What You Get For $325K In Vancouver – “Maybe a very small, really old, wood-frame apartment, maybe, on the bottom floor, looking at a dumpster, maybe, I’m not sure, but, yeah, really nothing.”

Tanja Beja, Global TV reporter:  “To minimize her payments, Catherine Green is moving out of downtown and into New Westminister, where she got a two bedroom and den for $324K. In Vancouver, that wouldn’t have bought much.”

Catherine Green:  “Maybe a very small, really old, wood-frame apartment, maybe, on the bottom floor, looking at a dumpster, maybe, I’m not sure, but, yeah, really nothing.”

Beja: “Instead of a dumpster, she’s now looking at the Fraser River.”

- Anecdote extracted from ‘Generation How?’ clip on Global TV, 4 Oct 2011 (3:00 onwards). [Thanks to Greenhorn, for the video archive]

Financial Planner Looking For $400K Condo – “I expected the Vancouver market to be really tough to get into, but the reality is hitting me even harder. I may need to rent while I earn more money for a bigger downpayment.”

Announcer: “Susie Shin is looking for a place to call home. The 33 year old moved to Vancouver from Toronto. She works downtown and would like to live nearby. But Shin knows in this city her money isn’t going very far.”

Susie Shin: “I’ve been working for awhile, I’m a professional, I figure at this age I should be able to afford a decent place downtown, but in Vancouver it’s a bit tough.”

Realtor: “So this is a one bedroom and den…”

Tanja Beja, Voice Over: “On Shin’s wish-list, about 700sqft, and a view. Her budget of $400K won’t get her both. But Shin isn’t spending a penny more: she’s a financial planner, and she’s calculated what she can afford, something her realtors says young buyers don’t do often enough.”

Shin: “I expected the Vancouver market to be really tough to get into, compared to Toronto… the reality is hitting me a little bit harder, you know, that I may need to rent for a little while I earn more money to get a bigger downpayment on a property.”

Tanya Beja: “So, for now, the house hunt in an overheated market continues.”

- Anecdote extracted from ‘Generation How?’ clip on Global TV, 4 Oct 2011 (3:00 onwards). [Thanks to Greenhorn, for the video archive]

It doesn’t look like this prospective buyer is anticipating any price pullback.
She is putting off buying in part out of being sensible (she has set a hard ceiling on what she can afford).
Her unplanned and forced delay, to save for a “bigger downpayment”, will likely, by complete chance, work in her favour.
It’ll be very interesting to see how buyers such as Ms Shin behave when prices drop by 10% or 15% or 20%. Will they jump in, or will they start questioning the wisdom of overextending themselves to buy what will still be very expensive RE? – vreaa

“I recently gave up on Vancouver and moved to Silicon Valley. The average salary where I work is around $100k. Yet, the parking garage at work is filled with 10 year old Hondas, Volvos, etc.”

“I recently gave up on Vancouver and moved to Silicon Valley. A few things struck me as notable here. First, the average salary where I work is around $100k. This is substantially higher than the average Vancouver family income. Yet, the parking garage at work is filled with 10 year old Hondas, Volvos, and the like. Sure, the guy two cubes over has a Porsche, Ferrari, and two airplanes, but the vast majority of people aren’t flashing their money around. The concentration of new Mercedes and BMWs in Vancouver is much much higher than here. Lastly, houses here are more reasonable sizes. They average probably 1200-1400 sq feet, as opposed to the monsters in Vancouver.”
- Ex Vancouver at vancouvercondo.info October 7th, 2011 at 4:43 pm

Professors Cross Threshold – “After this fiasco we are completely done. I phoned U.Alberta today and told them that we will take the jobs if they offer them to us. In our view this city is being rapidly ruined.”

‘mjw’ writes, in two e-mails to VREAA, 5 & 6 Oct 2011 -
..“What happened to us this past weekend offers a glimpse at the ridiculous game being played out on the westside.
..My wife and I are both profs at UBC, mid 40′s and have been trying to “upgrade” from a duplex on the westside to a SFH in Kits in order to get more space for our family, while retaining a good school district and a short commute. I wrote a post on VREAA a few months ago [12 May 2011] indicating that we are applying for academic jobs elsewhere in Canada. However, finding comparable work for two senior academics is a challenging enterprise, and takes much time to sort out. To make a senior hire in academics is often a long process, and the department needs to know that the candidate is serious on accepting if an offer can be generated. Fortunately, my wife and I are both at the top of our professions and we have been “head-hunted” a few times since 2000, but on those occasions had decided to stay in Vancouver. Fortunately, we both have interviews at U.Alberta in November, and we are pretty confident that this is where we will end up.
….In the interim, we continue to look off and on in Kits with the idea that if we are able to find something decent around the 1.5M price range we might just suck it up and try to buy it…
….In this light, this past weekend we went to the open house at 2655 Waterloo street [MLS number V912486] advertised at the magic number 1.488M…
….If you look tonight [5 Oct 2011] you will still see this as the advertised price. It was an okay house, not great by any means, no dining room, a 10 times 11 master, nanny suite rather than a basement suite, low ceilings etc…. The presenting realtor was so obnoxious that I was worried that my wife might launch at him during the open. The house was significantly less desirable than 1.6M homes that have sold in our neighborhood since last spring that we have seen in (and were unsuccessful in getting during a bidding war).
….Anyways, we made an offer in the low 1.5M’s, and were one of 3 offers presented this past Monday at 1pm. I have a sense from what our realtor told us that we were the highest bidder.
….Got a call from our realtor on Monday evening saying that they were rejecting all offers, as they really wanted a price of 1.698M (which is simply 210,000 more than the price of 1.488M advertised on the weekend of October 2nd). You can see the new listing and the new price on the realtor Julia Lau’s website (scroll down to 2655 Waterloo street listing).
….On Monday evening the listing realtor contacts our realtor and asks “are we interested in purchasing at 1.698M?”…. My first thought was that someone clearly has transposed some digits?… surely this is a joke?… Anyways, it is no joke, this is precisely the game being played here…. and perhaps is being played out in many other “transactions” on the west side…. A complete waste of everyone’s time (writing offers, visiting open houses etc…)…
….After this fiasco this past week we are completely done. I phoned U.Alberta today and told them that we will take the jobs if they offer them to us.
I don’t know if this is normal procedure; advertising one week at 1.488M, and then the next week at 1.698M… but this to me is a clear sign that there is rampant speculation and that buying bricks and mortar has turned into an auction…. In our view this city is being rapidly ruined…..
—
….“Renting a SFH on the westside is very unstable; places are being flipped like burgers; there would be little stability with regards to schools for the kid. I have watched my graduate student have to move 4 times in the past two years owing to the fact that his basement rental (shared with another student) is in a house that is being flipped. The overwhelming feeling is that at this stage of our lives it should not be so difficult. We will have an easy go in any other place in Canada…..
….I think that some sort of activism is needed to highlight and make people aware of the game that is being played out. If this type of behavior receives more “press”, hopefully individuals will choose to boycott the system until some sanity returns. I do hope that some maverick decides to run for city councilor who can really communicate the difficulty faced by so many families. I think it would resonate with so many people…..”
—

A remarkable story.
The loss to Vancouver of two bright professionals, and their family.
One example of the misallocation of human capital caused by the speculative mania in housing. It is crippling our city.
Only the most blasé RE bull will be able to read stories like the one above without feeling concern for the health of our community.
- vreaa

“Did it ever hit close to home. Add me to the list of young families looking at options East of the Rockies.”

“Did it ever hit close to home. I too am under 35 with two little kids and can relate 100% to the families interviewed. Add me to the list of young families looking at options East of the Rockies. They said it best when they said it doesn’t feel like you are making any financial progress. How can you with the outrageous cost of living here? For our generation the current path, with house prices the way they are, is financial failure…the type that you recently featured when profiling some 40 somethings. There literally is no money left at the end of the month after mortgage and bills. With both wifey and I working and earning over $120k combined, we are running on a financial treadmill. I don’t know how young families can manage here. A negative savings rate might offer an explanation. There is more to life than putting all one’s $ into a house in a region that is cold and wet basically 10 out of 12 months a year. Born and raised here but wanting out now. The nice cultural fabric we once had here has been shredded also in recent years, to add insult to injury.”
- ‘Metro Van Observer’ [greaterfool.ca 5 Oct 2011 12:54am] responding to stories on Global TV about young couples leaving Vancouver

UBC Faculty and Staff Housing Anecdotes – “As a recently recruited Assistant Professor, I feel I have no hope of supporting a family and purchasing a house in Vancouver. I lose a great deal of sleep over trying to make ends meet. This is holding me back from making research and education advances.”

Following up on our recent post, ‘UBC Staff And Faculty Housing Demand Study’ [VREAA 19 Sep 2011], here below is a series of first- and second-hand personal anecdotes excerpted from UBC faculty and staff comments posted at ubc.ca 27 Sep – 3 Oct 2011 as part of a discussion UBC is encouraging in order to develop a ‘Housing Action Plan’. [Many thanks to David for forwarding us the link].

It is perhaps remarkable that not one of the discussants appears to address the giant over-arching truth: that a speculative mania in housing is the cause of the problem. On the contrary, many of the posters explicitly state the belief that local housing prices can do no other than power forever upwards.
Once the housing bubble is recognized for what it is, it follows that only with an implosion of that bubble will any housing challenges be meaningfully addressable. Housing in Vancouver is currently two to three times overvalued, as determined by fundamental measures such as incomes, rents, and GDP. The mania will end, as all manias do, with substantial price drops. This will likely occur not as a result of policy changes, but as a result of market dynamics. Indeed, such an implosion may have already begun.

Under the shadow of this mania, the vast majority of ‘affordable housing’ plans in Vancouver are akin to rearranging the proverbial deck-chairs on the Titanic; to blowing into a hurricane. Any such plans will be incapable of addressing the powerful negative forces of the mania. Getting 10% or 15% assistance purchasing extremely overpriced RE still results in it being very, very overpriced.

The coming Vancouver RE price deflation will go a long way to solving Vancouver’s (and UBC’s) housing challenges. Imagine how different the UBC discussion will be when prices are 50% lower. Or even lower than that. Yes, there will still be a need for sensible policy about campus housing, and perhaps a need for housing assistance plans to attract desirable faculty, but housing would no longer sit centre-stage, where it is now, and where it certainly doesn’t belong.

Granted, a real estate price crash will at the same time result in other significant problems for Vancouverites, many of whom are over-invested in RE. Our local economy will suffer greatly, as it has become sorely over-dependent on activity related to real estate. This is, unfortunately, what happens when a massive speculative mania plays out. It’s baked into the cake. UBC has, of course, been an eager bubble participant, via large for-profit RE development projects. While showing concern about the cost of housing, the university, ironically, also has an economic stake in the bubble being sustained. This is why we haven’t seen (and don’t expect to see) strong statements truly critical of the status quo coming from within UBC itself.

Regardless, the personal stories below are noteworthy, and the detrimental effect that the housing mania is having on academic endeavours is apparent.
- vreaa

—

As an Assistant Professor that was recently recruited to the University, I feel like I have no hope of supporting a family and purchasing a house in Vancouver. I lose a great deal of sleep over trying to make ends meet in Vancouver and I feel this is holding me back from making research and education advances at UBC. I believe housing is only a symptom of a systemic problem at UBC: very poor support of young academic faculty.
- G.T.T., October 1, 2011 at 9:36 am

Very recently, I lost a dear and outstanding colleague to Oxford. He confided that one of the main reasons for him moving was that Oxford offered him the opportunity to own a home near his work (The university partners with faculty to ensure they can own a place near campus). In Vancouver, he could not see how he would ever afford a place for his family, including a newborn.
I too am about to start a family. I have been incredibly worried about moving from my small apartment to a bigger place. Paging through the real estate ads is depressing. It is clear that my salary and consulting fees are simply not enough. In this sense, it is heart warming to read about colleagues with the same concerns and about UBC leaders trying to alleviate the problem.
- Nando de Freitas, September 29, 2011 at 4:12 pm

If I had known about the future housing situation back in 2004 when I was hired, I would have probably reconsidered my decision to come to UBC.
- L. Van Waerbeke, Faculty of Science, [September 30, 2011 at 10:45 am], who also suggests “create a parallel UBC housing market where sells/buys can only happen between UBC employees”.

I am a graduate student at UBC and my stipend is $21,000. I have to live one hour from campus to pay for rent that is $800 per month. After my health insurance and phone bill, I barely have enough money for food. This summer, I calculated that I could spend only $10 per day for food. To top it off, the on-campus housing is more expensive. Shouldn’t campus provide CHEAP housing for students? This makes me want to leave UBC…
- Anonymous, September 30, 2011 at 3:46 pm

I live in East Vancouver and I could drive out to Tsawwassen in less time than it takes for me to creep west in my morning bumper-to-bumper convoy of the damned.
- SR, Library, September 30, 2011 at 3:45 pm

My salary is competitive compared to performing a similar job at a non-profit or charity but Vancouver is just too expensive.
As a staff member with two young children I have been despairing for a while. My paycheque after deductions covers rent and both kids at UBC daycare ($1300 for 3-days/week) I am left with a couple of hundred dollars each month to pay for rising costs of food, clothing, vehicle expenses etc. We’re just able to make it with my wife’s part-time, self-employed income but if she doesn’t work (as happened this summer) we’re running up the line of credit with the bank just to keep food on the table.
As rents have risen and our family has grown we have moved further and further east. We rent a small, run down 2-BR East Van bungalow for a bit less than what a 2-BR apartment would go for on campus. We have privacy, space and a nice vegetable garden in the yard but it means I spend at least two hours on bike or bus each day commuting instead of with my family.
As long as UBC’s definition of affordable housing is slightly below west side of Vancouver market rates, most staff will be shut out.
- I.P., Staff, Faculty of Arts, September 27, 2011 at 11:59 pm

When I moved to UBC, the faculty housing assistance was not sufficient for me to enter the housing market. The assistance options have improved slightly since then, but are only available within the first seven years, and I am no longer eligible. Meanwhile, the housing prices in Vancouver have become prohibitive, having doubled to tripled over this relatively short time. The UBC Village Gate Homes rentals on campus are very nice, and are extremely convenient, even though the rental rates are not really subsidized.
- A.F, Associate Professor, Science, October 3, 2011 at 3:32 pm

We know several faculty whose behaviour changed dramatically once they moved off-campus. Owing to traffic and the loss of efficiency in terms of writing, they started coming in only 2 days a week. Gradually, they started avoiding students and meetings, the opposite of what they were doing for years when they lived on campus. The incentives became too strong. The situation also creates perverse incentives towards devoting more and more time to consulting and non-scholarly activities, or accepting visiting positions elsewhere, as soon as April comes along. Gradually, faculty who stay at UBC will find themselves becoming helicopter professors, dropping in for classes and crucial duties, and rushing off to earn money or do their long commute home. In sum, there are many benefits that are externalities and not integrated into the pure monetary equation.
- Yves Tiberghien & Darrin Lehman, October 2, 2011 at 6:04 pm

In our own case, we would like to move to a larger 3 bedroom unit on campus. But there are none available, for almost three years now.
Rent, currently charged by UBC Properties is around 15-20% lower then market. Why not making it 40% lower, allowing families to live on campus and promote sustainability by reducing commutes for 4 people a day!
- Eugene Barsky, Library, October 1, 2011 at 12:24 am

Many of my colleagues who are since quite some time at UBC could buy into the market to relatively low prices and enjoy (nominal) windfall profits with which they leverage all kind of expenditures. People like me who only recently came to UBC are in a different situation and usually can’t afford buying a house, and yes, looking for locational options is always in our mind.
- Kurt Huebner, September 30, 2011 at 10:43 am

I was disappointed when I tried to obtain rental accommodation on campus, because of the no-pets policy. There was not a single building on campus that would allow me to have my cat in the dwelling. This policy probably prevents many people from being able to live on campus, and I strongly suggest that it be changed. Pets are important in many people’s lives.
- Selina Fast, administrative-support staff, September 30, 2011 at 10:30 am

I now finally have a house that I can afford…in Squamish.
- JKS, Faculty Dept of Medicine, September 30, 2011 at 10:09 am

Arriving to UBC 2 years ago from the US we found the dip in the US market while price increase in Vancouver to be much more difficult that we initially thought.
We were very frustrated from UBC policies that seem to encourage selling on-campus housing to retirees rather than to faculty. It seems that the current administration is thinking more about the short term profit than the longer term effect on UBC. I am hoping that this will change.
We finally bought a nice house in east van. With the size of our mortgage, I will not retire before I’m 85.
- Eldad Haber, September 29, 2011 at 11:50 pm

When I arrived at UBC from Stanford, the whole “University Town” plan was just starting. Given my experience with Stanford (similarly blessed with a large amount of extraordinarily valuable land in a very expensive real estate market), it was painfully obvious the plan was not in the long-term best interests of UBC. I do not fault the folks who pushed the “University Town” through, as UBC was desperately short of money, and they executed very well on a plan to convert UBC’s land wealth into endowment dollars. The failure, though, was a lack of long-term strategic vision, to see that buildable land at UBC was more vital to the University’s future, and faster appreciating, than financial assets in an endowment.
- Alan Hu, September 29, 2011 at 11:21 pm

As many previous contributors noted, the cost of housing in greater Vancouver will very likely continue to rise.
- Marcel Franz, Professor of Physics, September 29, 2011 at 2:32 pm

My frustration has grown since 2004, until I just decided to lose any hope that UBC Trust would care about people working on campus and any hope to ever own a place. There is only so far some one can go with the mounting frustration of seeing high end condos built on campus everywhere out of reach of a family of 4. Even the condos built for faculty/staff were unaffordable. Townhouses built for faculty/staff are now back on the market at more than a million dollars. I look at other options in other cities every year.
- B. Pfeiffer, Faculty of Education, September 29, 2011 at 1:47 pm

At my salary, I would not have moved here if I had young kids at home because I would not have been able to provide them the same “home” facilities as I had in Ontario. Since my kids are all old now, moving to a condo made sense and made it possible financially but if I had a younger family, the discussion would have dramatically changed.
There is a psychological factor that makes many professors bitter and angry with UBC. When a professor feels that after 20 years of service to UBC he/she is unable to buy a unit on campus but others who have nothing to do with UBC are; it is very demoralizing. I have been hearing that on a regular basis since joining UBC.
- Dr. T. Aboulnasr, Dean of Applied Science, September 27, 2011 at 3:53 pm

Six years ago I … told the Provost at the time (Lorne Whitehead) that I was worried about UBC retaining many of the outstanding colleagues that had been hired over the past several years, and that I was particularly worried about Vancouver’s expensive housing market and the minimal assistance offered by the University (i.e., little more than covering closing costs).
Owing to an even higher Vancouver real estate market, my worry is still there. Many colleagues that we’ve hired over the past decade are highly marketable and moveable.
- Darrin Lehman, September 27, 2011 at 3:52 pm

During the recruitment process housing or the lack of affordable housing is the number one issue. It is common to every single conversation that I had with all our candidates regardless of rank.
- Vanessa Auld, Assoc Dean of Science, September 27, 2011 at 3:51 pm

In my experience, the affordability of housing comes up at some point in almost every faculty negotiation (recruitment and retention). In a couple of instances, housing was arguably the major reason a faculty member chose not to join UBC, or chose to leave.
- Simon Peacock, Dean of Science, September 27, 2011 at 3:51 pm

We have lost candidates due to the difference in housing costs with many other locations.
- Rachel Kuske, Head, Dept of Mathematics, September 27, 2011 at 3:51 pm

In Vancouver, for a newcomer like me, it is very hard to accumulate enough funds for a reasonable mortgage within a reasonable amount of time not to be out-passed by the price increase. In the UBC area, I heard that two-bedroom units are currently worth about $0.7 million or more. … As a family of four, we found that it is very hard to find a townhouse unit or three-bedroom apartment, rented or owned, unless paying a very high price.
- Y.K., Assistant Professor, Faculty of Science, September 27, 2011 at 3:51 pm

Housing issues comprised the main reason that we lost an excellent prospective faculty member, Y. M., who we had made an offer to in computational applied math a couple of years ago. He liked the department a lot, but was not able to afford to get a place to live where he and his wife would be happy raising a family. They were priced out of the market. He went to U Minnesota instead. We lost out.
As I had written to the BoG a few years ago, we almost lost another collegue to housing issues (D.C.). Somehow that catastrophe was averted at the last moment by the head’s work. I think you will find many such stories among recent hires (last 10 yrs) who left us due to the real estate woes, or candidates we wanted to attract who took a look at the housing prices and voted with their feet.
- Leah Keshet, Professor, Faculty of Science, September 27, 2011 at 3:50 pm

First a theorem: Due to a large influx of immigrants who desire to live in Vancouver, the housing price in Vancouver will grow beyond the reach of a new faculty with regular salary. This will soon become an obstacle for UBC to hire new faculty.
- T.T., Professor, Faculty of Science, September 27, 2011 at 3:50 pm

After 16 years at UBC, I’m still living in 540 square feet.
- K.B., Professor, Faculty of Science, September 27, 2011 at 3:32 pm

2003 arrive UBC. 2004 look for a house. Kid #1 arrives; decide to rent for a bit longer and save $ for better place than we could afford at that time.
2004-2008 cost of acceptable house to purchase increases faster than our ability to pay. Period of frustration at that time.
2008 investigate positions elsewhere. Obtain great offers. Nearly leave. Stay at UBC after competitive retention raise is offered.
2009 combination of slight dip in prices, low interest rates, improved housing assistance program and increased salary mean we start looking again
2010 buy house (nice place near Fraser street). Notably just barely within the “seven years at UBC” time limit on the housing assistance program.
- Daniel Coombs, Associate Professor, Mathematics, September 27, 2011 at 3:44 pm

“You move to Vancouver, you make a lot of sacrifices to look at mountains and avoid a couple of months of snow. It’s far from a slam dunk.”

“I hire positions at a prestigious government employer [here in Vancouver] with an amazing benefit and pension package. I’ve noticed a serious drop off in resumes. 4 years ago I would see 40+ resumes for a professional IT position. The last post garnered 7. I didn’t necessarily connect it with the real estate market, but it does beg the question of where all these people clamouring to live in the “best place on earth” are.
I also perform stand up comedy on the side. There are 4 (soon to be 5) decent places to perform in Vancouver. I recently took a look at the scene in Toronto and there are dozens, you could do a different room every night for a month and never duplicate. You move to Vancouver, you make a lot of sacrifices to look at mountains and avoid a couple of months of snow. I still prefer it to any other city in Canada (I’ve lived in Toronto, Montreal and Calgary), but it’s far from a slam dunk.”
- LexLimo at VREAA 18 Sept 2011 11:50am

“Depending on what you’re looking for, Vancouver is actually a great city to live in. If you can’t be happy here, forget it and go live somewhere else where you can find your happiness…”

“Depending on what you’re looking for, Vancouver is actually a great city to live in. I don’t come from a 3rd world country, but from western europe. I’m not an aging baby boomer either, I’m 34! I’ve lived in London and Paris for years, so I know what’s living in a world class city is like. I also did my MBA at UBC (that’s the reason why I came here in the first place) and decided to get a job and live here (as did a lot of my fellow classmates). Depending on your chosen field, you can have a decent career here. For sure the opportunities might be more limited, of course you may have to compromise a bit on salary, but would I trade my life today to go back to London or Paris? Hell no! In fact, most of my work involved projects located anywhere in Canada and the US. I could be located pretty much everywhere I want, and I chose to be here.
Is everything perfect in Vancouver? Of course not. I wish so much I could afford a house here, which I can’t despite my 6 figure salary (that’s the reason why I’m on this blog!). But I’m renting a nice condo in a great location in downtown, the same way I was renting in London and Paris. I don’t have any problem with it and I’m patiently waiting (and saving) for prices to come down and be reasonable again, as they certainly will… If they don’t? well, I’ll be sitting on a pile of cash…
Vancouver is not for everyone, and there is no reason to be angry about it. I have a happy life here, and I know lots of people do too. If you can’t be happy here, forget it and go live somewhere else where you can find your happiness…”
—
“I agree this is not a city for everyone and a lot of my friends in Paris or London would have a miserable life living here. But Vancouver works great for me and this is where I want to raise my kid…”
—
“This city/province has a lot to offer, but not everyone enjoys nature and all the activities that come with it. If you prefer museums, a developed music scene and other cultural activities, you will have a pretty miserable life here.”
—
“When I went camping to Garibaldi Lake last month, there were all kinds of people, very young “party” folks, older mature ladies (early 60′s) and parents with young children (I brought my 7 month old baby up there and I was not alone, to my biggest surprised! Talking about family responsibilities…).
I agree with you there are a lot more important things in life than outdoor activities. It’s all about putting your priorities in order. I love great food and I have yet to find a good yet affordable restaurant in Vancouver. I’m still amazed at the costs of fruits and vegetables here, and don’t get me started about the price of cheese here. I would also love to have more music festivals in Vancouver during the summer season.
The same way some people go and spend spring break in Florida or Mexico to get sunny and warm weather, it’s possible to travel from Vancouver to satisfy your cultural (and other) cravings you can’t satisfy in Vancouver… Portland, SF or even NY are not that far away.”

- Makaya at VREAA, 20 Sep 2011 at 12:44pm, 2:25pm, 2:37pm& 4:49pm.

“We have often had to hire from outside of the province for certain specialist roles and it’s very difficult to convince people to move to Vancouver. Telling them they can rent doesn’t go over too well.”

An exchange at RE Talks, 12 Sep 2011:

“There’s a battle for good workers. I cannot tell you how many resumes have passed my desk and how many interviews I’ve run for people who aren’t up to snuff.” – jesse1, 10:08am

“I have heard the same, for high tech companies in Vancouver – too few quality people for open positions. Could it be that the good ones are simply leaving town? I know I still see a very healthy number of quality resume’s in Toronto, and have had no problem with recent hiring.” – westcoastfella, 2:08pm

“Paying more doesn’t help; you need a specialist doctor’s salary to afford what you can get in other North American cities. This is always the thing: we have often had to hire from outside of the province for certain specialist roles and it’s very difficult to convince people to move to Vancouver, even after showing them all the province has to offer. It’s just not for everyone and not deemed a location they want to move to; this is in big part because they look at what they can afford to buy but also because they have to forgo their professional networks when moving to a small-time market like Vancouver’s; if they get cut loose by us they have nowhere else to turn and we can’t afford to make them an offer they can’t refuse. Telling them they can rent doesn’t go over too well.” – jesse1, 2:18pm

A speculative mania in housing prices is very, very bad for a society; it causes misallocation of resources that hobbles future economic and intellectual health. See the ‘Avoiding Vancouver‘ sidebar category for numerous examples of people either not coming to Vancouver, or deciding to leave, largely because of RE prices. – vreaa

Modest Ottawa Example – “I bought my house 18 years ago and paid $178,00 – now I am being told it it worth $375,000. This is crazy. My old job is only paying $3,000 a year more.”

“I bought my house 18 years ago and paid $178,000 – now I am being told it it worth $375,000. This is crazy. My wage has only gone up because I switched jobs. My old job is only paying $3,000 a year more. The only way I will realize a profit is if I sell and purchase a home outside the Ottawa market – hmm I still need to work. The house price is more driven by the cost of land so when we looked around for a smaller home – the price difference would only cover the cost of moving – no more. The only one who gained was the bank – we have paid them a lot of interest over the years.”
- DeborahS, comment at cbc.ca 12 Aug 2011 9:26am

This Ottawa example is extremely modest by Vancouver standards. That’s an annual compound growth rate of just 4.5%, but still more than twice the Canadian inflation rate over the same period (1993-2011 CPI averaged about 2%). -ed.

“I know a married pair of boomers who lived the good life on borrowed money, and now that neither are working, have been forced to put their still-mortgaged house up for sale.”

“I know a married pair of boomers who lived the good life on borrowed money, did not save and now that neither are working, have been forced to put their house (still a large mortgage on it) for sale and will be looking to buy a much cheaper house. I warned them 10 years ago but they dismissed me as a wet blanket penny pincher. I have no mortgage on my house and when they asked me for a loan, of course I said no (who would be foolish enough to lend money to poor money managers?). They are not talking to me now.” – Canuckguy, at moneysense.ca, 17 Aug 2011

Unconventional Offer for Adventurous Home Owner (Vancouver) – “This is the only way you will ever have your pet dinosaur, and the only way I will ever be able to acquire a house in Vancouver.”

Thanks to all readers who have forwarded us the following ad from craigslist:
—-
vancouver, BC craigslist > vancouver > housing > real estate wanted
Unconventional Offer for Adventurous Home Owner (Vancouver)
Date: 2011-06-26, 8:16PM PDT
Reply to: hous-wxb6b-2464265874@craigslist.org

This offer is not for everyone. Those of you who have saved every penny for most of your life to afford a down payment and currently work around the clock to make mortgage payments, I commend you on your efforts, but this post is not for you.

Do you own more than one property? Do you have so many rental homes with no mortgage payments, yet you still feel unfulfilled? Tired of your illegal tenants whining that there are rats in the walls? Have you always wanted your own dinosaur? Now is your chance my friend.

In exchange for one of your properties, I will be your personal dinosaur for one year. I will be at your beck and call, 24 hours a day, wearing a dinosaur costume. The type of dinosaur is negotiable. I can babysit your children (references upon request), scare the mailman, wash dishes, entertain and impress your guests, and much more. (No sex stuff though, sorry.) I will make realistic dinosaur sounds, eat what the particular dinosaur eats and maybe even sit on a fake dinosaur egg, if you are so inclined. I am well educated, fluent in English and French (as well as dinosaur), can play several musical instruments and have no criminal record or outstanding warrants.

All this and more. This is the only way you will ever have your pet dinosaur, and the only way I will ever be able to acquire a house in Vancouver.
Serious offers only please.
Thank you.

PostingID: 2464265874

“Without the Vancouver housing bubble I would have probably spent 3,500 hours working on building my business instead of getting addicted to learning everything I can about finance and economics.”

“I hate to invest in things I don’t understand, so from the age of 18 to 28 I invested in the thing I understood best: myself. My investment involved spending enormous amounts of time studying computer science, marketing, sales, accounting, the basic skills needed to operate a business, and IT management practices. In the first 3 years after finishing university I had spent $25,000 on computer books (crazy, but true). I am sure some RE bull observers would say that I would have been better off buying a house and watching it appreciate in value but they would be wrong because I loved every minute of reading hundreds of books on all things comp sci, IT management and geo politics. End result I have a consulting business where I am tax optimized, and only work 100 days of the year, generating 140K to 200K of revenue per year while being able to live anywhere in the world, so I effectively own my job.

My obsession with finance and economics was born around 2007 when I decided that I would stay in Vancouver. The plan was to live in Vancouver, enjoy the great outdoors, start a family, buy a house, and put what I learned into hitting a home run with a product based business (still swinging for the home run; have not hit it yet).
What really pissed me off is that, even though I had done something totally crazy [in a good way] compared to the average 28 year old (starting out as an immigrant kid with no connections and no money and lots of student debt), I still could not afford to buy a house in Vancouver. At this point I owned some commercial RE in Ontario and had cash accumulating in the bank at a healthy rate. My definition of affordable is minimum 25% ideally over 50% down payment and prices close to fundamentals.
My obsession with finance and economics became an addiction in 2008 as the world economy was blowing up. As of now I estimate that I have spent over 3,500 hours reading finance and economics books, and blogs. For fun, I wrote the CSI exam to see if I had learned enough, and I had no trouble passing it.
After 3,500 hours of research I have learned how to tell if something is a bad investment. The problem is that I have no idea what the [current] good investments are, other than my business, and myself.
I don’t have enough money to afford the seriously good money managers that know what they are doing and I know that the financial advisers at the banks and insurance companies really don’t know anything that I don’t know and will probably not advise me on anything and just sell me some product from their company.
It also seems to me that the markets are fundamentally corrupt and rigged against those who don’t have servers in the stock exchanges, or friends in government, or 100 million +.
Buying a house and putting all my money into it would have freed me from dilemma of figuring out what to do with my savings because I would have worked to pay off the house in 5 to 8 years and get mortgage free.

Now it seems to me that my options for my money are:
A) Put my money into a grossly overvalued housing and lose lots of it – I have worked too hard to let that happen.
B) Put my money into the fundamentally corrupt politically rigged and manipulated public markets.
C) Keep it in cash and let the bank gamble with it and loan it to fools who buy over valued real estate while my taxes “guarantee” the loans (current strategy)
D) Spend it
E) Try my hand at investing and see if I learn anything useful (I like learning and creating things not buying things in hope of selling them for more not really who I am the game just does not appeal to me but maybe I could grow to like it)
F) Invest it in my business and work to increase my revenue to $300K per year while only working 60 days per year. Use increased time and cash flow to search for business model with a personal 25 million + exit where I bootstrap the business from the ground up.
G) Raise money from investors for a business idea that I have developed business models for, then work 60 hour weeks 50 weeks of the year, be in perpetual raise capital mode, baby sit investors, lose my time to learn and grow, and then maybe exit if my interests are still aligned with the interests of the investors by the time an exit opportunity shows up.
H) Keep learning more and see if I learn anything new to change my mind about what my options are.
I) Leave Vancouver and hope that by doing so I don’t end up being obsessed about finance and economics any more.

Now that I have written this rather long post, it seems to be too personal and revealing to post online. But … I share my story for sake of contributing to this blog’s effort to capture the impact of the housing bubble.
So, without the Vancouver housing bubble I would have probably spent 3,500 hours working on building my business instead of getting addicted to learning everything I can about finance and economics.”

- ams at VREAA 5 Aug 2011 4:36pm

—
Thanks, ‘ams’, for sharing your illustrative story so openly. You are by no means alone, as the pressures applied to you through these profoundly abnormal times have been felt by many of us. And the perversion of behaviour you describe has also affected many; each in their own way. Witness the very existence of this blog as just one small example.
A few thoughts:
1. The speculative mania in housing has distracted many from usual productive activity. This is just one of the many ways in which asset bubbles misallocate resources.
2. Despite ‘austerity’ talk internationally and nationally (BOC Governor Mark Carney, etc), economic pressures continue to punish the prudent. ‘ams’ still feels pressure to use his accumulated wealth in an arguably unwise fashion: to speculate, to buy overvalued assets, or to squander it (spend unnecessarily).
3. The speculative mania in Vancouver RE was very clearly underway by 2007, and it was prudent of ‘ams’ to avoid the market then. Price action in the four years since then has punished him psychologically. This is a common phenomenon in bubbles.

Having said all this, if one lives through abnormal times, and if one is naturally drawn to examining one’s own behaviour and the behaviour of those around you, isn’t it normal to be fascinated by these massive social forces, to study them, to document them, to discuss them, to attempt to take advantage of them? Isn’t that a particularly human thing to do under the circumstances? – We are all to a certain extent products of our times. The results of ‘ams’s 3,500 hours spent studying ‘finance and economics’ are perhaps as much an important part of who he is as his business career, or the business that he has built, or any other valued aspect of his life.
- vreaa

“A client of mine had an offer to take a teaching job at the Emily Carr art school and turned it down after seeing the housing prices.”

“A client of mine had an offer to take a teaching job at the Emily Carr art school and turned it down after seeing the housing prices.” – daloo22 at reddit.com 15 July 2011

“I convinced my brother – a doctor in Vancouver – to NOT upgrade his accommodations. I said, don’t you think the fact that you – a doctor – is afraid of getting priced out means that something is very wrong?”

Anotherlowlyrenter at greaterfool.ca 17 Jul 2011 11:17pm-
“I convinced my brother – a doctor in Vancouver – to NOT upgrade his accommodations. He owns a 2 bedroom condo and had been considering buying a house. Not that he can afford it. Homes are too pricey even for doctors. I said, don’t you think you have enough $$$ exposure? He said, but what if I get priced out? I said, don’t you think the fact that you – a doctor – is afraid of getting priced out means that something is very wrong with this picture. Besides, who is going to price you out? Incomes in Vancouver are well less than incomes in Toronto, yet prices are 3 times as high. He sez, but what about the Asians – they’re coming aren’t they? I said, well they have been coming. But what if they stop coming? Or maybe they sell too, once the bubble starts to deflate. Asian “investors” are pretty good at riding a trend up – and they’re good at selling on the way down. Besides, if Vancouver becomes a place that doctors can’t afford to live, then maybe you better ask yourself if this is the kind of city you want to live in . . .”

“Here’s a couple of attempted flips in Metrotown to watch…”

Crash at vancouvercondo.info July 15th, 2011 at 4:04 pm-
“Here’s a couple of attempted flips in Metrotown to watch:

MLS#: V893467
7005 Gray Avenue
Assessed: $780,000
Sold: Mar 2010 $805,000
Listed: Jul 2011 $1,340,000 (after some renos. maybe $40-50K worth)
Note: This was listed in May 2011 for around $1.1 Mil and didn’t sell, so now re-listed even higher!

MLS#: V899271
7162 Gray Avennue
Assessed: $739,900
Sold: Apr 2010 $790,000
Listed: Jul 2011 $1,398,000 (after some renos. maybe $40-50K worth)

Both of these houses are 1960′s era bungalows and were bought just over one year ago, prettied up with renos and re-listed just after the one year mark to avoid the capital gains.
These people must be watching old reruns of Flip-This-House.

Also:
7188 Gray Avenue
Assessed: $697,500
Sold: Oct 2010 $757,500
House has now been demolished and a new spec. house is being built. This next door to 7162 Gray Avenue.

Lots of builder and speculator activity in the Metrotown area south of Imperial Street. I have noticed a sales slowdown in the area recently, with a noticeable increase of listings.”

“We’re facing an exodus” – “Young families will say ‘Let’s sell what we have here, get a better mortgage and make more money somewhere else.’”

Nizam Ibrahim lives in Vancouver but commutes to Calgary, where he rents a two-bedroom apartment in a nice part of town. Despite added monthly expenses of more than $3,000, he still averages $15 an hour more than any job he could get in Vancouver.
“It’s a bit tiring, but to enjoy any kind of lifestyle in Vancouver it’s a compromise I need to make,” said the IBM IT consultant. “I’ve saved more in the last two years working in Alberta and traveling back and forth than I ever did working in Vancouver.”
Recruitment experts predict with its high living costs, skyrocketing real estate and grossly inadequate salaries, more Vancouverites will flee to where salaries are higher and commensurate with their skills and inflation.
“We’re facing an exodus,” said Feras Elkhalil of the WPCG recruitment firm. “We don’t want a brain drain out of Vancouver. We don’t want to lose talented people. If you want good talent, you need to pay for it.”
He added Toronto salaries are at least 15 per cent higher, and 20 per cent greater in Calgary and Edmonton where taxes and real estate prices are lower.
“Employers are not keeping up,” he warned. “I fear they’re turning a blind eye, saying it doesn’t apply to them and we’ll have people frustrated at the cost of living and (foreign investment) driving up costs of real estate. Young families will say ‘let’s sell what we have here, get a better mortgage and make more money somewhere else.’”
- From ‘BC facing a brain drain‘, Erica Bulman, 24 Hours, 17 Jul 2011 [hat-tip to Brent]

The math for Ibrahim is remarkable. It appears that, given the pay differential and his cited extra expenses, he only profits from the commute if he works more than 200 hours per month. Perhaps there are also career advantages.
That aside, the main point of the piece is sound: That income:RE_price ratio in Vancouver is forcing some people away. – vreaa

“At Christmas my four full-time employees were shocked to see I still live in a very small town-house with two children. My wife keeps bugging me to move, but if we had a big mortgage it would put me under too much stress.”

Ali at vancouvercondo.info 8 July 2011 9:10am -
“I came to Canada 16 years ago. We emigrated from the Middle East. The process was very long and difficult. We had to have every document translated, and go thorough a couple of interviews. The officer asked us about exactly where our money (which was small) came from, what languages we spoke- he was impressed my wife was fluent in French, asked why we wanted to come to Canada
When we got the visa, we felt like winning a lottery, we were so happy. It took me a long time to get going here, I took any jobs and worked for up-dating my technical skills and English. Finally I got a good job and after a few years I started my own small tech company. It is over ten years now. I have four full-time employees- 2 Canadian (many generations), 1 Serbian man, and 1 Chinese lady and a few contract people too. I am proud that I am helping give four families good incomes, and that we do 80% of our work here, but 60% of business is from outside Canada. Also I am very grateful to Canada for this opportunity.
What has this [to do] with real estate? A lot. I still live in a very small town-house with two children. My employees were shocked at Christmas to see how small and my wife keeps bugging me to move. But I tell her, some months I have to borrow from line of credit to make the pay-roll, if we had a big mortgage too it would put me under too much stress.
This has been a big trouble at home and every time it looks like the market comes down a bit, something pushes it up. The government does some tricks or they let in a lot of people with money (without asking any questions) and we lose the chance to move up.
My employees too have the same problem.”

The speculative mania in housing has punished hardworking, prudent citizens. – vreaa

“Lately I find myself overwhelmed by stories of young(ish) professionals who are leaving the city – often in their thirties, driven by the desire to purchase a home that is affordable for them and their families.”

“I have been asking myself what would make Vancouver a better place to live, work and play?  Lately I find myself overwhelmed by stories of young(ish) professionals who are leaving the city – often in their thirties, driven by the desire to purchase a home that is affordable for them and their families. They are grantmakers, green building specialists, filmmakers, and socially progressive bankers. All smart, caring folks, emerging in their respective fields.  All are assets to Vancouver.  
Mostly they love the city but can’t afford to live here, even working at good jobs and earning good incomes. Sadly, the lowest rung on the home ownership ladder is too big a step. Or with children, the lowest rung (typically the one bedroom apartment) is not workable.  I wonder, is this cohort the ‘lost generation’ – talented, skilled, thoughtful people that are bidding adieu to the city, and taking with them their energy, skills and unique potential contributions.”
- Heather Tremain, ‘What would make Vancouver a better place to live?’, The Vancouver Observer, 8 July 2011

In the rest of the post, Heather Tremain, discusses affordable or ‘attainable’ housing. The most important factor in understanding Vancouver’s RE predicament is not recognized: The speculative mania in RE prices. This is a giant bubble, folks. To ignore that makes the task of trying to ‘solve’ the problems of affordable housing completely meaningless.
A collapse in RE prices will change the landscape profoundly. The process won’t be painless, but in the end, it’ll be better for the city. – vreaa

“Only one UBC employee can afford to own a westside home.”

Unagi Don kindly posted this observation/analysis at VREAA 12 July 2011-

“Only one UBC employee can afford to own a westside home.”

#1) The income levels required to own a westside home: $496k.
http://www.yattermatters.com/2011/07/vancouver-home-buyers-adopt-slogan/

#2) The largest employer in Vancouver (which happens to be on the west side): UBC
http://www.lib.uwo.ca/programs/companyinformationcanada/canadaslargestemployersbycity2007.html

#3) The number of UBC employees earning more than $496k: 1
Prof. Donald Wehrung in Sauder School of business earns $510k.
Stephen Toope, the university president, earns only $483k.
http://www.vancouversun.com/business/public-sector-salaries/advanced.html

For the sake of comparison, the public universities in the US located in the most expensive housing areas are probably UCLA and UCSD. (I’m excluding Manhattan as single family detached homes simply do not exist there.)

At UCLA, there are roughly 100 employees with salaries over $400k:
http://www.sacbee.com/statepay/?name=&agency=UC+LOS+ANGELES&salarylevel=400000
And the average home price in Westwood (the upscale area where UCLA is) is around $650k:
http://www.zillow.com/local-info/CA-Los-Angeles/Westwood/r_118920/

It goes without saying that UCLA is not the largest employer in LA.

At UCSD, there are roughly 70 employees with salaries over $400k:
http://www.sacbee.com/statepay/?name=&agency=UC+SAN+DIEGO&salarylevel=400000
And the average home price in La Jolla (the upscale area where UCSD is) is around $1m:
http://www.zillow.com/local-info/CA-San-Diego/La-Jolla-home-value/r_46087/

UCSD is the fourth largest employer in the San Diego area.
http://www.alliant.edu/wps/wcm/connect/resources/file/eb9ce84c34a1a77/San_Diego_Major_Employers.pdf?MOD=AJPERES

“My wife and I are in our mid-30s with what others would call wildly successful careers here. We are seriously thinking about moving to Seattle or San Diego or at least elsewhere in Canada.”

bubbles at VREAA 27 Jun 201 6:45am -
“My wife and I are in our mid-30s with what others would call wildly successful careers here. We, however, hate the lack of any real economy or even culture coupled with the insecurity-manifesting-as-egomania of most residents. If I have to hear one more time about how Vancouver is the best place on earth from someone who’s never visited any other major centre in Canada (let alone the world) I’ll scream. Yes, the outdoor activities are nice, but experience living elsewhere has taught me that Vancouver residents do not have a monopoly on their pursuit. Despite the fact that it would mean essentially re-starting our careers, we are seriously thinking about moving to Seattle or San Diego or at least elsewhere in Canada. There is no way we would pick Vancouver as our home if starting again from scratch.”

Spot The Speculators #45 – “They revealed that they had 3 other units in the same area. They were self employed and were banking on their condos as their retirement fund.”

matt at VREAA 19 Jun 2011 5:59pm – “I went to view an apartment today which was being showed by the landlords. We got to talking and they revealed that they had 3 other units in the same area. The wife let me know that she and her husband were self employed and were banking on their condos as their retirement fund.”

Aftermath – Vancouver Riots 2011

 

The legacy of the ‘Stanley Cup Finals and Vancouver Riots of 2011′ may well end up being the ensuing social debate. We’ll here collect links to representative opinions, and other articles of interest. [This post will be updated with further readings; Please post suggested links, quotes or subjects in the comments. -ed. ]
———–

Theories of Causation (not mutually exclusive):

1. “Criminals, anarchists and thugs”
- Police Chief; Mayor (Globe and Mail, Van.Sun)
- No, not anarchists (Brian Hutchinson, NatPost)

2. Widespread Deep-Seated Societal Problems
- Adrian Mack and Miranda Nelson, Georgia Straight

3. ‘Disenfranchisement/Disinvestment/Powerlessness’
- Froogle Scott

4. Sport Fan Riot/’Fun’/'Exciting’
“Forget Freud, Forget Marx. Rioting, above all, is fun.” – Andrew Potter, Macleans
- Douglas Todd, Vancouver Sun

5. Bad Parenting

6. Mob Mentality/Madness of Crowds
- Chronicle Herald

7. Poor Planning by Authorities
- Calgary Herald

8. The Inherent Violence of Hockey Itself

9. Other?

———–
Other subjects of interest:

Concerns About The City’s Reputation
“.. a huge black eye for the city of Vancouver” – James O’Brien, online hockey writer, NBC Sports

Comparison with the Olympics:
- Different
- Not So Different: Christie Blatchford

Comparison with G20 T.O.
- Different: Toronto Standard

City preparation
VPD response, Globe and Mail.
Police Chief acknowledged mistakes, 17 Jun 2011, Nat.Post
“Mayor Gregor Robertson was a little naive. He wanted these live events. He wanted a great big fun city.” – Leo Knight, former Vancouver city cop and RCMP, chief operating officer Palladin Security.
Debating the blame, 21 Jun 2011, G&M

The Effect of Social Media
- #canucksriot
- Globe and Mail, ParsonsBlog
- “…the massive online reaction to the Vancouver riots is unprecedented and as groundbreaking as WikiLeaks.” – Christopher Schneider, a UBC sociologist

Public Outings of Rioters
- various websites: ‘Vancouver 2011 Riot Criminal List’; publicshamingeternus

“For reasons I can’t really explain, I went from being a spectator to becoming part of the mob mentality that swept through many members of the crowd.”- Nathan Kotylak (pictured above)

“A UBC student photographed leaving Black & Lee Tuxedos with a piece of clothing in her hands has been called out online by one UBC donor, who is threatening to pull his annual donation if she isn’t expelled.” – Vancouver Sun, 19 Jun 2011

“Alex Prochazka, 20, a professional mountain biker, was photographed during the riots with a T-shirt emblazoned with the name of a sponsor. He has since lost multiple sponsorship deals and told The Sun, “I didn’t go there for the riot, I went for the hockey game and got caught up in the hysteria of it afterwards.” – Vancouver Sun, 20 Jun 2011

Self Confessions
- Semi-Voluntary: G&M
- Unintentional: news957

Proclaimed Heroes
- example1; example2; others

Backlash Against Social Media and Public Outings
“The online forums have gotten pretty ugly. It enables a whole dark side of our psyche to go public … it’s too bad and I hope it turns around quickly.” – Mayor Gregor Robertson
“I don’t think we want to live in a society that turns social media into a form of crowdsourced surveillance.” – Alexandra Samuel, Harvard Business Review

The Iconic Kissing-Couple
- yahoo, cbc

The Clean-Up
- Georgia Straight

The “Citizens’ Wall”

Healing? Penance? Purification? Blaming?
“Mayor Gregor Robertson says the city has been in touch with merchants and asked them not to throw the plywood away, while archival staff consider ways to save what he calls “these pieces of history.” – G&M 19 Jun 2011 [This just 4 days after the riots themselves. An attempt to instantly manufacture a palatable history. -ed.]

Notice How Nobody Is Talking About The Hockey Result
“I would like to congratulate the Boston Bruins on a game well played for the Stanley Cup.” – local Canuck fan
———–
Parodies
- ‘Ballad of Brock Anton’

- ‘You Gotta Be Here’

‘Worker’ Buys $900K House – “Accused killer slipped back to B.C. to transfer his $1.6M home into his wife’s name. She started working as a realtor in 2011.”

“An accused killer and United Nations gang leader, wanted since January in the murder of a rival, slipped back into B.C. in April to transfer his $1.6-million house into his wife’s name.
And now the palatial Burnaby residence, that was owned solely by Conor Vincent D’Monte when he was charged with murder five months ago, has been put up for sale. D’Monte and co-accused Cory Vallee are on Interpol’s Most Wanted List after being charged Jan. 24 with first-degree murder in the 2009 Langley slaying of Red Scorpion Kevin LeClair. … D’Monte, 33, attended a Metrotown law office on April 1, 2011 to sign over his Burnaby house to wife, Jennifer Kong. … Kong, who just started working as a realtor in 2011, hung up on a Sun reporter Sunday when asked about the property transfer. …
The house was built in 1988 and the annual taxes are just over $6,000. It was assessed in 2011 at $1.2 million, and is listed for $1.58 million. …
D’Monte listed his occupation as “worker” when he bought the house in 2006 for $900,000. Police say his job was to lead the day-to-day operations of the UN gang, of which he is an original member.” – Vancouver Sun, 19 Jun 2011

Interesting multifaceted anecdote:
Crime proceeds pump housing prices.
RE as money laundering vehicle.
EITHER Self-employed self-declared income gets you $900K mortgage in 2006,
OR $900K house bought with cash gets no questions asked.
Husband indisposed gangster? -> consider becoming a realtor.
- vreaa

“I have been here five years now; I still can’t figure out what all the people here do.”

Michael at VREAA 13 Jun 2011 11:15am -
“I have been here now five years, I still can’t figure out what all the people here do. The Tech people I know all seem to hope for the big break or work for a US company that once upon a time decided it was cheaper here than in the US, but that seems to be changing quickly too.
Anything, at least in the computer field, that has proven successful has moved to other places, mainly the US, either on it’s own power or being sold to a US company.

Having hung around the “startup” world here in Van for a bit I think what is happening is that this is the place where quite a few smart people come to play, mainly outdoors. On the side they develop an idea and because wages here are low (comparatively) they start their business here.
They soon realize that the cost of doing business here is high, that the good employees want to have money they don’t have so they either move or sell the business (Flickr comes to mind) and the cycle repeats.

There really isn’t that much high-tech success here, it’s mostly a lot of self celebrating of the “high technology” field. Vancouver was a small border town with a large rail yard and some industries that lived off of the interior (e.g. sawmills, tanneries in False Creek). Once those industries were “cleaned up” there wasn’t really a lot left.
Interesting times ahead for Vancouver, and BC as a whole, that’s for sure.”

The Disinvested – A Few Disparate Thoughts On The Vancouver Riots

by Froogle Scott, VREAA, 16 June 2011 -

Rioters = people less invested in a society, or at least capable of being less invested for an evening, when fueled with booze and testosterone.

Interesting that the typical riot shot or ‘riot pose’ adopted by the young male participants, is one with arms thrust upward and outward in a V, as if proclaiming some kind of victory, or drawing power from the carnage behind. Ergo, these are people who spend most of their time walking around feeling powerless?

The boutique and upscale display window, the BMW or Hummer, is the magnet for trashing, upscale consumer goods the key item for looting.

The riot appears to be a fun event for the participants, but also something that helps define them, assert their individuality — ironically, while part of a mob. The Canucks fail to make them feel good about themselves, so they take matters into their own hands. Surreal to see “Kesler” and “Luongo” and “Sedin” running around inside the Bay and outside smashing and looting. If the real Luongo can’t get it done, I’ll just do it myself.

A few disparate thoughts, perhaps held together by the notion of ‘investment’ — the various meanings of that term, the lack of it, and perhaps the distortion of its meaning by the broader Vancouver society. We feel invested if we own a house or a condo, or earn enough to buy $500 hockey tickets, or designer handbags and shoes, or fancy automobiles. As the society has become increasingly focused on consumerism and sensory experience, on houses and home renovation, and the price of admission to that society climbs increasingly higher, the notion of what constitutes a healthy society in which everyone can feel invested becomes increasingly murky.

I don’t think the rioters are ‘dispossessed’ in any real sense of that word, but I do think that a riot of disaffected, bored bottom-feeders in a consumerist hierarchy tells you something about the nature of the broader society.

“The number of resumes I see at work from people currently in Vancouver looking to leave, or that have already left is pretty surprising.”

westcoastfella [living in Toronto] at RE Talks 11 Jun 2011 8:08am -
“The number of resumes I see at work from people currently in Vancouver looking to leave, or that have already left is pretty surprising. The simple fact is they make more in Toronto and pay less for everything around them, and when you’re raising a family and have no tangible ties to Vancouver, it can sometimes be an easy decision to make. My observations are anecdotal for sure, I’m one guy in one industry. But the people I hire are technical engineers earning 70-120K a year (so 60-90 in Vancouver) – not the sort that Vancouver wants to be losing in droves.”

“My brother works in the film industry in Vancouver, and after a few years of nonstop employment, no longer has steady work. He said that there is nearly nothing filming now (which is understandable given its the summer), but more alarming, there is little on the horizon for the fall. 4 regular TV shows film there in the winter, and a handful of movies – but not enough to employ the industry in any significant way, he estimated 40-50% of the usual workers are looking for work. He is leaving this summer to go to Toronto or Montreal, or possibly Europe. The high dollar is stopping some projects from coming here at all, and a lot of others are moving east.”

“I’m not too surprised that the local Vancouver media has not picked up on it, given the negativity of the implication – I’m sure they’ll finally start reporting on it when its too late.”

“I’m in my mid-30s but I feel like someone who is in their 80s saying “in my day…”. The disconnect between income and housing prices is insane.”

HM at VREAA 2 Jun 2011 11:05pm – “I’ve been working in various companies in the software industry and I’m seeing that there is a difference in what I’d get paid here versus elsewhere. The disconnect between income and housing prices is insane, and this is speaking as someone born in the Interior who has seen the prices go to crazy levels there. I feel like someone who is in their eighties saying “in my day….” and I’m only in my mid thirties. I remember when the coal harbour condos were just going up and seeing the sell prices at $150 – 200K and the prices they go for now is insane. I’m resolved to pretty well never buy a home, probably stay as a renter or take whatever inheritance I get from my parents (god I don’t want to be that ghoul) or move elsewhere and not buy there as well, prices across this country just seem delusional and out of touch with common sense.”

The Disillusioned – “I tell all the young co-op students that come and work at my office to leave this city if they want to make something of their life.”

Anonymous at vancouvercondo.info June 2nd, 2011 at 9:00 am- “Vancouver sucks, i tell all the young co- op students that come and work at my office to leave this city if they want to make something of their life. Unless you’re a civil servant, a union slob, or in sales… Vancouver has nothing to offer. After listening to me they all agree… Most have moved.”

More MSM Reports Predicting Price Drops – “Vancouver’s average house now costing an astounding 11.2 times a family’s average income.”

“David Madani at Capital Economics expects Canadian housing prices to fall 25%” [Reuters, 6 Jun 2011].

“Vancouver’s housing market looks primed for a correction, according to a report from Sal Gatieri, senior economist at BMO Nesbitt Burns, with the average house now costing “an astounding” 11.2 times a family’s average income.” [G&M, 7 Jun 2011]

Spot The Speculators #39 – 60 Year Old Couple; 75% Of Net-Worth In House; “They can’t afford it.”

From Financial Post, 25 May 2011 -
“In Vancouver, a couple we’ll call Adrian, 62, and Vicky, 58, are moving toward retirement as they reduce their work in management consulting. Their goal is to retire fully in a few years, but they are not sure if they can afford to maintain their way of life in their $1.7-million house. For now, they are spending $5,850 per month. But their current after-tax income is $2,600. Their secured line of credit, $435,000, pays the difference. Their total liabilities are 14 times their annual income. They have nearly $947,000 in retirement savings and $28,000 in other savings. The problem is eliminating debt before they retire.
“The old saying that you can’t have your cake and eat it pretty well sums up Adrian and Vicky’s problem,” Mr. Egan [a financial planner and portfolio manager] says. “Their house has an after-tax opportunity cost — what its value could earn if invested — of, let’s say, conservatively, 3% of $1.7-million or $51,000 per year or more if the return estimate is raised. They have to live someplace, but the house costs them the equivalent of rent at $4,250 per month or more if upkeep and heat are added. They can’t afford it. Either the house has to be downsized, remortgaged with a longer amortization and cash extracted or a few rooms rented out. Hard decisions have to be made.”
—
[in 2013, according to the advisor's five-year plan] “It is time to make a decision about keeping or selling the house, cutting debt and converting the high intrinsic cost of occupancy to an income-generating asset. Incurring more debt, as they have done by living on their line of credit, is unwise. The bill would eventually have to be paid and probably at a higher interest rate than the 3% they have been paying. Renting a room would reduce their privacy and would not produce enough income.
Sale and investment of proceeds is the best alternative. Assuming they can harvest $1.7-million less their $435,000 mortgage (about $415,000 by 2013) — roughly $1.25-million after selling costs for investment, they will need to replace their home. If they spend $500,000 on a condo, they will have $750,000 left for investment.
—
“If Adrian and Vicky downsize their house, eliminate debt and guard their investment returns, they should have a similar way of life to what they have now,” Mr. Egan says. “Most of all, they will have financial security.”
—

Discussion:

House with current market value of $1.7M. Savings of $975K. Mortgage $435K.
Total Net-worth: $2.675M – $435K = $2.24M
Percentage of Net-worth in RE: 75%

This couple is overexposed to real estate.
They look fine on paper, largely because of PR price appreciation. It would be interesting to know what they paid for the house, and thus to be able to calculate what percentage of their current net worth is solely the result of house price appreciation. Quite likely more than 50% (meaning that they likely paid less than $500K for the house). A good number of Vancouver boomers are in similar situations; many have even more of their net-worth in RE; over 100% is not unusual.
They are speculating on RE prices appreciating further, or at least not losing ground.
The advisor should advise them to sell immediately, not wait until 2013.
A 50% drop in housing prices will result in them losing 37.5% of their net-worth, and their financial future will be severely hobbled. If prices start dropping, that realization will loom large.
These are the ‘speculative holders’ who will bring their houses to market en masse when price drops establish themselves in earnest.
- vreaa

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.”

Anecdote from Business in Vancouver article ‘Home truths hurt talent search’, as cited in Macleans 1 June 2011 -
“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. He’d have to give up his 20-minute on-foot commute for what he figures would be “a considerable drive, at best.” He’d have to start paying provincial tax. He’d see his current $1.15-per-litre gas prices rise to what he terms Vancouver’s “insane” pump prices. And with Vancouver’s salaries failing to keep pace with Calgary’s oil-rich pay scale, he’d likely be looking at a pay cut to boot.”
Needless to say Roa is staying put in Calgary. He’s turned down several offers from head hunters in Vancouver, and the BIV story includes recruiters who are having trouble luring educated and experienced workers to the city. In short, Vancouver is increasingly being seen as a no-go zone for top talent.
—
Another wave of articles in the MSM this week using strong language: “Outrageous house prices” (Maclean’s), “No-go zone” (BIV), real estate a “culprit” (Maclean’s), the “Vancouver Virus” (Maclean’s), “if house prices crashed” (Maclean’s).
We expect these phrases to ‘prime the pumps’. People hear these words but they don’t hear them; they don’t act on them. Buyers keep buying and prospective sellers sit on their hands. The surging prices and the stories of foreign buyers stalking the city overshadow any doubts that prices will continue upwards. Then, fairly suddenly, prices aren’t going up, then they’re dropping, and then these phrases will return to consciousness. Speculative buyers will disappear and speculative owners, including those who don’t even know they’re speculators, will bring their product to market. – vreaa

Maclean’s – “Call it the Vancouver Virus. The culprit is real estate. Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed.”

‘This little 3 bedroom, 1 bathroom bungalow in Vancouver is priced at $1.5 million. The listing suggests buyers just tear it down and build a new home.’

Excerpts from ‘The real problem with Vancouver’s outrageous house prices’, by Jason Kirby, macleans.ca 1 June 2011 –

“The international media have finally clued in to the wackiness on Canada’s west coast, otherwise known as the Vancouver real estate market. Last month Bloomberg noted that when compared to median household incomes Vancouver homes are more expensive than even New York. The story linked soaring prices to the influx of wealthy buyers from mainland China. Today the Wall Street Journal retraces the exact same material. The warning in both pieces is clear: Vancouver’s housing market has become disconnected from reality and is primed to crash.” …
“Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong. I still think prices here in Vancouver are nuts, but each day as I walk to work past the high-end coffee shops and panhandlers I see more “For Sale” signs going up, along with plenty of “Sold” stickers, too.”

“The real threat to Vancouver isn’t that the housing market might crash. … Far more insidious is the impact housing unaffordability is having on employers and the broader economy. You hear stories of smart, young people leaving for jobs elsewhere. At the same time smart, young people from elsewhere aren’t coming here for jobs. The price of real estate and cost of living are too high, while pay is simply too low relative to other parts of the country.”

“Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed. As Vancouver develops a reputation as a place where only the uber-rich can afford to buy property, it could seriously undermine the economy. Fewer workers living here and earning good pay means a weaker income tax base for the province (though the city is benefiting from property taxes) not to mention less people with the means to shop, eat out and support local businesses and the arts. In addition, if you don’t have a vibrant and enterprising population, chances are new companies won’t get started. Coupled with the scarcity and high-costs of commercial real estate, more companies are likely to move their head offices away. Earlier this month mining giant BHP Billiton shifted its Canadian head offices from Vancouver, a self-proclaimed global mining capital, to Saskatchewan. Who knows how many businesses decided not to come in the first place.

If the economy is left weakened by departing head offices and a scarcity of talented workers, it will leave Vancouver even more vulnerable to that housing crash when it eventually comes. In economics Dutch Disease refers to countries that are overly dependent on their natural resources at the expense of other industries. Only here the culprit is real estate. Call it the Vancouver Virus.

—
Bingo! -ed.

“I sold our house in a Vancouver suburb for 300k 8 years ago. If I wanted to rebuy now it would cost me 600K. In the same time my wage has gone up less than 5%.”

ACjourneyman at zerohedge.com 1 Jun 2011 20:10 – “I sold our house in the Vancouver suburbs, 30 miles from Vancouver, for 300k 8 years ago. If I wanted to rebuy the same home now it would cost me 600K. My wage has gone up about 2.00 an hour or less than 5%. I don’t know if anyone else can do the math but it doesn’t work. I guess the 5.00 gas and 1500 a year car insurance doesn’t matter either, hard to live now.”

“One of my best friends has decided to move to Australia. Early 30s, born in greater Vancouver, 2 university degrees. Buying is completely out of the question. Would like to stay but for the high cost of living and low salary.”

human at VREAA 29 May 2011 at 11:38am – “One of my best friends has decided to move to Australia with an Australian woman he is dating. Early 30s, born in greater Vancouver, 2 university degrees (one professional), can’t make enough money as a renter to save anything. Buying is completely out of the question for them. They would like to stay here but the high cost of living and low salary is driving the decision.”

human -> Pity about losing your friends. If it’s any consolation, we do like your handle! (Same race as us here at VREAA; please send us more of your kind.) – vreaa

Misallocation Of Human Capital During Speculative Bubbles – “What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

JRoss at VREAA 29 May 2011 11:50pm, in response to a comment suggesting that a couple who are both academics at UBC looking for accommodation in Vancouver shouldn’t have an attitude of “entitlement and elitism” and should consider “some homes in Renfrew area that require some elbow grease for <700K with revenue suites" -
“I lived on < $900 month from a TA at UBC in Point Grey for several years so I could obtain an advanced degree. My wife did same. Why would I or anybody else do that if there were not the potential (potential, not promise) of some future reward? That is not entitlement. That is a meritocracy.
Question for you my obtuse friend – What do you call societies that depart from meritocracy? What tends to happen to them in the long term? And just exactly who are the 'elistists' in same?
You seriously think that is is entitlement for the dentist who fixes your kid's teeth, or the doctor who treats your wife's cancer, or the lawyer who writes up your real estate contracts, or the CA who does your taxes, or the pharmacist who had the misfortune to graduate 25 years after you, or the professor who teaches all of them, to want some chance at a reward commensurate with their efforts? Seriously, what is wrong with you?
You do realize there are very nice places in the world where people who EARN such qualifications are afforded a better life than an 80 year old house in a marginal neighbourhood with strangers in the basement? Why would anybody who is possessed enough of their faculties to EARN one of the aforementioned careers not question what it has bestowed on them and realize they might be better off elsewhere?
You seem to think that we should all just accept the status quo and sign up for a lifetime of debt that will fund your retirement with wealth that came your way mostly because of the accident of the timing of your birth and you actually have the balls to call ME entitled."

Very, very eloquently put.
A speculative mania in real estate causes misallocation of resources. JRoss highlights how people with skills useful to a society can be forced away because of a profound perversion of normal reward dynamics. People are avoiding Vancouver because of these forces. The detrimental effects on our society are mostly hidden during the boom leg of the bubble, but will almost definitely compound other negative aspects of the inevitable deflation.
Forcing hard-working, talented and useful members of our society to avoid Vancouver is just one aspect of this misallocation of human capital. Other manifestations include (1) young people being drawn into short-term-attractive construction work (rather than studies or more sustainable lines of work), (2) professionals decreasing their hours worked or retiring early (as a result of perceived paper profits in RE), (3) people in useful professions selling their homes and leaving the city (because the capital accumulated in their home has hit life-changing levels), etc. We personally know of individuals in each of these categories, and related personal stories have appeared on these pages. People do unusual things in unusual times, and we’re living through unusual times in Vancouver by virtue of our overly-expensive real estate. – vreaa

“Even with good salaries we’re not finding anything within 10-15km of our jobs. Our limit is $500k, or $650k with a suite. We could look further out, but then we might as well live in a different city.”

MM at VREAA 26 May 2011 5:46pm – “Even with good salaries we’re not finding anything within 10-15km distance from our jobs. To be specific, our limit is $500k, or $650k with a suite. Even further out (pomo, coquitlam) we’re struggling to find a place in that range (but in that area we’d expect some kind of private yard, and not have to deal with $50-100k renovations to bring it to reasonable standard). We could look further out, but then we might as well live in a different city.”

Five Couples Lost To Vancouver Because Of RE Prices – “In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming.”

Sheesh at vancouvercondo.info May 28th, 2011 at 10:23 am-
“In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming. They are all highly educated professionals and the ridiculous cost of living in Vancouver relative to the professional salaries and opportunities available have them suddenly running for the hills.
I don’t know if it is coincidence or if this is a sign of a larger trend, but I feel like we have all waited a really long time for things to get better here and now, in our 30s to early 40s, we are tired of sitting around waiting for a piece of the pie to come our way.
One couple both have MBAs but have had trouble finding work here that lives up to their potential. A corporate recruiter told them staying in Vancouver will kill their careers; one has already found work in Toronto so we expect both to be gone in a few months.
Another couple, both with Masters degrees, is moving to Edmonton. The husband found a job there and they have just put in an offer on a house. They can buy a beautiful house for grown-ups there for the same monthly costs as renting a dark, dank one-bedroom in the West End.
Another couple have met with an immigration lawyer about moving to the States. They can sell their place here and, with the equity, buy a sweet little house in a trendy neigbourhood in Portland for $300,000.
We also know a Canadian/English couple that were going to move here after living in Japan for many years but, after a real estate tour of each city, chose London, England, as the more affordable option!
The last couple that wants to leave is us! Unfortunately, our jobs are keeping us in Vancouver for now. But we have a young son and just don’t see Vancouver as a place where we can raise a family, save for retirement and have anything left over to buy a place.
All of us, by the way, would pick Vancouver as their first choice. It just seems like the city doesn’t want us. At this rate I really have to wonder what kind of place this will be in five or ten years. Can money launderers, speculators and offshore investors really make Vancouver “The Best Place on Earth?”
There are lots of nice places to live in this world; looks like a lot of us that didn’t get in on the ground floor are setting off to find another one.”

We share this poster’s concerns. Speculative manias in real estate cause misallocation of human capital, and our city is going to be poorer for it. – vreaa

Peter Ladner Personal Anecdote – “My home that I bought in 2000 is now worth about four times what I paid for it. But I have four kids, three in their 20′s and one in their 30′s, and they’re never going to be able to afford to live in Vancouver.”

Peter Ladner shared this personal anecdote in his recent interview with David Berner on Shaw cable television, 25 May 2011. We’ll archive it here:
“I think about my own home that I bought in 2000, it’s worth about four times what I paid for it now. … I have four kids, three in their twenties and one in their thirties, and they’re never going to be able to afford to live in Vancouver because they’re not already in the market.”

Peter Ladner – Correct Concerns, Questionable Attributions – “Is it always a good thing that property values go up?”

Peter Ladner interviewed by David Berner on Shaw cable television, 25 (?) May 2011. Thoroughly worth watching.

Excerpts from an early section of the interview:
Ladner: “Is it always a good thing that property values go up? The papers, the news: ‘Property values up – Good Thing; Property values down – Bad Thing’ … when you start to look though, at what happens in an ‘insanely hot market’ – which is how one real estate agent described this one – you can start to identify some bad things about property values being too high. … It erodes the economy of the city, because businesses can’t hire people. … Mining company CFO, six figure salary, cannot afford to buy a home in Vancouver. Another story about a couple, both surgeons, cannot afford to buy a home in Vancouver… Stories about companies that want to expand, they need workers, they can’t find them.. the young people can’t afford to live here… They recruit people from TO or Seattle or wherever, the people take one look at the housing market and say they can’t afford to move here, so now the company is thinking about moving to Waterloo… We have a declining number of head offices in Vancouver. …
You’ve also got a dividing rich and poor thing that destabilizes the society and leads to all kinds of unpleasant consequences… and new immigrants who want to move here, work hard, – it can’t happen…
If you’re in the market you are a multi-millionaire so there are a lot of people who love it this way and put a lot of pressure on to keep the ‘good things’ coming… but I think it’s time to look at the downside of it and say.. are we actually losing? … You get a resort town, it’s all hollowed out, there’s a few fancy people at the top, and a few serving them at the bottom, or a lot serving them at the bottom, coming in from Langley or wherever it is, crunched together in some little condo or basement suite, and you’ve got no real vibrant city… artists can’t live here, you don’t have a real community, and young people are leaving, and we spend all this money educating our kids and then they’ve gotta take off.. we lose all that money…”

A few thoughts:
Both Ladner and Berner raise some good general and specific points, and the whole interview is to be recommended to anybody concerned about the Vancouver RE market.
Most central to their discussion, Ladner expresses the desire to open a dialogue on possible restrictions to property ownership by off-shore buyers. He argues that lack of restrictions makes local RE a speculative asset for these investors and results in property being unaffordable to locals. He also emphasizes a “hollowing out” of communities that occurs with absentee owners.
Early in the interview, in the section excerpted above, Ladner also challenges the apparent broadly accepted wisdom that rising RE prices are a good thing, and he describes the dangers of becoming a “resort town”.
Later he makes excellent observations about the lack of dialogue on real estate issues being the result of so many vested interests. Both he and the interviewer point out that they are each sponsored, or have in the past been sponsored, by the RE industry! (“The biggest industry in this city is real estate.”)
Both Ladner and Berner agree in passing that even if foreign ownership was curtailed, they wouldn’t expect property prices to fall much at all, and that the city would still remain unaffordable to many. This is a very important point. It partly challenges the rationale behind Ladner’s concerns about foreign ownership in the first place. We think that it could be argued that both Ladner and Berner are avoiding the elephant in the room, namely the existence of a very broad and deep speculative mania, and the related very high risk of a price crash. It would be interesting to see either Ladner or Berner challenged on their price-resilience assumptions, and to be asked to consider the issue of local speculation. Ladner does at one point acknowledge that the source of the high prices may be related to interest rates.
So, we share Ladner’s concerns about the effects of overly expensive real estate on the community, he states many of them eloquently, and he should be applauded for publicly speaking out. We disagree with him, however, regarding the major cause of the insanely high prices: the cause of our housing bubble is inappropriately cheap financing/loose lending combined with local ‘speculative’ buying (a speculative component to almost every purchase), rather than off-shore ownership (which is important in its own right but far less so than local speculation).
- vreaa

“I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered.”

Brendon J. Wilson at VREAA 24 May 2011 10:33am -
“I returned to Vancouver from living and working in Silicon Valley for four years (I left after my MBA because Vancouver opportunities were lacking at the time). My wife and came back to start a family, and because we had grown tired of the Valley.
I interviewed at one company for a Chief Technology Officer position. When we got around to salary discussions, the employer indicated they would be willing to go as high as 90K. I pointed out that this was the salary I earned ten years ago.

“Oh you can’t compare a Vancouver salary to what you would get in Silicon Valley!”
“I’m not. That’s what I was paid ten years ago…in Vancouver.”
<awkward silence>

Ten years of additional experience, an additional advanced degree, plus international experience in the hotbed of technology in a significant role at a successful startup = no incremental value to a Vancouver firm.
Needless to say, I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered. For those of you wondering – the cost of living in Vancouver is about the same as living in California.
What is wrong with this picture?”

[When you add in considerations such as taxation and cost of accommodation, does California end up being cheaper? - vreaa]

“My wife and I talk about giving up and moving to the ‘peg (or equivalent) every day.”

Felix Wilcox comment on article ‘Housing costs soar in Vancouver‘ at The Globe & Mail 22 May 2011 7:35pm -
“My wife and I live and work in Vancouver, $60-70K annual, no kids, and we talk about giving up and moving to the ‘peg (or equivalent) every day.”

“Trying to hire for my IT based business was impossible in Vancouver, we have given up. People wanted ridiculous salaries, just to keep their heads above water. We can’t make the numbers work. We have set up shop in Halifax.”

‘Ralph Kramden’ at VREAA 22 may 2011 10:57am -
“Trying to hire for my IT based business was impossible in Vancouver. The kids are all in debt up to their eyes and they wanted a ridiculous salary, just to keep their head above water.
I have been trying for a year to get staff – and we have given up.
Potentially we could hire 20-30 people, and we can’t make the numbers work.
Scratch one job creation situation for this burg.
We are going to be running our business out of Atlantic Canada – and have set up shop in Halifax, Nova Scotia.
We have already had 120 applications and the people are well qualified, and the Government in NS has been very friendly and helpful, every step of the way. We sold out here – (*people way overpaid for the apartment building I owned and our home in West Vancouver) and for the next few months, I am bi-coastal as my Family heads East.
We will never come back to Vancouver, and as a matter of fact, we don’t even want to visit.
The one negative is, we are going to have to look for a Caribbean getaway, as we realize that we will never go to Hawaii again.
Will we miss Vancouver? Not at all.”

[Note juxtaposition with last anecdote -> It's tough for both employers and employees in over-expensive Vancouver. -vreaa]

“A few months ago I applied for a pretty advanced software engineering position at a local company. I realized that if a potential employer here asks you why you live in Vancouver they are just setting you up to expect a crap pay.”

ams at VREAA 20 May 2011 8:02pm – “A few months ago I applied for a pretty advanced software engineering position at a local company, thinking I can get away from traveling east for doing consulting work. I was surprised that one of the questions that was asked in the interview was “Why do you want to live in Vancouver?” I thought it was a strange question but then right after that we talked about salary expectations and discovered my expectations and their were off by about 30K to 40K. That is when I realized that if a potential employer in Vancouver asks you why you live in Vancouver they are just setting you up to expect a crap pay. I think employers in this town think oh why yes you live in Vancouver you should be happy so shut up and accept crap pay because baby you are in Vancouver!”

[Note juxtaposition with next anecdote -> It's tough for both employers and employees in over-expensive Vancouver. -vreaa]

Prospects Look Better In The US – “Ambitious people have left”; “I think we’ll be leaving too.”

Whenever we hear fellow Canadians slagging off the USA, we are reminded of the guy who said that you can’t criticize Sigmund Freud without referring to concepts that wouldn’t exist if Freud hadn’t described them in the first place. Yes, the US can be criticized in almost innumerable ways, but ask yourself what your life would be like, materially, culturally, intellectually, without it.
The US ain’t over yet, and that’s a good thing.
‘rp1′, in a comment on these pages [VREAA, 22 May 2011, 11:40pm]  eloquently summarized an argument for currently preferring the US outlook to that of Canada. He also embedded an anecdote in which he describes himself and his family as likely leaving Vancouver. That would be our loss. Here’s his post:

Wall Street cheered a non-existent US recovery in 2009, and 2010 was mediocre, but it does appear the bottom is in for the United States. Do you read CalculatedRisk? If not, here you go: Household formation, Business lending, ISM Manufacturing, Construction spending, and Job openings.
With all five of those things in the black, there is no real doubts of a US recovery. It is happening, largely due to currency debasement and asset and wage deflation. Painful, but they did it. Canada did not.

Canada took the “Greenspan approach” and avoided a sharp recession and purging of debt by holding interest rates at 1% for 3 years. Household debt exploded, everyone bought more house than they could afford at normal interest rates, and now inflation is eating family budgets. Whatever advantages Canada had in 2007 are long gone. We have taken precisely the same sequence of steps that the US did in the 2000′s, with the same results so far.

A closer look at the data is frightening. By most measures, Canadian real estate was fairly valued in the early 2000′s. Not true in the US. Their prices started going up in in 1998. Four years later, with housing already more richly valued than ever before, Greenspan cut interest rates to 1% and housing went up further in defiance of all fundamentals.

Canada started later and rose slower, with a lot of genuine economic growth backing the early rise. But our prices detached from fundamentals by 2005. Interestingly, we seem to have gotten the subprime mortgages first. That would be zero-down, 40 year amortization, with no income verification care of the CMHC. The Economic Analyst has some nice graphs: House prices and rents across Canada, and House prices and inflation.

So in 2008, with housing already more expensive than ever before, the BoC starts slashing interest rates. And guess what happens? House prices rise in defiance of all fundamentals. And we keep interest rates at 1% for how many years? 2009, 2010, 2011? Yup.

In short, we have done the exact same things as the Americans, in a slightly different order, with largely the same result. How much of our economy is now underpinned by housing? What percentage of our job base? How many people put down the minimum and and require low interest rates to service the loan? Those questions had people yelling at Peter Schiff on Fox News in 2006. I’ll make the exact same call for Canada right now. We are toast.

For the US, I think we’ll see a slow but steady recovery driven by manufacturing and consumer spending. The best investment I see is respectable houses with 8% rental yields in Michigan, upper New York, and Ohio. A lot of these are 70k. They could be over 100k in a few years, plus or minus the currency, which I think will be a plus. The courageous long term investor can buy classic homes in Phoenix and fix them.

For young Canadian families, affordable housing is the #1 issue. Canada has not had it for 5 years, and it could be another five years before the combination of a good job and an affordable house appears in this country again. In the meantime, expect a shitstorm of people who expect things for free, so maybe the US is worth trying. The weather is certainly nicer.

For the highly educated and frustrated, why haven’t you moved yet? Seriously. The US has lots of jobs for you, and it is easy thanks to NAFTA to get them. Stop hurting yourselves and go live your life. Living in a different country is interesting, it’s good for you, and you can always come back. Things are not going to get any better here for a while. Certainly not in Vancouver anyways.

And there’s no need to tell the ambitious people. They’ve certainly left. I think we’ll be leaving too. It has been a torturous decision, with family here and everything. But we have our own family to look out for. I’m worried that if we stay we’ll do very poorly. We have not benefitted from the housing mania (the jacuzzi tax credit was particularly painful). We’re just going to be asked to pay for it all. We have already reduced our expectations but now it’s getting ridiculous. What a crummy deal. It’s just too much.”

“I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation.”

Smartinuk at talkvancouver.com discussion thread on affordable housing in Vancouver, 17 May 2011 10:18am – “I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation. The housing situation in Vancouver seems to be a simple result of supply and demand.”

No, it isn’t, it’s the result of a speculative mania, driven by cheap money and local buyers prepared to overextend themselves to nose-bleed levels based on their fear of being ‘priced out forever’ and their greed regarding the promise of preternatural profits. Once gravity reasserts, things will return to normal range. Even graduate students may be able to afford to buy something, if they care to, at some point in future. – vreaa



Realtor Opinion – “It will get harder and harder to enter the Vancouver Real Estate Market. This is just a fact of life. The majority of people have a very hard road ahead.”

Vancouver Realtor Jay McInnes, Sales Agent, Macdonald Realty, as quoted at PropertyWire.ca, 20 May 2011 – “This is just the beginning. Affordability will be a factor from now on in the Vancouver Real Estate Market. [hasn't it always been a factor? - ed.]  The rate that the city is growing and the product ranges that we are seeing, it will get harder and harder to enter the Vancouver Real Estate Market. This is just a fact of life if you are living and working in this part of the world. If you want all of the luxuries that the world has recognised we have here in Vancouver, the majority of people have a very hard road ahead.” … “Without a crystal ball, I believe the market (in general) will continue to slowly rise over the next few years (assuming world economies move positively forward). Don’t forget, after the recession hit in ’08 the Downtown Vancouver market was back to where it began (pre-recession) within 9 months! I greatly thank the conservative levels of Canadian Banking for that and I don’t see that changing any time soon.”

We beg to disagree with Jay.
The uncalled for Vancouver RE bail-out of 2008-2009 is something to regret, rather than celebrate. Like giving cocaine to a dying racehorse to get one last sprint out of it, the ‘emergency’ interest rates gave unwarranted legs to our speculative mania, ensuring that the inevitable crash will be that much more destructive. 
And, regarding the “very hard road ahead”… let’s just say that ‘affordability’ will greatly improve… in the form of much lower ticket prices after the crash. – vreaa

Academics Avoiding Vancouver – “A world-class scholar we were trying for years to attract to UBC ended up going elsewhere. He turned our offer down flat in one day after going around town with a real-estate agent.”

mjw at VREAA on 20 May 2011 at 5:45pm -
“One issue that I have seen now for at least 5 years is that the most talented young academics NO LONGER come to UBC as a result of the insane cost of housing. Someone we were trying to attract for years to UBC (a world-class scholar, who is Canadian and who studied in the U.S. and Europe) ended up going to U. Alberta for a 150K per year chair position; he turned our offer down flat in one day after going around town with a real-estate agent. Instead we hired someone well down the list who is not remotely in the same league as this individual. Invariably, for our hiring we now make much longer hiring lists and end up going through a several rejections before the 4th one in line (typically a single young person just starting out with a rather mediocre record) accepts the job….. For the past year I not bothered participating in this hiring process. as it is clear that the process is excruciating and we are not getting the same quality people as we used to prior to 2005. Would you be concerned if the typical physician who stays in Vancouver is the one with family cash and a big inheritance and not the one who actually has the most skill in their profession?…. Perhaps reflect on this if you ever go in for surgery… The housing issue affects all working class people (blue collar, white collar etc…) who have local incomes…. Although our jobs are not so portable, and it will take some time to find academic jobs elsewhere, we are working hard to leave to a NON-WORLD-CLASS-CITY….. My view is that a “world-class” city does nothing good for 90% of the population besides attracting hordes of speculators from every corner of the planet…. we are not interested in this game…”

“He sold his place in Richmond for 300K over assessed value. He’s now renting from a young guy who can’t afford the mortgage on the place. And the landlord’s mom is a realtor.”

Anonymous at vancouvercondo.info May 17th, 2011 at 8:54 am – “I overheard a guy yesterday on his phone. He sold his place in Richmond for 300K over assessed value. Said he thinks it’s a great time to sell because for sale signs are popping up all over. He’s now renting a place from a young guy who can’t afford the mortgage on the place. and the landlord’s mom is a realtor.”

“The idea of a highly paid surgeon leaving because he can’t afford to live in Vancouver is absurd.” ["No, it isn't."]

Pat at VREAA, 17 May 2011 8:11am, writes in response to the anecdote: Doctors Leaving Vancouver – “My friend, a surgeon at Children’s Hospital, said he couldn’t have the life he wanted in Vancouver because of the insane real estate prices here”, 16 Feb 2011 -
“Even though prices are obviously too high in Vancouver, the idea of a highly paid surgeon leaving because he can’t afford to live in Vancouver is absurd.
It says more about that person’s idea of ‘lifestyle’ than anything else. How is it that I can live here very comfortably on a self-employed salary ranging from $35,000/year to $50,000/year with my mature student spouse who earns maybe $15,000 part-time?
It’s ridiculous that someone says they can’t afford Vancouver on, what, $200,000/year. Utter nonsense.”

Pat -
Many thanks for your comment. Arguments similar to the one you make are made regularly and in various forms, so we’ll headline a discussion here.
We don’t find this surgeon’s decision absurd at all.
It is important to realize that, when “prices are obviously too high” in a RE market, they seem so to people at all levels of wealth and income. The surgeon takes a look at Vancouver RE, and realizes that he cannot afford the type of property that he’d expect to be able to live in, given his training and income. In actual fact he likely earns substantially more than you suggest, perhaps over $300K, or $400K, or even more. He could prudently afford a property selling for, say, $1.6M-$1.8M. But, take a look at what he gets for that on the westside at present. Then compare those properties with the houses that surgeons earning similar incomes, living in Washington State, or California, or Hawaii, or New York, or even Ottawa, get to call ‘home’. That’s the point. The surgeon in Vancouver cannot afford to live a lifestyle commensurate with his training and income. So he moves. This is a completely sane decision.
It is inevitable that a speculative mania in real estate should causes such forces to take effect; the misallocation of resources is characteristic of a bubble. In this case, valuable human capital is squandered and lost to our community. Many skilled professionals have made similar decisions, by either leaving or not migrating here to Vancouver in the first place. There have been anecdotes on these pages of business executives and university professors, amongst others, avoiding Vancouver for these reasons. [See the 'Avoiding Vancouver' post category for some examples.]
So, yes, it may seem that it is unfair for the surgeon to say that they “can’t afford” Vancouver; but their conclusion and their move is also perfectly sensible. It would be more accurate for him to state: “I can’t afford the kind of home in Vancouver that I can afford in every other North American city.”
This line of thinking is relevant to all Vancouverites. You may think you can ‘afford’ Vancouver, but have you considered what a similar income (or your home’s current market value) would get you elsewhere?
We’re not concerned that this specific force will leave our city deserted. Everybody can’t leave at once. It’ll only take a small percentage trying to cash out for the market to crash.
While the bubble remains in existence, however, it is sorely damaging our community by the many perverse pressures that it applies; having professionals leave town is one of them.
- vreaa