“Happened to my Mom in the very early 80′s. She was an agent at the time and was buying up everything. Condos, houses and “making” a fortune. She looked brilliant until… well she didn’t. Lost it all, and I mean all. Never did recover. I was only around 9ish at the time but I remember before she lost it all that her, business partner, heck everyone was saying it’s only going up up up, buy buy buy, but instead it was bankrupt bankrupt bankrupt.”
- DaMann at vancouvercondo.info August 3rd, 2011 at 2:58 pm
“Same with my Dad, a realtor in the early 80′s who thought he was smart and scooped up a bunch of places. He lost everything, we ended up going from rich to renting a small place, I was only 14 but I remember like it was yesterday. Right, Vancouver is “different”
- Anonymous at vancouvercondo.info August 3rd, 2011 at 3:32 pm
Huh. When my folks were just starting out, they bought at the exact wrong time in early 80s. That decision – coupled with selling at the wrong time years later – seriously hobbled their personal finances. I’d even say the echoes of those choices are still bouncing around today as they ponder retirement. And while I know I’ve had some success in hammering home the points about the present market – they agree that things aren’t sustainable at present levels – they still seem to have trouble accepting the level of folly our society has embraced.
I can say, without any equivocation, that when I found myself in a position a few years ago where 1) I had some money and 2) I knew I was going to be trying to build a life here, it was their mistakes and misfortune that initially drove me to educate myself on why prices here were so high.
Oh how quickly we forget history.
It took less than 8 years for people who bought at the tippy-top of the ’80′s crash to be made whole again:
http://vreaa.files.wordpress.com/2010/09/vreta-chart-0-lines.jpg
Plus they had a place to live.
You have to time these crashes absolutely perfectly if you plan to profit from them. If your timing is off, like the majority of Vancouver RE bear bloggers (by upwards of 3 years or more in most cases), you will most likely fall behind the curve.
Actually, when adjusted for inflation, it took 24 years.
http://cuer.sauder.ubc.ca/cma/data/HousingPrices/housing-pri-vancouver.pdf
But you are right – make the wrong choice and it will take a very long time to catch up.
Nice!
Actually, adjusted for inflation, our current run-up looks less ominous (okay, it’s steel steep but then so is gold). And the majority of buyers in your chart would have been whole after 10 years (we need volume in these RE charts). And, these charts do not account for the dividends (rent) that RE generates.
Further, the buy point is when nominal price meets real price, around 2001/02, and since then house house prices have merely been tracking inflation.
Not saying RE is a screaming buy here, especially West side – though how many readers will ever be able to afford West side, massive correction or not? 5%? So why does it get the bulk of commentary?
You can still buy a modest East Van home with a suite for a 3-5% cap rate. If you are a two income family, this is not egregious.
“If you are a two income family”
Indeed.
blammo -> “…since then [2001/02] house prices have merely been tracking inflation…”
…
We see what you mean, the real and nominal prices look vaguely similar 2002-2007, but prices have actually very definitely not been tracking inflation.
In Vancouver prices have doubled, trebled, quadrupled from 2001-2011.
Perhaps you should look again and try a little harder this time -
Housing prices only tracked inflation from about 2002 to about 2005. After 2005 the trajectories clearly begin to diverge again. The chart ends in 2007. Care to guess what an updated version might look like?
And despite your crafty deflection, the point stands. To wit:
Anybody who bought near the peak of the last bubble had negative price appeciation for 24 years.
Anybody who bought anytime over the next eight years was better off.
That is to say, it is not necesary to pick the bottom. It is sufficient to avoid the top.
My point is, who can pick the top precisely in real time? People have been bearish on Vancouver RE since 2005 and earlier. This site for 3 going on 4 years but there were many more before it.
There are many who have been trying to avoid the top for 6+ years.
Dude, have you been to East Van! 3% cap rate with suite on double income. You have got to be kidding – you are either a blind fool or an idiot.
In 1986 I was fortunate enough to buy someone else’s loss when I bought my first house for $105,000 which the previous owner had bought for $135,000. Small numbers by today standards, but large by a percentage standard. I also watched in the 1990s as a dear colleague bought and flipped one condo too many and lost it all when the hot market came to a screaming halt. The monetary loss sent him into state which resulted in him losing his job. He never recovered.
This happened to my dad too but he was able to bounce back.
And if prices crash going forward most will bounce back this time too. But it’s the ones who just don’t quite make it who bears will be buying from, not your proverbial dad.
Apparently, there are still quite a lot of people that do believe we are not in a real estate bubble. The following comment was taken from the comment section of a cbc article “Bank of Canada faces interest rate dilemma”
“The housing bubble in Canada is fictional. Prices dropped in Vancouver because the Olympics are over and there are less foreigners buying, it has nothing to do with them being unaffordable… If you can’t afford $500K for a 600 sq ft condo, can you afford $450K? Can you afford $400K? The difference is only $400 to $500 a month which in downtown Vancouver is not a lot of money… If you can’t afford to live in downtown Van, then buy in Abbotsford and take the train in to work, you pay 1/2 the price and get twice the footage… If you want to live in one of the worlds most densely populated areas, then you pay the price…”
The article can be found here: http://www.cbc.ca/news/business/story/2011/08/10/canada-interest-rates.html
“If you want to live in one of the worlds most densely populated areas, then you pay the price”<<<<<<<<<<
This poor guy Doesn't get out much… however, we can't blame him for his ignorance because most of the people in Vancouver are this shallow and un-educated about what happens WEST of Vancouver Island; that is unless guys like Ozzy Jurrock feed them the lines about how Vancouver is the best rah, rah, rah.
Been there and smelt "real" over populated cities… Vancouver?? Child's play.
Dad lost it all too, the nice house in the burbs, several companies and his wife. He was a builder/developer in the Toronto area. He eventually climbed back and made it big, but it took 15 years working in another industry and country.
Not interesting in going down his path
Oooops….
[Bloomberg] – Hong Kong Apartment Sellers Cut Asking Prices as 70% Property Surge Ends
“Derek Ma and his family in May sold two of their eight properties in Hong Kong, doubling their money in four years. They’re struggling to sell the other six. “We have been trying to offload more, but many sellers are now cutting prices,” said Ma, 36, whose portfolio includes units mainly in the upscale Mid-levels and Island South districts. “There’s definitely a softening in prices.” Hong Kong home values, which surged 70 percent in the past two-and-a-half years and outperformed stocks, are set for their biggest decline since Lehman Brothers Holdings Inc. collapsed in September 2008 as land supply increases and global growth slows.”…
http://tinyurl.com/4y7t43t
[Bloomberg] – Hong Kong Recession Risk Is Global Warning, Most Accurate Forecaster Says
““Global demand is really weak and we expect the U.S. and Europe will see a sharp slowdown, or near-zero growth, next year,” Lai said in a phone interview in the city today. “A recession is a reality for Hong Kong.” An 11 percent decline in Hong Kong’s merchandise exports in the second quarter from the previous three months highlights the weakness, Lai said. In a note, he described the economy as the world’s “most externally-driven” and said that a slump has “grave implications.” …
http://tinyurl.com/43butp7