Tag Archives: Employment

Wage To House Price Ratio Is A Changin’

inside-llewyn-davis-trailer

Readers may have seen the 2013 Coen brothers movie ‘Inside Llewyn Davis’, about a folk singer in NYC in 1961.
In a relatively early scene we hear from Llewyn’s sister that their parents’ house has been sold for “Eleven-Five” ($11,500).
Immediately thereafter Llewyn sits in on a recording session for another folk singer, playing second guitar and doing fill-in vocals on one song. For this he is paid $200 (a little under 2% of the value of a house!).
Gee, how times have a-changed.
The equivalent in our town today would be for a musician to be paid $15K-$20K for session work on one song.
- vreaa

A Veterinarian’s Dilemma – “Living in a 300-square-foot closet, moving to northern B.C. or renting for life.”

“My veterinarian, owner of a successful west-side practice, emailed recently to say young professionals like him “are left with a choice between living in a 300-square-foot closet, moving to northern B.C. or renting for life.”
- from ‘Here in B.C., we’re richer than we think — on paper’, Barbara Yaffe, 24 Mar 2014

[Posts are, as you can see, very sporadic. No change in our outlook for Vanc RE market. -ed.]

“What’s the worst that can happen? You can’t pay your mortgage, so sell your house! No fear.”

Hannah Sung, Globe&Mail: “According to the numbers Canadian’s are carrying more debt than ever; which seems like a worrisome place to be. So I decided to ask people: ‘What is your biggest financial fear?’.”

Man1: “That’d be my mortgage. Actually, I just lost my job, about a month ago. Believe me I’m really happy about it; I can go back to school. I really don’t want the fear to come in front of me. What’s the worst that can happen? You can’t pay your mortgage, so sell your home! No fear.”

Hannah Sung: “‘What is your biggest financial fear?’.”

Woman: “The stereotyped idea of graduating and living in your parent’s basement.”

Hannah Sung: “What is the best way to manage the stress of being in debt?”

Man2: [looking concerned] “Try to think positive. I just had a job interview.”

- from ‘The fears that grip Canadians as debts rise, housing prices fall and incomes stall’, Globe and Mail video, 9 Mar 2013

High Paid Vancouver Workers Choosing To Live In The U.S. – “The cost of housing is four to five times what they are accustomed to; He did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver; There are other really pretty places out there.”

Eric Murray is chief executive officer of growing clean-tech company Tantalus Systems, based in Burnaby, B.C. Mr. Murray, however, lives in Raleigh, N.C., where he owns a 3,500-square-foot house and puts his three kids through private school.

He is a Canadian, with several family members in Vancouver. But when his career trajectory sent him to Raleigh, he decided to stay put. Mr. Murray is one of a growing number of workers in the Lower Mainland who live in the U.S. You could call them cross-border jobbers.

“My father’s entire family is in Vancouver, so for our relationship, it would be great if I lived there,” he says in a phone interview. “But for me to pick up and move from Raleigh, where I have a fully wooded lot, and a very nice home, and I can send my kids to private school, this sort of stuff – to do that in Vancouver, I just can’t swing it economically. When we looked at this whole thing, we knew we would have to compromise on housing.

“Absolutely, I would live in Vancouver if I could afford it.”

Technology is the third-largest contributor to B.C.’s gross domestic product, says Bill Tam, president of the B.C. Technology Industry Association. He says there is demand for about 4,000 more employees in the industry, and the majority of qualified people come from the U.S.

“Especially in the Vancouver area, technology has been one of the faster growing industries,” he says. “So when companies have had to expand and recruit managers to come here from the U.S., some have relocated to places like Blaine, Wash., close enough to commute on a daily basis. That’s the level of creativity they’ve had to resort to.”

Others, he says, fly in from more distant U.S. locations, like Mr. Murray. Mr. Murray used to fly into Vancouver every other week. These days, he’s flying in every third week.

“When they come across and recognize the cost of housing is four to five times what they are accustomed to, they end up being commuters,” says Mr. Tam.

Sierra Wireless CEO Jason Cohenour, who was travelling and couldn’t be reached for comment, works in Burnaby and lives in the U.S. Tom Ligocki, CEO of Richmond-based Clevest, says he has several employees who live in a golf course community at Semiahmoo Resort, near Blaine. One of his engineers, Jeremy Westbrook, commutes from his home near Blaine to work in Richmond. It takes them about 30 to 40 minutes to make the drive.

“None of the folks in the U.S. want to move to Vancouver,” he says. “The simple example that I heard from one gentleman is that he did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver.” …

“There’s no point in even talking about the Vancouver market. We are just talking to them about directly moving to the Semiahmoo resort,” he says, on the phone from a conference in New Orleans. “If you can’t bring them to Vancouver, that’s the only option we have.

“And they do certainly make very good wages,” he adds. “These are high-end experts that we are hiring.

“But all these folks are used to living in a house. They are used to American comforts, and they are well paid, and they can afford to have a nice luxury home wherever in the U.S.”

“I get into this discussion all the time with guys. Vancouver is great. The mountains and ocean are super. I get that. I would love to live there. I have a lot of family there. But I don’t see how the economics would work for a young person trying to do both of those things, unless they had a similar opportunity in another really pretty place.

“And I have been in a bunch of different countries and there are other really pretty places out there.”

- from ‘Some Vancouver workers have been priced right out of the country’, Kerry Gold, Globe and Mail, 22 Feb 2013 [hat-tip Aldus Huxtable]

Smart business people know: Vancouver RE is woefully overpriced.
- vreaa

“My friends who are westside realtors are cutting spending budgets and dipping into savings now to keep things going.”

“My conversations with friends who are westside realtors over the past few months (I know a few – hey everyone wanted to be a RE agent for a while, it seems) [reveal that things] are not good (for them). Telling me they are cutting spending budgets and dipping into savings now to keep things going.”
- Girlbear at VCI 11 Feb 2013 2:51pm

“Over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”

“Labour Minister Pat Bell was on CBC radio earlier today. He said that over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”
- Patiently Waiting at VCI 8 Feb 2013 3:37pm

It does seem that things are slowing down on various fronts.
These are the kinds of self-perpetuating downward-spiral/vicious-cycle factors that will cause lower prices to beget lower prices still.
Our recollection is that we have roughly 7%-8% of the work-force directly involved in RE construction, whereas more normal levels are 3%-4%.
- vreaa

“I am in LOVE with the natural beauty here, but I can’t find work! The more time goes on, the more sad, lonely, desperate and lost I feel in this city.”

“Wow, this is really defeating. I mean, I am in LOVE with the natural beauty here, but I can’t find work! it’s ridiculous! I live in Surrey and the job market seems horrendous. I’ve applied for about five months straight, and nothing. nada. it’s like you’ve got to be super cut throat to find that you’ve competed with hundreds of other sorry applicants. forget having credentials. really? this is sad. I want to believe that it’s possible to find a way to stay here, but the more time goes on, the more sad, lonely, desperate and lost I feel in this city…which feels absolutely awful as I left Toronto feeling the same way. What the hell kind of life are we supposed to live where your next meal is being paid by the service industry job that you abhor and can’t wait until you find your next soul sucking job? where are the JOBS other than the oil loving alberta? what the hell is wrong with this country?”
- Tova at VREAA 2 Feb 2013

Three Vancouvers? – “A recent report paints a picture of a city riven with inequality and the growing geographic segmentation of its classes.”

“The 21st century is shaping up to be the century of the city. But global cities are not only becoming increasingly-important economic forces of the world economy. They are also becoming increasingly divided and segmented. …
A new report, by David Ley and Nicholas Lynch of the Cities Centre, takes a detailed look at Vancouver’s growing class divides and geographic segmentation. Vancouver is a very different city than Toronto. It is a city of tremendous natural assets and physical beauty, noted for its mild climate, perched on the Pacific coast. It is widely thought of as an affluent city, with some of the highest housing prices in North America. It has attracted a huge influx of immigrants, especially from the Pacific Rim. It is a frequent winner of “livable cities” titles, as the study notes. This city is sometimes referred to as “Dream City” or “Lotus-Land.”
But their recent report, “Divisions and Disparities in Lotus-Land: Socio-Spatial Income Polarization in Greater Vancouver, 1970-2005,” paints a Vancouver riven with inequality and the growing geographic segmentation of its classes. …
City #1 is affluent Vancouver, made up of neighborhoods where average individual incomes grew by more than 15 percent of the metro average between 1970 and 2005, comprises roughly 30 percent of the region’s census tracts and covers three distinct areas: the central core, the North Shore suburbs, and scattered areas with high-priced condos and houses close in proximity to valued amenities, such as waterfronts, views, and green spaces.
City #2 is middle class Vancouver, with income changes of plus or minus 15 percent of the metro average. It includes nearly half (47 percent) of the region’s census tracts.
And City #3 is disadvantaged Vancouver, areas where incomes fell by more than 15 percent of the metro average between 1970 and 2005. These areas account for some 22 percent of the region’s census tracts; and as the authors note, they “are relatively concentrated in the southern and eastern neighborhoods of Vancouver and extending out to the southern and eastern suburbs.”
While City #1 consists overwhelmingly of native-born Canadians and is more than three-quarters white, City #3 has an immigrant majority and is 61 percent minority. It has the highest population densities too, as well as the lowest gross incomes, and despite its lower property values, a lower share of homeowners. More of its residents are employed in working class and service occupations than in either City #1 or #2. …
The study concludes:
As a result, the dominantly middle-income City of 1971 is now divided three ways: one-third lower income, one-third higher income, and one-third middle-income. The middle-income city of the 1970s has become the polarized city of the 2000s. …
Even the city widely recognized as the world’s “most livable” cannot escape the growing class polarization of our increasingly spiky and divided world.”

- excerpts and image from ‘The Growing Urban Class Divide, Vancouver Edition’, Richard Florida, The Atlantic Cities, 14 Nov 2012 [hat-tip Aldus Huxtable]

“Substantial declines in home sales are usually a precursor of home price corrections.”

“Our in-house investment managers in NYC have a global portfolio of around $300bn USD; this was their take on Canada sent to me yesterday:
“It is reported that home sales in Vancouver and Toronto metropolitan areas dropped by 20-33% in September from a year ago. Substantial declines in home sales are usually a precursor of home price corrections. While almost all high loan-to-value mortgages in Canada have guarantees from government backed entities, a housing correction will likely impact consumer finances and aggravate credit card ABS credit performance”
Word is getting out there pretty fast now. Housing market correction = recession in Canada.”

- Toronto_CA at greaterfool.ca 7 Nov 2012 10:04am

Price follows volume. The weakness we are seeing in sales will be followed by similarly impressive price drops.
And, yes, a housing market correction will have profound effects on our economy, particularly in areas like the lower mainland where we are sorely overdependent on economic activity either directly or indirectly linked to RE.
- vreaa

Mortgage Prisoners – “Something like that will never happen in Canada”

“How it happens
Here is a fictional but typical example:
A shop owner moved home in 2006, after being offered a mortgage without needing third-party corroboration of their income.
The interest tracked base rate at 1% over bank base rate for five years, after which the rate would revert to the lender’s standard variable rate (SVR).
The lender was happy to lend the money on an “interest-only” basis, where the repayment of the loan would come from future profits in the business, or from an inheritance, or from the sale of the property itself.
With the Bank rate at 5%, the interest stood at 6%, so the householder had to pay £2,000 a month.
In 2007, the Bank rate increased to 5.75%, so repayments increased by a further £250 a month.

Changed circumstances
It is now 2012, the High Street is suffering, and the shop owner’s current income is only £50,000. The property might be worth only £570,000.
From April 2008 until March 2009, his mortgage costs dropped from £2,000 pm to £500 a month as the Bank rate fell to a record low.
All appeared well until the end of the five-year Bank rate tracking product in November 2011.
Now, payments have gone from 1.5% (£500 a month) to the current SVR of 4.25% (£1,416 pm).
Traditionally over the last 25 years or so the answer to this issue of increasing costs would be have been to remortgage to another lender.
However in the current environment things are different, with lenders being much more conservative.
The shop owner would find it difficult to find a new loan on an interest-only basis.
The loan is now at 70% of the value of the home, so almost every lender would require him to take a repayment loan.”

- from ‘Mortgage prisoners’ are locked in to home loans, Simon Tyler, BBC, 25 Apr 2012

Hat-tip Erebus at VREAA 25 Oct 2012 for this link, and who added:
“My co-worker’s response to this: “Something like that will never happen in Canada” “.

Note that in the above example, problems have arisen even with property prices rising.
Yes, there are some differences between UK and Canadian mortgages, but the broad principles of those in debt coming under increasing pressure, as the virtuous cycle turns vicious, are the same.
- vreaa

“A lawyer, a public company financier, a real estate marketer, a cop, and a real estate agent walk into a diner…”

“I went out for lunch with a few old university friends yesterday. One was a lawyer, one a public company financier, one a real estate marketer, one a cop, and of course, one of whom was a Real estate agent.
Needless to say, the conversation ultimately led to the fact that we all hate our jobs! When it came to the police officer’s turn to gripe, he expressed that after 10 years on the force he was finding his work becoming particularly mundane. In fact he had taken to framing houses on the weekend with a carpenter friend of his in return for free help with a renovation he was doing at his own residence. He said he really enjoyed the labor/results aspect of the work versus what he deals with at his 9-5. But when he began saying that this framer buddy of his and he wanted to build a few houses out in Port Moody and sell them I damn near pulled out his pepper spray and gave myself a good spritzing.
I did my best to casually offer a warning of dabbling in the dark arts of amateur development… but hell, what’s the worst that could happen?”

-nom nom no at VREAA 19 Oct 2012 7:53am

We’d submit that a major reason that so many in mid-career find their jobs ‘mundane’ is the era of bubbles. In typical times, one develops a profession or a trade, strives to do it well, and is rewarded by society for one’s work.
Since the 90′s, we have heard so many stories of those speculating on tech stocks, housing, and sector-whatever, making ‘x’ times their annual income in ‘y’ months, that the fabric that holds together part of the reason for working unravels.
Why should I continue to be a perfectly competent dentist when society will reward me better for flipping condos or trading stocks in my pjs?
This distraction is part of the misallocation of resources that occurs in times of speculative mania/s.
We need police officers to be good police officers, and dentists to be good dentists; not to be taking off to build and flip houses.
- vreaa

“Young people are leaving B.C. for other provinces at the fastest rate in years, raising concerns about a sputtering economy and unaffordable housing.”

“BC stats from January to March show more than 2,500 have uprooted and left.
Both economists and folks who live here blame the economy, housing affordability, and the high cost of living in BC.
A woman we spoke with isn’t shocked by the mass exodus earlier this year. “No, it’s not surprising at all. I was actually thinking of doing that myself, especially towards the US; you get way bigger houses [in the States] for a small amount.”
One man tells us he’s done it before and could do it again.”
[Leave twice?! -ed.]
- ‘Thousands of people leaving BC for other provinces: Some Vancouverites not surprised, blaming jobs and expensive housing’, news1130.com, 16 Aug 2012 [hat-tip RESkeptic]

“Young people are leaving B.C. for other provinces at the fastest rate in years, raising concerns about a sputtering economy and unaffordable housing.
The latest numbers from B.C. Stats show that from January to March this year, 2,554 people left B.C. for other provinces. That’s an alarming jump that continues a negative trend started in 2011, when B.C. logged a net migration loss interprovincially of 1,920.
In an interview Wednesday Helmut Pastrick, chief economist for Central Credit Union 1, said B.C.’s negative migration “seems to be accelerating.”
Pastrick said those leaving B.C tend to be young people looking for better employment opportunities, but there also could be a “push and pull” factor of younger families seeking both better jobs and more affordable homes in other provinces. …
B.C. NDP leader Adrian Dix said interprovincial migration is “complicated” and B.C.’s negative trend covers a short period, so he doesn’t want to jump to conclusions.
But housing affordability and B.C.’s habit of exporting raw resources without developing manufacturing jobs are likely culprits, he said.
“If this trend continues in the coming quarters it is not good for the economy or the government’s record,” Dix said. “We have to focus on making things and manufacturing in a consistent way, and training our [workforce].”
B.C. Finance Minister Kevin Falcon was not available for an interview for this story.”

- from ‘Young people fleeing B.C. in big numbers: Are bad economy and pricey housing to blame?’, The Province, 16 Aug 2012

For dozens of other stories in this vein, see the ‘Avoiding Vancouver‘ sidebar category.
The bubble has been bad for our society.
- vreaa

600,000 square feet is to be dedicated to office space packed in around Rogers Arena and BC Place – “We have our work cut out for us to fill that space.”

“The city’s planning department, concerned about the loss of key office sites on Vancouver’s small downtown peninsula to the condo boom of the 1990s and 2000s, decided several years ago that the last bit of undeveloped former industrial land that was the site of Expo 86 – Northeast False Creek – should include 1.8 million square feet of commercial space.
Of that, 600,000 is to be dedicated to office or, as the planners call it, “job space,” packed in around Rogers Arena, the home of the Vancouver Canucks hockey team, and BC Place, the government-owned stadium where the B.C. Lions play football and Whitecaps play soccer.
That 600,000 square feet is the equivalent of a whole Park Place tower in Vancouver’s business district or the new PricewaterhouseCoopers tower on York Street in Toronto.
Now, landowners in that area are trying to figure out who they’ll get as tenants.
“We have our work cut out for us to fill that space,” says David Negrin, president of Aquilini Development, one division of the Aquilini family empire that includes the Canucks, Rogers Arena and a host of other businesses and development projects. “It’s just a tough location because it’s on the edge of the [central business district].”

- from ‘Canucks owners gamble on new office district in Vancouver’, Globe and Mail, 30 Jul 2012

“I have a friend I literally begged to sell his Yaletown condo a year ago. Instead he poured in 50 K worth of Miele and Granite and teak floors. He lost his job on Tuesday.”

“We rent in a very nice Vancouver Condo Highrise – average for one bedroom is around a million. (gulp).
Three Open Houses in our Building last weekend.
NOT ONE SHOWING. (The concierge and I are pals).
NOTHING. Nada.

Today – anecdotal evidence of how business is in D/T Vancouver. The ONLY place I saw that was busy is Sears – going out of business – a new tenant is rumoured to be Target. The rest of the stores in the area are DEAD as Stephen Harper’s eyes.

I have a friend I literally begged to sell his condo a year ago. Instead he poured in 50 K worth of Miele and Granite and teak floors. He lost his job on Tuesday.
He called this morning, and he sounded terrible. I dropped in on the way back home (he lives in Yaletown) – and when I got to his shoebox, he looked like he hadn’t slept in a month.
He was nearly in tears. I asked him to tell me what was going on and I just listened.
Maxed credit cards. Leased Land Rover. 60 inch TV – all the toys.
He has one bank account that has $123 bucks in it, and a two week severance check worth $1190.
He was frantic. His Mortgage payment is coming up at the end of the month, $2350.
What could I do for this guy? He can try and list his shoebox – but he owes 412 K on it and it won’t sell.
His student loans total? $45 K – he has an MA in Fine Arts. His animation job was chopped.

I have a sinking feeling that my poor pal is in a crowded boat.
The whole mess makes me sick.
This is just starting.
What is coming is a disaster. I am very concerned that we have a generation of folks that will be destroyed. Maybe two.
DEBT. Easy credit. It’s like Oxycontin. Once you get on it – you are finished.”

- Bill Gable at greaterfool.ca 20 July 2012 6:45pm
[hat-tip 'subterranian']

“Wages are just not enough to entice anyone to Vancouver. Everyone we’ve interviewed so far says “Hey, I need at least $X to get the same thing I already have”. And no company here that I know of can afford to pay $X.”

“I have to agree on the difficulty in attracting good, well skilled, engineers or technicians here… our company is looking to hire at least 3-4 people right now (pneumatics, electronic, electrical, PLC… that kind of stuff) and wages just are not enough to entice anyone to Vancouver… everyone we’ve interviewed so far says “hey I need at least $X to get the same thing I already have”… and no company here that I know of can afford to pay $X. Tough spot for companies in Vancouver.”
- BurbsBoy at VCI 28 Jun 2012 10:20pm [hat-tip jesse]

It is best for a society and for its economy for housing to be priced near fundamental value, as judged by local incomes and price:rent ratios. Vancouver prices are two to three times higher than those determined by fundamentals.
- vreaa

One Chart – Canada is “a country where house prices still haven’t found fair value.”

“A chart that shows those countries where housing prices still haven’t found ‘fair value’.”

- chart and excerpt from ‘Of housing booms and busts’, David Keohane, ftalphaville.ft.com, 26 Jun 2012 [hat-tip Ralph Cramdown and JS]

[If you find charts eloquent, see also this post from two years back: 'Two Charts: All You Need To Know About Canada's Housing Bubble', VREAA, 26 Aug 2010]

‘Something Is Not Working Here’ – “The median after-tax income for families of two or more people in B.C. have remained unchanged at about $67,000.”

“The median after-tax income for families of two or more people in B.C. remained unchanged between 2008, 2009 and 2010, after adjusting for inflation, said Wendy Pyper, analyst at Statistics Canada. There was a slight increase between 2007 and 2008, from $66,400 to $69,900, but since then incomes have remained unchanged at about $67,000.”

“Something is not working here [in the Canadian economy], this is not a positive report,” said Benjamin Tal of CIBC World Markets.

Canadians are spending beyond their means and it’s starting to catch up with them, said Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc. “It’s going to be even more of a problem if they continue these behaviours if their incomes are not rising,” Schwartz said. “If we see everything else go up in price, then they’re going to have trouble affording much of anything. It’s really important for Canadians to get their spending in order and reduce their debt.”
- from ‘Despite economic growth and job gains, family incomes remain stagnant’, Vancouver Sun, 18 Jun 2012

Housing prices ultimately follow incomes; if they go through a period of decoupling from rates of income growth, they will eventually reconcile. – vreaa

Spokesman for Homebuilders of BC: “This industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate.”

“Here are some facts about residential construction.
Nine per cent of all employment in British Columbia is in the residential construction field. That’s 192,400 jobs related to new home construction, home renovation and home repair. The home building and renovation community earned $10 billion in wages last year, while $22.7 billion in investment value was created by residential construction.” …
“We can easily see that this industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate. Just think: For every single home we build, 3.5 person years of employment are created and more than $60,000 is generated in spinoff spending.” …
“The next time the housing market in B.C. comes up in conversation – and we know it will – let’s try to remember that without such a successful industry, our economy would be in much rougher shape.”

- excerpts from ‘Benefits of home buying’, M.J. Whitemarsh [CEO of the Canadian Home Builders' Association of B.C.], The Province, 17 Jun 2012

We fully acknowledge BC’s dependence on residential construction — when you add in other aspects of the RE industry, and knock-on spending in household goods, a very substantial percentage of our economy is driven by real estate. Under normal circumstances we would celebrate a robust construction industry, and we certainly wouldn’t wish for anything other than prosperity for BC Homebuilders.
It must be realized, however, that this sector of the economy has ballooned unnaturally with the speculative mania in housing; an example of the misallocation of resources that results from a massive asset bubble. In BC, if 9% of employment is in residential construction (as Mr Whitemarsh reports), this is strikingly large compared with 7.5% for the whole of Canada, and 3.5% for the US currently (they hit 6% at the peak of their bubble) [see chart below].
This overgrowth will shrink back with the demise of the bubble. We don’t ‘wish’ for this, and we don’t point to it to be difficult to the builders; it simply is part of the inevitable boom-bust cycle that comes when speculative manias in RE develop and then dissolve. Unemployment as a result of loss of jobs in this sector will be part of the unfortunate fallout.
- vreaa


[Chart source: BNN interview with David Lepoidevin, 8 Jun 2012.]

“I never like hearing distressed anecdotes but here’s another. Imagine some slightly more severe distressed situation and instead of daycare being the casualty of rebudgeting it’s the mortgage into an illiquid housing market.”

“I never like hearing distressed anecdotes but here’s another. Two teachers (full time, part time) with 3 pre-school-age kids, mortgage, car broke down and they bought another (more expensive) one. Now grandmother is on 5 days/week (up from 3) daycare duty because 1) they lost a few days from the strike 2) the part-time teacher converted to full-time to make the difference. Gran’s in her late-60s, and she’s feeling the stress. This was because of a single random foreseeable event.
I do not wish hardship on anyone but hardship is going to happen and this was, luckily, a manageable case. Imagine some slightly more severe distressed situation and instead of daycare being the casualty of rebudgeting it’s the mortgage into an illiquid housing market. The lines of defense will be increasing earnings (more hours), borrowing from parents, borrowing from the bank, liquidation of assets, and finally…”

- jesse at VREAA 11 Jun 2012 8:48am

“If I sold now, I would be in a position of weakness – I’d have to rent.”

“It’s a sunny afternoon in a Toronto industrial park, and a group of about 60 laid-off factory workers are gathered for a farewell barbeque.
The Honeywell workers lost their jobs 15 months ago as the valve and parts maker shifted production to lower-cost factories in Hungary, China and Mexico.
But it isn’t as easy as picking up and moving. “I have to take care of my father – he’s 82,” says Brendan Andrews, a machine operator, who lives in Belleville, Ont.
Instead, he’s accepting an $11-an-hour job – a wage reduction of 50 per cent – that is non-unionized. He started on a 7 am to 7 pm shift last week.
Mario Garofalo also can’t move. The 42-year-old assembler, who worked at Honeywell for 14 years, doesn’t want to sell his house and leave his parents, girlfriend and nieces and nephews behind. “If I sold now, it would be in a position of weakness – I’d have to rent. I would use up money for other things, and on living expenses,” he says.”

- from ‘Stuck in place: Canada’s mobility problem’, G&M, 6 Jun 2012 [hat-tip KC via e-mail, and Makaya at VCI]

Years of RE-cultism blurs the thinking.
- vreaa

“I work in the software industry. I’m preparing to move away. Other high tech employees with the skills and talent to get better work opportunities elsewhere are leaving the company due to the stupid cost of living here.”

“I’m one of those so called bitter renters. I have chosen to rent because I believe that living close to work is important for family health reasons. Our household is also loosely budgeted with the idea that the wife can stay home if she chooses. As we have a young child now, she is choosing to do that for the near future.
An opportunity came up at work for a company transfer to the US of A. Company transfers are pretty sweet. Most expenses are covered. Moving to a state with 0% state income tax, and homes cost oh, 75% less than they do here.
It’s a tough decision, lol. But you know, sacrifices have to be made.
I work in the software industry, and as I’m preparing to move away, I’ve been in informal discussions with some of the higher ups in my company, and in the discussions I’ve heard that other high tech employees are leaving the company (and the lower mainland) due to the stupid cost of living here. These are the shining star employees that are fleeing, as they are the ones with the skills and talent to get better work opportunities elsewhere.
Just in regular meetings, it’s come up with the upper level management, that the housing in vancouver is just CRAZY, and they worry for their children’s futures. Not only do they consider the housing to be CRAZY, but the also point out that salaries are out-of-proportion low. (Those two are likely related.) Also other general feelings that commutes are taking longer. Commutes from white rock to richmond used to be 30 minutes outside of rush hour, but in the past few years, it’s consistently been 45 minutes instead. (outside of rush hour)
VREAA I know you’re reading this, and I’d likely be interested in contributing to a series about my experiences in this new place outside of the ‘Best Place on Earth’, if you deem my writing style and content worthy of publishing.
In any case, after waiting so long and quite a large amount of marital stress over housing, we’re moving away.
I gotta say, at first it was a hard sell with the spouse. She didn’t want to leave her friends, but then she saw the shopping, the beaches (wow!) and um, the housing down there. And she came around.
There’s a lot more to write about. Differences in taxes, health care, car insurance, property taxes, and those HOA fees. Bottom line though, I’ll be paying a LOT less interest when I purchase down there. Credit ratings may be a bit of a challenge. Seems even with large DP’s you need a good credit rating for the best mortgages.
Good luck to all intelligent posters. I’ll still be hanging around these forums. I’ll just have to observe from a distance as the meltdown progresses.”
“I think we will choose to rent for at least the first year.
It just makes sense to take a little bit of time to get familiar with the area before committing to buying a place we have to live in for a long time. It does seem that monthly costs are really high in the area we are moving too.
Maybe we won’t like it down there. Who knows, leaving may open our eyes to the truth that Vancouver really is the BPOE. I’m thinking likely not. I’m looking forward to the adventure of being someplace new and different. Life should be fun and exciting. 30+ years of debt is just not for me. It’s really amazing how much Vancouver demonstrates the ‘emperor has no clothes’ children’s story.”

- ‘curious lurker’ at VCI 6 Jun 2012 5:27pmand 8:12pm

Thanks for the story, curious lurker. All the very best for the move and with future endeavours. We’d certainly welcome hearing more of your experience living away from Vancouver. Send updates via your own blog (see White Rock renter’s suggestion below) or by e-mail to us (see ‘contact’ above) and we’ll post them here.
Needless to say, we are saddened by the ongoing process of skilled individuals being pushed away from Vancouver due to housing costs, and we look forward to a time when housing here becomes more reasonably priced and less of a hinderance to the health and growth of the city.
- vreaa

“CuriousLurker – If you blog about your experiences moving stateside, I know I’d be interested. My family is in the exact same position as you, except husband hasn’t formally started applying for jobs there yet (software engineer). The only thing that keeps us here is family, really. I would love to know how education and health care measure up from someone actually making the switch. I think too often we dismiss the US as a non-option because of the assumption that schooling is terrible and health care is too expensive. I’m betting with better salaries, cheaper cost of living, and affordable housing that maybe healthcare costs and even private school costs would balance out and maybe we’d still come out ahead. I don’t know. I’m just sick of it here, the rain, and the attitude that somehow its different here. Let us know if you start a blog.”White Rock renter at VCI 8 Jun 2012 3:05pm

“I have a friend with 2 kids in 2 different daycares costing untold organizational nightmares and $2400 per month so she and her husband can work full time at jobs they don’t really like so they can try to keep their heads financially above water. What kind of life is this?!”

“I have a friend with 2 kids (one just a year) in 2 different daycares costing untold organizational nightmares and $2400 per month so she and her husband can work full time at jobs they don’t really like so they can try to keep their heads financially above water. The dream of a home is still there but the townhome they bought 8 years ago is all they can really afford. They spend 3-4 hours a day with their kids, a few hours in the morning getting them fed and dressed to go to daycare and a few hours in the evening getting them fed and bathed and ready for bed. What kind of life is this?!
And then there are the Bumfuzzles – live on a 44 foot boat in Mexico, spend all their time with their kids and each other, live with less, work for themselves, love their life.
I know which life I’d choose. The idea that you need 3+ bedrooms and 2+ bathrooms and a big yard and stuff and debt is wrong for so many people but they don’t even know it.”

- terminalcitygirl at VREAA 5 may 2012 1:11pm

Realtors With PhDs – “I’m a fully qualified brain-surgeon! I only do this job because I want to be my own boss!”

“While at the corner store, saw a funny ad on the monitor above the checkout. One of the non stop real estate ads had a RE agent who advertised the fact that he had a PhD! How flipping distorted is the economy in this town when a PhD educated guy abondons that considerable education investment (8 years or so), takes the 5 week RE course, and pursues the “noble” RE profession? Sad part is, he probably made more money flogging RE than applying education.”
- Re-diculous at vancouvercondo.info 20 Apr 2012

“He’s not the only one. /dev/null pointed out Gina Rossi the other day: Local realtor with a PhD in molecular biology and cancer research from UBC medical school.”
- Anonymous at vancouvercondo.info 20 Apr 2012 7:55pm

[image from Gina Rossi's site previously posted here removed in response to comments below. The focus of this post is on the phenomenon of individuals with higher education ending up working as realtors. - ed.]

“After finishing an undergraduate degree in Biology at UBC, I took on a PhD at the UBC Department of Medicine at Vancouver General Hospital. I successfully defended my thesis to earn my doctorate. My graduate studies focused on molecular biology and cancer research.
I’m good at stats and math. These are helpful skills to have in real estate. I can see a little deeper into the monthly Board statistics and often come up with better resolved, more useful information.”

- Gina Rossi, Sutton WestCoast Realtor. Image and excerpt from her blog.

It is not unusual for people with PhDs to end up in occupations unrelated to their training. This happens all over the world. After all, universities produce far more PhDs than they have academic positions for them to fill.
At the same time, we think that these two sightings are significant.
The Vancouver RE mania has drawn human resources away from many useful and productive endeavours; we find it hard to imagine that these individuals’ skills couldn’t serve them, and their communities, in better ways.
Anybody know of any other examples?
Who’s the most (over?) qualified realtor in town?
- vreaa

“So long Vancouver! Adieu! It’s been nice, but now I feel like a young naïve girl who’s been tricked into having sex with a pretty but vapid jock. How many smart, motivated young people must you scare out with your over-inflated prices and lack of joy before you realize that you are headed to an economic and human disaster?”

“So long Vancouver! Adieu! It’s been nice, but now I feel like a young naïve girl who’s been tricked into having sex with a pretty but vapid jock.”


Disappointing thing #1: The job market …
There are no jobs here, and when a good one pops up, the competition is so fierce that you have to send a singing telegram to get noticed.

Disappointing thing #2: The cost of living …
How many people must cram into a 1500$/month 2-bedroom apartment just to make ends meet? “Why aren’t they moving somewhere cheaper?” you ask. Well, there isn’t anything cheaper. Well, actually, there is, but the cheaper stuff is often illegal, unsafe and unhealthy.

Disappointing thing #3: The heart …
The city has, how can I explain it… no soul. It is as superficial and empty as the endless condo towers growing like weeds. There are good people in Vancouver who give this city some spark and light; but most times I felt no joie de vivre, no… happiness. Everyone is working so hard to maintain the appearance of being affluent that they lose their souls in the process. They lose their ability to enjoy life. And what good is a city surrounded by nature if you can’t find it in your heart to enjoy it to its fullest because you are worried about bills all the time?

Conclusion …
I used to love Vancouver as a tourist… but staying there made me hate it. How many smart, motivated young people must you scare out with your over-inflated prices and lack of joy before you realize that you are headed to an economic and human disaster, Vancouver?


- excerpts from “Don’t Move to Vancouver”: Why I Changed My Mind After 6 Months”, by Anabelle, at her blog ‘Anabelle’s Blog’, 18 Mar 2012 [Hat-tip Aldus Huxtable]

“I am single have a awesome job in health care and OWN a condo that is not eating up my paycheques. Yes Surrey sucks but I am making good money and can walk to work in 5 min. from a condo I OWN.”

“You and that stupid girl are single, unemployed and miserable because you think so highly of yourselfs, blow what little money you have instead of saving and investing. I am single have a awesome job in health care and OWN a condo in Surrey that is not eating up my paycheques. I have no debt except my mortgage because I thing ahead, don’t you reaserch a career before you enter university? The people in this town never want to look at themselfs first they want to point the finger and blame others for their lifes problems, as a minority born, raised and educated in BC, I am glad I didn’t move downtown and end up like all of you. Yes Surrey sucks but I am making good money and can walk to work in 5 min. form a condo I OWN.”
- ‘vince’, commenting at soloinvancouver 23 Mar 2012 5:31pm

Debt and Compromise.
You can do it!
- vreaa

“My wife and I both work in healthcare in Vancouver. We are currently experiencing a flood of applications from our local talent, the USA, and around the world. I know it doesn’t fit with the “message” on this blog, but this is the true reality.”

“My wife and I both work in healthcare, both here in Vancouver, PHSA and VCH. We are currently experiencing a flood of applications from our local talent, the USA (especially), and around the world. It is a very competitive hiring environment. Local nursing schools are producing far too many graduates and few have employment offers upon graduation. My wife tells me that many of our medical school graduates are also having trouble. But please, don’t take my word for it, simply look at the career websites at each of our health regions and you will see very few postings. And though we only have 4 degrees between us, we know of what we speak. My wife was recently part of a team recruiting for a new pediatrician at the Children’s, MANY applicants, hired a physician from Johns Hopkins. Hey, I know it doesn’t fit with the “message” on this blog, but this is the true reality.”
- allen at VREAA 27 Mar 2012 9:27am, responding to a post from ‘Vancouver in Rearview’ claiming that “Recruitment to Vancouver for skilled health professionals is nearly impossible.” [VREAA 27 Mar 2012].

Interesting, as we have two different health care ‘insiders’ describing very different recruitment conditions. Perhaps they are looking at different subgroups within the field?

With regard to allen’s comment on “message”: At VREAA we welcome any form of personal anecdote pertaining to Vancouver RE, regardless of what ‘message’ it may seem to project.
Even though we are personally very bearish regarding Vancouver RE, we hold our opinion because of the available data, including accumulated anecdotes.
So, we invite you to submit any personal stories that shed light on what is happening in the market, regardless of your opinion regarding future market direction. In fact, we come across so few ‘bullish’ stories, we’d particularly like to hear any of those.
- vreaa

“Recruitment to Vancouver for skilled health professionals is nearly impossible. I’m leaving, too.”

“I work for/with a large health organization in the lower mainland. Here is the bottom line:
Recruitment to Vancouver for skilled health professionals is nearly impossible. For very skilled, technical, health professions, out-of-city recruitment just doesn’t happen. If they don’t already live here, they aren’t coming. They can make more money ($5-$7/hour more, depending on the profession) in Alberta, with housing costs way lower to live in Edmonton or Calgary. For people with families and/or student loans, Vancouver is a non-starter. Our pay here is relatively low compared to other jurisdictions, and our cost of living is enormous. Plus, our employment scene really isn’t that great here for spouses – yes, there are jobs, but the professional ranks here are pretty thin. We don’t build stuff in Vancouver – in fact, I don’t know *what* it is we actually do here!
Yes, Vancouver is a pretty city with water and trees and mountains, but guess what – you can’t eat the scenery and more young families (the ones you want to recruit for the long haul) do the math and say ‘better value elsewhere’.
I’m leaving too – just got back from a weekend in Seattle and my wife and I said “and why do we stay in Vancouver?” We have five university degrees (three Bachelors, two Masters, one PhD in progress – in health sciences and engineering, in case you were wondering) and we can’t wait to pull the pin to move to a place where we can have a house of our own and be around people that do more than just talk about real estate.
As an aside, the bigger problem with real estate in this city is that it has turned the culture into one where everyone wants to be rich, without actually doing anything. Go to a city where people care about actually doing real work, creating value, building things….wow – what a difference in energy! More than anything, that is what Vancouver lacks, and unless that attitude changes, Vancouver will be condemned to also-ran economic status and will continue its status as an economic and cultural backwater.”

- ‘Vancouver in the Rearview’ at VREAA 25 Mar 2012 12:01pm

“Ryan and Laura Cain wanted three children. Despite having great jobs, the surgeon and physiotherapist say they couldn’t afford to stay in Vancouver.”

Announcer1: “The high cost of real estate in this province isn’t just an annoyance anymore, it’s life altering, quite literally” …
Announcer2: “Ryan and Laura Cain always knew that they wanted three children, but the decision to raise a family came with a compromise. Despite having great jobs, the surgeon and physiotherapist say they couldn’t afford to stay in Vancouver.”

Laura Cain: “We’re lucky enough that my husband’s work allowed us to actually move out of Vancouver because the housing was so expensive here and now in Cranbrook and there housing prices (are) much more affordable.”

Dr Ryan Cain: “You know, as a young surgeon starting out here the cost of living is something to consider. In the Kootenays its a little bit different and I’d certainly say you get a lot more for your dollar.”

Dr Paul Kershaw, UBC Early Learning Partnership : “You may be making six figures and still be having a mortgage of $600K for 700sqft and then you’re thinking about how do I have a couple of kids on my balcony?”

Announcer: “According to StatsCan, BC has the lowest fertility rate in the country, with more women giving birth over forty than any other province. In Canada they are also having fewer children than in other major Canadian cities.”

Kershaw: “Incomes have stalled for young families… they’ve actually dipped in BC.. and people have to pay for housing prices in BC that has gone up 149%

- from Global TV News, 21 Mar 2012

[hat-tip Liggsie, Greenhorn, others]

Comment:
The speculative mania in housing is applying pressure on sensible people to leave Vancouver; this is bad for our city.
- vreaa

Video:

“Some are saying that there is no legitimacy to claims that working class or low income people should be able to live in the City of Vancouver.”

“Some are saying that there is no legitimacy to claims that working class or low income people should be able to live in the City of Vancouver–and that the suburbs do these groups just fine.”

“But what’s being forgotten here is that, until recently, working class and low-income people have long lived in the City of Vancouver. I grew up in the City of Vancouver in the 80s and 90s and my dad was a working class non-union labourer who really made a pittance wage. My parents rented. They could afford to rent in Vancouver, not in social housing, in private market rental housing. We had half of a house and a big yard in the City of Vancouver on a working class single wage.”

“My mum’s family was also working class–also rented a big house in Vancouver–that house would probably go for $2 million in today’s market.”

“We’ve been forced out to Surrey because of high rents in Vancouver. The move was a slow progression, for me. My first place when I was 19 and living away from my parents for the first time was a rental in East Vancouver. I shared it with two other roommates. My share of the rent was $350 a month. I had a minimum wage full time job and paying rent in Vancouver was easy. That was in the late 1990s–not so long ago. Things don’t work out with roommates so you move around a lot when you’re young. But with each move I made, the rental market became progressively more difficult. It’s not just a problem with high rents. It’s also simply a lack of vacancies–or the only thing available is total dumps (I had a nice place for $350 a month when I started out)–or they don’t allow you to take your cat. So that forced me out of the city I grew up in.”

“I left Vancouver at the very end of 2001 because already by then the rental market was getting difficult in Vancouver. I went to New Westminster–which is a great city. I believe New Westminster is the densest city in Canada. It is very urban. Great place to live if you are an SFU student–skytrain to Production Way and then a bus up the mountain. So I lived in New West and I went to SFU. Incidentally, my ancestors built New West–I’m just learning about my genealogy now but it’s fascinating. I can trace my ancestry back in New West back to 1865.”

“But then I was renovicted out of New West. Transglobe Property Management went on a buying spree in New West in 2006 and bought up lots of apartments. My apartment building had about 70 units–all 70 households evicted–had to be out by Dec. 31–New Years Eve!!! They renovated and jacked up rents after we were gone. Many longterm tenants in that building, including war veterans and one woman who lived there 40 years. So then I ended up in Surrey–along with a lot of the other people who were evicted from that building.”

“Whalley is one of the last areas of affordable rental housing near skytrain (crucial for people renovicted out of Vancouver/New West but still working in Vancouver) left in the Lower Mainland. But Mayor Dianne Watts is putting up high rise condos everywhere. She’s built a new library. City hall is moving here. It’s not King George Highway anymore, it’s King George Boulevard. It’s not even Whalley anymore, it’s Downtown Surrey. This is to become Metro Vancouver’s second tier downtown core, after Downtown Vancouver. But this is also about gentrification. I’m afraid these dumpy rentals in Whalley are going to be demolished for condos. Then where will I go? Langley? Abbotsford? No skytrain there to connect me with work and social connections back in Vancouver. Time to leave the province soon. I’d rather live in Calgary than Abbotsford.”

“Working class and low income people do have a legitimate claim to the City of Vancouver because we (and our ancestors) built the City. It’s where we grew up. We have memories there. We have friends there. We go to school there. We work there. We access services there and amenities. If you’re gay–the City of Vancouver is so important for community and for just walking down the street holding your partners’ hand. Surrey is just a dump. It’s really hard to find community here and services. Everything is worse here. Even the hospitals and the medical clinics and grocery stores are worse in Surrey. And we have to pay 3 zone $5 bus fares to go back to Vancouver to visit old friends or for jobs. Try that when you’re making minimum wage $10 an hour. Your first hour of work is just to pay for your transit costs (and a lot of jobs only give 4 hour shifts–first hour pays transit, second hour pays lunch, you only net benefit from 2 hours–$20 per shift–less CPP, EI contributions–hardly worth it to work–probably make more money staying in Surrey collecting cans than commuting to Vancouver for min. wage).”

“Having said all that, I do think there is a bit of truth in the statement that the suburbs are becoming more urban and Vancouver is becoming more suburban. I mean, there’s actually a costco in Downtown Vancouver (a mark of suburbia)–but I can’t find a costco in Surrey. I used to go to UBC as well, since I’ve been living in Surrey (en epic commute by transit!). It’s weird that we have a rapid transit skytrain system in Surrey that connects us to Burnaby, SFU area, Lougheed, New West, but as soon as you come into the City of Vancouver you have to get off the train and board a bus the rest of the way to UBC. The west side of Vancouver (where I grew up) does feel like some strange enclavish suburb where hardly anybody lives. Surrey, New West, Burnaby, Lougheed area–all way more urban than vast portions of the City of Vancouver. And the feeling of community is coming here. You can see it right outside on King George Highway (I don’t call it boulevard because I don’t like gentrification)–the diversity of pedestrians walking up and down King George is more than the diversity you get in Vancouver, in terms of class and race. Way more working class feel in Surrey. Way more black people and people from all countries of the world in Surrey–compared to Vancouver which is mainly Chinese. The gays are coming this way too. Surrey has a gay pride parade now. There’s gay pizza shop/cabaret on King George.”

“So I’m actually starting to like Surrey now. I’m not sure I want to go back to Vancouver even if it did suddenly become affordable. I mentioned that I have memories in Vancouver–but it’s disturbing to go back there and see all the changes. The way Vancouver is now is not how it is in my memories. So I can remember more easily how it was, if I stay away. My community isn’t there either, increasingly. So I’m turning a page and I’m never going back to Vancouver no matter how affordable it becomes. But I do think working class people like myself still have a legitimate claim to Vancouver if we want to live there because it’s where we’re from.”

- Joe_Blown_Away_By_High_Housing_Costs at VREAA, 23 Mar 2012 8:21am

Housing-Bubble-Headedness – “Since I want to open a wine bar one day, I figured house-flipping was one way to jump-start a savings plan at the beginning of my career, when the money is still tight.”


“George, who lives with his mother in a townhouse, wants to open a wine bar. To get a leg up given his modest income, he is looking to speculate in real estate.”

“George has the lofty goals and dreams befitting a budding entrepreneur: He wants a business of his own, easy money, and the freedom wealth brings to put up his feet and retire by the time he is 55 – with an income of $150,000 a year after tax.
Back down on earth, George is 23, recently graduated from university and has just landed his first “real” job earning $35,000 a year plus bonus and other benefits. He lives with his mother in a townhouse in the Guelph area that they plan to flip for a $60,000 profit. He wonders how best to use his share of the anticipated gain.
George’s big dream is to open his own wine bar. He aims to save $70,000 over the next 10 years as a down payment and wonders whether that will be enough to enable him to get the financing he will need. To get a leg up given his modest income, he is looking to speculate in real estate.
“Since I want to open a wine bar one day, I figured house-flipping was one way to jump-start a savings plan at the beginning of my career, when the money is still tight,” he writes in an e-mail. Mind you, that $60,000 profit he and his mother expect has yet to be realized, and they’d need at least half of it as a down payment to buy a bigger, better home.”


“We asked Kurt Rosentreter, a senior financial adviser at Manulife Securities Inc. in Toronto and author of Wealthbuilding, to look at George’s situation. /… As for house-flipping as a way of making money, “Be careful. A real estate correction in the future could leave this ending badly for a young guy with not a lot of wiggle room.”
Mr. Rosentreter says George would need to accumulate $2.5-million by the time he is 55, excluding his home. Assuming a 5-per-cent rate of return on his investments and a 32-year time horizon, he would have to save $33,000 a year to achieve his goal, so he may want to set his sights a little lower. Mr. Rosentreter’s suggestion: “Save what you can.”


- from ‘Champagne dreams with a chaser of realism’, Dianne Malley, Globe and Mail, 2 Mar 2012

See how the distorted economic playing field that results from the speculative mania in housing has perverted the thinking of the young?
It’s all very distracting.
- vreaa

“Crazy Land” – 9% of the working population employed in construction.

Chart via Kevin at saskatoonhousingbubble, who also points out “The long term average of the Canadian labor force employed in construction is just under 6%. Right now it is over 7%. … BC is in absolute crazy land with almost 9% of the working population employed in construction.” [Thanks Kevin.]

More misallocation of resources.
Sheds light on why the Provincial Government would want to keep this going.
After the housing mania ends, by the next price trough, about 40% of those construction jobs will have evaporated. Possibly 50%.
(Aside, for TA lunatics: Failed double-top.)
- vreaa

Vancouver’s Too Expensive For Entrepreneurs – “Last night during a meeting we realized that of five, only two of us aren’t thinking about leaving the city in the next year or two.”

“Over the past year I began working with a loose group of consultants; there are five of us who work together in complementary ways. We’ve taken steps towards forming a more formal business together, but last night during a meeting realized that of five, only two aren’t thinking about leaving the city in the next year or two. Vancouver’s too expensive to be an entrepreneur and have a family, and we all want other things – like retirement funds, or the ability to travel and take vacations, etc.”
- Absinthe at VREAA 20 Feb 2012 11:37am

“GDP contracting, but real estate agents still riding high before what’s expected to be a cooling market.”

“Canada’s economy stalled again in November [2011], for the second month in a row, but manufacturers continued to make strides. And real estate agents were still riding high before what’s expected to be a cooling market. …
With so much focus on the housing market of late, it’s worth noting that construction posted a decline of 0.3 per cent, but Canada’s home resale market was still going strong, with a 2.2-per-cent gain for real estate agents.”

- from ‘GDP lag: At least real estate agents are making money’, G&M, 31 Jan 2012 [hat-tip Jason]

“Incomes Haven’t Risen, But Housing Prices Have”


- part of an ‘infographic’ from The Globe and Mail, 18 Oct 2011

One of these provinces is not like the others… – ed.

“The two top tech companies could not find anyone to fill the position. The number one reason given by the numerous Canadian & US-based candidates for withdrawing was the cost of living in Vancouver.”

“Heard two interesting Vancouver anecdotes recently. Two top tech companies (one bio, one IT) were recruiting for certain specialist legal skill sets. Given that very few people meet the criteria the jobs were advertised across North America. Both companies were offering very attractive salaries and both were prepared to pay for relocation etc.
In both cases, despite interviewing numerous Canadian & US-based candidates, the companies could not find anyone to fill the position. The number one reason given by candidates for withdrawing…the cost of living in Vancouver was just too high.”

- Bally at VREAA 26 Jan 2012 6:16pm

Anybody not troubled by stories such as this really doesn’t care about the future of this city. – vreaa

“Vancouver, this sounds pretty stressful to us. We have decided to leave you and move to Texas where my salary would be double and our living expenses would be less than half.”

“Dear Vancouver,
Happy new year!
I’ve lived here most of my life, I’m 32, married now and about the right age to buy a home and start a family.
My wife and I have been saving up for a nice 2 bedroom apartment for several years. We’ve looked at the prices and it seems too risky in terms of ending up “house poor”. We’ve been waiting and waiting for anything to change in Vancouver, but nothing has happened!
At the current state of things, after doing some calculations we envisioned a situation where we would be both forced to work (dual income) and drop our future children into daycare in order to make ends meet. Most likely we will make the payments just fine but without any retirement savings no extras for vacation, etc. Vancouver, this sounds pretty stressful to us.
So after much deliberation, we decided to leave you and move to Texas where my salary would be double and our living expenses would be less than half.
In Texas we would be able to afford a large home and still save plenty for vacation/retirement/etc and this is on only one income!!
My commute is only a 5 minute drive, the people are so friendly, it feels like the same level of friendliness as being at church everywhere I go.
The weather is great, I don’t see any junkies, at worst there is a homeless person with a sign by the highway asking for change.
I thank you Vancouver for your past accomplishments, your scenery, your skytrain lines and abundance of sushi restaurants.
Unfortunately at this time I will not be needing your services and wish you farewell.
Sincerely,
A former Vancouver resident (for more than 28 years!)”

- from formervancouverresident at vancouvercondo.info 1 Jan 2012 10:22am

Extirpated Biologist – “In conservation biology, when a species can no longer survive in its home territory, it is referred to as “extirpated”.

From the ‘Introduce Yourself To The Forum’ thread at RE Talks, a post by ‘extirpated’, 22 Mar 2011 7:55pm-

1) Age / Location / Occupation
“38, born and raised in Richmond BC (to Polish immigrants) forced out of my home province by rising real estate prices and the desire to live in my own house. Conservation biologist – turned – artist”

2) What real estate do you own?
“2 houses, which are not in BC”

3) What’s your view on the market going forward? Buyer or seller? Which parts of the market?
“I don’t think I’ll ever be able to afford to live in BC again” :cry:

4) Anything else?
“In conservation biology, when a species can no longer survive in its home territory, it is referred to as “extirpated”.

RE Price Effects On Grandparents, Daycare, and Working – “My parents thought it would be cool to live near their grandchildren, but that can’t happen at this point in the housing market cycle. Who will look after the kids?”

“It is heartbreakingly cruel, but the retired probably need to learn to love cheaper cities. My parents thought it would be cool to live near their grandchildren, but that can’t happen at this point in the cycle. Unfortunately the cycle may easily take us into their teens, so grandparents and grandchildren alike will miss the most magical people through the most magical period in their lives.
Which begs the question of who will look after the kids while we both work at professional jobs to accumulate enough wealth to de-risk potential home ownership (we can still do that, we’re young). Right now the answer is our awesome home daycare. Her revenue doesn’t cover the cost of her basement-and-garden space, but it’s okay because she bought the place a while ago. She can bleed out her RE gains through years of subsidizing me to go to work. If we lose her we might suddenly have to pay market price for the service. Market price is substandard facilities or care, because they can’t actually charge $2500/month: no one would go to work!”

- Zerodown at VREAA 25 Nov 2011 9:34am

Every word wise. – vreaa

Tech Startup In Vancouver – “It’s much easier to focus, there isn’t so much noise. The disadvantage is that you also don’t have as many people with experience in the tech industry. We know everyone there is to know in Vancouver, and that’s a few dozen people.”

Why not come straight to Silicon Valley?
“We looked at numerous options other than getting hired by a big company. We could have gotten green cards if we waited a few years. But in the meantime, we found Bootup Labs [a Vancouver startup accelerator and seed fund] that gives you $100,000 [to nurture your startup idea], and that’s also helpful with visas. Basically, if you want to come here, there’s no straightforward way to do it if you want to own your own company. People do it with some tricks, but Canada is a bit friendlier in terms of immigration and helping people start their businesses.

But you’re still in Vancouver and not the Valley. Do you think that puts you at a disadvantage, particularly since a number of companies are trying to solve the same information overload problem as Summify?
“It’s a lot smaller, naturally. But there are advantages, including that it’s much easier to focus, there isn’t so much noise. You don’t hear about people trying to do startups all the time. It’s easy to obtain talent, too. People are excited to work at a startup versus a telecom company or some of their other options. And if you take care of them, they stick around. There aren’t startups trying to steal your employees.
The disadvantage is that you also don’t have as many people with experience [in the tech industry]. We know everyone [to know] in Vancouver, and that’s a few dozen people.”

- Mircea Pașoi, 24, is the cofounder of Summify, a startup that summarizes the top news stories of the day for its users by scouring their social networks for clues. From pehub.com 14 Nov 2011, cited by ‘anonymous’ at VREAA 15 Nov 2011, as an example of people moving to Vancouver.

“We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard.”

“My wife and I have good jobs in high standing professions. Between us, we have five university degrees in hard science fields (with a sixth at the doctoral level underway) all from top three Canadian universities. We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard. We are good with our money and have solid nest egg already built. We cannot justify spending 80% of our income to be able to afford a single family home anywhere within an hour of the downtown core.
We also visit Seattle regularly. In Seattle, we would both make double or more than we would here in Vancouver, with housing at half the price, and the same climate. Similar circumstances exist elsewhere in Canada. While our families are here, we want to start our family in a place where we can provide our children with opportunities, not where every last dollar goes to real estate.
To put a point on it, people like my wife and I are being groomed by our employers to take on senior leadership roles in their organizations down the road. The problem for our employers is that we won’t be here – we can’t have the family we want, along with quality of life we desire and can easily obtain elsewhere.
I look forward to leaving this real-estate obsessed burg. Unless things change, things are going to get a lot worse here before they get better.”

- Vancouver In The Rearview at VREAA 6 Nov 2011 8:06pm

“I’m a govt worker, my boyfriend is a journeyman plumber, we don’t have kids, how are we supposed to save up a 10% down payment for a mortgage?”

“I’m a govt worker, my boyfriend is a journeyman plumber, we don’t have kids at the moment, I’d say we live “comfortably paycheque to paycheque”, but how are we supposed to save up a 10% down payment for a mortgage?
We have had no issues paying our landlord’s mortgage – $1250 for a 2 bedroom condo in Poco, so clearly we are willing and able to afford our own mortgage, but we are just unable to save up for the gouging cost of a down payment. Are we supposed to borrow from the bank of Mom and Dad? Buy in with our siblings? What is happening to our independence?”

- Mrs.PacMan, comment, Vancouver Sun, 18 Oct 2011 3:53pm

City Of Vancouver – Enough New Homes; Business-Unfriendly; ‘Green’?

City of Vancouver, 1998 to 2010:
Net increase of new residents: 83,267
Net increase of homes: 50,973
Net increase of new businesses: 46 (0.09%)
Business:Residential tax rate ratio: 4.5:1 (cf 3:1, or less, rest of Canada)
Net increase in cars: 64,329

- from article ‘Business growth in Vancouver stalls while suburbs flourish’, by Don Cayo, Vancouver Sun, 24 Oct 2011

Are these figures correct?
If so:
1. 1.7 new people to each new home (cf 2.1 average household).
2. Unattractive to business endeavours.
3. ‘Green’?
[eyeroll]
- vreaa

“He’s a lawyer. She’s a manager. His mom’s a doctor. Just the kind of people who could live anywhere, and do it well. But not Vancouver. This is how a bubble can eat a city.”

“He’s a lawyer. She’s a manager. His mom’s a doctor. The family has breeding and expectations, not to mention wealth and upward mobility. Just the kind of people who could live anywhere, and do it well. Make the locals inadequate. But not Vancouver.
Some months ago he was offered a job at a prestigious BC law firm with the usual perqs, Big cheques. Moving costs. Status office. West Georgia ain’t Bay Street, but there was the appeal of a city which fashions itself green, progressive, sporty and insufferably self-centred. Besides, you can drive the Carrera all year. Sweet.
But it took just one weekend of house-hunting on the west side, in West Van, even North Van and down to White Rock to send the ambitious thirtysomethings fleeing back to godless Toronto. “They are,” he told me, “nuts. What possible benefit is there changing jobs and doubling my salary when I have to pay triple for a lesser house?” Left unsaid: If I’m going to move to a regional city with no subway and no prestige at least I expect to live better, not worse.
This is how a bubble can eat a city.”

- anecdote relayed by Garth Turner at greaterfool.ca 18 Oct 2011

Spot The Speculator #61a – “We have friends who recently bought a place because “they didn’t want to waste money on rent”. They put 7% down, and a month later bought a car. Now on a tight budget.”

“We have friends who recently bought a place because “they didn’t want to waste money on rent” Even after we told them the pros and cons of renting. They put 7% down, and a month later bought a car.
Dad has decent paying job, mom is stay at home mom, similar household income as my wife, who does not work at the moment, and I.
Originally our friend’s wife told my wife their monthly budget for food was 1200 a month. Which we thought was tight for a family of 3. Turns out we misunderstood, 1200 a month includes utilities, cell phone bills, internet (no cable), and who knows what else.
This was a shocker to us. Sure you can do it, but to have such a tight budget and the majority of money going to your mortgage is it really worth it? What if the dad loses his job?
Sure, some can say if you have our mentality you will never own anything. But before, even if you lost your job, you would probably have a safety net of savings. But with today’s prices, most new families are maxed when they buy in, and have no ability to save anything. All the eggs in one basket.”

- 4SlicesOfCheese VREAA 16 Oct 2011 10:18am

Spot The Speculator #57 – Medical professional chooses to rent – “On the contrary, MY SECRETARY, who I employ, has already bought two condos in the last year; is more than $800K in debt, and insists on giving me real estate advice.”

“I am a medical professional and do quite well financially and can afford a large mortgage in Vancouver.
I RENT a house because it makes no sense whatsoever to spend a million dollars to buy an old dilapidated house. I will give it another year or so, otherwise off I go to some place that actually makes sense.
It might make sense to take on so much debt if the value is sure to go up by 15-20 percent over the next two years, but not in this town and not with these fundamentals.
On the contrary, MY SECRETARY, who I employ, has already bought two condos in the last year and is more than $ 800K in debt, and insists on giving me real estate advice. …
I moved to BC 2 years ago (after having lived in NYC, Dallas and Toronto in the last 15 years ) for compelling family reasons, and the Vancouver RE reminds me of the Pied Piper’s story.
I rent a house and use portion of it for my office. People do not realize it but it is far more cheaper and far more comfortable than owning property in Vancouver.
People get this false sense of security and “affluence” but do not realize the property value would have to go up at least 10 percent each year for them to break even versus renting. (This includes the cost of renting money from the bank, property taxes, agents fee (if selling) and cost of maintaining the property).”

- Get real at VREAA 16 Oct 2011 12:36pm and 7:00pm

Spot The Speculator #55 – “At my workplace the lot-boy who washes customers cars for $10/hr. told me how how to invest in real estate. His 1st condo equity was extracted to buy his 2nd condo and that equity was extracted to buy the 3rd.

“At my workplace the lot-boy who washes customers cars for $10/hr. told me how how to invest in real estate. His 1st condo equity was extracted to buy his 2nd condo and that equity was extracted to buy the 3rd and final one. He says Royal Bank was willing to give him the money since all of them are rented out. We don’t have sub-prime like the USA but this looks like a dangerous house of cards that I think is not just isolated to this one individual. I read somewhere that a famous stock investor said once a shoe-shiner was giving him stock tips he knew that was the time to get out of the stock market. I was getting that feeling when the lot-boy was giving me tips on how to buy real estate since I’m just a lowly renter.”
- Pat at VREAA 15 Oct 2011 11:47am

“I’d like to share my story as someone who was born and raised in Vancouver, lived abroad for ten years, returned, and is now planning to leave permanently.”

“I’d like to share my story as someone who was born and raised in Vancouver, lived abroad for ten years, returned, and is now planning to leave permanently.
I grew up in what is today ground zero for Vancouver’s speculative mania, Point Grey. My dad was a professor at UBC, and my mom a part-time teacher. In real terms, my income is comparable to that of my parents when they bought our house in the 70s. And my expenses are lower: we have one child (so far) instead of four, one car instead of two, etc. And yet the modest house I grew up in would be utterly out of reach for me today.
The question is, what has changed between a mere two generations? Yes, the economy has grown, and there is more wealth in the world today. But presumably one’s income reflects this growth, so that real estate should be no less affordable than it ever was.
Locals shrug off this uncomfortable question with the standard wisdom: We have water! And mountains! To which I reply: Vancouver has always had water and mountains. The city’s attractive geography is widely known and has long been priced in to the market. It’s a valid reason for local prices to start out higher than in certain other places, but not for them to go up any faster over time. Some improvements have been made to the city itself, but the fact is Vancouver is pretty much the same place it was 30 years ago.
What does seem to have changed is our collective mindset. We are living in a dream where Vancouver is the new global hotspot, debt and real estate are the path to riches, and where history doesn’t matter, because “it’s different here”.
I believe Vancouver is in for a grim wake-up call. By any number of fundamental metrics, local real estate appears overvalued by 60-70%. If there were a way to short the market, I would wager a significant portion of my net worth on this bet.
The ridiculous cost of housing aside, after living in six cities in four countries, and traveling to countless other locales, I can say with some confidence that Vancouver is not as uniquely wonderful a place as its residents claim it to be.
None of my three siblings—all hard-working professionals—has chosen to settle in their hometown. My wife and I only moved back because my dad fell ill. We currently rent an eastside bungalow, and intend to relocate internationally next year. I plan to move my business with us. The place we’re going to has its own challenges, but in our experience the overall quality of life is superior.”

- El Ninja at VREAA 15 Oct 2011 3:28pm

Waitress Pre-Approved For $250K Mortgage

“I was just eating breakfast at a little resto in E. Vancouver and I heard the waitress talking to one of the customers about how she just got herself a Realtor(tm) and has been looking for an apartment to purchase. She looked maybe mid-twenties and talked about how she’s tired of throwing away money for rent, she found a place for 178k (I think that’s what she said), and she has a friend that will rent some space from her. She might be moving to Vernon, though, so she’ll just rent the whole place if she does.
This is who buys real estate in this city? I cannot believe that a bank would give her a mortgage. She’s a server at a cafe. She said she’s pre-approved for 250k, but thinks that’s too much, so she’s being conservative! what can you buy on the east side for that kind of money, anyway? I find this; and the Maint fees are 500 pm. Sheesh.:
#502 – 175 E BROADWAY Vancouver. MLS V905512
437 sqft; condo/strata
Ask price $177,000
Maintenance Fees: $498.40 Monthly”

- Oilman at vancouvercondo.info October 12th, 2011 at 11:43 am

Yes, this is who buys RE in this city. Or, more broadly, individuals at different income levels over-reaching to a degree similar to this.
And, wow, those are pretty remarkable maintenance fees, they come close to the mortgage payments (with 10% down, 3% rate, 30 yr amort., monthly payment is $670).
- vreaa

RE Prices Make Vancouver Unattractive For Doctors

“I am a family doctor. One of my friends from residency (currently in Toronto), took a pass on moving to Vancouver after coming over for a week and seeing first hand the property prices. Just another example of Vancouver losing out on young professionals needed to upkeep our society.”
- KFPanada, at VREAA, 12 Oct 2011, 2:24 am

“An IT recruiter told me there are almost no quality people. He sees the same applicants again and again. He said that he has never seen such a shortage.”

“A software developer that worked on one of my projects has moved to Ontario. Another one announced that his wife is pregnant and once the baby arrives, they are moving back to Europe.
In the past few years, I have been looking for several software developers for my business. The positions were mostly for senior or at least intermediate developers and were advertised on craigslist, BCTechnology and Monster. The funny thing was that for every single position from all sources, the pool of applicants was virtually the same – same people and most of them were not very skilled. Out of those few that were skilled, some left or are leaving soon.
Recently, I talked to an IT recruiter. He told me basically the same thing – there are almost no quality people and he sees the same applicants again and again. He said that he has never seen such a shortage.
So there is the silver lining – if you are a quality software developer, it should be easy for you to find a job, because many quality people have left.
However, salaries for these positions are still lower than in Toronto or Montreal. That may eventually change in bigger companies. I doubt that small companies can afford to pay more, because the owners need to make money too.”

- bubbly, at VREAA 12 Oct 2011 5:47pm