“I am a college student living at home in a house assessed at 7 million dollars. With that price tag you would expect a mansion right? Nope. The house is 90 years old, doesn’t have insulation or a proper heating system. My parents bought the house in 1985 for 450,000. Adjusting for inflation that is 860,000 in 2012 dollars. That is the most I would pay TODAY for this piece of junk house. However we do live in a quiet area in the UBC area and the property itself is quite large with a premium view, but even those factors do not begin to justify the difference between the assessed value and the inflation adjusted price my parents paid 28 years ago.
Luckily my parents were smart with their finances and a large correction in the market will not affect them. My parents have avoided using any paper gains in the property even when their coworkers and friends kept pestering them to take out loans against the house to buy condos and rental properties. These same coworkers and friends have been driving around in fancy leased cars and enjoying nice vacations every year while my parents worked hard to pay off the mortgage. I have had to sit through countless dinners where my parents friends bragged about foreign investors leaving notes in their mailboxes making cash offers on their houses and how they could “cash out” at any time. But they didn’t. Now that they do want to sell they are finding the market has cooled and no on wants to pay peak prices for their homes. Very few people are prepared to spend 15 million dollars on a home in a cooling market.”
- Robert Borden at VREAA 8 Jan 2012 3:43pm
Most Recent Comments:
- welschprincess on Business In Vancouver – “To take a job in Vancouver, Calgary-based senior information management consultant Joey Roa would have to give up living in a 3,000-square-foot house just outside the downtown core.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Real Estate Tsunami on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- bubbly on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- ling on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Toby on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- Nemesis on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Raspberry ketone on Commit Crime To Buy A House
Type of Anecdote
- 01. He Said, She Said (247)
- 02. Profiting from the Boom (442)
- 03. Changed my Life (103)
- 04. Changed my Career (38)
- 05. Where do Buyers get the money? (962)
- 06. Held my Nose and Leapt (96)
- 07. Avoiding Vancouver (375)
- 08. Overextended Buyers (1190)
- 09. Delaying Buying (316)
- 10. Demoralized Renters? (366)
- 11. Regrets about Investing in RE (417)
- 12. Effects of Development (274)
- 13. 2010 Olympics Related (74)
- 14. Social Effects of the Boom (1257)
- 15. Misallocation of Resources (959)
- 16. Missed The Boat? (236)
- 17. The Froogle Scott Chronicles (27)
- 18. Spot The Speculator (171)
- 19. BlastRadiusPostCards (17)
- 20. The Limitless Demand Argument For Ongoing Market Strength (70)
- 21. Vancouver RE-Verse [Found Poems] (8)
- 22. RE References In Popular Culture (41)
- 23. Jumping The Shark (1)
- 24. Policies On Housing (10)
- 25. Epigrams For The Bubble (1)
- 26. Premature Calls Of "Bottom" (3)
- 27. Seller Panic (3)
- 28. Erroneous Causation Theories For Falling Prices (7)
- 29. Bubblespeak (1)
- Uncategorized (176)
Blogroll
- 01 Vancouver Condo Info
- 02 AmericaCanada [retired, no archive]
- 03 Housing Analysis
- 04 RealEstateTalks BC
- 05 Vancouver RE and then some
- 06 Whispers from the Village on the Edge of the Rainforest
- 07 Greater Fool
- 08 Canada Bubble
- 09 Rob Chipman's blog
- 10 YatterMatters
- 11 condohype [retired; archives available]
- 12 vancouver (un)real estate
- 13 Agent Will's Stats [retired]
- 14 Landlord Rescue
- 15 The Economic Analyst
- 16 Canadian Housing Price Charts
- 17 Hoodsurf [retired Jun 2011]
- 18 World Housing Bubble
- 19 Vancouver Price Drop
- 20 North American Economics
-
Latest Anecdotes:
- ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- “Let’s remember how we got here” – Looser and Looser CMHC Limits
- Don’t Worry, I’m Sure Somebody Will Sort This All Out – “Policymakers now know better and will be a lot more proactive in preventing a collapse.”
- “Things have changed, we are not doing that type of mortgage. We are not interested at all.”
- “We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”
- Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”
- A Bed in the Bathroom, Why Not? [Let Us Count The Reasons...]
- “My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”
- “I Wish Them Bad Luck.” – Jim Flaherty, on those who wish to profit from Canadian RE price drops
- “We asked why he doesn’t just rent the whole house. He said he can’t, it wouldn’t cover his mortgage – he’ll get more to rent it out as two suites. These new landlords are hilarious, thinking that rent will cover their mortgage!”
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
Follow vreaa on twitter
- 'Doomed'? - "Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real… 16 hours ago
VREAArchives
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- October 2008
- September 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
Tags
Anecdotes Banks Bears blogs British Columbia Bubble Bulls buyers Canada Capitulation China CMHC Construction Debt Economy Employment Fear Foreign buyers Fundamentals Government Housing Interest Rates Landlords Life Media Mortgage brokers Okanagan Olympics Ownership Prediction Real Estate Realtors Relationships Rent Retirement RE_ATM sellers Sentiment Speculators Toronto US Vancouver Victoria Visual Anecdote Whistler
Had another conversation with my dad the bull yesterday. He says RE always goes in cycles and the prices will be back in 5-10 years. I told him I think prices will drop and yes, prices will be back but not in our lifetime. He vehemently disagreed and told me he would sell when the next cycle comes to finance his retirement.
Your answer should have been: “Dad, you don’t need this complicated plan to assure us there is no inheritance. We weren’t expecting one anyway.”
I don’t get it; they can sell today for 5MM but won’t because the market is soft. They need lessons at being rich.
“They need lessons at being rich”
I had the exact same thought when I read this anecdote!
Hilarious, and so true!
It boggles my mind that people don’t act and effectively win themselves a small lottery jackpot even if they “lose face” and take an offer for much less than peak prices or have to end up a lowly renter for a while until prices correct.
Many people in the Point Grey/Kits/Dunbar area are obviously well off because of their professions and not leveraged to the hilt since they bought two or more decades ago, but few are so rich where several million dollars in cash isn’t a considerable sum of money compared to the rest of their assets.
It’s enough money to retire. Right now. Today. Weird that people can’t grab that brass ring while it’s hanging there.
“Be fearful when others are greedy and greedy when others are fearful”. – a bearish confirmation signal
RE- Cycles
It will be a LONG time(if ever)before we see this kind of bubble again. This was no cycle, this was an intentional bubble blown up to disguise underlying economic disasters.
The FED tried and is trying hard to blow it up again but it isn’t working. We are getting closer and closer to taking our medicine every day.
Any rational person in this situation would sell.
He’s right about the cycle, but to get close to the heights we saw last year it’ll take 15 years after a big crash, not 5! I’m from Switzerland and we’d a big collapse in the early 90′s and now it’s just like Vancouver for the last 4 years with those low interest rates… For the case below I’d put a killer price under 7 and try to sell it quick then rent and wait for the crash! Big money and a good transaction to make there, if you’re smart.. Don’t wait too long, once the market crash you can sit on your shitty house for years….
If they book a FRACTION of their paper gains they’ve still won the lottery. And they’ve been enjoying nice cars, vacations, and day spas all this time.
Boy, what a bunch of dummies.
Yes, but they bought in 1985.
vreaa 28 December 2012 at 1:04 pm: “Sure, earlier buyers will still be somewhat ahead (not all that impressive if you account for inflation), but you think that this will make the evaporation of that ‘wealth’ any less painful?”
Tell me vreaa, how painful would that 1 or 2 million dollars, nice cars and vacations be?
vreaa: “…the vast majority will end up riding their paper profits all the way down again…”
In order for these people to ride their paper gains to zero we would have to see their home valued at 1/7th it’s assessed value.
You don’t know when most people bought, and even if prices go down to 2001 levels ( your prediction ) early buyers will be sitting pretty.
Loyal cadre! It is so good to see you!
Continue the good fight!
Once again, you have caught the disharmonious splittist “vreaa” in his web of lies and tautalogical disinformation!
“And Vancouverites wonder why they are characterized as money-hungry, real estate obsessed cultural philistines. Vancouver is the kind of city which would bulldoze the Roman Colliseum to build a Condo development called “Colliseum Mews”.” – Peter Pan – 7:40 PM on January 9, 2013
[G&M] – Patrons Lament Closing of Waldorf After Sale to CondoDeveloper
“In August 2012, the landlord’s attitude changed overnight and it was baffling.” – Waldorf Entertainment Director Thomas Anselmi
http://tinyurl.com/bbkcw6n
[NoteToEd: Surely... a collapsing property market had nothing to do with the Waldorf owner's renewed interest in liquidating his holdings 'tout de suite'? NoteToSelf: Etymologically and poetically, it would be infinitely more satisfying if, henceforth, we referred to condo salespeople as Suite Touts.]
We will headline the Waldorf at some point. Thanks, Nem.
There’s also the lament from the actual Waldorf site. I posted the URL yesterday, FWIW.
I agree with Nemesis; the Vancouver of today has very minimal appreciation for the past… what little past there is compared to places like Rome.
If any of you ever read Geist magazine (a cultural treasure in the otherwise wasteland of the lower mainland), it has so many anecdotes and even articles on small cultural gems that still exist. But those simply highlight all that Vancouver has lost in the past couple of decades in the flurry of building meant-to-be-a-highrise-slum glass towers all over the place.
Suite Touts? Your diphthong is showing.
One for the archives… [#CouldBeWorse]…
From this….
http://tinyurl.com/aj72e3s
To this….
[UK Guardian] – Battersea power station homes go on sale: The development includes flats, townhouses and penthouses, but the prices are not for the faint hearted
…”The Circus West development will see 800 homes built around the south London landmark, which is the largest brick building in Europe and has achieved international fame as the backdrop for films and TV programmes and the cover for Pink Floyd’s 1977 album Animals.
The development includes a mixture of flats, townhouses and penthouses together with offices, shops and leisure facilities, and is the first phase of seven. By 2024 there will be more than 3,400 homes.
Residents will have access to an elevated garden, and prices are similarly lofty: studio apartments start at £338,000, one-bed flats at £423,000, two-bedders at £613,000 and three-bed flats at £894,000. Anyone with their eye on a penthouse will need to be able to raise at least £6m”…
http://tinyurl.com/b382qhg
“These same coworkers and friends have been driving around in fancy leased cars and enjoying nice vacations every year while my parents worked hard to pay off the mortgage.”
- I highly doubt this person would have been tuned into matters like this as a young child (when the mortgage was likely paid off and mom and dad began putting that college fund together)
- “stay at home” student has zero life experience, credibility and real world knowledge. Just enjoy the free laundry, wifi, cable tv, second hand Lexus, home cooked meals, allowance for gas/clothing/food/entertainment, that “premium” view of Spanish Bank etc and keep quiet. So what if mommy and daddy don’t cash out at the top? Obviously you’ve got a lot to learn still if you believe the real rate of inflation over the years has only been 2% and that the home you live in is an uninhabitable “piece of junk”. Please remind them to remain “smart with their finances” when it comes time to gifting you a d.p. on your first home.
- btw, this must be one hell of place if they bought for $450k in ’85. My parents bought their place in MacKenzie Hts for $120k in ’84.
Well said!
The thesis of every Bull distills down to this:
SSSHHHHHH!!! Everyone just shut up and don’t wreck this for us!
+1
It is similar to denial. Then anger, then regret to final acceptance and listing/price capitulation.
VRAA will probably be e-firebombed in the anger stage.
“Luckily my parents were smart with their finances..”
Yet they are not smart enough to trade their POS asset for $7M.
If they had sold, either down sized or rented, then stay at home student would have had nowhere to live.
Fair point. Parents wouldn’t be able to help out kiddo too much since they only have $7M in their bank account.
Why would they have to downsize? They could have sold for $7M, keep $4M and use the remainning $3M to buy a large house on the West Side near UBC or a palace anywhere else.
This anecdote is a bit odd…
@ bubbly
I didn’t say they HAD to do anything. My point was that IF they sold on the premise that prices would correct sharply, they would presumably trade down either in terms of location and/or size (or rent). This, in turn, would further compound “stay at home” student’s pain and suffering (and we can’t have that now, can we?). It would be “odd” for them to do otherwise. No?
Kid would also look like a complete hypocrite if he/she were to go on and accept gift of d.p. for over priced condo from parents, who suddenly have all this cash to burn now and no further need to be “smart with their finances”.
And my point was that they should have sold even if they didn’t think that prices would correct. Of course, the compromises they would have to make, would be brutal.
This anecdote came from me. My parents are far from wealthy. bullwhip29 most of your assumptions are far from true. The reason I stay at home is I attend UBC so I cannot justify spending 1500 dollars a month renting a basement suite when my parent’s house is literally 15 steps away from the university. As a family of 6 we have 1 car and I use the bus 99% of the time. I’ve held a job since I was 16 and every penny I spend comes from my income. Never been given an allowance or money in my life. The most exotic vacation I’ve been on with my family is to Toronto.
Honestly my parents do not want to sell and have never wanted to. They are first generation immigrants and to them the house symbolizes the “Canadian Dream.” All the sacrifices they made brought them to owning this house. Sure 7 million dollars is a lot of money. But handing down the house to one of their children and seeing their grandchildren grow up in a prestigious neighborhood outweighs anything they could do with the 7 million. This may be hard to believe for most people.
It’s totally illogical.
Robert, have you and your family ever considered taking to a tax expert?
To my knowledge, 50% of capital gains tax applies to inherited assets.
Talking to a tax specialist now is a really good idea if the plan is to pass the house along. One child should be put on the title now. Not all of them, for reasons that should be explained by a professional.
@ Robert Borden
Not that I am trying to split hairs or anything, but you originally said your parents DID want to sell but that the market had cooled etc…and now you are telling us the opposite. Hey, I have no problem with you ripping me for making “assumptions”, but you’ve got to get your story straight first.
Anyway, while I’ve got your attention, why would your seemingly old fashioned, conservative and well grounded parents host dinner parties for a bunch of douche bags who parade around in fancy leased cars, enjoy nice vacations and brag about all the money that they could make?
AG Sage,
I believe my older sibling is on the title, but will confirm with my parents. Thanks for the heads up. Real Estate Tsunami thank you too.
bullwhip29
After re-reading my original post it looks like my pronouns were misused and confusing. What I meant in the original post was my parents friends are currently trying to sell and are unable to. I think the reason they are not dropping their prices substantially is because they don’t need. One family in particular wants to sell their house for 200% of assessed value but then on the flip side wants to purchase a new downsized home for 50% of assessed value. You just can’t have it both ways.
The one luxury I had growing up was I went to a private school (on a substantial scholarship) in Vancouver so most of the children come from high income families. Rich snobby people became friends with my parents after I was friends with their children. I guess when you keep hanging out with the same kids your entire childhood, the parents become friends as well.
My friends have very skewed views on their financial futures. They expect six figure salaries after finishing undergraduate degrees. Any house located east of Oak and south of 41st is “ghetto.” I find it funny that they hold these views when mom and dad have purchased their multi-million dollar condos for them and if they were to go and apply for a mortgage themselves they would not be approved for ANY house in Vancouver.
Bullwhip, you’re being a bit harsh on Robert. Whether you agree with his parents’ decision to hold on to the home or not, it is their decision, not his. He seems like a nice guy, and is working on getting his education and eventually contributing to this city. Why pick him apart and his anecdote, which we surely don’t do with all the others?
Roberts parents are immigrants to Canada (like mine) and have paid off their mortgage (like mine) and have an opportunity to cash out and be millionaires (like mine), but they are not (like mine). I’m as bullish as one can get but do I think my parents are fools? No, they just have a different risk profile than I do; one that perhaps matches their path to Canada and their age. The house they are in right now is not a mansion but it suits their needs and is paid off. They would rather accept their current lifestyle of stability rather than gamble by selling and renting. Sure odds are stacked that they would make out like bandits however there is still the unknown remote possibility that things keep going up and they end up on the short side of a trade. I respect their decision and don’t ever try to convince them one way or another. When they start to tell me that I’m throwing money away on rent…well then this bear bares it’s teeth and claws as my risk profile is totally different.
I sense a trend emerging.
My parents are the same way. First generation immigrants, entirely dedicated to home ownership. Completely bullish, not interested in selling despite turning their $60,000 down payment into nearly a million dollars.
And like others, they too preach the ”buy buy buy” mantra, regardless of any logical facts put before them. I have since learned to avoid the topic, much like trying to disprove the existence of God to a devout Christian.
You may be interested to know that in the past many of us have talked of the ‘cult’ of RE ownership in this city.
This is not hyperbole, as there really are many parallels between a group locked in a spec mania and a cult.
Come on, ED…. you KNOW you want to make this the new ‘RE Cult’ sidebar panel…
http://tinyurl.com/ae3jzwj
i never been to a place where people talk so much about real estate… i guess Vancouverites cherish their home value so much because there is no decent jobs or industry or any real wealth in this city