“I’ve never been more poor in my life.”

This from DaMann at rob chipman’s blog (04.04.08 at 10:30 am)

“My wife and I bought 3 years ago, a very modest TH out in Steveston. It was only $270 k at the time, which for us was more than we wanted to pay. We had only one child at the time and my wife was working part time. Now we have two kids and my wife is not working. I make above the average household income for Vancouverites, not by much but definitely more, and we are barely living above the poverty line. I’M serious! We haven’t bought clothes for ourselves in almost a year. All we do is pay a mortgage, strata and taxes. I’ve never been more poor in my life. Now the place is worth $380k and I honestly don’t think we will see these prices again for 10 years ( after the crash comes). There will be no more Olympics to hype things up, we have borrowed most of the young buyers for the next 10 years to service the current boom. So many people are going to be hurting that have bought at the peak that RE will be a dirty word in Vancouver. So yes we will probably sell and get out of this insanity and just rent or move to the island and rent and wait. Then maybe we can start living again. (Keep in mind this was a $270k place. I have no F#$%^ clue how people are buying $500k places. I know people doing it and they are barely getting by, but they will certainly not be able to have families or change their income levels ( 2 people working). They are mortgage slaves.)”

One response to ““I’ve never been more poor in my life.”

  1. Hi DaMann: Back in the early 90’s I bought a house for about $165,000 in Cloverdale. I worked in Kits. Like you I earned over the statistical median and my wife had a decent job too. I had a lot of pressure from family and my boss to buy. The cost of the house was pretty modest even back then. My boss told me I should have gotten the biggest mortgage the bank would give me. I wasn’t into it. We had no debts and the 2 cars were paid off. Then came my child. Wife stopped working and the debts piled up. Those 2 paid off cars started to wear out and needed replacing (the long commute was turning my car into metal filings) and there was no money to do it. We sold the house, paid off the debts and I have rented (never more than 10-15 minutes from work) ever since. The point is that most people DO take the biggest mortgage they can get, 40 year amortization the whole works, because that is what it takes to buy a place today. All it takes is an unexpected expense (child, car replacement, whatever) and you are in a world of financial pain. All the real estate porn on HGTV shows happy young couples buying nice houses within their budget and then buying new furniture and decorating the way they want within 3 months of buying the place. The reality (in Vancouver at least) is far from that. To make it work you have to have a salary that increases considerably over time to keep up with those extra expenses. That depends a lot on what age you are when you are first able to get into the market (people in the same career path usually make more in their 50s than they did in their 30s). That is NOT true for all jobs and the timing of the increases has to be right. I make significantly more now than I did in the 90s but my pay didn’t start to go up till many years after I had to bail on the house. Take it from me, when you sell that place your stress levels will decrease dramatically. Once you are out of the market, however, it can be tough to get back in (unless of course prices take a dump – something I’m hoping for, but can’t count on).

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