“I personally know 5 people that have overextended themselves buying multiple houses and condos, planning to sell in the future. None of them have gotten out yet and I know for a fact they are underwater on some of these and hoping to sell in the spring.”

“I personally know 5 people that have overextended themselves with multiple houses and condos that they only bought to sell in the future. These are not realtors or people that have any investmeny knowledge in general, they are people that have owned for a long time and took advantage of the mania of the last 6 years to leverage up to the max on as many propertiea as they could. None of them have gotten out yet and I know for a fact they are underwater on some of these and hoping to sell in the spring.”
- Groundhog at VCI 29 Nov 2012 3:05pm

Of all the ‘springs’ that we’ve been watching over the years, this one is perhaps shaping up to be the most eagerly anticipated.
There appear to be a lot of owners intending to list and sell in the spring. And bears are wondering where the buyers are going to come from.
- vreaa

12 responses to ““I personally know 5 people that have overextended themselves buying multiple houses and condos, planning to sell in the future. None of them have gotten out yet and I know for a fact they are underwater on some of these and hoping to sell in the spring.”

  1. Naked Official Overdrive

    Loyal cadre, Kenney!

    Open the spigot to allow the pure and pious, 83 million strong perfectly righteous members of the perfectly harmonious party into this treaty port and save this real estate market from itself!

  2. I’m sure they’re fine if they could afford that many properties. Getting a loan for a rental property requires qualification for the loan. It’s not as easy as getting financing for you principal residence.

    • RBC is just the latest to have tightened, in their case by putting a hard ceiling on the number of properties an investor can own, and a floor on his credit rating. Previously, it was all discretionary. Does this say to you that there’s a lot of loans out there that lenders a) wish they hadn’t made b) wouldn’t make today?

  3. @Van Guy.

    I don’t know exact income levels but none are extraordinary. The only exception is one who works in Alberta with oil and makes a healthy amount. They own 3 condos in Langley, I’m pretty sure their entire net worth is in real estate.

    Another has usually owned a second house to rent out for most of his life and is approaching retirement, but in the last few years he cashed out on his prior properties at a large profit and purchased two more homes on acreage for far higher prices. I don’t know the exact amount of mortgages He has on all 3 combined. My guess is the one he lives in is paid off, and about $2 million in mortgages combined on the other 2. I would assume in the ballpark of $3M worth of housing and $2M of mortages. He does not have a pension and again, all his money is in RE. He will probably be OK with a 20%-30% drop, but more then that and I worry. Once he retires from his job I questions whether he is able to handle the carrying costs. I think the goal was to sell these to finance retirement.

    Also know another who was a basic admin assistant and bought a house around 2002 with help from her parents at the time. Did very well for herself on this and decided a couple years ago to write the RE exam. She now owns 3 properties in South Surrey near 0 avenue in Summerfield I think its called. Again, entire net worth is in RE and although she did well on the first property, she has whenever possible leveraged herself to the max to buy more home. I doubt shes got any net worth now, and income is probably suffering I imagine too. I don’t really count people that jumped in to be Realtors in the last couple of years as Realtors, so that is why I said in my comment that none are realtors or have investment knowledge. She just made a killing on her first house and decided in the last few years to try her hand at RE, I think she will be out of that gig soon.

    I posted the comment in a reply to Dave on the VCI forum who said there was no evidence of elevated levels of speculation in Vancouver. I think he was just trying to stir things up, but from what I’ve seen in the valley, and heard from people in Vancouver, speculation is rampant. I feel kind of sorry for these people I know. Although they seem to understand the benefits that come from leverage in a rising market, they failed to consider the risks in a flat or declining market.

  4. I am starting to overhear or be part of a lot of conversations about people who respond to the more convincing market decline evidence with “that person will be alright, they have a lot of equity…”

    Sure, some people do have a lot of equity. But everybody in the chain is going to be affected. The zero-money-down crowd is at risk of bankruptcy/foreclosure. The 20% equity crowd is going to be touching negative equity, cancelling renovations etc. The 55 year old mortgage paid off crowd is going to start worrying about retirement income levels and be cancelling Mazatlan. The net effect of all that is a wicked recession, which will exacerbate the housing downturn. I’m sure glad these people are going to be alright ;-)

    • Only very few Vancouver owners have high enough networth/RE ratios such that a 50% drop in real home prices will have inconsequential effects on their future financial well-being.

  5. I’m starting to get the feeling next spring is going to be a bloodbath for real estate….we’ve been looking for a place to rent and there sure are a lot of accidental landlords out there (who plan to relist in the spring.) We shall see though, maybe the market will be saved (by what, I don’t know).

    • Real Estate Tsunami

      I agree. It all depends on whether the overseas German speculators are coming back.

    • I have been monitoring Craigslist off and on for a couple of years looking for 3-bedroom rentals in the city and have noticed a marked increase in “short-term” and “six-month lease” postings this fall. And those are just the ones who are upfront about their plans! It has made me very reluctant to change my current (inadequate but stable) situation.

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