Calgary After-Dinner RE Chat - "Renting is scoffed at. These bulls apparently do not believe that any significant economic or political events could impact Canadian RE values. Denial is powerful."

“Was at a swank inner party last night (here in Calgary where I live) with 6 couples including my wife and I. At around 9:00pm when the table had been cleared and the many pre-dinner drinks and about 8 or 9 bottles of utterly intoxicating wine had been consumed, the after dinner whisky, scotch, and cocktials started to flow and the conversation around the table turned to real estate, economics, and politics.
The host couple (close personal friends of ours) and my wife and I were the only RE bears at a table full of RE bulls. Time for a little background, the host was a wealthy doctor who acquired his home on a golf course 11 years ago for about 1/3 of what it might be sold for today. He owes about $200K and will have the mortgage paid in full in 24 more months. If the property dropped back to what he paid for it they would not be materially financially impacted in any way, since they didn’t know that, or plan for, any appreciation due to a boom in RE values. They built the house to live in and pay off in a decade. It is one of a portfolio of many international properties that they own, amongst other things. The correct definition of homeowner could be applied here. We are renters here, even though we own a single piece of property in another continent that is paid for. Over the last 11 years we have saved a mid 6 figure sum in cash by renting, staying out of debt and living within our means.
These bulls apparently do not believe that any significant international economic or political events could impact Canadian RE values. Witness the election of a socialist to the presidency of France for example and the ramifications thereof. The Euro zone will create problems for all of us. As will the US and China.
It is also their entrenched belief that interest rates will never rise in Canada for a very, very, long time. Even though as other nations react and perhaps have to raise rates to attract capital in order to keep their financial ships afloat, poor little ole’ Canada will have no choice but to follow along or be left behind. Of course, we may just raise rates due to the bubble (that does not exist mind you) because we need to stop the madness and eventually one government will do so of their own accord when they come out of the ether.
Renting is scoffed at, merely because it does not support the last generations ingrained mental foundation of wealth creation, that all of your eggs must be in a piece of property or you are in a class lower than everyone else. When I was explaining that a renter can do just as well as, or IMHO better, than someone who had all of their net worth in a single piece of property, the guffaws could be heard round the table except at our end. Yet they could not, nor would they even try, to rebut our position with logic facts and reason, since perhaps they knew we held all the cards. Their arguments were entirely emotional in scope, and easily debunked. Just like any RE agents sales pitch.
At the end of the night I was looking at them and, to me anyways, it seemed that they were all dressed in black pants and shirts while wearing brand new white Nikes…… waiting for the RE comet to take them away (a la ‘Heaven’s Gate’). Denial is a powerful belief system.”
- Carioca Canuck at VREAA 6 May 2012 2:43pm