Profile of a Recent First Time Buyer – “About a month ago I became a first time homebuyer in Vancouver. I have been living here for about 15 years, and seeing prices triple, or quadruple in some instances, and I just thought “Wow, I need to get on this wealth train”.

This anecdote is extracted from a telephone interview between CBC Cross Country Checkup host Rex Murphy, and a caller from Vancouver named Steve Zimbalatti, 25 Apr 2010, during a program on debt called ‘Living Beyong Our Means’. The segment occurs at the start of the second hour of the show. The whole segment is transcribed here. Thanks to AnonymousAA at vancouvercondo.info 25 Apr 2010 3:17 pm for first alerting us to this story. –

“About a month ago I became a first time homebuyer in Vancouver. I had been a renter and I had money in the bank and quite a bit of freedom actually. It was very liberating the way I was living and a lot of my friends, I think, were perhaps envious of the fact that I wasn’t tied down by debt. I sort of got into that situation by learning my lessons the hard way. As a student in college I got one of those credit cards that you are allowed to sign up for in the foyer and I thought “Wow, this is great. I’m a grown up now, I can take on some debt.” But I just couldn’t manage it. I maxed it out almost right away. I couldn’t really manage the debt, and it gave me a poor credit rating. I did not pay the bills on time and I just thought “Well this is enough of this, I am never taking on debt again”.

So, from that point forward, I was just living pay cheque to pay cheque, able to squirrel a little bit away every time and build up a little nest egg but I was thinking, here in Vancouver, I am watching all this wealth go by in this housing market. I have been living here for about 15 years now and just seeing prices triple or quadruple in some instances, in that time, and I just thought “Wow, I need to get on this wealth train”. So my partner and I decided that it was time to buy and, you know, if we are going to be here in Vancouver, working here in Vancouver, we might as well own something.

So, we bought last month [March 2010]. We just thought it was an astronomical amount of money that we are paying for this little box in a building in the sky and we just thought “Wow, this is crazy because, we’re grown up, we watched our parents pay $12,000, maybe $20,000, for a house and all of a sudden we are paying $350,000 for a tiny box in the sky. And to get anything in the City of Vancouver at that price, you have to compromise. You might not be able to live in the part of town that you want to live in. But we are very, very happy, actually, with what we’ve got, and we think it was, you know, a spot where we can make a good home.

[Rex Murphy: So do you feel now any less free than you did before?]
Absolutely. We find it very confining. You know, we never used to sort of care about the goings on in government or the world of finance or anything now we’re watching the news every day to see what going to happen to the interest rate, or “do we lock in now?”. You know, we got almost free money in a way. When we tell people that we’re got a mortgage rate of 1.95% interest, my parents’ jaws drop. They used to pay 18% or 20% to service their mortgage, and now it is just like its unbelievable to them. You know I think wealth in a lot of ways these days has been transferred sort of to real estate and it seems to be, you know, by design if you ask me. If you look at say wealth, and where most of the money was 25-30 years ago, most of it was in the stock and bond market. Now for Canadian wealth it is in real estate.

Regarding our debt situation, it is not a worry in the sense that we don’t have it under control but we do find it, you know, I don’t want to say “crushing” because, like I say we are quite happy where we are but we do find it is less liberating, we might not be able to take the vacations we want which was great in the past. Yeah it is just, you know, it is a whole new ball of wax.”

10 responses to “Profile of a Recent First Time Buyer – “About a month ago I became a first time homebuyer in Vancouver. I have been living here for about 15 years, and seeing prices triple, or quadruple in some instances, and I just thought “Wow, I need to get on this wealth train”.

  1. This is going to end very, very badly…

  2. This guy is a perfect example of Shiller’s “irrational exuberance” at work. He can’t really explain why he would “buy” an asset that worsens his actual enjoyment of life, yet he is happy to jump on the “wealth train” before it leaves the station forever.

    Check out latest episode of PBS Nova episode “Mind over Money” where Shiller describes the psychology of bubbles in his own words. This guy fits the profile perfectly….

    http://www.pbs.org/wgbh/nova/money/

    Just my $0.02….

  3. What an idiot! He has been looking at the bubble growing for years and now, with the bubble reaching monstrous proportions, he is fully in!
    And what the fuck is this “wealth train”?!? Sounds like something that exists only after a good dose of LSD.

  4. Have you noticed: Vancouver real estate now has Certified Bubble Pricing!

  5. “wealth train” is probably coined by a realtor

  6. Get on the wealth train before it’s too late!

    http://tinyurl.com/2cpljyg

  7. Froogle Scott

    “Wealth Train”
    [With sincere apologies to the O’Jays]

    People all over the world (everybody)
    Join hands (join)
    Start a wealth train, wealth train
    People all over the world (all the world, now)
    Join hands (wealth ride)
    Start a wealth train (wealth ride), wealth train

    The next stop that we make will be England
    Tell all the folks in Australia, and China, too
    Don’t you know that it’s time to get on board
    And let this train keep on riding, riding on through

    Well, well
    People all over the world (you don’t need no money)
    Join hands (come on)
    Start a wealth train, wealth train (don’t need no downpayment, come on)
    People all over the world (ride this train) (Ride this train, y’all)
    Start a wealth train (Come on, train), wealth train

    All of you FTBs over in Victoria
    Tell all the folks in TO, and Calgary, too
    Please don’t miss this train at the station
    ’Cause if you miss it, I feel sorry, sorry for you

    Well
    People all over the world (Sisters and brothers)
    Join hands (join, come on)
    Start a wealth train (ride this train, y’all), wealth train (Come on)
    People all over the world (Don’t need no jobs)
    Join hands (come on, ride)
    Start a wealth train, wealth train
    Ride, let it ride
    Let it ride
    Let it ride
    People, ain’t no debt
    People all over the world (on this train)
    Join in (ride the train)
    Start a wealth train, wealth train (ride the train, y’all)
    People all over the world (come on)
    Join hands (you can ride or stand, yeah)
    Start a wealth train, wealth train (makin’ money)
    People all over the world (’round the world, y’all)
    Join hands (come on)
    Start a wealth train, wealth train

  8. My favourite? “Buy now before prices drop in July!!”

  9. I couldn’t believe it when I heard this guy on CBC. Unbelievable what people will put up with to “own” real estate. You don’t get to live where you want, the place is too small, and you don’t get to go on any more vacations. All to get on the “wealth train” Poor guy. He’s been taken for a ride.

  10. Froogle Scott

    Wealth Drain.

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