“I can tell she gets tense when I trot out the usual arguments about why it’s STILL a bad time to buy.”

tincup at VREAA 18 Jan 2011 7:43pm“Much like all the people in the US who vowed they would move to Canada if Bush were elected for a second term, we have not followed through with our plan to move away from Vancouver if things didn’t start correcting by fall 2010. We simply renewed our plan…”if things haven’t turned around by fall 2011.” The difference now though is that due to a growing family we simply can’t stay in our current (cheap) place beyond that, and the S.O. is very anti-renting now due to the eccentricity of our current landlord. I can tell she gets tense when I trot out the usual arguments about why it’s STILL a bad time to buy. It’ll be an eventful 2011 for me, that’s for sure. If/when we buy, it won’t be at the bottom but hopefully it’ll be down enough that I won’t feel like all that patience was wasted. Vancouver really is different in the sense that it is taking forever for this correction to get going.”

Chin up; you are not alone. It’s bloody difficult to live through these times on the wrong side of the bubble. The market is a massive distraction, and it hinders regular folks who are simply trying to get on with their lives. It wastes time and misallocates resources. It causes people to leave or avoid living in our city. Affordable (not necessarily cheap, no one is expecting that) housing (to rent, and, yes, to own) is far, far better for a society. Economically, socially, psychologically. It’s going to take a while to resolve, but it will normalize. The more people that are scared off, the worse the comeuppance. Let’s hope sanity returns soon. -vreaa

UPDATE: tincup at VREAA 20 Jan 2010 1:37pm“Just to mix things up even more though, yesterday I found out that my very solid, stable job is being relocated. Exactly where is uncertain at this point, but the options (not decided by me) range from pretty nice mountain town to god-aweful northern hole. If they decide on the latter, I’ll be looking for a new job. 2011 will be an interesting and stressful year.
Sure glad I don’t own right now…”

20 responses to ““I can tell she gets tense when I trot out the usual arguments about why it’s STILL a bad time to buy.”

  1. I really doubt the 2011 fall will make a big difference.
    Seriously. Why wait! Move out of vancouver right now. I don’t believe the house price will drop more than 5%.

  2. I believe the house market will gradually cool down but not in a huge dump.
    at the current price, even 20% drop, it still the highest price in Canada.

    the likelyhood of getting 20% off by fall is ZERO
    so start packing your stuff now.

    • I believe the house market will gradually cool down but not in a huge dump.
      at the current price, even 20% drop, it still the highest price in Canada.

      What’s most likely going to happen is that come February the listings will rise, by around April the first round of cuts will come in, which I would expect to be around 5 – 10%, this will lead to a short surge in sales as people think they need to “buy in now or be priced out”, depending on what happens with mortgage approval.

      By around June I expect the market to stall again, with listings being removed only to reappear in late summer / early fall. Some will try to be cheeky and post it with a higher price only to be disappointed, others will hold the line and probably not fare much better. The last group will have seen the signs and cut the price by another 5 – 10% from what it was originally listed. Those will sell out of the same reason as above.

      The rest of the year will be hanging around at that level, so around 10% off by December of this year would be my guess.

      The REAL fun will start in mid to late 2012 when the first mortgages start resetting and people need to seek re-financing or decide to bail, from there on in I expect a 20 – 30% drop (in a zig-zaggy way) until around late 2014. After that? Who knows.

  3. yes, we can only hope…but please put away the crystal ball; it has been cracked since 2004

    • yes, we can only hope…but please put away the crystal ball; it has been cracked since 2004

      It’s not a crystal ball. It’s an “educated guess” based on what is going on and information currently available.

      The longterm outlook will still be correct but how we get there is still open.

      It’s a bit like hearing that the earth is warming but outside you have five feet of snow and conclude that this information must be wrong as it clearly is damn cold outside.

      Besides, without heavy interference by the Government that shakeout would have already happened any rational person though would have never expected our fearless leaders to be that stupid, alas. We were wrong.

  4. It’s also looking like the risk of a second dip in the great recession has declined and I would expect to see the US economy to pick up. As long as Asian economies don’t lose their shit, I don’t think we’ll see too much change in the market.

    • The US suffers even more from the same problem that Canada does: It’s a consumer spending driven economy. The US consumer seems to be tapped out or at least afraid of spending money at this point the risk of a second dip is not reduced nor has the longterm outlook for the US economy or housing changed drastically.

      The sudden “good numbers” can be explained by one simple fact: There are things people need to buy. If you read about an uptick in car sales it’s not because people love to buy new stuff but because they need a car to get to their job etc. After almost no sales for over a year there was a penned up demand for these products.

      If you want to be sure there is a recovery you have to remove any and all Government spending out of the equation and then see at least four solid quarters of economic activity increase as well as an increase in employment. Neither can be observed in either the US or Canada at this point.

      As for China? We’ll see. They keep their secrets closely guarded but anecdotal reports seem to hint at things cracking there too.

  5. It is all tie to interest rate, if the government can finally decide to do the right thing and remove these artificially low interest rates then the market could finally loose steem and return to somewhat normal. What people see when buying a house is not really the price of the house but the monthly payment, with higher interest rates these monthly payment would be a lot higher and people probably would not be able to afford to buy. So if there is no buyer the price will fall until some balance is establish.

    The government if fueling this bubble, You see other part of canada where house prices are still going up like crazy, place where no rich asian are buying properties. Cheap money for everyone.

    When the government remove the punch bowl we are all set for a harsh hungover. Hopefully this time they will let the market fix itself and not try to reinflate the bubble.

  6. It is all tie to interest rate, if the government can finally decide to do the right thing and remove these artificially low interest rates then the market could finally loose steam and return to somewhat normal. What people see when buying a house is not really the price of the house but the monthly payment, with higher interest rates these monthly payment would be a lot higher and people probably would not be able to afford to buy. So if there is no buyer the price will fall until some balance is establish.

    The government if fueling this bubble, You see other part of canada where house prices are still going up like crazy, place where no rich asian are buying properties. Cheap money for everyone.

    When the government remove the punch bowl we are all set for a harsh hungover. Hopefully this time they will let the market fix itself and not try to reinflate the bubble.

  7. Royce McCutcheon

    @tincup: I’m bear-ish on Lower Mainland real estate. I think several years from now it will be easy to track a substantial correction in prices here. Much like others on this site, I could provide arguments you could present to your S.O. explaining why this place is nutty and has to correct.

    But I don’t want to do that. Instead, I want to tell you something that helped me get to a point where I slept a lot better.

    Here it is: make a choice NOW. Don’t hedge. Don’t wait till the end of this year. Ask yourself: how much sleep have I lost over this issue? How many fights have I had with my partner? How much stress have I carried with me because of this? How much WORSE will my obsession with this issue be as I consider the implications of having an expanded family?

    The day I embraced the fact that I would be in the Lower Mainland for at least the next several years – and I realized that I was completely fine with the idea that I might rent that whole time – was a GREAT one. It removed some seriously pointless baggage. Life can’t be lived waiting for things to happen – and while I truly believe things here are going to correct soon, I can’t tell for certain if we’ll see it start this Spring or a few years out – or if I’m flat out wrong. Do you want to worry about how this issue is going to affect your life for that long? A terrible thought.

    So do the pro/con calculations with your partner TODAY, ruminate, and make a CHOICE. Choose to stay for a longer time line (like several years) or choose to move soon and start building your new life ASAP. You don’t have to carve it in stone, but at least put it on the wall with some fairly permanent ink. The funny thing is that there’s a decent chance you’ll be happier either way.

    Make a call together and then stick with it.

    And as a post-script: nothing says you can’t stay engaged on this issue from an intellectual standpoint. I’ve actually found it to be much more interesting once I stopped considering it so much vis-à-vis my own life.

    • Thanks Royce, that’s some solid advice. Just to mix things up even more though, yesterday I found out that my very solid, stable job is being relocated. Exactly where is uncertain at this point, but the options (not decided by me) range from pretty nice mountain town to god-aweful northern hole. If they decide on the latter, I’ll be looking for a new job. 2011 will be an interesting and stressful year.
      Sure glad I don’t own right now…

      • Royce McCutcheon

        I’m really sorry to hear that tincup. I hope you get the locale you want. “Life is what happens to you while you’re busy making other plans” is the John Lennon quote, I think. Seems apt. I do think you’re bang on in your assessment: it really IS good you don’t own right now. A positive thought: if you do leave Vancouver, wherever you go next will be substantially more affordable (both in terms of renting and owning costs).

        Given what you said about a growing family in your original post – and without knowing your prospects – here’s an unsolicited random-guy-on-the-internet anecdote: My Dad worked in the forest industry during dire times in the early and mid 1980s. I recall bouncing from Vancouver through a couple different BC towns in that time. We lived in rentals and, for a while, in a motel room. During the same time, my folks had been burned by the early 80s real estate price peak; they bought at the exact wrong moment and rented out that ill-timed purchase at a loss (couldn’t sell it, had to move for work). My brother was born in this time frame. Here’s the thing I want to share: we had incredibly happy childhoods. My gut sinks NOW when I think about how I’d have reacted had I been in my parents’ position, but I don’t recall noticing any stress at the time. All I remember is having fun hiking and camping and feeling like I was on an adventure. My wife could tell you similar stories from her childhood, as could many of my friends.

        My point is that, if you find yourself worrying about your family in the next little while as this stuff shakes out for you, you need to remind yourself that kids are resilient and they can be happy in all kinds of different circumstances. Stay positive for them and help them create memories they’ll always treasure no matter what. I’ll never be able to thank my folks enough for what they did for me during their tough times.

        And also, while things may generally get worse here over the short term, they WILL get better in the long term. Like VREAA said: chin up.

  8. whoever said they want to move out if the house price stays the same.

    I suggestion to those people are why wait. even it crash. the house price in Vancouver still way over than other places in Canada. Why just pack your stuff and move instead of if and if….

    a grade 1 student can do this kind of math.

  9. awww mannnnnnn! Yesterday i was at a red light behind a new BMW M3 convertible with the license plate “wy rent”. Took what i thought would be an iconic bubble pic, but it came out blurry and phone memory was full. If someone sees mr “wy rent”‘s bmw please send a pic to vreaa. Wy don’t we also all answer his question? Could be fun if he’s a reader.

  10. @ MHL

    Based on your broken English, I am guessing you are “BestPlaceOnEarth” from Greaterfool.ca and “VancouverGoingUp” from Vancouvercondo.info

  11. I completely agree with Royce, but as most of you know I chose the other side of the equation: I left.

    Even if there were some kind of official notification tomorrow that the bubble is popping it will take many years for prices to go from “completely insane” to “slightly less insane”. Life’s meant to be lived, not spent on the sidelines and like it or not that’s where a lot of Van bears are…. waiting on the sidelines for things to make sense.

    It takes a lot of courage to say “I’m tired of this stupid game, I’m going somewhere else”, but once you’ve made the decision it’s crazy how fast life can improve.

    Like it or not there’s an almost subliminal “Nowhere is as good as here” vibe that permeates Vancouver. You have to learn to shake that off. Moving helped me figure that out but it took well over a year. Now… well my cost of housing is ridiculously cheap, my employment prospects are a lot better, I sleep better and feel happier and more free because the housing thing isn’t constantly hanging over my head.

    There’s a certain shallowness to life in Vancouver, too. I suppose lots of big cities are like that but Vancouver seems to be especially affected. My brother says the same thing, and he’s been living in Van for about 6 months now.

    ANyway those are just my thoughts.

  12. Thanks for the thoughtful input Royce, and Skullboy too. We have often thought about moving to a smaller town, but this “opportunity” isn’t really what we are looking for. The S.O. would take a big income hit so our standard of living wouldn’t change much, and a city of 7000, 2.5hrs from the nearest airport is smaller than we’d like for the long-term (and we tend to think in the long-term.) The job itself is kind of dead-end too. Any promotion would likely require another move. If it comes down to being our only choice, I’m sure we could be happy there but there are still other options at the moment.
    This is a good wake-up call though to not take on a mortgage we can’t comfortably service.

  13. Pingback: “The day I embraced the fact that I would be in the Lower Mainland for at least the next several years – and I realized that I was completely fine with the idea that I might rent that whole time – was a GREAT one.” | Vancouver Real Estate

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