so in others. But now that I am becoming happy in renter skin, I like it here . There, I said it.

      • People don’t move here for work, but for the lifestyle. In the 6 years I’ve been here, I’ve only worked for a local employer for the 2. There are few companies in my field because their prospective employees tend to favour hip and bustling cities.

      • forgot to say: apart from the great outdoors, I also moved here to be able to afford decent accommodation! (and renting is still not too bad)

  10. Interesting discussion…. I seemed to have missed a large part of this debate that (unfortunately) I seemed to have stirred up….. I think that this will be my last blog entry, so I will try to summarize our overall view….

    1. We do not feel entitled to a house on the west side or some other high
    priced area of the city as a result of spending much of our 20′s and 30′s
    getting an academic career going, This is not about meritocracy or
    elitism. We both grew up in East Van with
    certainly no family fortune…chuckle.. etc….went to a mediocre
    high school… etc… The road to a career that we very much enjoy was
    very long and difficult (financing it ourselves, student loans to pay off
    etc..)… Nothing was given along the way…. This beginning for sure is the
    story of many people in this city, and is typical of the aspirations of
    many of the previous wave of immigrants who came to Canada… As
    Jesse has pointed out, there are indeed many new (non-investor class ) immigrants to Canada who have this aspiration of a better life etc… (which is now becoming increasingly difficult to achieve in this city)…

    2. Similar to the mind-set that was associated with many previous waves
    of immigrants who came to Canada, it is very important to us to
    be able to provide better opportunities and a somewhat easier path for
    the next generation (our son) via good schools etc… Buying a tear
    down on Rupert street (working weekends to fix it up, being an
    opportunistic landlord with a crappy basement suite and focusing every
    month on how much the rental market has gone up etc.. and how
    much I can squeeze out of my tenants) just seems rather base to us.
    Then, with the additional issue of sending your kid to a local school
    where you know full well (having gone through this path yourself) that only a very small percentage of the kids
    their will go on to university, sets the next generation up for the same
    long road…… So do you then decide to get a place in North Van, where
    the schools are better, commute 1hr per day each way to work, and miss
    out on school activities with your kid etc… and have a rather fragmented
    lifestyle with the commuting etc…. Or do you stay very long-term in an apartment-style living with your family (ala NYC, London, etc…)… we
    know of many families that are doing just that….

    3. Everyone has their own personal threshold on what they are willing
    to accept to live in this city. Some will stay here no matter what,
    others have already left do the housing issue. Some like Rusty don’t have
    to worry, as they sit at the pinnacle of the land-fill site focusing on their
    rental units, watching the market trends, blogging in the middle of
    the workday (like me at this moment…chuckle…), optimizing their
    position at every step along the way as they have done now for many
    years, debunking the insightful comments of Peter Ladner, etc…

    There are other things that I would much rather be doing than trying to predict whether the market goes up/down etc…, whether the market crashes (which I unfortunately doubt will happen) etc…I was not trained in the fine art of speculating, investing, and optimizing portfolios…

    Essentially, the point is that the hyper-inflated real estate situation in
    Vancouver has exceeded our tolerance of acceptability with regards to
    lifestyle (choosing between being a reluctant landlord, a daily
    long-distance commuter etc…), and the extreme indebtedness needed to have a rather average aspiration in this city. This coupled to our view that
    there will be an increasingly difficult path in Vancouver for the next generation who do not have large trust funds, really solidifies the impetus
    to leave…. I am sure that there are many other families that are dealing
    with this rather complex issue
    As I said earlier, we would not be having to deal with this issue in any other place in Canada (even Toronto, which could afford)…. For us, the opportunity cost for NOT leaving Vancouver for Edmonton, Montreal etc… is at this stage too high…..No amount of “being able to take a walk on the seawall in this world class city” can overcome (for us) the negative factors
    associated with living here.

    3. Everyone has to make their own call.

    • I definitely see the need for something to change. Having such angry and frustrated citizens does not make for a good society. Until our immigration policy changes I don’t see how this will ever end (and eliminating CMHC is not the answer).
      All the best with your dilemmas

    • DoIt!… WorkedFor’Moi’.

      &AsItHappens: The Economist has something timely to add to the debate, too…

      “Letting educated people go where they want looks like the brainy option.”

      http://tinyurl.com/3kvdqrm

  11. Royce McCutcheon

    @Rusty:

    Does it really not register as an issue that, for example, Vancouver may not be able to convince enough doctors to stay and practice here? You don’t see a down side there? This is only one really obvious example.

    There are plenty of folks with professional backgrounds who really want to stay here and are prepared to take a significant financial hit to stay. But amongst the younger people I know with professional training, I am seeing more and more discussion about how people feel they may HAVE TO leave for the sake of their families.

    Serious question: where would you draw the line? What IS the Vancouver premium you’d be prepared to accept if you were starting out in this city today? If you were a born and raised Vancouverite – someone who loved this place because you were of this place and had family here – what would that be worth to you? For me, I can honestly say that a 25% salary haircut to stay here may have been tolerable when house prices were only a bit higher than the cities with the better wage. But when the housing costs here are TRIPLE what they are in the city with the better wage, I’m going to start weighing my options a little differently.

    And the thing about having professional training – the thing about having worked your butt off to get to the top of a competitive heap (as wannabe real estate mogul halfwits deride you as an elitist and/or bitter renter) – is that there are often plenty of other areas that WILL reward such credentials. You don’t see it as a problem that people working jobs important to any community could theoretically live somewhere else entirely and have enough of an earnings boost/cost of living decrease that they could afford to have more leisure time in BC than if they actually lived and worked here? (Yes, I know people in this situation.)

    The hardest part for anyone is taking that first step and actually leaving. Once that step is taken, that person is quite often lost for good. As bright, hardworking people from your community do this in increasing numbers, the only way you can possibly be okay with it is if you honestly believe brain drains don’t have consequences. And that is just nuts.

  12. Abolish the CMHC & charge higher property taxes on properties held for investment. If houses are uninhabited, then charge higher property taxes still. Allow markets to function properly and interest rates to self regulate. Problem solved.

    • folks bidding up prices are paying cash and not involved with CMHC. And the locals are brigging hig hequity to their purchase (also no CMHC). Back to the drawing board.

      Lively debate. All the best with your dilemma JRoss

      • Thanks. Enjoy your hubris and your delusions.

      • You have obviously no idea what you are talking about. You don’t need everyone to be involved with CMHC. All you need is the marginal buyers who allow the current owners to move up the property ladder. Upsizers need to sell to someone before they can buy a bigger property. Not everyone can sell to Chinese investors like you seem to think. Many have to sell to local people with mortgages that are insured by CMHC. Thanks to CMHC, even the low end of the market is now extremely expensive. Realtors are marketing million dollar houses to first time buyers in Vancouver, because that is now the lower end!

        Anyway, keep ignoring the reality and have a happy life with your delusions, rusty.

  13. To me the whole REIT mania, when boiled down to is essence, is that some home-flippers would like to go back to being land Lords, gentry, making their living from the work of others almost entirely because of a name on a deed. Which isn’t a real world business model anymore – actually having tenants requires something of the landlord, like not running a slum, and obeying the laws as they stand – but the idea that you get a place and it just pays you monthly has become so pervasive that it’s a bit like walking into an Austen novel. You want elitism, listen to the lord & serf talk that comes out of these modern day Dukes that appear to look down on the working professional like the gentry looked down on the merchant class.
    Only feudalism’s not going to happen anytime soon. Just a bubble and a bunch of fools trading paper dreaming of being better-than.

  14. hear, hear.

  15. What JRoss forgets is that higher education is a privilege. I have a degree from UBC. Many of my peers from David Thompson high school could not go to post secondary,due to lack of finances, lack of parental encouragement, divorced parents, mental incapability, bad peer pressure. I don’t deny the meritocracy if you don’t deny your career is as much luck as hard work.

    • Jim, in Vancouver, a university education almost seems a disadvantage. The wealthiest people are I know are mostly in the trades. Meanwhile, I’ve met many people with BAs and Bscs who sling coffees for a living.

      • Mike,

        Nice anecdote, but it runs counter to employment and income stats. Higher ed equals higher income. My point was: whining about being well educated and an “achiever” yet unable to buy where you want is not elitst. It’s “I want my bottle mommy”. And yes the sense of entitlement that Jross exudes angers me, because the logical extension of that lament is the homeless are slackers. Which means our society is lost.

      • Jim, I am not insensitive to your statement. I am one of those who rolls my eyes when hearing people natter about being self-made men (and women).

        Each of us who has success owes it in part to the society in which we achieved that success – the infrastructure, the security, the R&D funds, etc. – and for some of us the contributions our parents/grandparents made by reading to us every night, or training our work ethic, or treating us with love, or knowing & helping us learn the manners of society, have made life easier for us through no great work of our own. We are all – from the richest to the poorest, today standing on the shoulders of giants… and profiting from cheap labour in other countries…

        But that can be true AND JRoss and his wife could have done hard work and sacrificed and taken risks in order to afford a better life. I’m one of those who didn’t continue with my education after Undergrad although the opportunity was there, because I simply didn’t want to make the sacrifices.

        So I think it’s both, you know? Both what the society and environment provides and what an individual does with that plus their inherent skills and abilities. We’re all on different paths. It’s not a dismissal on those who haven’t gone as far – or who have been unable to cope with their circumstances – to recognize the achievements of those who’ve taken what they’ve been given and really worked them.

  16. I would suggest readers here peruse through the comments on Frances Bula’s blog. More than a few comments on increasing density by “MB” and Michael Geller (if that is his real name… jk). Again, there is an ongoing analysis surrounding solving affordability issues and while you may disagree with many of the points some people make, there are some areas of common ground. If I were a politician, which I am not, I would focus on these areas as the “low hanging fruit” in starting to tackle affordability issues (and by “affordability” I mean providing a decent value proposition to people in order to stay in and contribute to Vancouver’s economy).

    http://www.francesbula.com/uncategorized/vancouver-the-most-unaffordable-no-says-provocative-talk/#comments

  17. “You seriously think that is is entitlement for the dentist who fixes your kid’s teeth, or the doctor who treats your wife’s cancer, or the lawyer who writes up your real estate contracts, or the CA who does your taxes, or the pharmacist who had the misfortune to graduate 25 years after you, or the professor who teaches all of them, to want some chance at a reward commensurate with their efforts?”

    These professions set their own rate to charge for the services. They are worth what they are paid for. Their paychecks are the reward. What else do they expect? Free and affordable housing? Get real.

    • Who said anything about free housing for high salaried professionals? The issue is that the same individual — who has the potential to contribute to their society whether through their work, their volunteering or just their commerce — is very mobile, very in demand, and can find houses that cost half as much for greater salary. In desirable, beautiful, and interesting cities. So, many of them will choose to move. Nobody’s crying for the doctors — its the city they leave that loses.

      But what gets lost in this argument about whether its a bad thing that folks who pull 6 figure salaries can’t afford modest homes If things are bad for the engineers, doctors and lawyers, what about the proverbial average vancouver family. You know, the one whose household income is around 85K a year. They have to take on huge financial risk, debt and stress to live here (assuming they “started out” sometime in the last 5 -7 years. But they’re nowhere near as mobile, so the ‘up and leave and move to San Francisco’ thing may not be an option.

  18. To Royce: What is the premium for people to stay? Well first to have jobs in one’s chosen field. Other than that, why not look south and compare to Seattle. If prices were more in line with that, then there would be more people staying, affording a house comfortably etc. Of course I am just talking about Vancouver, or West Vancouver, not Langley or Surrey. But what if the westside prices dropped to comparables in Seattle. I am honestly not sure of the Seattle market, but have seen very nice homes with more square footage than tear down west side homes for under 1.5 million.

    • yeah – you can get nice homes in a nice part of the city, in the best parts of the city, for a LOT less money. Fremont, Wallingford, Green Lake, near the University of Wa, ect.

      Some good places even in the 300Ks. Certainly in the 400 & 500K you can get a really nice 2-story place with a lot of room. For 600 & 700K &800K you can get what you would call a mansion in Vancouver – probably with views of the water.

      http://www.zillow.com/homes/Seattle_rb/

  19. Troll fodder

    One of the most amusing threads yet.

    As an academic at UBC and proud renter, I’m not sure why everyone assumes one needs to own a house to be “afforded” a good life. I have better things to spend my days doing than think about how to make my next mortgage payment.

    If you got into academics to become rich keep dreaming. If you have a professional degree stop whining.

    • I agree, I’m more concerned about our unstable economy imploding than I am about personally owning a crackshack. I believe a lot of innocent people will pay for this madness along with those who deserve the pain.

      • I am afraid I must disagree on where to draw the line. I agree with one thing: children growing up in unfortunate circumstances wrought by their parents are innocent; the rest should man up and take it. Canada is not a despotism void of the means and ability to make prudent financial decisions.

  20. This is worth repeating:
    “As an academic at UBC and proud renter, I’m not sure why everyone assumes one needs to own a house to be “afforded” a good life. I have better things to spend my days doing than think about how to make my next mortgage payment.
    If you got into academics to become rich keep dreaming. If you have a professional degree stop whining.”

    • right said Fred.
      In fact, renters here argue that owning a home is onerous/costly. So why would they also be hoping to be able to afford that very same home that will bury them in payments, repairs, etc.?
      And I agree, profs at UBC make approx 90K/year. Not much more than a BC Nurse.

      • “profs at UBC make approx 90K/year.”

        Um. It depends on tenure. A great many earn into the six figure range (and not including the medicine and law departments). Compared to most local professionals it’s not bad money at all and the vacations are a-w-e-s-o-m-e. There are downsides, of course, like having to deal with tenured professors for the rest of your life, not all who may be to your liking.

    • “If you have a professional degree stop whining.”

      Agreed. Just pack up and leave and let Vancouver be inhabited by nothing but in-breeding f**ktards like Rusty and Fred.

  21. another downside to being a BC Prof is not being paid enough to be able to afford west side Vancouver ownership they so rightfully are merited

  22. Ralph Kramden

    “Too many people reaching for a piece of cake” – McCartney 1970

  23. “Agreed. Just pack up and leave and let Vancouver be inhabited by nothing but in-breeding f**ktards like Rusty and Fred.”

    what happened? why so angry? lost your UBC bus pass???

  24. I was a painter as a full time student at UBC to get by, when painting luxury homes owned by vietnamese and italians in east vancouver had to move furniture from walls only to find loadad guns. The owners smiled and tipped generously, i continued with work, no questions, no answers. i guess many people can still afford this town

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