Spot The Speculator #91 – “I personally know of a young woman in her 20′s who just got her first job and refused to rent.”

“I personally know of a young woman in her 20′s who just got her first job and refused to rent. Her parents forked out the 25% down for a condo in South Surrey as she did not qualify for CMHC financing.
She purchased a one bedroom with a flex space, once she moved in she was astonished at the extra monthly fees she has to pay. She had her boyfriend move in to help with the payments and now has foolishly went out and got a dog.
6 months later from the original purchase she now finds herself in a space that is too small. Now she wants to rent (yes rent) a larger place (2 bedroom) closer to Vancouver.
To make all this happen she now has to find a tenant for her South Surrey condo.
It seems that Gen Y looks at condo buying as a fashion accessory and not a prudent financial decision. There is a serious lack of financial literacy amongst the marginal buyers of real estate.”

DJB at VCI 20 Nov 2012 9:21am

Why isn’t she selling the condo?
She’s holding on the assumption that its market value will rise.
– vreaa

49 responses to “Spot The Speculator #91 – “I personally know of a young woman in her 20′s who just got her first job and refused to rent.”

  1. pricedoutfornow

    I’ve run into this a lot in my time as a renter (in fact, living in one of these condos now). So many of the landlords we went to meet had grown out of their smaller units and had bought another larger place (or in one case, were renting a bigger place). I never understood why they hadn’t decided sell place #1 to finance place #2. Why keep so much of your money in one investment type?
    In other news, my sister in law (a fervent bull who has been telling me for years to buy buy buy!) recently said something about the possibility of the market falling, and actually suggested that the family sell their rental property. WTF!!!! Ok, now I know that this market is toast! And I will know that it’s time to buy when she insists that real estate is a “bad investment”.

  2. Mommy and daddy said not to sell. They could lose out now. So theyll wait until the market recovers and they will find themselves drowning.

  3. The speculators and financially illiterate here include the parents who made the down payment to get their daughter on the “property ladder”. Once parents have second thoughts because they no longer believe “Vancouver house prices will always go up” it will be another step in the reversal of expectations.

  4. she’s not selling the condo because her Dad will sell the condo. He’s held her hand all through life, why would it be any different now? The story state with owning property, especially condo’s, is that you become ‘captured’ by the invoice producing crowd. ‘Extra fees’ my ass, this is the same technique used by Car salesmen. After they have secured the original purchase, ‘new’ items are thrown at you, to Pad the invoice.

  5. I would never entertain the thought of owning more than one property. Even my bullish parents have not bought a second property. I did get a call from CIBC the other day asking me to take advantage of the low rates and to buy a second property even though I had just bought a property in Van West in 2010 for us to live in and rent out. The thought of buying an investment property scares me. Renting one property out is work enough. Having to deal with all the upkeep, etc of a second property is not worthit and with tha market tanking, I may as well give my money to the bank.

    • I’d certainly own a rental property, but I’d wait to buy until the asset class is deeply out of favour. And it’d have to be at least 3 units, ideally purpose built. One does NOT want to be in competition with amateur landlords flogging poorly subdivided SFH. If I lived in the US I’d either still be kicking the tires or I’d already own a rental building, but I don’t want to live that far from my investment.

    • What, exactly, did the bank rep say? I’m sure VREAA would be interested in such an anecdote.

      • First of all, the bank rep assumed I was Chinese because of my name. My Chinese is good, but not great and I much prefer to communicate in English. Nevertheless, she just started in English then asked if I spoke mandarin or Cantonese, I told her Cantonese, and she just started speaking to me in Cantonese. This is interesting because she probably assumed that CBCs can’t afford to buy investment properties. And I am a CBC. And speaking initially to her, i have zero accent in english. She started asking me how much I pay for my mortgage currently, how much I owe on my property, just real personal questions that I declined to answer. Then she went on to say how CIBC would love to have my business, that rates are low, that why I don’t consider buying a second property. I just said no, not interested, I’d rather invest in something else.

    • Brian, I posted here a while ago as well about CIBC. I’ve banked there for a long time but went into a new branch just to deposit a couple of cheques in a savings account that has minimal amounts in it. The teller tried to sell me a mortgage telling me it was a great time to buy, they had wonderful mortgage offerings etc. The fact that they are now calling people is horrible.

      Makes me want to switch to Bank of Nova Scotia since at least they have the balls to say that we’re in for a drop and a long recovery

      • I only have a credit card with them. I bank with TD. I like their extended hours. I also have a TD Waterhouse account with them, as I like buying their e-series index funds ( which you must have to buy)

      • Real Estate Tsunami

        Tellers, sorry Customer Service Representatives, are required to up-sell services. Just like McDonalds.

      • Stay away from banks that up-sell this much. People are promoted based on sales not competence.

      • CIBC is the best contra-indicator for the market. They have an innate ability to find the pointy stick in a dark room. CIBC is always late to the party and always pushes things after everyone else realizes its a ticking time bomb.

        Telecom loans in 2000.
        Latin American Loans in the 1980s.
        The Reichman real estate loans (uncollateralized) in the early 1990s.
        US expansion (Oppenheimer) in the late 1990s.

        I could go on…

  6. @VREAA

    Another bottom call for the records:

    “Vancouver, British Columbia’s housing sector may have hit its bottom with an improvement in home sales seen in October”
    -Marc Pinsonneault, National Bank

    http://blogs.wsj.com/canadarealtime/2012/11/21/toronto-house-prices-cool-in-october/

  7. UBCghettodweller

    She wanted to be a condo owner because that’s what everyone in my generation does if they have any money. Renting is seen as something only poor people do. Most every 20-something I know in Vancouver still believes that housing prices will always go up 7-12% per year or at least never drop. They are convinced that if they don’t buy as soon as possible they’ll be priced out forever. I can’t blame them because it’s probably difficult for them to imagine a time where housing wasn’t insanely expensive in Vancouver.

    /Yes I am Generation Y.

    • Naked Official #9000

      Hah – I am technically last year of gen x – go [impolite word] yourselves!

      Now the millenials, there’s a bunch of douchebags. Pull your goddamn pants up you little brats, stop listening to dub step on your iPhone headphones while you are in an intersection crosswalk and stop drinking PBR – it’s shite beer.

  8. You reap what you sow. When Generation ME is running things in 20 years With the budget shortfalls the Boomers and Gen X are creating today and the ….OMG whatever, wtf Creepy TL;DR, Daddy tell the professor to make my grade right mindset of this generation.. I would not want to be the environment or ugly or disadvantaged…

    • UBCghettodweller

      Whatever the hell generation you want to call current 20-somethings some, if not most, of us realize the failings of the Boomers and even Gen Xers. We want to be different because we realize that the mindset and behaviours of the latter half of the 20th century is not sustainable in the future.

      You’re just displaying to age old phenomenon of older people thinking young people have it all wrong.

      Who do you think taught some of us to be so self centred, consumerist and blind to consequences?

      • Real Estate Tsunami

        Who invented Facebook and Twitter, these enablers of narcissism?
        Not the Boomers.

      • UBCghettodweller

        Who’s to say that Facebook and Twitter are causes and not symptoms?

      • TeeHee! or should that be, “Touché”, BordelloDweller?

        Strictly [and etymologically] speaking, it was BonfireTom who coined the expression “ME Generation”…

        http://en.wikipedia.org/wiki/Me_generation

        FYI, BordelloDweller… we didn’t all sell out [but many of those who did are now 'ShowRunners', metaphorically speaking].

      • UBCghettodweller

        From the wikipedia article:
        >Characteristics- Discos and nightclubbing became popular with Me generation singles during the 1970s. Health and exercise fads, New Age spirituality, discos and hot tub parties, self-help programs such as EST.

        I totally could go for more disco and hot tub parties in this day and age (minus to cocaine and HIV.)

      • Daddy tell the professor to make my grade right

      • UBCghettodweller

        Bob, as someone who is in academia, I can assure you that although helicopter parents may ask for the professor to “correct” the grade, most every professor I know would tell the parent to go fuck themselves (in the most polite academic way possible.)

        Not that that would stop the parents from either suing the school or “donating a large sum.” The latter scenario, however, is as old as Universities themselves. Such is life.

      • there was not one single parent anywhere near the campus or a prof 20-40-60 years ago berating a prof for a better mark or an RA for a better dorm assignment. That is certainly the millennials who have trained their idiot parents that they can do no wrong.
        City Council meeting in 2027… “the motion is defeated”…..”Wait a minute…wait a minute… the honorable member calls their Mother and Father in to address the chairman to discuss the motion”

      • OR how about this one…
        2029 Front Page of Globe and Mail
        Political Lobbyists going broke as Millennials rely on Mom & Dad to get things done.
        try the veal

      • 2036 release ot “Moms Helicopter Time Machine” coming this March watch 4 powerless guys who cant make a decision between them get transported back to a time when they could get things done! or better said..Their Moms could get things done….starring Sterling Knight,
        Brandon Mychal Smith, Doug Brochu with Lindsay Lohan & Miley Cyrus as the hot moms and a special guest appearance of the ghost of Macauly Caulkin as the creepy old homeless drug addict ;iving in a dumpster

      • A TherapeuticRegimen of proven efficacy… for Bob.

  9. Just a guess, she doesn’t want to sell because she will lose money if she does. Prices are as sticky as when “Sticky the Stick Insect got stuck on a sticky bun”

  10. Forget 20 somethings, my parents are urging me to buy asap. I can see the it on his face when I tell him I am not interested right now. He thinks he is saving me.

    Doesn’t matter what kind of property, at first it was a cheap starter house in bby for around 600, then a townhouse, now an 20 year old apartment in slummy part of town. Anything as long as I am not throwing away rent. Meanwhile my investments are paying for my rent and I still get to save money in RRSP’s and rainy day fund, and pay for vacations in cash.

    It has infected everyone.

  11. A better term to define Canada’s housing market.

    Non-spec·u·la·tor: a home buyer who purchases a property to consume for personal use with the intention of no financial gain or a loss.

    Now find how many of these folks are in the market and everyone else is a speculator.

    • “a home buyer who purchases a property to consume for personal use with the intention of no financial gain or a loss” … after a paper loss has occurred.

      Many think they fall into this category — they “intend” to be solely housing consumers — but turn out to have speculative undertones in their motives, whether they admit it or not. This was certainly the experience in the States.

      • Real Estate Tsunami

        Agreed. The expectations are to live mortgage free when they retire.
        Therefore it is in investment liken putting money in an RRSP.
        And all investments are speculative.

      • “all investments are speculative”

        Every time I state that I get flamed. :?
        My major point has been that it’s hard to discriminate speculators from “non-speculators” in practice, even among the most devout value investors. In my view we’re all speculators, some are more speculator-ey than others ;)

  12. She’s going to be feeling it twice… when the condo goes down in value in South Surrey due to the market and over-development in that area. Second, when her sense of entitlement which has been nurtured her entire life runs out because the parents need to roll back their spending due to the market downturn.

  13. http://worldhousingbubble.blogspot.ca/

    2nd story in… “Talon has been facing an escalating buyer revolt since last February as the glitzy Trump Hotel set to open and buyers found out that maintenance fees, property taxes and other incidentals on the project’s 276 hotel-condo units had skyrocketed from Talon’s earlier projections.”

    Once these real estate managers have you in their clutches, the ladle on the fees.


  14. Asian Americans and Problem Gambling PDF

    In a qualitative case study of four Chinese Canadian immigrants, immigration and acculturation stresses were cited as key factors in problematic gambling behaviors.The casestudies also highlighted the impact of loss and isolation as a result of immigration. Loss of social and supportive networks such as extended families and tight‐knit communities can create a sense of isolation.

    This is often where local gambling establishments step in to fill the void. In addition, immigrants also typicallywork very hard in order to care for their loved ones and send money back home, and gambling is often viewed as a source of stress relief. Gambling may also help immigrants fulfill a sense of status. Many Asian immigrants report that success in gambling can bring about recognition, in addition to being a quick way to make money. Further, studies have often pointed to decision making opportunities as motivation for gambling – particularly among marginalized populations who feel a lack of control over their daily lives. Life stressors such as adjustment problems,
    pre-existing trauma, can therefore predispose immigrant populations to be more likely to gamble excessively.

    ——-

    Does flipping homes count as gambling?

    • Naked Official #9000

      i seem to recall bringing this angle up myself a year or more ago – back when i was up at 5am yelling at pre-sale line ups: “DOESN’T ANYONE WORK ANYMORE?”

      it’s all abhorrent to my wasp instincts – i want my money in my pocket, not on the fucking table like a weak junkie

    • Real Estate Tsunami

      Bang on, Watchdog.
      The term “Lucky Money” also comes to mind.

  15. why extrapolate one example to all of “Gen Y”?

  16. I can’t blame them because it’s probably difficult for them to imagine a time where housing wasn’t insanely expensive in Vancouver.

    That would be like me saying I can’t imagine Fascism making a comeback because I wasn’t alive in the 1930s.

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