Monthly Archives: October 2011

“Over 7 years we have paid approx $250K in payments and took a whopping $80K off the principle. I knew at the outset how the math works but to actually be reminded of it really made this whole process hit home.”

“I ran by the bank to get my closing costs for cleaning up the mortgage. The payout is 415ish with the 5k penalty. So over 7 years we have paid approx $250K in payments and took a whopping $80K off the principle. LOL.. Now to be honest I did know how it works and I knew at the outset how the math works but to actually be reminded of it really made this whole process hit home.”
– Sean in Vancouver, as quoted by Garth Turner, at greaterfool.ca, 28 Oct 2011

“Canada’s recent economic performance has benefited greatly from a booming housing market, which has driven house prices, residential investment and construction employment to elevated levels. We see little hope of it rising much further.”

Excerpts from ‘Canada’s house of cards?’, BNN.ca, 28 Oct 2011 -
“Homeowner’s continue to hear a chorus of admonishments from the Department of Finance, the Bank of Canada and OSFI that these low interest rates will not be around forever,” Bank of America Merrill Lynch economist Sheryl King said in a recent note to clients. “However, we think the stronger signal households are receiving is from policy rates, which have held steady at 1.0 percent for 13-months now.”
King says roughly two out of three mortgages underwritten this year have been for a variable rate term, compared to a typical 25 to 30 percent share. …
“Over the past decade or more, rolling a variable rate mortgage from month-to-month has consistently been less expensive than a fixed mortgage rate. In essence, a generation of homeowners has experienced nothing but declining rates and lower monthly interest payments,” she says.
“This expectation will be hard to change. … The U.S. homeowner was lured down a very similar path by the Federal Reserve at the turn of the century.” …
“Canada’s recent economic performance has benefited greatly from a booming housing market, which has driven house prices, residential investment and construction employment to elevated levels, from which we see little hope of it rising much further. There is the strong likelihood of a housing market correction at some point in the not-too-distant future, which we believe would involve an outright decline in housing investment.”

Agree on all counts. -ed.

“She moved back to her parents’ house earlier this year, and has paid off everything she owed. She expects to have enough saved to make a down payment on her own home in about 18 months.”

“J.Y. Fores-Pimentel, a single parent in Richmond with two children, says society encourages people to think they can spend more than they earn — and gives them credit cards that make it easy to tumble into unmanageable debt.
Fores-Pimentel, 31, became caught in the debt trap but freed herself by curtailing spending and cutting up her credit cards. She moved back with her kids to her parents’ house earlier this year and has paid off everything she owed.
By living frugally, Fores Pimentel expects to have enough saved to make a down payment on her own home in about 18 months.
“You have to change your lifestyle and it’s really difficult,” she says. “But there is such a sense of freedom in being debt-free.”

– from Average British Columbians unprepared for ‘tsunami of debt-related problems’, Paul Luke, The Province, 29 Oct 2011

Can’t. Make. This. Stuff. Up.
Somebody with a net-worth of zero, sees path to fiscal responsibility via leveraging up meagre savings 20:1 and ‘purchasing’ (promising to pay-back over lifetime) a property, almost definitely a condo, for hundreds of thousands of dollars.
We’re living within a cult; the majority are brainwashed.
– vreaa

High Up On The Roof


“My brother, who has zero experience in construction, answered a craigslist ad for a roofer position at a large roofing company. They offered it to him after a brief interview, 15 bucks an hour. He started work and was ‘trained’ by a crack addicted employee. The crack head, actually asked to borrow money from him for supplies, which turned out to be a lie for drugs – he obliged and offered up $200 – which he never saw again. My brother confronted his boss after the crack head went awol for a week. The boss had the keys to his apartment (the crack head was staying at an apartment of his) and offered him to go in and take whatever he wanted ! My brother quit shortly after.
If this is the quality of the people who are in the industry now, I can only wonder the quality of the output… crazy.”

– Loon at VREAA 30 Oct 2011 8:46pm

“When I was younger I did roofing for an outfit in Alberta and they had strict standards:
– sneak off to a local pub at lunch for a quick beer if you’re going to drink on the job. Or a one beer limit on the roof, but pound it so the customer doesn’t see
– smoke weed in the company truck but never ever on the roof. That would be unprofessional
– if it goes up nose I don’t want to know about it, but you’d better share
– if you’re working on the road don’t bring hookers back to the motel room you’re sharing with your fellow roofer. That’s what parking lots are for.
– be nice to the new guy. He just got out of prison, and oh by the way – can he stay with you for a while until he gets on his feet?
– all fights are to be done on the ground away from the kettle. And don’t throw hot tar at your enemy/co-worker no matter how much you want to kill him
Good times!”

– nobody you know at VREAA 30 Oct 2011 9:29pm

Concerned citizens hear these stories all the time, but they’ve gotta be exaggerations, right?
– vreaa

“I remain convinced that the naysayers will be wrong again. Each time – after climbing a wall of worry – we muddle through with the result that hard assets will be even higher five to 10 years later.”

Excerpts from an article in the Vancouver Sun, 28 Oct 2011, by Ozzie Jurock, publisher of the Jurock Real Estate Insider. The Sun comment section was closed for this piece.
“In 1960, … your home sold for an average price of $13,105. Yes! By 1970 we reached $24,000, by 1980 we clocked in at $100,000, by 1990 $230,000 and by 2000 $296,000. In the last 11 years we rocketed from there to where we now are at $1.1 million (average used home sale price between Lions Bay and Mission).

We have had massive inflation in housing prices, driven by excess, cheap easily available money and today we are doing more – much more – of the same.

Real estate remains cyclical. I have told my subscribers to expect a downturn in the Interior and Vancouver Island over a year ago and a slowdown in Vancouver, too. But, I remain convinced that the naysayers will be wrong again. Yes, the numbers are bigger, the zeros larger and yet each time – after climbing a wall of worry – we muddle through with the result that hard assets will be even higher five to 10 years later.

House hunting is a little like duck hunting. When duck hunting one has to lead the duck. You have to shoot ahead to allow for the distance the duck is going to fly while your shotgun pellets are getting to him.
If you don’t you’ll always be shooting where the duck was, not where the duck is. Same thing with the real estate market. It is always changing. You have to know what’s happening with the aspects involved in your potential purchase and the management of your existing property portfolio.”

Agree regarding the importance of doing your best to anticipate the market.
Does the “management of your existing property portfolio” ever involve selling? – vreaa

“I open the door an the end of the hallway. Surprise! It’s a fully occupied suite. The owner made no mention of this. How about that for a surprise after you’ve signed the lease? The owner’s sister lives in the basement!”


“Ready for a chilling Halloween rental tale? What if you moved into a house without knowing there were other people living there?
It almost happened to me today. I check out this rather promising listing at 1107 Yorston Court:
$2300 / 3br – Beautiful North Burnaby Home
Date: 2011-10-16, 2:23PM PDT; craigslist.ca; PostingID: 2653098354
It’s old, but has a large lawn and a huge deck. I’m poking around in the basement, and I open the door an the end of the hallway. Surprise! It’s a fully occupied suite. As you can see, the listing makes no mention of a downstairs suite or shared accommodation. Neither did the owner as he was showing me the place. How about that for a surprise after you’ve signed the lease? The owner’s sister lives in the basement! What if I hadn’t opened the door?”

Vulture Fun at vancouvercondo.info 29 Oct 2011 6:50pm

Spot The Speculator #63 – “I run the numbers in my head: This guy is paying $8K mortgage for this?! He paid $1.6 million for a house I would not buy for $400K !?”

“I decided last week to look for a rental home.. and it turns out to feel like a study of Vancouver real estate behaviours. This is actually great fun.
So today I go visit a 4 bdrm home in Point Grey. Smells like a sponge, feels like a sponge. Asking: $3300. I run the numbers in my head: this guy is paying $8000 mortgage for this?!?!? He paid $1.6 million for a house I would not buy for 400K !?!??! Maybe he paid cash… Well, what a poor return on investment, even less than inflation. Not to mention the $5000 taxes.
Obviously this was an amateur landlord. The paint was peeling off the window in large chunks, and he expected me to bring in my kids? The appliances were from the 80s. For God’s sake, if you rent for $3200, you could buy a brush and some paint. The basement showed signs of freshly scrubbed mold. The door between the master bdrm and the attic looked like an outhouse door. All skylight windows had missing handles. The attic was filled with moldy dusty insulation from the 70s. I even felt sorry for the owner.
So the HAM-guy says: Do you like it?
Me: Too humid, sorry
Him: You know, I own 3 other empty homes and I am looking for tenants, including a 5 brdm in Dunbar.
Well, the vacancy rate is 2%. So either he has 20 rental homes, or he only has 3 houses and recently realized he is loosing money on them, so he should better rent them. Who knows?
I left, feeling I was leaving a completely surreal place… “Insanity” is a euphemism.”

– ‘jumping in’ at vancouvercondo.info October 28th, 2011 at 6:54 pm