Monthly Archives: July 2011

Salt Spring: 2 to 6 years of inventory – “You may own a million dollar property, you just can’t sell it in a reasonable time, unless you discount the property heavily.”

“Salt Spring: 3 house sales in the last 30 days and 221 properties listed for sale. That’s 6 YEARS of inventory! Of course that is ridiculous, evened out over the last year its more like 2 years of inventory. But the point is the same. You may own a million dollar property on Salt Spring, – you just can’t sell it in a reasonable time, unless you discount the property heavily.”
– JustJack at HouseHuntVictoria, as cited by chip at VCI, 25 July 2011 9:17pm

Westside New Build Calamity – “The house is for sale for $2.7M at the moment.”

rmac at VREAA 21 July 2011 4:01pm“The house next door to ours (on West 21st) was constructed by casual labourers that were trucked in daily from Surrey – not much English between them but they did anything required, including discovering an old oil tank and disguising it in a pile of debris to be hauled off. After the house was finished but before curtains were up we glanced in the front window from the sidewalk and noticed a veritable waterfall cascading out of the ceiling fixture. We called the real estate agent listed on the sign out front and hours later someone came to look at it. The never used plumbing in the bathroom had exploded. The water was cleaned up and the plumbing fixed but the wiring, light fixtures, hard wood floors were just left to dry out. Shortly after that the three stairs leading to the front porch came separated at the porch because no rebar had been used to tie in the stairs. That little faux pas was tiled over. The house is for sale for $2.7M at the moment.”

In a red-hot speculative ‘seller’s market’, construction standards disintegrate. Buyers get even less than what they would for lower prices in a more normal market. The ‘high-end’ has not escaped this effect. – vreaa

“I’m Peeved” [‘Vancouver RE-Verse'; Found Poem]

I’m peeved

I confess I am really angry that I have to
leave the city I was born and raised in
(where my parents and grandparents grew up)
because I can no longer afford to live here.

Why is it that we are working
more and more
but can afford
less and less.

- from Georgia Straight, 18 Jul 2011, ‘Confessions’ section
[also made the print edition this week; hat-tip to AR]

A post in the very, very occasional ‘Vancouver RE-Verse’ [Found Poems] series.
Poems are completely unedited but for layout.
Prior example here.

Victoria – “But this is my goal. A house by 55.” – “Renting’s the only sane option. But I know from his conversation with me, that ain’t gonna happen.”

Garth Turner at greaterfool.ca 17 Jul 2011 relays this story from Jake in Victoria -
“I just turned 50. I married in 96 and then started thinking about purchasing a house. Should have bought something but had no cash, no down payment, and job wasn’t that good. But then things picked up. Starting saving, had 2 kids, moved to a small rental house.
But in 2001 prices started spiralling out of control, and even though my income and savings increased, I am still chasing the market up. I could rent a much better and bigger house than I could ever buy, so did just that. But I am running out of time.
So if I wait until 2013 or 2015 to buy in, and I could as I have now saved, I will be 54 by then and ready to retire. And every rent payment is going right out the door, I don’t even want to think how much I have spent on rent in the last 15 years, I could have bought 3 houses.
I work for Government, and my pension from BC Pension Corp starts at 55. I have 31,000 in an RESP, and 90,000 in RRSP money, of which 50,000 was destined for the HBP. 5,000 in a TFSA.
Am I screwed as far as owning a 4 BDR House in Victoria? Is it time to throw in the towel on my dream, rent til the kids are gone, and then buy a 76 Winnebago and live off the land?”
“I am not whining about my position in life, I thank God for what I have, I know I am in a better position than some that have shared their stories on the blog,” he said, “but this is my goal. A house by 55.”

GT added this sensible analysis: “Following up, I found his two kids are 11 and 13, his wife doesn’t work, the family income is seventy grand, he’s desperate to retire at 55 and his pension will be $2,800 a month gross. So here is the situation – devoid of emotion.
The average SFH in that city is $630,000. His down payment will max out at $80,000 (with the HBP and cashing in his TFSA plus the rest of his RSPs). That’s 12% down, which means (with closing costs) a mortgage of $562,600. Of course, he can’t risk going variable since rates have nowhere to go but up, so a 4% fiver amortized over 30 years would cost $2,734 a month, and then escalate. With property tax and insurance, that climbs to $3,134.
His pension income, after tax (at 20.6%), would be $2,416 a month. So, carrying the house would take 129% of his income. No food. No gas. No cable TV or new clothes. No car. And only $31,000 in RESPs to help his two kids through a collective eight years of university.
See what I mean? Home ownership’s a dream denied by his own financial reality.
The only hope might be to move to rural New Brunswick, buy a place for $139,000, shoulder a mortgage in retirement, and have zero savings. Or, Jake could rent for 50% of his after-tax pension income, still have money to live, plus $95,000 invested.
If financial security and quality of life are the goal, renting’s the only sane option. But I know from his conversation with me, that ain’t gonna happen.”

“I work long hours to be able to pay for a house. I drive long distances to get to and from work. I barely do anything in my expensive house other than sleep and go back to work each day.”

“A caller on the Bill Good show this morning [29 July 2011, as recalled by E.G. at VREAA] was saying something to the effect of his being not sure why he bothers living in the Lower Mainland anymore:
Caller (Paraphrased): “I work long hours to be able to pay for a house. I drive long distances to get to and from work. I barely do anything in my expensive house other than sleep and go back to work each day. And on top of that (speaking about the upcoming additional gas tax) every time I turn around I’m being taxed for something else.”
Mr. Good: “I think that you’re speaking for thousands of people right now.”

When the speculative bubble deflates, as all bubbles inevitably do, these “thousands of people” will be in an even worse situation, as their “expensive homes” will be significantly less expensive, but they won’t be in a position to benefit from that. Their mortgages, workload, commutes, and taxes will all be just as onerous as before. And because our economy is so overdependent on RE, some will have the added burden of their employment and/or income being in jeopardy.
Can we imagine how demoralizing all that is going to be?
The misallocation of resources caused by speculative manias is deeply detrimental to a society, in so many different ways.
– vreaa

Ottawa – “She then tells us the owners have already bought another place, unconditionally, and that they MUST sell.”

Bottoms_Up at greaterfool.ca 17 Jul 2011 9:33pm -
“Prestigious area north of Ottawa. Show up at the end of the open house.
Agent tells us that we’re only the second group through the house (and that the first group was ‘really interested’ but they have just leased a place — I said, ‘they can always break the lease’, and she just looked at me confused).
She then tells us the owners have already bought a place, unconditionally, and that they MUST sell (isn’t this a conflict of interest/breach of trust?!).”

“I can’t tell you how many people have informed me of their imagined real estate profits in the past few years, but I can tell you that not a single one of them has actually sold anything and taken those profits.”

“I can’t tell you how many people have informed me of their imagined real estate profits in the past few years, but I can tell you none, and I mean not a single one of them has actually sold anything and taken those profits… but they’ve sure as hell spent them thanks to 2nd mortgages.
The whole “best investment you’ll ever make!” sales pitch falls apart when owners realize they’ll have to either move to a smaller home, distant suburb or back into a rental.”

‘nobody you know’ on VREAA 24 Jul 2011 11:33pm

Speculative holders. – vreaa