Twitter Vancouver RE Chat [‘YVRREChat’] – Three Realtors, Four Mortgage Brokers, One Home-Stager, and Three Civilians Discuss The Market

“Gold, Jerry, gold.”
Recorded here for those of us who don’t ‘tweet’, this ‘twitter chat’ between realtors, mortgage brokers, home-stagers, and three regular civilians, 22 Feb 2011, 9am-10am [#YVRREChat]. There were a number of ‘threads’ to the chat stream, and we have done our best to parse the various threads. Our summary/analysis of the discussion follows at the end.

The cast:

Scott Dawson [mortgage broker, moderator]

Leah Bach [realtor]

Christopher W. Earl [realtor, ‘earl of condos’]

Jason Krist [ex-nurse, mortgage broker]

Rossana Wyatt [mortgage broker]

Heather Stewart [homestager]

Teri Conrad [realtor]

Conrad DeJong [mortgage broker; RE investor]

Gary Jones [financial security advisor]

Jonah Lewis [website builder, prospective FTB]

Lynne Robson [web designer, non-owner]

The discussion:

Scott Dawson: Welcome to YVRREChat. Hope everyone’s been having a productive start to the week. I have noticed a definite uptick in business. Today’s topic is an open discussion on the YVR Real Estate market. Does anyone has anything they want to start with?
Lynne Robson: All I know is the market is way out of control…this from a third party perspective.
Leah Bach: I’m really interested in why you feel that way.
Lynne Robson: I just don’t quite get it…I have a cousin in wpg who is an agent…heritage houses sell here for 1 mil, same homes in wpg 300g.
Leah Bach: So, your thought is that it is the price disparity between yvr and wpg (for example)?
Lynne Robson: I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
Scott Dawson: Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
Leah Bach: The drivers of this market are two fold. First time condo buyers (get into the market), and upgraders.
Jonah Lewis: Compare Vancouver to New York, a 300,000 apartment here is bigger and more affordable.
Lynne Robson: I am not going to pay 300g plus for an apartment.
Leah Bach: Of course not, because you don’t see the value. If however, you want land 300g gets you Mission.
Christopher W. Earl: location, location, location.
Scott Dawson: You may not pay $300k but many people do. Like Earl_of_Condos says, location, location.
Lynne Robson: But what is the location? the view? the weather? what makes this “the location”?
Leah Bach: My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
Lynne Robson: The market in Vancouver makes me crazy…I should just be quiet…
Leah Bach: No, I LOVE that you will talk to us about how you feel about the market. Your info is like gold to RE’s.
Lynne Robson: I know I keep saying wpg, but you can still get a very nice home in wpg for 147k.
Christopher W. Earl: Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
Leah Bach: Exactly which is why we see strong immigration in Richmond condos. Scarcity drives prices (less listings/more offers) and people who “get in” the market eventually “move up”.
Jonah Lewis: What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
Lynne Robson: I agree, there is no way to get into the market with that family home.
Leah Bach: AND the fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
Scott Dawson: You’d be surprised. Homes that price [1-1.5M] are going into multiple offers.
Lynne Robson: But what happened to the day when you got married, bought a home and lived in it while your family grew…?
Jason Krist: A lot of people are doing it with a rental suite now.
Leah Bach: ..you can do that in a three bedroom condo in Maple Ridge.
Leah Bach: The whole affordability argument is earning power does not rise in step with housing prices, but those in the market make equity.
Lynne Robson: Back in the day you actually saved for a down payment.

Scott Dawson: Your first home is never your dream home it’s a stepping stone.
Leah Bach: Exactly. I tripled my investment in 5 yrs and moved up.
Heather Stewart: Wasn’t that an extreme anomaly, though?
Leah Bach: Which part? the buyer or the return?
Heather Stewart: The return, so quickly. [No specific reply to this point. -ed.]
Lynne Robson: My parents did not buy their first home with the thought that it was a step stone, they bought it because they loved it.
Scott Dawson: Previous generations also settled down at one job for 35 years. Didn’t move as much.
Jason Krist: Homes are like jobs there days, people rarely keep the same one for long right.
Scott Dawson: Exactly! I rarely see a client that’s been employed longer than 3yrs at current job.

Christopher W. Earl: Average Vancouver home buyers can afford average Vancouver homes.
Lynne Robson: I don’t want an apartment…I want a house where my kids (if i had them) can play in a yard, or I can plant a real garden.
Jonah Lewis: It’s a question of wanting average or not. I’d rather live somewhere affordable if I could.

Leah Bach: I have clients that paid cash for a 750k place (dinks under 35)
Rossana Wyatt: Nice for them!
Gary Jones: Really? How did they amass that much wealth in such a short time?
Leah Bach: One good job (overseas) one well educated, some inheritance, one car, no kids, good investing etc.

Teri Conrad: Seems to me I’ve read somewhere that ratio of income to mortgage not far off from parent’s generation here in Van [Nobody responded to this statement. Too ‘facty’. -ed.]

Rossana Wyatt [mortgage broker]: hello evry1. We pd 190000 4 our condo at City gate and were lucky 2 get tht when we sold – now worth 400000 😦 [Example of flat market. Ignore. No responses to this either. -ed.]

Gary Jones: Is every home an investment or not?
Scott Dawson: I believe so. You have to live somewhere why not pay your mortgage instead of your landlords?
Jason Krist: As someone who has tenants it’s great, I tell clients all the time how much they waste on rent
Gary Jones: All the money savings books suggest renting is cheaper.
Scott Dawson: The first step when thinking of buying is to do a budget. For some it might make sense to rent.
Jason Krist: Renting may be cheaper but it doesn’t mean it’ll get them further ahead
Conrad De Jong: That’s why homeowners are rich and renters are poor; FACT.
Leah Bach: The fact remains, renters are covering somebody’s mortgage.
Conrad De Jong: I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage, you can rent it out
Lynne Robson: As someone not in the industry, I don’t want to have to look at buying a home as only an investment, I want a home
Jonah Lewis: It’s hard to go from a good size rental deal to 500sq of nothing and be house poor though. 1st time buyer.
Leah Bach: The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
Jason Krist: I agree, sacrifice for long term gain. Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?
Scott Dawson: Owners realize this once they’re in the market. Most wish they got in sooner.
Conrad De Jong: I think its worth the sacrifice in the longer term
Rossana Wyatt: Yes, pays off in long run!
Lynne Robson: Do people even save for a down payment now a days?
Jason Krist: They should be saving, problem is they walk into a bank, open a savings acct and feel relieved.
Scott Dawson: People are saving more than you think. Most of my current files are not high ratio.
Lynne Robson: Back in the day you had to save 25% for a down payment…how the hell do you save 25% of a mil…?
Leah Bach: You can always try the “bank of dad”
Christopher W. Earl: Get a REALLY high paying job 😉
Lynne Robson: So 25% of $1mil.. $250,000.. will buy me an ocean front property with a rental in barbados…hummm let’s reconsider..
Jason Krist: 25% was a lot less “back in the day”, now if you get 5-10% as a down payment, get into the market, smart purchase
Leah Bach: You don’t need 25%, mortgage people…where are you? and can you get a work visa in Barbados?
Lynne Robson: lol, actually I can…I have a virtual business, and a husband who is retired…

Heather Stewart: Best time to buy is always last year!
Jason Krist: Trying to “time the market” rarely works out for a FTHB
Scott Dawson: You can’t time market & mortgage rates. Buy when you’re ready.
Christopher W. Earl: You should buy where you see value…that fits your budget.
Rossana Wyatt: If u wait too long, never a rt time

Scott Dawson: Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors. [Mentioned out of the blue and for no apparent reason. Agreed with repeatedly by realtors. Not sure who the ‘some’ are who are arguing this in the first place. -ed.]

Christopher W. Earl: Housing prices always trend towards affordable.
Lynne Robson: Exactly what planet are you living on?
Christopher W. Earl: I didn’t say affordable for whom 🙂
Conrad DeJong: Vancouver hasn’t been affordable for 27 years
Leah Bach: It’s affordable [to renters? -ed.] because renters aren’t paying for the initial deposit, carrying costs, infrstrcture mtnc.
Heather Stewart: I guess when rent is almost unaffordable, coming up w/dnpmt and maintainence can be seen as unaffordable – investment or not
Heather Stewart: Market is what market will bear – it’s just too bad the market is out of reach for so many, now

Leah Bach: So, then let’s talk bubble….[..with minutes to go. -ed.]
Scott Dawson: Ohhhhh nooooo for the RE bubble chat we’d need hours.
Heather Stewart: Or days!
Leah Bach: It’s 10 anyway [time to end the chat hour]… bubble chat next week…
Rossana Wyatt: Thx evryone for gr8 chat – gotta run. Have a gr8 day! 🙂
Scott Dawson: Thanks for the chat everyone! Some great discussion today!
Lynne Robson: Sorry if I stepped on anyone’s toes
Christopher W. Earl: It’s important to have a wide range of opinions…otherwise, there is no discussion.
—/end of twitter chat/

——-
Summary/Analysis:
Okay, let’s breakdown the “wide range of opinions” offered in this discussion:

1. Why pay a landlord’s mortgage?:
– You have to live somewhere why not pay your mortgage instead of your landlords?
– I tell clients all the time how much they waste on rent
– Homeowners are rich and renters are poor; FACT.
– The fact remains, renters are covering somebody’s mortgage.
– Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?

2. Other people are buying; Therefore there must be some logic to buying:
– You may not pay $300k but many people do.
– Homes that price [1-1.5M] are going into multiple offers.
– I have clients that paid cash for a 750k place

3. Overextend yourself to buy; This is normal; It pays off; Always:
– My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
– The fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
– …earning power does not rise in step with housing prices, but those in the market make equity.
– I tripled my investment in 5 yrs and moved up.
– I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage
– The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
– I agree, sacrifice for long term gain.
– Most wish they got in sooner.
– It’s worth the sacrifice in the longer term
– Pays off in long run!
– If you get 5-10% as a down payment, get into the market, smart purchase
– You don’t need 25% mortgage, people…

4. Accept less than you reasonably expect:
– If however, you want land, 300K gets you Mission.
– ..you can do that in a three bedroom condo in Maple Ridge.
– Your first home is never your dream home, it’s a stepping stone.
– Average Vancouver home buyers can afford average Vancouver homes.

5. Don’t try to time the market; Buy now:
– Trying to “time the market” rarely works out for a FTHB
– You can’t time market & mortgage rates.
– If u wait too long, never a right time
– Vancouver hasn’t been affordable for 27 years

6. Always keep in mind the compulsory RE wisdom:
– location, location, location.
– Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
– Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
– Scarcity drives prices (less listings/more offers)
– Market is what market will bear
– Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors.

7. Ignore counterarguments; Avoid logical consequences of sensible statements/questions:
– Isn’t it an anomaly to triple your investment in 5 years?
– I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
– But what is the location? the view? the weather? what makes this “the location”?
– What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
– All the money savings books suggest renting is cheaper.
– Ohhhhh nooooo for the RE bubble chat we’d need hours. [And we’d have to consider actual facts and arguments! -ed.] – gotta run

8. Silence the dissidents; Or, rather, just keep talking to them until they silence themselves:
– The market in Vancouver makes me crazy…I should just be quiet…
– Sorry if I stepped on anyone’s toes
[Note to Lynne Robson -> Next chat, no need to apologize for your sensible observations. -ed.]

20 responses to “Twitter Vancouver RE Chat [‘YVRREChat’] – Three Realtors, Four Mortgage Brokers, One Home-Stager, and Three Civilians Discuss The Market

  1. Actually a few comments there were quite bearish. But notice NOBODY discussed the numbers on an investment basis comparing to other jurisdictions.

    The one comment how renters weren’t paying for all the costs was poignant. Kind of a strange way of putting it but an interesting comment nonetheless.

  2. 4SlicesofCheese

    This pretty much reflects the view of the state of real estate for the general public. Too bad these people are suppose to be “professionals” in their industry and they have nothing to back up what they say other than pulling stuff out of their asses.
    Try having a discussion with anyone about this topic.
    They will repeat most of those points, like bullet points. Its like they all got an email and they all memorized all the points.

  3. A must read for anyone investing in the housing or stock market:

    http://canadabubble.com/bubble-watch/1992-
    market-crash-2011-it-will-hit-by-christmas.html

  4. puke… again…

  5. Thanks for the hard work posting this.

    • A pleasure; thanks.

      It’s kinda like my public diary of the bizarre stuff going on.
      ‘Bubble’ in more ways than one:
      1. Ponzi scheme bubble; Inflated and due to pop
      2. Isolation bubble; as in unaware of stuff going on outside.

  6. Ugh, people in the real estate industry. How can they be so oblivious? The one who insists that you should buy, that it always pays off: I just read an article yesterday from Florida about someone who bought a condo for $230k, and now it’s worth less than $100k. Gee, that certainly didn’t pay off did it? What planet are these people living on?

  7. The bulls have been overwhelmingly right. If you ignore the rest of the world…

    One of the good old ways to amass wealth was to start a business and if you provided a good value the market would reward you. A great number of people would benefit from the business – customers would get the product they desire, employees would make a living and the business owners would reap the monetary rewards for their risk taking and hard work… This is what I have been doing and I have saved some good money in the process.
    However, I could have saved the same money or more by simply buying a house and flipping it. No overtimes, no dealing with clients and employees, no stress, just buy high and sell higher. Why work when you can make more money by flipping houses?

    • That’s another by-product of mis-allocation of capital. Speculation becomes more profitable than productive uses of time, effort and capital.

  8. I had to stop reading it. I can’t stand to listen to these people scraping for every last rationalization to wring the life savings out of people like Lynne.

  9. Reading this makes me crazy! Crazy! I want to jump into the discussion and pound all their pathetic “facts” into oblivion. If one were to say, “All home owners are going to be bankrupt if the market corrects ; FACT,” that sounds ludicrous. How can one say is it a “fact” that renters are poor and think that is a rational argument for purchasing a home?

    And I take what these animatrons say personally because…? Gotta stop rising to the bait.

  10. Well, as it happens – post Paris G20 – the IMF also has an opinion to share with us…. 😉

    Global Economic Prospects & Policy Changes – “In addition to well-known downside risks associated with real estate in major advanced economies, an emerging risk to the global recovery stems from a potentially steep price correction in Chinese property markets. Residential real estate prices in some of China’s larger cities have risen rapidly since the crisis, spurred initially by stimulative policies aimed at easing restrictions on real estate lending and subsequently by strong income growth, high savings, and limited alternate investment vehicles. Over the past year, the authorities have stepped up efforts to rein in property prices, recently announcing a range of measures, including raising the minimum down-payment for second-home buyers and enforced a 5½ percent business tax on properties sold within 5 years. Given the government guarantees in place, financial sector risks threaten the fiscal outlook. While it is difficult to predict how significant the stress from potential property price correction would be, if these risks are realized, there could potentially be global ramifications.”…

    http://tinyurl.com/4q595jw

  11. Location Location (And everybody forgets), Timing

    Buy at the wrong time in the property cycle (let alone a bubble) and you will do damage that will take years to repair.

    When this bubble implodes half the people in that listing will be out of a job and be forced to sell property.

    Oh and well done Lynne Robson. She is a lot smarter then she realizes.

  12. Holy !@#*&(.

  13. “That’s why homeowners are rich and renters are poor; FACT.”

    I’ll be sure to pass that fact along to Mark Zuckerberg. He’d better buy soon before he’s priced out!
    http://www.dailymail.co.uk/news/article-1315097/Facebook-founder-Mark-Zuckerberg-gives-glimpse-private-life-Oprah.html

  14. Jason Krist? Seriously, that’s his name? First time I saw that, I thought, that sounds like a euphemism for an expletive. For Fox Creek…

  15. “Leah Bach: AND the fact is we all feel a pinch when we get a mortgage,”
    This is the stupidest thing I have ever heard, and probably the reason that so many FTB’s will land themselves in a world of trouble.
    I just bought my first place and my mortgage payment equates to about 25% of my income…so one eighth of my husbands’ and my combined income. We aren’t feeling any kind of pinch because we bought something that we could easily afford. Even if interest rates rise (and they will) we will still have more than enough money to save for retirement, take nice vacations, buy new cars when we need to, etc…
    You would think that anyone buying a place today would factor in how cheap money is at the moment. I calculated the carrying cost should I need to take a mortgage at 8%. I am of course anticipating that the person who purchases this place form me will be paying a realistic interest rate.

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