“I’ve got friends in Vancouver, and I’m sort of horrified and entranced by the situation. Half a million is a lot of money. This bubble just baffles me. Canada has land. Canada has trees. WTF?”

Yank at VREAA 4 July 2011 6:39pm -
“I’m a US ex-pat living in Canada, enjoying the country and the people very much. For bubblelicious reasons, I’m concerned about buying — especially as I might not be in town for more then 5 years. I’m not in Vancouver — prices are just mildly insane in the prairie city where I live. I’ve got friends in Vancouver, and I’m sort of horrified, entranced, and baffled by the situation.
Until recently I was living in the medical and university center in a rural midwestern state. My small city had the most expensive housing in the state: 5000 square foot mansions were going for 400 – 500K. A large 2 story was going for 200-300K. Townhouses with 2story attached garages, 1400 square feet, not including the finished basements, new construction were selling for 150K.
About a year ago friends bought a detached house in a nice area near Greenlake (Seattle) for 350K. You can get a good house in the nicest suburbs of Chicago, with the best public schools in the nation for half a mil. (Northbrook, Glenview, Willmette, Evanston). I’ve also seen nice two stories in those suburbs for as low at 350K.
Half a mil is a lot of money. This bubble just baffles me. Canada has land. Canada has trees. WTF?”

We also experience the bafflement, the horror, the entrancement.
And the fascination appears to have gone up a notch this last 6 months.
It’s like we’re watching a freak show and the rubber man is pushing limits we hadn’t anticipated.
Even his handlers are aghast; surely he can’t do that without hurting himself? – vreaa

‘The Canadian National Museum of the Perils of Excess, Hubris, and Fantasy’

This 65,000 sqft, $25M ask, incomplete home in rural Ontario, featured in ‘Few Offers For Canada’s Biggest Fixer Upper’, G&M 19 Apr 2011.

Here’s an idea: When most opportune, secure this behemoth for the nation of Canada (we should get it for pennies; perhaps even for owed back-taxes), and turn it into ‘The Canadian National Museum of the Perils of Excess, Hubris, and Fantasy’. Exhibits to include images and testimonials from great Canadian bubbles and frauds. Educate young people about infatuation, debt, and ponzi schemes. A pilgrimage destination  for realists. Also incorporating a residential reform program for recovering debtors.
A monument to a golden age with feet of clay. – vreaa

“The janitor recommended that she get her daughter working as soon as possible doing “anything” so she can buy real estate as soon as possible since “that’s the only way she’s going to get rich.”

granite countertop at VREAA 5 July 2011 at 10:21 am -
“A friend of mine, she’s an American, works in Richmond, was talking to the janitor at her workplace. He is ethnically Chinese but doesn’t have much accent, so he’s probably been here for decades.
She mentioned that she had a teenaged daughter. He recommended that she get her daughter working as soon as possible doing “anything” so she can buy real estate as soon as possible since “that’s the only way she’s going to get rich.” My friend’s replied that the area was in a bubble, but the janitor assured her that an endless flow of Chinese money would keep the market going up. My friend had made a bit of money owning a house before moving to Canada, but then she’s watched her home country’s market tank, doesn’t have trouble imagining the local market tanking.
Three things weren’t clear:
What exactly was a teenager supposed to do to make enough to afford any sort of down payment? There’s one profession a teenage girl could make enough money in, but I’ll assume the janitor was just real estate crazed and not disgusting in other ways, and that he wasn’t suggesting she get into that.
Why did he suggest the daughter get into real estate? When I asked her, she jokingly said “Oh, maybe he figures I’m too old, it’s too late for me.” I pointed out to my friend that he probably assumed she already owned.
Are there teenagers being pushed by their parents into actually trying to do this?”

“The city seems hellbent on turning Vancouver into a giant suburb. Right now it’s home but not sure if it will always be the case.”

Christopher at francesbula.com Jun 23, 2011 at 11:45 am -
“An interesting question to ask is, without the usual talk of “beauty, nature, 2 minute walk to the ocean, biking the seawall, etc” what do we have? If that were not here, how many would flee?
I was born in Winnipeg and moved here as a child and i often go back to visit family. People often joke they would never live in a city like Winnipeg yet despite its lack of size and style often has more arts and cultural events happening in the city than Vancouver does…and bonus, you can buy a house! this isn’t an endorsement for Winnipeg but when me and my wife think of leaving Vancouver the only thing that keeps us here is the ability to live a “urban” lifestyle without being stuck in the city all the time (escaping to third beach, etc).
I know there are many people in the art, music, etc scene that are trying their hardest to make Vancouver more vibrant and I applaud and support that effort but the city seems hellbent on turning Vancouver into a giant suburb. I won’t be surprised when a cactus club opens up on main street or an american eagle on commercial. It feels like we’re headed that way.
I really like Vancouver but compared to most other cities it’s not that diverse, exciting or affordable. Right now it’s home but not sure if it will always be the case. I think a lot of young(ish) adults we know are feeling this way. A lot of our friends have recently moved to Toronto or abroad.”

What Makes For A Great City? – “…an inventory of the possible, a place of imagination that attracts ambitious migrants, families and entrepreneurs.”

“Vancouver is a world class city, and it is embarrassing and shameful to see the type of violence and disorder we’ve seen tonight.” – Vancouver Mayor Gregor Robertson, who had earlier hailed the city’s Stanley Cup crowd experience as unprecedented in North America. [G&M, 16 Jun 2011]

“This is wrong for the city, this isn’t the reputation we want. After the Olympics we did so much to bring this city to where it is today… and this is what we do now? This is not what the city wants.” – unnamed Canuck fan on BBC TV news, ‘Vancouver: Riots after Canucks’ Stanley Cup defeat’, 16 Jun 2011

“What does “world class city” mean, anyway? (I had never heard this phrase until I came to Canada.)” – Yank at VREAA, 16 Jun 2011 11:07am

“My wife and I are in our mid-30s with what others would call wildly successful careers here. We, however, hate the lack of any real economy or even culture… Despite the fact that it would mean essentially re-starting our careers, we are seriously thinking about moving to Seattle or San Diego or at least elsewhere in Canada. There is no way we would pick Vancouver as our home if starting again from scratch.” – bubbles at VREAA 27 Jun 2011 6:45am (also headlined 8 Jul 2011)

“It seems to me what makes for great cities in history are not measurements of safety, sanitation or homogeneity but economic growth, cultural diversity and social dynamism. A great city, as Rene Descartes wrote of 17th century Amsterdam, should be “an inventory of the possible,” a place of imagination that attracts ambitious migrants, families and entrepreneurs. Such places are aspirational – they draw people not for a restful visit or elegant repast but to achieve some sort of upward mobility.” – from “Why the ‘Livable Cities’ rankings are wrong”, by Joel Kotkin, newgeography.com, 10 Aug 2009 [hat-tip 'mezzanine']

The speculative mania in Vancouver’s Real Estate has resulted in purchase prices of accommodations that are two, three or even four times fundamental value. This has profoundly distorted the composition of people moving to Vancouver. It has attracted more and more of those who are already wealthy: older people looking for rest, recreation and security. They don’t come here to work, generate ideas, or build new things.
Those who are young, ambitious, have a desire to try out new ideas, want to start families, want opportunities for off-spring, want to work and create, are avoiding Vancouver. They are either leaving, or not coming here in the first place.
This is not a recipe for a Great City, it is a recipe for Stagnation; these forces are steadily turning Vancouver into a stagnant mega-suburb resort. – vreaa

“My wife and I are in our mid-30s with what others would call wildly successful careers here. We are seriously thinking about moving to Seattle or San Diego or at least elsewhere in Canada.”

bubbles at VREAA 27 Jun 201 6:45am -
“My wife and I are in our mid-30s with what others would call wildly successful careers here. We, however, hate the lack of any real economy or even culture coupled with the insecurity-manifesting-as-egomania of most residents. If I have to hear one more time about how Vancouver is the best place on earth from someone who’s never visited any other major centre in Canada (let alone the world) I’ll scream. Yes, the outdoor activities are nice, but experience living elsewhere has taught me that Vancouver residents do not have a monopoly on their pursuit. Despite the fact that it would mean essentially re-starting our careers, we are seriously thinking about moving to Seattle or San Diego or at least elsewhere in Canada. There is no way we would pick Vancouver as our home if starting again from scratch.”

“What does New York have that British Columbia does not?” [Let me count the ways...]

tdma800 at RE Talks 9 Jun 2011 7:59pm – “If you don’t want to see live theatre, and don’t like to work in the financial industry, what does New York have that British Columbia does not?”

Wow, where do you start?
Reminiscent of “What have the Romans done for us?”….
We thought we’d pop this up as a free educational service to tdma800 and others who have never left the 604 area code.
Readers thoughts?

[Why exactly is this relevant to a discussion of Vancouver RE? Well, next time you get into a bidding war for a Yaletown Condo, remember that one (all?) of your competitors may be thinking "After all, what does New York have that Vancouver does not?" as he pumps that bid 33% over ask.]

We’ll start us off below by listing some fairly standard stuff about NYC itself; we’re sure to be missing lots. (That’s something else about NYC, even its fans have only scratched the surface…)
In no particular order:
1. MoMA
2. Strand Books
3. The Cloisters
4. The Chrysler Building
5. The Village Vanguard (and how many dozen other jazz clubs?)
6. The Met
7. The American Museum of Natural History
8. Washington Square
9. Staten Island Ferry
10. The NYC Marathon
11. Positive Cash Flow Residential Real-Estate (made that up; much closer, anyway -ed.)
12. The Macy’s Thanksgiving Day Parade
13. The Yankees, The Mets
14. Madison Square Gardens
15. Central Park
16. Chelsea (20 streets of private art galleries)
17. Carnegie Hall
18. The Subway
19. The Lincoln Centre
20. Times Square
21. Actual Newspapers
22. The Whitney
23. Actual Industry (deserves own list)
24. 48 Million tourists per annum
25. The US Tennis Open
26. The Knicks
27. $1.3 Trillion GDP (NYC metro alone)
28. The Guggenheim
29. The Fifth Avenue Mile
30. The Chelsea Hotel
31. The Frick
32. A setting for lots of books
33. Fashion
34. The High Line
35. Eraserhead, recent midnight show
36. Chocolate exports of $250M p.a.
37. Food manufacturing $5B p.a.
38. Bowery Ballroom
39. Joe’s Pub
40. Public Transit Nostalgia
41. The Zoo
42…. etc etc etc etc
[please post own examples: 'Debate'?; 'Diverse opinions'?; ??]

[PS: We LOVE Vancouver, it's a very fine city, that's why we live here, but it simply ain't NYC.]

“The average retail lease rate on Robson is $194 US per square foot, less than one-tenth the price on Fifth Avenue in New York and significantly less than lease rates on comparable streets in London, Paris and Hong Kong.”

From ‘Robson retail space a bargain on world stage’, Vancouver Sun, 8 Jun 2011 [hat-tip SethM/Greenhorn] -
“Retail space on Robson is a bargain compared to high-end fashion hubs in the U.S. and around the world, according to a Colliers International report.
The average lease rate on Robson is $194 US per square foot, less than one-tenth the price on Fifth Avenue in New York and significantly less than lease rates on comparable streets in London, Paris and Hong Kong.
Robson is the third most expensive street in Canada behind Bloor Street in Toronto ($292) and Ste-Catherine Street in Montreal ($204). Victoria and Calgary clock in at $53 a square foot.
But Drew Keddy, Colliers vice-president, Canada, and national retail leader for the real estate company, expects Canadian lease rates to climb as vacancy rates trend down and U.S. retailers like Target move north. …
As for Toronto outranking Vancouver on retail lease rates, Keddy said the Ontario city remains the top “internationally exposed city” in Canada despite the spotlight that shone on Vancouver during the 2010 Olympics -and despite our superior hockey team. “Toronto is probably a more established international city,” Keddy said. “Vancouver’s really been coming on the scene in the last decade or two.”
—
So, Vancouver RE prices are in the same ballpark as those in Manhattan, but retail space lease rates are 90% less. Hmmmmm.. let’s think about how this aberration could reconcile itself… (Hint: does not involve Vancouver retail lease rates rising by a factor of ten…) – vreaa

“We moved to the interior of BC years ago. We have friends and family in Vancouver, and we like to visit. But we can’t imagine living there anymore.”

E.G. at VREAA 25 June 2011 at 1:56 pm-
“My family and I moved to the interior of BC years ago, and we aren’t looking back. We have friends and family in Vancouver, and we like to visit. But we can’t imagine living there anymore.
Yes, we get more snow in the interior. And the temperatures are colder for about four months of the year. But during those cold months it’s raining continually in Vancouver. So pick your poison. And during the rest of the year we’re as warm, or warmer. And the sun is out so much of the time in comparison… even when it’s cold.
We can’t imagine trying to buy a house in Vancouver. And we know that if we did both my wife and I would have to work, rather than having the option of one of us home with the kids. And, not only work, but commute a couple of hours a day as well.
So we decided to live in a city where we could have time with our family and time with our community – where we wouldn’t be slaves to our mortgage in terms of our money and our time. And lots of other people here have chosen the same thing. And because of those choices by others and ourselves we can enjoy neighborhoods that are much like south Burnaby – and so many other parts of the Lower Mainland – used to be.
On top of that, people here have well-paying jobs and, with lower mortgages and lower fuel costs, they have the extra money to go to Maui for a couple of weeks in the winter. Or to get that cottage by the lake. Or… well, you get the picture.
Of course, the average Lower Mainlander will read this and say, “well, yes, but we’d have to live in the Interior.”
Yup, you would. Either the Interior or some other part of Canada.”

Opinion – “Providing for your child’s future means making sacrifices and perhaps taking on risk and debts you would not have imagined yourself doing.”

rusty at VREAA 2 July 2011 at 2:15pm -
“What’s your long range plan? Not owning means you have no assets to pass to your children. This is what it’s all about my friend; passing your wealth to your children. Yours will need to leave town and provide for their own future because you’re still pissing your money away on rent and toys. Providing for your child’s future means making sacrifices and perhaps taking on risk and debts you would not have imagined yourself doing. There’s no textbook or UBC course for this – just use common sense…if you’re not passing wealth to your children and others are for theirs, how much of a disadvantage will your kids be at? Take a look around you – those parents that are passing wealth off to their kids today are helping them buy Vancouver homes. And the parents that aren’t? Those kids are moving out of town, or renting or raising their kids in condos. You have the benefit of insight a generation before this happens to your kids.”

Whether you agree with rusty or not, you have to acknowledge that this way of thinking is part of what is driving buying in Vancouver. It is one facet of ’buy-now-or-be-priced-out-forever’ thinking. Over the last ten years, those who don’t own have not been able to expand their net-worth as rapidly or as easily as their owning peers. It thus seems to many that the only road to wealth and security, for oneself and one’s family, is by owning real estate. It drives new buyers to overextend and overbid, to go into that much more debt than is prudent.
There are no safety brakes: the Governor of the Bank of Canada may occasionally make speeches imploring people to be prudent, but how many hear him, let alone listen? The majority only hear their extended family egging them on to buy, and their bank managers assuring them they are eligible for larger mortgages than they’d themselves imagined.
Built into this line of thought is the premise that prices will continue steadily upwards.
Almost needless to say, we find this line of argument fallacious. It is the kind of thinking that prevails when risk takers have been disproportionately rewarded for more than a decade. It prevails until it stops, and when it does stop, when prices plunge and the great Vancouver RE Debt Deleveraging begins, we’ll see who has actually provided for their future. -vreaa

0-Down Lending In Vancouver, circa June 2011

This from realtor Lesley Wagstaff’s website, archived here for the record. [hat-tip 'Patiently Waiting' at VCI]:

“In Vancouver, you need a family income of at least $250K per year to be able to afford a house, save for retirement, and save for your kids’ education. Unfortunately on $140K we can only do two of the above.”

ams at VREAA 1 July 2011 10:34pm-
“Vancouver was the place I wanted to move to from Toronto. I moved here in 2007, by accident, to do a project for a few months. I met the right woman and got married. What was a temporary assignment became home. Now that I have been here almost 5 years I am planning the family exit out of Vancouver. Vancouver will always be a very nice place to visit. As a place to raise a family and grow a high tech IT business it is not a good spot.
Based on detailed spreadsheets of our current family expenses we live a very modest lifestyle (we don’t own anything fancy). You need a family income of at least $250,000 per year to be able to afford a house, save for retirement, save for kids education. Unfortunately on a family income of $140,000 we can only do two of the above, so bye bye Vancouver hello Toronto. The issue with Vancouver is far deeper than just the housing bubble the economy is not diverse enough there are hardly any world class companies here and I don’t see why any major company would setup shop here than say Toronto, or Calgary.
April of 2012 we will leave, sell all our stuff move out of the rented place and head to Germany with the kids for the summer we will come back to Canada in September 2012 to Toronto, or who knows maybe we will stay in Germany till 2013.”

—

Note that ‘ams’ is not claiming that a family can’t ‘get by’ on $140K p.a. in this town. They are comparing the lifestyle and future security that their skills can earn them in Vancouver with what they can earn them elsewhere. It is not good for our community that those comparisons are leading to people leaving. The speculative mania in housing is resulting in loss of human capital. – vreaa

The US Dollar – Who You Gonna Listen To? ‘Some Anonymous Blogger’, Or Lindsay Lohan?

“Have you guys seen food and gas prices lately? U.S. $ will soon be worthless if the Fed keeps printing money!”
- Lindsay Lohan tweet 27 Jun 2011

Need any more evidence that the USD will rally? -ed.

Westside Owner – “I am grateful for what I have, I take care of my property and live frugally so I am able to pay mortgage and property tax. I am paying tax on an over-valued asset.”

notsellingyet at VREAA 25 June 2011 at 1:01 pm-
“In his movie, ‘Everything’s Gone Green,’ Douglas Coupland introduced a couple other means of livelihood in Vancouver–lottery scams and internet porn. Don’t know anybody involved in those ‘industries’ so not sure how much $$ those ‘jobs’ bring in. My husband and I bought a fixer-upper in westside Vancouver in 2000 (market still depressed) with down payment from our own savings and a gift from generous relatives. We diligently paid the mortgage over the years with hard-earned $$ from our respective white-collar jobs (medical research, computers). He passed away recently– I used his life insurance proceeds to gut the house and put in a rental basement suite. My total square footage increased 14.5%, while my property tax increased 33.3%, thanks to yearly tax increases, increase in my property assessment and property tax shifting (from business to residential properties) started by the NPA and continued by Gregor’s gov’t. In BC, property assessment values are based on market value (therefore influenced by skewed prices) and not replacement value. In this scenario, banks and municipal governments always win. Banks will keep enticing home owners with home equity loans they can’t afford based on unrealistically high property assessment values, and municipal gov’ts collect ever-increasing property taxes based on unsustainable, hyper-inflated market values. As far as I am concerned, market value is irrelevant as long as I don’t sell my house, but under the current property taxation system, I am paying for an over-valued asset which is clearly on paper only or, as poster DM has called it, ‘illusion of wealth.’
I am grateful for what I have, I take care of my property and live frugally so I am able to pay mortgage and property tax, but there may come a time when I may have to consider lottery scams — internet porn and drug peddling aren’t my thing. I also know I’ll keep buying goods via the internet (started during reno), and pick up from a relative’s place in WA state, or a mail receiving business in Blaine. I’ll bulk-buy to minimize cross-border travel. I hope as long as I am upfront with Canada Customs border agents, they’ll continue to wave me through without collecting sales taxes. Sorry, local businesses, I can’t support you much anymore–wanna join my future lottery ‘business?’
PS. The house across the street from mine has changed hands 2x in the last 18 months. A young family (from somewhere in the Far East, they did not venture out much) lived in it for approx 1 yr, then put the house up for sale in March this year. Sold in April, the house has been reno’d cosmetically since then, and will be back on the market soon. I’d like to see how much this one goes for.”

“We’d never had a HELOC until recently when we used $150,000 to purchase a home in Florida.”

Alison Griffith at moneyville.ca 28 Jun 2011. We believe she lives in or near Victoria. – “A senior branch employee e-mailed my husband and I to let us know the bank could do better on our, fairly typical, one per cent over prime, home equity line of credit.  The bank employee was honest enough to admit that clients get irate when the institution across the street is offering a better deal.  So she was taking upon herself to contact those with HELOCs to offer a rate drop.   We’d never had a HELOC until recently when we used $150,000 to purchase a home in Florida.   The credit line will remain in place only for a couple of years until we downsize our current home and pay it off.  Still, the .5 per cent reduction will save us $1,500 in interest over the next 24 months. “

This financial journalist now owns at least two properties, each in declining markets, with recently increased leverage.
We were talking to our bank manager: He volunteered that HELOCs were now extremely common in Vancouver, and went on to say that people like them because they make it easy to buy a second property. – vreaa

“The house prices, the sense of the city as a place where the main economic base is the city itself as a spectacle…”

Local civic-life commentator Frances Bula on her blog 22 Jun 2011 -
“I have a feeling that many people who once thought Vancouver was a good place to live are beginning to see it as a good place to visit only — stay a week, visit the sites, and then head back to home. The house prices, the sense of the city as a place where the main economic base is the city itself as a spectacle: those give the sense to some that it’s not really a city to live in any more.
I don’t feel that way myself. I’ve lived in the city proper for more than half my adult life. It feels workable to me, a place with neighborhoods and a sense of civic life. But are those of us who feel that way dying out?”

Toronto – “Everyone my age and younger is getting into these 500k+ mortgages, thinking they’ve arrived in life. I rent and feel no shame.”

“I live in the Mississauga/GTA, and virtually every billboard, bus shelter and cheap cable ad scroller is taken up by the smiling face of a real estate agent. The condos are still going up, the developments are still breaking ground….it’s a suburban nightmare.
My grandparents had a nice house on the other side of the city; the result of a lifetime of hard work and frugal living. They still travelled mind you, but they saved.
Everyone my age and younger is getting into these 500k+ mortgages, thinking they’ve arrived in life. What happens when interest rates go back to something realistic?
I rent and feel no shame. The ‘buy real estate’ strategy of my boomer parents doesn’t cut it anymore. It just isn’t affordable. There’s more to life than hardwood floors and granite countertops.”
- Dr Porkchop at zerohedge.com 24 Jun 2011 19:22