“Had a picnic with a couple in their 30s yesterday.
He is currently unemployed. She is part-time student and works as a professional but not in a high paying field.
He currently owns two condos and they have been looking to buy a home in East Van. They figure it will cost about $800,000 with around another $100,000 worth of renovations.
He expressed a little frustration that the bank wouldn’t give him a mortgage given his current employment status and also would not allow him to borrow against the full “equity” he has in the two condos.
But he is moving ahead with the assumption that he will get a six figure income in the next couple months and he will be able to sell one of his condos easily.
I expressed my view that not being able to buy another house is a good thing given the fact that home values are about to take a substantial hit.
Despite the fact I have studied finance and economics at the post-graduate level (and they have little training in this area) my comment was ignored.”
- b5baxter at vancouvercondo.info 11 Sep 2011 8:49am
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- buy cheap digital cameras on MSM Continue To Pump RE – “What’s next? “Cigarettes found to extend lifetime: Marlboro?”
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- bailinginbc on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Real Estate Tsunami on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Real Estate Tsunami on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- LadyInWaiting on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Nemesis on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- terminalcitygirl on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Xyz on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- rod_jonsson on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- terminalcitygirl on “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
Type of Anecdote
- 01. He Said, She Said (247)
- 02. Profiting from the Boom (441)
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- 04. Changed my Career (38)
- 05. Where do Buyers get the money? (958)
- 06. Held my Nose and Leapt (96)
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- 15. Misallocation of Resources (958)
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- 17. The Froogle Scott Chronicles (27)
- 18. Spot The Speculator (171)
- 19. BlastRadiusPostCards (17)
- 20. The Limitless Demand Argument For Ongoing Market Strength (70)
- 21. Vancouver RE-Verse [Found Poems] (8)
- 22. RE References In Popular Culture (41)
- 23. Jumping The Shark (1)
- 24. Policies On Housing (10)
- 25. Epigrams For The Bubble (1)
- 26. Premature Calls Of "Bottom" (3)
- 27. Seller Panic (3)
- 28. Erroneous Causation Theories For Falling Prices (7)
- 29. Bubblespeak (1)
- Uncategorized (176)
Blogroll
- 01 Vancouver Condo Info
- 02 AmericaCanada [retired, no archive]
- 03 Housing Analysis
- 04 RealEstateTalks BC
- 05 Vancouver RE and then some
- 06 Whispers from the Village on the Edge of the Rainforest
- 07 Greater Fool
- 08 Canada Bubble
- 09 Rob Chipman's blog
- 10 YatterMatters
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Latest Anecdotes:
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
- Rumor that some OV units will be reduced by 20%.
- Downside Weights On The Vancouver RE Market – “One of the older guys (over 60) mention to the guy beside him that he and his wife were thinking about selling their family home, and renting, in order to get some of the money that was locked up in the house.”
- “My buddy was looking to upgrade to a house in the Coquitlam area. With 200k extra for a home, that’s half of lifetime saving between him and his wife.”
- “I was walking in the Fraser neighborhood yesterday, I noticed that the population, on average, seem to be composed of workers. I belong to the top 5 percent in terms of income. Nevertheless, I cannot afford any of the houses for sale in that neighbourhood.”
- “Vancouver is an urban resort whose value mostly resides in its real estate and not much else.”
- “Rogers Communications is expanding into RE; aiming to relaunch website; providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.”
- I’m only 50 and I can just about retire if I want to, all because of a single simple decision – “When prices rebounded to their former highs, then rocketed another 30% higher to what I considered to be totally unsustainable levels, I decided that only a fool would pass up a second opportunity to harvest such a massive non-taxable capital gain, and in 2011 I sold my place.”
- The Vacant Lot of Versailles, Richmond.
- “I don’t think that most people think things are going to crash, just that there is going to be a slight correction, but it was amazing to me how sentiment has changed, and the fact Vancouver RE is too high was just understood.”
- “The ‘investor’ who purchased our house put it up for sale two months later, in January 1981, but the bubble had burst.”
- For A City To Have That Kind Of Vacancy, It’s Like Cancer – “Downtown, the vacant unit rate is so high that it’s as though there were 35 towers at 20 storeys apiece – all empty.”
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Why let reality interfere with one’s real estate dreams?
dont blame your friend not listening to you. he has two condos, and you have a piece of paper hanging on the wall!
Fred ->
1. What percentage of your net-worth is in Vancouver/BC RE ?:
(a) 80%
(b) 100%
(c) 400%
(d) 500%
(e) >1000%
See here for various scenarios leading to responses (a)-(e).
The point is that the vast majority of Vancouver RE owners are very, very overexposed to RE.
Even moreso those in RE and construction related industries, where income, too, is dependent on the RE market.
So, Fred, tell us about your exposure.
even if Fred’s net worth is 80% real estate…this 20% if likely 10-12x your total net worth.
I don’t know any rich renters. Perhaps they’re out there but I don’t know any and neither do my friends.
@Fred: Paper, huh. b5baxter’s paper (degree) reflects training/skills he may be able to use to generate wealth (in Vancouver OR ELSEWHERE). The friend’s paper (deed, mortgage)? That’s the only place where his wealth resides.
yeah wake up! your freind owns real estate..,
aka hes better than you and your fancy book learning.
He doesn’t “have” two condos. What he has is hundreds of thousands of dollars in debt, requiring monthly payments, and he wants to add a million more. And no job.
VREAA, stop playing the logic card, damnit! It serves only to confuse and bewilder.
Though Fred, I gotta ask: Do you believe real estate prices only increase? And if you do, have you been to the United States lately? Or the Okanagan? Or even right next door in the Fraser Valley? That’s right, Fred, depsite rock-bottom interest rates and the orgasmic squeals of Vancouver non-news anchors, the corrrection is just outside the gates of the best rainforest on earth. It knows we’re out of money. And it wants in. It wants you, Fred.
Gord,
Seriously, you should write a horror novel…Stephen King style…Fred is going to have nightmares…lol
Just got a talk with a colleague of mine this morning. She bought a condo for $400K in 2008 in kits, and sold it last week. Lost $50K total (transaction costs included). Happily renting now.
RE ownership always a winner?
Agreed, to be honest, the rise has not been across the board from the 08 prices, condo prices hit the top in 08 and have not gone back up to that level yet. It’s the SFH that has really heated the market.
Actually, if he can land his 6 figure job and sell one of his condos (which I presume is worth around 400K say) then he is not in that bad of a shape. So he has 400K down on a 900K house with a 6 figure income plus his wife’s plus rental income from the other condo. The picture is not as bleak as it seems unless he can’t land his 6 figure job, then he is simply dreaming.
i wouldnt worry if were him, vancouver is chalk full of 6 figure jobs.
doctor
stock swindler/promoter
head of govt agency
real estate developer
etc…
And add to the fact that the interest rate is going to be ridiculously low for a couple of years, so he does a variable rate at 2.25% and then lock it in a couple of years. And if he has a rental suite in this place then it will mean that he can probably get around 2K from the condo that he didn’t sell plus his rental suite. I am not sure if this is a good example of a speculator, I have seen worse than this to be honest. So there are 2 caveats:
1. If he can’t land this job of his, then all is out of the window.
2. If any of his condos still carry a mortgage, then this isn’t going to work.
But say if these 2 caveats are not true, then you have 500K in debt versus about 100K plus 2K * 12 + whatever his wife makes, so let’s say 25K, around 150K of income servicing 500K of debt at a low rate for a couple of years.
Somehow I seriously doubt their condos are mortgage free. Also 6 figure job? I wonder what his field is.
So by locking in a variable rate you mean he has to pay a prime-minus loan for 2 years or suffers termination penalty if he sells early. Or do you mean he locks in a variable rate at a fixed rate. Credit marketz r hrd.
In bond land he’s what they call “rogue”.
I mean a closed mortgage at a prime minus rate, currently he can probably get prime minus 0.75. He’ll have to pay a penalty as any open mortgage is now prime plus. But what I am saying is that either way, the situation doesn’t look that bad for him from a debt versus income view as long as my assumptions hold true.
” the situation doesn’t look that bad for him from a debt versus income view”
Of course it doesn’t from that “view”. The same can be said for someone with negative equity. I’ll put it in bold, not for you of course, but for others who might be reading:
Current debt payments are only one part of the calculation. Future debt payments, solvency and liquidity are equally as important.
This is a reason why capital assets historically trade with a bigger spread. Credit, duration, and solvency risk are currently not properly priced in.
Look it’s pretty simple case here. You with your fancy degree is viewed as just some plain bookworm with no street smarts and experience in real life. The friend couple with the 2 condos got the street smarts and succeed in life and the proof is that they have 2 condos and have a higher asset base than you. That’s really how most people judge this stuff. If you were so damn smart with your degrees, why aren’t you already rich and retired with big mansion and RE portfolio? The fact that you aren’t must mean you aren’t smart and don’t know how to get rich.
Is this logical or reasonable? Does it really matter? People treat their perceptions are reality and act accordingly. You can argue ’til the cows come home but that isn’t going to change anything. The easiest and maye best thing to do is give one warning and just go along.
Why? He does not need a six figure job. If the bank refuses to loan him some money, he should try one of the private lenders. They are more than happy to lend to savvy NINJAs so why not to him. He already has “assets” (mortgages on the condos – that is an asset in Vancouver’s bizarro world).
I say: Go to a private lender, borrow as much as you can and buy a beautiful fixer upper on E Hastings.
“He expressed a little frustration that the bank wouldn’t give him a mortgage given his current employment status and also would not allow him to borrow against the full “equity” he has in the two condos.”
This alone is scary