“In about 1997 a good, intelligent friend said I’d be better off to rent because housing prices were too high and would probably come down.”

There are Vancouver RE bears who have been wrong for a long, long time. Many have friends who have done very well as owners.

This from realisticman at The Tyee 2 Dec 2009 -

“About twelve years ago a good, intelligent friend said I’d be better off to rent because housing prices were too high and would probably come down. He said, keep your money in the bank and earn the interest. I didn’t listen and bought. Risking all my savings and risking too that I could become horribly in debt, particularly if a crash came. Well it didn’t come and instead of earning almost nothing on cash because of low interest rates I now have a home and no matter if it’s worth a million or a hundred thousand I don’t care because this roof and this space is mine.”

“Me and my wife came to Canada [from China] with $3,000 10+ year ago.”

CAVEAT -The veracity of the following story has been doubted by some commenters at robchipman.net.

The fact that stories like this are either true, or are seen as true in the public imagination, is noteworthy. Many locals have purchased RE in Vancouver based on the idea that hard working Chinese immigrants will continue to support the RE market.

This from The Chinese at robchipman.net 26 Nov 2009 8:21 pm -

“Me and my wife came to Canada [from China] with $3,000 10+ year ago. We bought an apartment in 2000, and worked hard, and paid it off in 4 years. Then we bought a house in 2005, and again worked hard and paid it off a year ago (before we reach our 40s). The house has a market value around $1 million in today’s market. Now we bought another house in a much better neighborhood on the west side, with very good schools, so our kids can receive a good education. We are not alone, lots of people from China are in similar boat as us. This is a culture value real estate, willing to work hard, willing to live below the mean to invest for the future and their kids, and willing to take calculated risk, and sometimes enjoy gamble. Now, more Chinese are coming, bringing way more than $3,000 – and they all share the same culture…”

“Over the last two weeks, I’ve been hearing lots and lots of people in the ‘nearing baby boomer’ generation, of all socio-economic classes, talk about selling and downsizing.”

There are many important variables affecting the Vancouver RE market that are very difficult to measure. What is the effect of intergenerational wealth transfer? How many Vancouverites own houses in lieu of RRSPs? How many current owners are planning on ‘cashing out’ in one or five or ten years time? Anecdotes serve as an imperfect window into some of those factors.  This from pianoexcellence at RE Talks on 28 Nov 2009 9:56 am -

“Over the last two weeks, I’ve been hearing lots and lots of people in the ‘nearing baby boomer’ generation, of all socio-economic classes, talk about selling and downsizing. Many are not talking, but have already done it.  I still do a number of piano tunings and repair engagements. A lot of these are for previous piano students parents. I taught mainly Gr 10-12 high school students, and many of them are off to university. I’ve been getting a lot of calls right before thanksgiving to get the piano ready so they can play when they come home for thanksgiving. To my suprise, a number of [these families] had moved to a smaller place. A number of my other acquaintances, even my parents, are talking about it too.”

Toronto Anecdote – “There hasn’t been a lot of time spent on discussing the human side of investing in a real estate bubble”

VREAA is a collection of anecdotes from Vancouver and its immediate surrounds. Occasionally, however, an anecdote from elsewhere in Canada speaks so powerfully of issues that are relevant to our market that they merit mention here. This anecdote from Garth Turner’s greaterfool.ca article 24 Nov 2009 crosses that threshold, so I post it here, with it’s out-of-province source (Toronto) clearly noted. It speaks to the financial and social risks of being a young FTB in a RE bubble market. A mortgage broker in Toronto describes their children’s friend’s travails -

“House purchase summer of 2008.   100% financing, 40 year amortization.  Husband a carpenter, wife at home with the new baby.  November 2008, husband laid off, wife goes back to work for minimum wage. Still not enough family income to pay the mortgage and buy groceries. Value of house has dropped 10%.  Payout of mortgage was higher than the purchase price the day they completed, by virtue of 100% financing and the CMHC fee.  Real Estate commission 7% on the first $100,000, 3.5% on the balance.  Shortfall would be $49,000.  Couples’ families want to help.  Daughter and baby move home with her parents.  Son moves home to his parents.  Duplex is rented out to cover the mortgage payment. This doesn’t work.  Husband moves in with wife and her parents.  This doesn’t work.  Couple rent cheap apartment. This doesn’t work.  Mother and child leave after 8 year relationship. There hasn’t been a lot of time spent on discussing the human side of this recession or investing in a real estate bubble but it is important to note the consequences are not [limited to] a loss of money or investment.”

“A ’single family dwelling’ in Vancouver will more than likely have at least 2 households, I’ve personally seen 4 per house.”

This from bgard at greaterfool.ca on 22 Nov 2009 at 2:08 pm -

“I own a very similar house [to recently featured 265 East 24th Ave], probably in the same neighbourhood. In fact when I first saw the picture I thought it was my house. Even have a similar colour scheme…though mine is much nicer. Nicest house on crack alley as my wife likes to say. But on to the meat. My taxes (on an assessed value of 700K) are 5,000/year. Hydro and Gas are 3,000/year, for the 3 households that live here, same as in the example. Plus 1,000 for insurance. A ’single family dwelling’ in Vancouver will more than likely have at least 2 households, I’ve personally seen 4 per house. So you have to factor that in to the overall cost of RE. And taxes never go down. I’ve owned for 12 years and seen my assessments drop twice, last March (when assessments were done at mid dip) and from about ’98 to ’00. I have always paid more each year.”

Herb adds at 5:56 pm that in Ottawa, a 475K house has annual taxes of $6,140 and utilities of $5,200.

“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.”

“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.”