265 E 24th Ave, Vancouver – Ask: $749K – 18 Offers – Sell: $1,033,000 – $284K (38%) above ask

The east side market is hot. Frothy-hot. This from the Globe and Mail 19 Nov 2009 6:03 pm -

265 East 24th Avenue, Vancouver

‘A heritage fixer-upper’

List price: $749,000

18 offers

Sold for $1,033,000 within 13 days

$284,000 above ask

“It is annoying to see almost all our friends have moved to their new houses recently. Our hearts sink every time we hear mainstream media telling us next year housing price will continue to go up.”

The real estate boom has shut out some prudent citizens who would, under more normal circumstances, be homeowners. Some feel despair, others great inconvenience. Some gain solace from local and national real estate blogs, in the following case, from Garth Turner’s greaterfool.ca. This post by ‘Mom Society’ at greaterfool.ca 16 Nov 2009 10:33 pm appears to be an update and elaboration from the same poster whose earlier thoughts are archived at VREAA 7 Nov 2009 -

“We desperately want to buy a place with a yard as we have an 18 months old son and he needs a place to play. Although our annual income is around $15,000 more than average, we still find we can not afford anything with a yard, even in Surrey. It is annoying to see almost all our friends have moved to their new houses recently. Our hearts sink every time we hear mainstream media telling us next year housing price will continue to go up. Actually we don’t care if your [Garth Turner's] prediction would be accurate, no one has crystal ball. At least your blog gives us hope in this raining winter, give us a hope to allow us still dream we may have a home with yard in the future. Thank you. If we are belonging to middle class or working class, I feel [we are not alone in] our sadness.”

“Yes, the interest rates will rise, but my salary will also increase. If I’m laid off, or my mortgage skyrockets, I’ll work my ass off to keep it all together.”

Vancouver RE currently demonstrates historically record high price-to-rent ratios. Despite this, very, very low interest rates continue to make buying look attractive, especially if one only considers monthly payments. This illustrative example from Beth (2009 Nov 13, 20:27) in the comments section of the 12 Nov 2009 ‘Vancouver RE market bounces back’ article in the Georgia Straight, by Charlie Smith -

“My rent was $975 a month for a crappy, 35 year old one bedroom that didn’t have insuite laundry or anything, and where the landlord would knock twice then enter my suite without advance notice for non-emergencies, once even while I was on the toilet. Now, my mortgage is the same for a 12 year old one bedroom with laundry, fireplace, dishwasher. This includes maintenance fee. And I can have a pet. And no landlord can come in because he feels like it. Yes, the interest rates will rise, but my salary will also increase. If I’m laid off, or my mortgage skyrockets, I’ll work my ass off to keep it all together. I am confident in my ability to make it work. Downpayment? Some people work two jobs and weekends for years and years and years to save up for one; others inherit it when a loved one passes away; others borrow money interest-free from family, and others have it handed to them by well-to-do parents who would rather their kids have a condo than live in a dump run by a slumlord. Do you blame them? It’s not really anyone’s business where a downpayment comes from. It’s not a crime to have a downpayment.”

Personal Growth Through Real Estate Purchase – “His friends look at him differently now that he’s a homeowner”…”You have plants. You look after them. It’s like you’re an adult.”

A 24 year old pharmacist buys a downtown condo for $508K, and reaps the admiration of his friends. This from the Georgia Straight cover story ‘Vancouver real-estate market bounces back’, by Charlie Smith, Nov 12, 2009 -

“Even though he had never purchased real estate before, Alym Abdulla could sense that the market was heating up as he began looking at downtown condos last spring. The 24-year-old pharmacist started seeing suites in late March, and before long he realized that some of the units were receiving multiple offers from prospective buyers.

“I must have looked at close to 50 places,” Abdulla told the Georgia Straight in a recent interview in his living room. “I put in offers on two other places that didn’t go through because the market started to pick up.”

He said he was getting discouraged and was ready to quit when his real-estate agent, Stu Bell, recommended that he check out a home in a Bosa-developed building near the corner of Hornby and Smithe streets. When Abdulla entered the suite in the middle of May, he was immediately impressed by the layout, which featured two full bedrooms, each with an en suite bathroom, on either side of the living room. “The thing that really sold me on this place was the balcony,” he said. “It’s quite large. It makes you feel like you’re not trapped in your little shoebox downtown.”

Abdulla ended up paying the $508,000 list price. He said he bought then because he wanted to take advantage of the low interest rates. With a smile, he acknowledged that some of his friends look at him differently now that he’s a homeowner: “One of my friends who I used to live with in university, he’s like, ‘I feel since you bought your place, you’ve matured. You’ve completely changed in the way that you are. Before, we used to live the student lifestyle. Now, you’re always cleaning your place. You have plants. You look after them. You’ve even got a cat now. It’s like you’re an adult.’ ”

“In the past few months we’ve seen just about all of our non-owning friends jump into the market and buy. This is driving my wife crazy.. we’re in marriage counselling”

There are many stories about couples at odds regarding RE decisions, but only a few clearly described on Vancouver blogs. These two anecdotes come from greaterfool.ca and it is unclear thus far whether they originate from Vancouver or other parts of the country. Regardless, they do represent some of the social conflict being experienced in Vancouver.

This from Typhoon at greaterfool.ca on 11 Nov 2009 at 11:28 pm -

“In the past few months we’ve seen just about all of our non-owning friends jump into the market and buy their first home. This is driving my wife crazy.. to the point where we’re in marriage counselling because she wants to buy and I don’t. With her, it’s the emotional attachment to pride of ownership. With me, it’s not buying so that we don’t devastate our future enjoyment of life. I can’t seem to negotiate with her on this. Is there any middle ground you can think of? I’ve suggested splitting the difference and buying half a house, but that doesn’t make any sense to either of us. Do you have any suggestions for me?”

Here’s Stessed at greaterfool.ca 11 Nov 2009 at 12:43 pm -

“I know exactly what you are talking about. I am in the same situation as you. Counselling and the whole bit. I have managed to delay the purchase pressure for a year by agreeing to rent a similar place to what we would buy in the area we want to live for one year. After the year is up who knows but it gives me a year to come up with a new plan. Good luck.”

“Even though I don’t believe it logically, it seems like the ‘best place on earth’-hype has actually gotten to me subconsciously.”

A Vancouverite becomes aware of the fact that they’ve been unduly influenced by the herd, and decides they’re better off elsewhere. This striking story from Rust at vancouvercondo.info 10th Nov 2009 at 8:56 am -

“I’ve been doing more travel for work, and the thing that always surprised me is how nice other cities are. Even though I don’t believe it logically, it seems like the ‘best place on earth’-hype has actually gotten to me subconsciously. I find myself almost surprised when I notice things that are far more appealing about other cities with lower cost of living. It’s been an eye opener. Right now family and work keeps me here, but prices would have to drop DRAMATICALLY for me to even consider buying here. It’s become clear to me lately that I’m just not interested in living in Vancouver long term.”

“The real story is how many jobs in hi-tech did this real estate boom kill? How many startups never bothered?”

Home owners have experienced paper and emotional gains from rising RE prices, and the construction industry has obviously experienced a period of boom. What is less obvious is that, for many, real estate prices have made Vancouver a less attractive city in which to live and work. Business have left Vancouver, or avoided it in the first place. Recent job cuts have people talking about this effect -

This from other ted at vancouvercondo.info 9th Nov 2009 11:11 pm -

“Let’s face it Kodak Canada is what is left of Creo. The [major] job cuts were in 2002 and 2003. There is almost nothing left there now. I don’t think I know anyone left working there, maybe a few. It won’t make a difference. The real story is how many jobs in hi-tech did this real estate boom kill? How many startups never bothered? How many real jobs vanished or were never created? The damage is done. Seriously, crash or no crash I can’t see myself moving back to Vancouver.”

This from patriotzed at vancouvercondo.info 10th Nov 2009 4:49 am -

“I took a high-tech management program from SFU back in the late 80’s when it looked like Vancouver had a real future in high tech. Our focus companies were Glenayre and Creo. For a metro to be a growth centre for high tech, it must be attractive to professional families. Vancouver was in the 80’s and 90’s and that’s the major reason why capital and workers were attracted here for the many startups. Make the metro unattractive, and you kill high tech. Housing in Seattle is a good deal cheaper than in Vancouver, and it is and has always been a major high tech hub – why on earth would anyone locate here instead of there, except to employ a few peons who couldn’t get H1B’s? Inside Canada look at Ottawa, or Waterloo, which are even cheaper. If housing gets down to and stays at 80’s real prices, high tech may get going again, but it looks like we’ve slipped back 20 years or more.”

“Bankruptcy for two swinging 20 year olds and two aged Mainland Chinese folks (the parents who funded them)”

This from Strataman at vancouvercondo.info 8 Nov 2009 at 7:34 pm -

“Looking after a bank repo at King’s Landing. Bankruptcy for two swinging 20 year olds and two aged Mainland Chinese folks (the parents who funded them)! The old folks are dumping their other two condo’s cause they co-signed! All heading back to China it seems. 500K loss after mortgage was paid off.”

“We dare not dream to buy a home in Vancouver. We feel shame to be poor and working poor.”

This brief yet poignant personal story about the feeling of being left behind by this RE bubble. From ‘Mom in Vancouver’ at greaterfool.ca on Nov 07, 2009 at 1.48 am -

“We dare not dream to buy a home in Vancouver, actually we can not afford anything with a yard for a kid to play in, in Surrey, or Maple Ridge, although I worked for several years as a full time programmer. We feel shame to be poor and working poor.”

“On Halloween we got less than 25% of the historical number of children at our door Trick or Treating.”

vreaa was not the only one to notice the dearth of trick-or-treaters this year. This from TheOrra at thetyee.ca, commenting on an article on reduced projections regarding the economic benefits of the 2010 Olympic Games, by Andrew MacLeod, 3 Nov 2009 -

“On Halloween we got less than 25% of the historical number of children at our door Trick or Treating. Was it H1N1, the economy, or just a change in attitude towards candy, who knows? But the Olympics (as a symbolic Halloween) are likely to experience the same low numbers for the same reasons: fear of the pandemic, not enough money to pay for the trip, or just a pervasive rancor over the spending on junk, rather than on economic meat and potatoes.”

Bizarre Reason For Becoming A Realtor #47- To Avoid Insulting Your Mother-In-Law

Perhaps this kind of family politics occurs regardless of market conditions. Or perhaps it is indicative of a market in which unusual behaviour of all sorts has become the norm. This dialogue in a series of posts on RE Talks, started by househunting on Thu Nov 05, 2009 8:55 pm -

househunting: “I am house hunting right now and it is not looking good. I am probably going to rent until more listing show up in the spring. Is it worth it to get my license to purchase my my home? What is the process and what is the cost? … I don’t have much faith in realtors, and would rather pay myself the commission.”

Lost Soul: “You do realize that having a Realtor is not a pre-requisite to buying a place, don’t you?”

househunting: “It is in my case. Got a realtor in the family that kinda have to use. Rather get my own license and do it myself.”

islandlandlord: “If he/she can’t do the job then I’d cut him loose and find someone who can. Maybe things are different in your family, but I wouldn’t hesitate to drop him.”

househunting: “I wish it were that easy. When it is your spouses immediate family it’s a little hard. Any info on how long it takes to get a license?”

Multiple Offer: “Since there is a realtor in the family, why not offer to split the commission with him/her and save the trouble?”

househunting: “Thanks for the response. It has nothing to do with the commission. If I could use another realtor I would. I just don’t want to have to deal with my current realtor (MIL [my mother-in-law]) and the only way is to be my own realtor without opening up a can of worms. I have many friends that are realtors that I could use, but that would cause a lot problems.”

“I keep trying to tell my wife that Vancouver is a city living on credit and home equity loans, the music will stop soon. She doesn’t buy it anymore.”

This account of RE related spousal discussion from DaMann at vancouvercondo.info Nov 6th, 2009 at 12:01 pm -

“I really don’t get this silliness. My wife says “I don’t care what anyone says, there is no recession in Vancouver”. All she comments about is the wealthy cars, and stupid prices of RE. I keep trying to tell her that Vancouver is a city living on credit and home equity loans, the music will stop soon. She doesn’t buy it anymore. She IS starting to believe it’s different here. Shit, so am I!!!??!?!? EVERYTHING is defying all logic and reason. Sure, I know people are buying places based on variable rates of 2% but even at that, I still can’t fathom how ( or why) people are buying and getting $700k mortgages on $100k household incomes. Man I can’t wait for rates to go up!”

“Her partner seems to be doing well in therapy/personal growth work, but they sure can’t afford a house!”

So, who is buying? This from Ginger at greaterfool.ca on Nov 5 at 12:07 pm -

“I think the new-agish health industry is big (in Vancouver), my sister used to be a yoga teacher there, but after being away for a few years, was unable to get back into it because of saturation in the market. Her income from waitressing has gone down too. Her partner seems to be doing well in therapy/personal growth work, but they sure can’t afford a house! And these are 2 people with university degrees. I guess the beauty and climate make it worthwhile.”

“There was that big buzz about people renting out their homes and making a killing on it”

This from the CBC Tuesday November 3, 2009 3:49 pm -

“There was that big buzz about people renting out their homes and making a killing on it,” said Vancouver resident Tanya Peters. Peters and Tyler Jones planned to get married in Costa Rica during the Games. Their vision was to rent out their house to Olympic visitors to help pay for the wedding. But so far, they have no takers, and now regret not hopping on the gravy train earlier. “I know several people who rented out and did make a lot of money but they rented out a year ago,” Peters said. It appears the Olympic rental market has slowed to a crawl. Jones and Peters have had their home listed on various websites since July. They have dropped their price to $3,000 for two weeks from $5,000.”

“Leaving Vancouver was one the best things I ever did. I do not miss any of the things people believe to be so essential as to require living in the most expensive real estate in the country.”

This advice was directed at the prior ’sardine family’ poster, but it’s applicable in a broader sense too, so it is posted separately. Here’s Kurt at greaterfool.ca on 29th October at 11:37 pm -

“I don’t know how portable your job(s} are, but leaving Vancouver was one the best things I ever did. Think carefully, and if you do, make damn sure you’ve got a job waiting for you, but you really should consider going elsewhere. I do not miss any of the things people believe to be so essential as to require living in the most expensive real estate in the country.”

“We are holding our breath and keeping our happy little family of three in a 1 bedroom 560sqft condo in Kits”

This from ‘family of sardines in Vancouver’ quoted on Garth Turner’s greaterfool.ca blog, October 29th, 2009 -

“We are holding our breath and keeping our happy little family of three in a 1 bedroom 560sqft condo in Kits (that crazy Realtors have priced at $400,000) and waiting for the day when the cash we’ve saved up will be worth something a wee bit larger. While the Realtors keep telling us to fear the rising interest rates, the math doesn’t work – how do you justify bidding up an already overpriced home by another $200,000? I’ll keep working on the down payment, take a raise in interest rates, forget the bidding war increase, and possibly have a more reasonable price instead – thank you very much!”

People Making Money From RE – “Hooray for Real Estate!” & “I sold all three of my downtown investment properties over the past three months.”

This story came to VREAA as an e-mail from pianoexcellence, a poster on the RE Talks BC discussion board -

“I cashed out of my PR and my Squamish condo. I sold the Squamish condo in May 2008 and my PR in June 2009. I made a lot of money and am thankful for the role that RE has played in my life as I am only 28. I threw all my gains on the Squamish condo at the TSX in Jan 2009 and have made a killing (after momentarily crapping my pants during the crash in Feb). I am waiting to put the rest of my equity from my PR into div stocks but am looking for a suitable entry point. Until then, it sits in GIC’s. There…ho0ray real estate!!!”

And this from MultipleOffer, also at RE Talks, on Wed Oct 28, 2009 11:01 am -

“I have ["sold high" and made a huge return on (my) investment]… this market was too good not to sell into, particularly after coming through such troubling times. I sold all three of my downtown investment properties over the past three months. I am holding onto one small older rental unit that breaks even with a good 5-year rate on it. Whether this was the right move or not for the market remains to be seen, but it was the right move for me and my family. We no longer have a mortgage on our PR which we can live quite comfortably in for many years to come. I am saving for a future downpayment, but waiting for a buyer’s market before re-entry.” And later added – “Unlike [pianoexcellence] I held onto my principal residence and an investment property, so I still have some exposure to the market, which is good if it goes up, and not a bother at all if the market falls. Rental cashflows and PR is paid off, with $ in the bank to pay off the rental property mortgage if I ever needed to. A crash would just be seen as a buying opportunity for me.”