An Ex-Pat Comes Home – “I’ve been frustrated talking to friends and family in Canada about housing because I honestly feel like I’ve traveled backwards 5 years in time, to when reasonable discussion was impossible in California, and house prices were only going up-up-up.”

CalgaryLurker at greaterfool.ca 27 Mar 2010 7:55 pm

“I want to share my experiences as a former expat coming back home. I lived in San Francisco/Bay Area for most of the last 11 years and recently chose to move back to Canada for family.  Since being back, I’ve been somewhat frustrated talking to friends and family about housing because I honestly feel like I’ve traveled backwards 5 years in time, to when reasonable discussion was impossible in California, and house prices were only going up-up-up.
I think what frustrates me the most though is knowing what it was like to live through the years after that peak, and the possibility of reliving them yet AGAIN here in Canada. The truth is I very much would like to own a home, I just am unwilling to sell my financial future to do it, which is what the last decade has asked of home ownership.
I am in my late 30s and have never owned a home, but instead chosen to rent. Financially I am certainly capable of buying, and came close on several occasions, but for various reasons ultimately decided it didn’t make sense for me. Our culture’s recent obsession that views homes as investments is an aberration in my view, and over the years I have chosen to put my money to work elsewhere. I suppose I developed this thinking during the 80s as I watched my father tried to sell our family homes during recessions in Alberta, usually at a loss. It certainly coloured his thinking.
After I moved to San Francisco in my late 20s, I watched the dot com bubble inflate and pop, lived through power brownouts, 911, antiwar protests, two terms of Bush, and saw the California real estate bubble inflate and pop, and the budget crisis that followed. What stayed with me is that nothing moves in a straight line for very long. It’s never different this time. People will always move en masse to find the next good thing (or avoid the next terrible thing) whether looking for a job or an investment. It has made somewhat cautious when dealing with my money and big social events like bubbles. Animal spirits be damned!
I do understand what the ride up feels like. It is exciting and it feels GOOD. I had to line up with 30-40 people just to see an apartment to rent, and usually had to overbid! In my industry, everyone was trying to figure out how to get an investment property or three. HELOCs were providing family trips to Hawaii and brand new cars. Every lunchroom conversation was about home reno projects. Etc..etc.. I chose not to buy back then even though a dozen of my friends and co-workers did because the numbers just seemed silly to me (perhaps being the son of an CPA something rubbed off). In retrospect I am very glad I didn’t cave to the pressure I was feeling at the time (though I went to open houses and talked to realtors, so it was close). Today many of my friends in California are underwater on their homes but making payments, some have lost their vacation and rental properties, and some are under threat of foreclosure. Many have had to scale back their lives. One even used to live in Stockton, the ground zero for the central valley collapse, where entire streets were gutted before he moved to Seattle. He lost about 200k of equity and considers himself lucky.
And these are not poor or dumb people by most standards. All of them work in software making 6 figure combined incomes, but they ‘caught the bug’ and started to believe the narrative. It is infectious. And, as you know from Garth’s site, the mortgages that have been issued over the past few years are stretched for perfection. If prices drop more than a few percent, or rates go up a little, or a few bad apples default, it starts a cascade. And although San Francisco proper was more shielded than further out communities from the declines, they eventually felt it too. This in the city that was’ jewel of the west coast’, and where ‘they are making no more land’, like so many arguments I hear now about Vancouver.
So, I recognise now I will likely have to rent until 2014-15 before the crash has played itself out here. Hopefully it will go quicker since the government has relatively fewer schemes left in its pocket to keep the prices high. I will be moving to Vancouver shortly (for business) and it is astonishing to me that prices are now HIGHER than San Francisco’s were, even at its peak. And I used to tell Americans friends about the sensibility of Canadians….
One side effect of the crash in California I noticed was the exodus of people. Either because they were broke, or lost their jobs, or didn’t like what was happening to the social programs, etc. Many people I know are now in Austin, Portland, and Seattle, cities which didn’t crash as mightily, but where housing is cheaper to begin with. (Actually look up the luxury 6000 sqft places with huge lot that you can get in Texas for the price of a Calgary condo. And that is simply what they cost, not crash pricing. Reminds you what housing SHOULD be.) These cities economies where buffered by the influx of people and I think are doing relatively better. The same might happen to Calgary and Edmonton when Vancouver starts to dip, but then again the American cities I mentioned have more diverse economies than in Alberta. If oil isnt high, the entire western provinces start to look like all of California.”

4 responses to “An Ex-Pat Comes Home – “I’ve been frustrated talking to friends and family in Canada about housing because I honestly feel like I’ve traveled backwards 5 years in time, to when reasonable discussion was impossible in California, and house prices were only going up-up-up.”

  1. oh, can I relate. I’ve been in Miami since 2003. It was obnoxious to listen to all the RE talk. Now I get the same thing from my Vancouver-based family.

    Have fun y’all.

  2. Pingback: “I’ve been in Miami since 2003. It was obnoxious to listen to all the RE talk. Now I get the same thing from my Vancouver-based family.” « Vancouver Real Estate Anecdote Archive

  3. oh great. You are complaining about how home prices in Vancouver but yet you are planning to move here? No wonder our prices are high…cause of immigration. =)

  4. genxr…….groan. Not going to continue if people can’t find jobs and can’t afford to live here.

    Be prepared for one of Vancouver’s many “it is different here” theories to burst along with the bubble.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s