“I used to go to the parking lot with my co-workers, point at the realtor section and say: “See these cars? They’re bought though fees and commissions you paid when you took out the mortgage. When you buy property, you purchase a BMW as a gift for somebody else.”

“My name is Stan. I live in Vancouver, BC. I’m 30. I rent and plan on doing so for as far into the future as my eye can see. I carry no debt. Have enough diversified savings to last about 2 years if I happen to lose my $65K / year job. I’m the sole bread winner in my 3 member family, which may become 4-member family if my mother doesn’t find a job soon.

I keep hearing about boomerang kids and those that live in their parents’ basements into their 30s. To me, a fall back option such as this, would be a luxury. I face the possibility of housing “boomerang parents”. Each time the media mentions someone returning to someone else’s house, I cringe.

Despite being told all my life that renting meant throwing money away, I could never bring myself to invest in a mortgage. Signing a contract that amounted to a promise to remain in good health and financially stable for 30+ years never made sense (regardless of the premise). Not knowing what the next year might bring, how could I commit to anything forcing such obligation?

My previous place of employment shared the building with a realtor firm. Their parking lot was always full of top of the line BMW’s and Porsche’s. My young friends were all starting families and jumping into mortgages at that point. They thought they could afford the $1 mil homes they were going for (while earning roughly less or as much as I did).

I used to go to the parking lot with my co-workers, point at the realtor section and say: “See these cars? They’re bought though fees and commissions you paid when you took out the mortgage. When you buy property, you purchase a BMW as a gift for somebody else.” My friends laughed, but they’re not laughing now… neither are they my friends anymore.

Yet with many of my, now underwater, former friends no change has taken place. They still occupy the properties, having missed out on the blessing of a faux recovery. Not everyone gets a second chance to get out of the market and they totally blew it. I still cannot understand what pushed most of them into “ownership”. I had no data, no projections when making my decisions, just a simple set of observations. The parking lot and my own clunker told me more about the state of the housing market than all of the mainstream economists, university professors, and TV newscasters combined.”

- Stan from Vancouver, as relayed by Garth Turner at greaterfool.ca 21 Oct 2012

22 responses to ““I used to go to the parking lot with my co-workers, point at the realtor section and say: “See these cars? They’re bought though fees and commissions you paid when you took out the mortgage. When you buy property, you purchase a BMW as a gift for somebody else.”

  1. One of these days I’m going to stress test Realtor incomes under the “soft landing” scenario. I think that’s as big a story as falling price.

  2. the old school standard, bravo … meanwhile at the other end of ben’s rainbow … looking to meet a nice, hot, respectable sociopath … settle down, raise a couple of mostly non-violent, mostly std-free heroin addicts … hey, check that scoreboard! … wonder if ben’s having a good day … pfffft!

  3. …”When you buy property, you purchase a BMW as a gift for somebody else.” – Stan

    Actually, Stan… you’d be surprised how far that ‘FoodChain’ stretches…

    Alas, DearReaders… it’s official…. CondoGeddon for TheRidge & TheVarsity.

    [CBC] – Vancouver’s Varsity bowling, Ridge theatre demolition approved

    “Plans to demolish the Varsity Ridge Bowling lanes and the Ridge Theatre to build a new four-story condominium development were approved by the City of Vancouver’s development permit board on Monday night.

    Community members had rallied to save the bowling lanes near the corner of 16th Avenue and Arbutus Street in recent weeks, saying they were a valuable community facility. About 700 people use the lanes as league bowlers they say.

    But Brian Jackson, the general manager of planning and development, said the board does not have the authority to order Cressey Developments to include a bowling alley in its development.”….

    http://tinyurl.com/8upoea6

    • Not coincidentally, the F.I.R.E. economy has claimed another local casualty… May you Rest In Peace, and far from the RemainderStacks & PulpMills, D&M…

      [CBC] – Douglas & McIntyre owner files for bankruptcy

      …”D&M identifies itself as “Canada’s pre-eminent independent publisher, with over forty years of success.” It has published books that include the non-fiction work Something Fierce by Carmen Aguirre, novels like Wayson Choy’s The Jade Peony and art books such as The Art of Emily Carr. The company, originally J.J. Douglas Ltd., was founded in 1970 in Vancouver and published its first book in 1971.”….

      http://tinyurl.com/9jeuxhs

      [NoteToEd: Sadly, yet another of Nem’s former publishers gone to that GreatFuneralPyre in the Sky. Really.]

    • UBCghettodweller

      Damn, I liked the crappiness of the Varsity Ridge Bowling alley. It was a cheap place for students to go and spend little money while having stupid amounts of fun. It seems everything in Vancouver needs to be upscale-organic-luxury priced stuff for peak net worth boomers and the few yuppies that can scape by in this city.

      … only a couple more years in my degree. Can’t wait to get out of this premium priced backwaters.

    • empty foodmart used to be something like a buy/low, then something else, then a meinhardts … parking and access always a kluge-fest there … use case has a history of being sub-optimus prime … if trading down, not necessarily a huge step down … hey, wonder if any of the re-dev-artistes seriously eyed kerrisdale arena and for what?

  4. Renters Revenge

    Good work Stan! The bubble is obvious to anyone who cares to use their eyes and see.

  5. glistens1@yahoo.ca

    Most realtors’ cars are leased and few make big money – mostly illusion.
    Sent on the TELUS Mobility network with BlackBerry

  6. I know some Realtor friends of mine who do make money, but after all the fees, and lease on their vehicles they were left with nothing. In a downward market they will not be able to survive. How pathetic. I work in a medium sized company and still have more money left over than they do.

  7. Way to go Stan. You’re the one laughing now. I’m with you. I drive a 1998 Honda, moved out of the city to buy a cheaper townhouse with a minimal mortgage and live stress free.
    Part of me feels for the numerous underwater homeowners and part of me doesn’t, knowing how smug they were about owning their overpriced houses.

  8. The problem with Stan’s post is the ingrained bias against home ownership regardless of the market, Just because the last 7 years have been a bad time to buy doesn’t equate to “it’s always a bad time to buy”. It is easy to get swept during a market meltdown about the joys of renting and forget things like seniors being renovicted from rented apartments or bedbugs.

    • Good tactic, distracting with extreme examples like “seniors being renovicted” and “bedbugs” (btw, seniors also get re-possessed by banks, and bedbugs also afflict owned homes). The point is that for Stan, and many others, owning doesn’t make sense–in this market, or in any market.

      • You are correct, El Ninja.

        What I was saying is that regardless of the direction of the market the idea of home ownership may not be for everyone. Some, like myself, value low risk and high personal mobility. I looked at houses and though they were overpriced and not worth the lengthy commitment. As simple as that.

        If my private sector job offered me a 30 year contract, I’d probably view risk differently, but as far as I know, such prospects don’t exist (beyond the justice department, maybe). A lifetime commitment with no lifetime guarantee is a great risk, and very few weigh their opportunities adequately. People put more importance into what the others are doing, and let salespeople do the thinking for them.

        How could I tell I couldn’t afford a house (even if I wanted to buy)? Because I wasn’t driving a shiny new import like a realtor. My old American car was over 20 years old when I finally retired it this year. It almost fell apart on me. I bought another used car in its place, which, with luck, will serve me another 20 years. Cash purchase. No debt. Still plenty of savings left over. Bad decision? I doubt it!

        And guess what?! If the market was heading up, I would’ve done the exact same thing, unless 2 things were true – employment was stable and houses were affordable.

        Today, the housing market is crashing. The prices trying to return to the level where they reflect intrinsic value of shelter, but government intervention is preventing asset deflation. Debtors who created the mess get rewarded (with their agony prolonged) at the expense of savers who lived within their means all these years.

        Apparently, the market thinks it doesn’t have to listen to people like me. In that case, I choose not to listen to the market either. I’ll run my budget the way I see fit – deficit free.

      • Take a look at the bed bug registry for the West End, sadly its not an extreme example, its an everyday occurrence.

      • There is a bed bug registry? What next…..

  9. Stan – agree by 100% esp. what you said about the people that “missed out on the blessing of a faux recovery. Not everyone gets a second chance to get out of the market and they totally blew it.” Lots of people just act irresponsible and jeopardize their families future and financial stability for sake of the pretending that they are born with the BMW sign on their underwear, so futile.
    I also agree that buying in your circumstances – 1 the sole bread winner in your 3 or may be even 4-member family, very unstable economic situation and overpriced Vancouver housing – would be wrong and reckless, regardless what type of property you would be looking at, even if you can afford the townhouse in Fraser Valley, what is the justification of buying the declining asset with the strata fees and yearly taxes that you can not avoid – there are lots of condo owners that are more than happy to rent it out to you. Renting gives more flexibility now, safer and is economically beneficial.

    • …..and if younger people are not buying overpriced homes because of the costs and the lack of stability in long term employment then what motivation will they have to start families? Children are surely the next costliest decision young couples can make after home ownership. The two are now incompatible as budgets get stretched. Even recently it seemed the choice was one or the other but as the economy takes a downward trajectory both these choices are off the table. I remain convinced that our credit bubble is functioning as a form of birth control and that family formation will decline as a result.

      • Banks are in right spot. Most new home-buyers got for the lowest payment maximum amortization option, which is 25 years currently, down from 30. The majority also does not accelerate payments either not being able to, or not wanting to, holding the house as a speculative asset (why put more into something you’re going to sell anyway).

        So, for someone planning to retire, say, at 65 that gives 65-25 = 40. Or, the person has to be younger than 40 by the time he takes on a mortgage. The chances are that if a person didn’t get into the housing market by then, he never will.

        Enter student loans. Young people are taking on tens and even hundreds of thousands of dollars of debt even before they’re employed. Those debts often take decades to eliminate, even while working in a career field. Since most end up in professions not related to their diplomas, debts become an inhibitor for major milestones in life. Family formation is delayed, capital purchases are put off or eliminated enitrely. In a blink of an eye those “kids” turn 40 and then it’s game over. No credit for them, no loans, no money supply expansion, no asset inflation. Housing deflates to reflect the declining pool of capable borrowers and with aging demographics there’ll be fewer and fewer of them each year. The housing bubble will crash.

        It would’ve been an orderly transition without the Bank of Canada intervention. Instead they pumped funds into the “Big 5″, just like the Fed did in the US (matching spending on per capita basis). Housing would’ve corrected years ago on its own. Instead it will crash. Intervention burns us – savers. The crash will consume borrowers and no one will be left standing. That’s what I think will happen.

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