“I worked my ass off to earn money in Europe, and saved up enough to buy a house in Vancouver. I’m ‘long’ Vancouver- political stability, bank stability, food security, fresh water security, good natives and immigrants, climate stability.”

LAF at VREAA 25 Mar 2011 at 8:32am“Folks, part of [all this] might be Asian money, but part of it is just, heck, Vancouver is a great place to live and people are becoming more aware of it (thanks Economist and Forbes surveys). I worked my ass off to earn money in Europe, and saved up enough to buy a house- in Vancouver. I still live in Europe, but I’m “long” Vancouver- political stability, bank stability, food security, fresh water security, good natives and immigrants, climate stability. C’mon guys, don’t blame the Chinese, realize the long term prospects of Vancouver and you’ll understand why so many of us foreigners/Expat Canadians see it is a very positive place in a highly uncertain future.”

We also like Vancouver, a lot, but we think Vancouver RE is disproportionally very overvalued, and in a bubble.  Those are not incompatible thoughts, to like Vancouver but see the bubble.
Two questions for LAF:
Did you take fundamentals into account at all when you made your purchase?
What percentage of your net-worth is represented by the current market value of your house in Vancouver? 20%? 50%? 100%? 400%? Ballpark is okay. Please share. -vreaa

61 responses to ““I worked my ass off to earn money in Europe, and saved up enough to buy a house in Vancouver. I’m ‘long’ Vancouver- political stability, bank stability, food security, fresh water security, good natives and immigrants, climate stability.”

  1. “the long term prospects of Vancouver”

    What industries are growing in Vancouver? What are average salaries in Vancouver?
    I love the place too, but be aware that much of the current atmosphere of growth and “prospects” may actually just be the overheated real estate/finance industries.

  2. Laureate Money Punters

    LuLu Lemon and EA Sports!

    • its worth it to add that EA is in BIG trouble. Its analogous to the print publishing industry.

      EA does not have a digital distribution channel (xbox, valve steam, etc), oooooops! they are/will be hurting very bad soon.

      the ceo admitted they missed to boat on that. I guess they were too busy making money to stay on top industry trends.

      as for lulu, well, i dont see anyone wearing ‘chip and pepper surf gear’ anymore

    • Ornamental Tepee Usury

      yeah that’s why i said it

      i know both companies well – LuLu is just another fad (yoga) – EA is constantly releasing products that are so goddamn buggy as to make them not worth playing. ever try playing NHL 11 online? i’d rather try to walk up an escalator that goes down.

  3. Yeah it’s sort of funny. I am still scratching my head on what the long term prospects will be. The harbor? A “resort town”? It seems most of the industries that could bring prosperity to Vancouver are actively being forced out / shut down.

    But hey, I guess we can all work at Blenz or Starbucks 🙂

  4. Well, I am sure this guy has never been in europe, as i can reasoanbly say that 99% of cntinental europeans have never heard of BC, let alone Vancouver. a decent detached home in most of contiental europe cost 150 to 200k euros, food is cheaper and better, salaries are much much higher than here , culturally richer, and opportunites for work better. Canada was the place to be 20 years ago, now it has become an east asian dump, like it or not.
    No rich europeans are coming here to buy houses, they arent stupid.
    One million euros buys here a shack, where with 300k you can buy a nice house in South France , enjoy mediterrean climate and sunshine, and live on the rest 700k for the rest of your life. It rains for 300days a year in this place for christ’s sake. Stop looking at your belly button all the time.

    • Agreed. Why the fuck would I move to Vancouver if I could afford to live in the center of Amsterdam? Or Stockholm? Or Zurich?

    • Laureate Money Punters

      “stop looking at your belly button all the time”

      we’ve lived in van for 25 years now, moved from calgary, toronto and the yukon originally – and this is what drives us batty about vancouver, the constant navel gazing.

      Toronto does not worry about whether or not it’s ‘world class’

      completely ridiculous.

      • I agree this city is constantly patting itself on the back. It’s like a person whose very insecure and needs constant reassurance. I can think of nicer spots to raise a family.

  5. Wow, I’m glad I touched a nerve, and the responses are thoughtful. Like many of you, I am a skeptic- but skeptical of both the bubble story and the Vancouver as utopia story. The pragmatic truth is that it is somewhere in between. @VREAA, I do not see a house in Vancity as a money investment. After living in many places (currently canal zone of Amsterdam) , I have simply come to a semi-informed conclusion about where the future will be good and where it won’t be, and the future will not be good in Europe and most of North America. South of France and Italy sounds beautiful, but anyone who was there for the heatwave in 2003 that killed 40,000 people would disagree. That is a foreshadowing of life during global warming. Don’t get me started on immigration. Europe made crappy and short term decisions, so they have low skilled low educated immigrants who are falling through the cracks and getting angry. Paris is beautiful eh? ever been to the suburbs? Know what sovereign debt crisis is? think Portugal, Ireland, Spain, Italy, Greece. This could bring down the euro. So yes, its lovely to live here and go to the museums once in a while and eat good cheese, but take it from me, you have it very very good in Vancouver. Everyone’s opinion on this post is “correct” as I have had the same misgivings about Vancouver in the past. My train of thought is coming from an understanding of the world that is based on a rising China, “peak everything” and ultimately the confluence of three global difficulties that will make the world more uncomfortable in the coming 20 years : economics ( the failure of global financial systems) ecology ( dwindling natural resources, more severe weather, hotter places, water scarcity) energy ( peak oil, geopolitical instability, terrorism, war). @ Paradox and matt: I’d love to live in the south of France, or stay in Amsterdam, but my pessimistic “read” on the world makes me optimistic about Vancouver. And I think I’m not the only one.

    • On a side-note, I had a Chinese acquaintance who immigrated to Vancouver. They didn’t come for the real estate (As far as I know they are struggling in a crappy basement suite). They didn’t come to find a place to put their corrupt money (struggling to make ends meet). They didn’t come for the education system (no children). No – they came for the clean air and water. They hate it here, but they thought things were getting bad enough in China environment wise that it was time to make a move. They had a choice between Canada and Australia, but they chose Canada because we have more water 😀

      • Restaurant Unemployee

        if they want a better life, tell them to join The Party, it’s the only way.

        or join a tong/triad – lots to choose from here.

      • Re: Join the Party

        It’s so sad, but so true. The CCP isn’t driven by ideology anymore. It’s the Chinese Mob basically.

      • Restaurant Unemployee

        MEET THE NUMBERS

        OR YOU’RE OUT QUICKER THAN PATTISON’S CAR SALESMEN

        lol i amuse myself

      • Restaurant Unemployee

        those members not yet in the politburo are hilarious to watch at press conferences – i watched the minister for harmonious society or some bullshit answering questions about the *** 60,000-100,000 *** missing children in china and he was more of a dead fish than Harpo.

        someone get these people some mushrooms, stat.

    • LAF, the grass is always greener on the other side, right? 🙂

      I think that Europe is fine, although I would not live in Amsterdam or anywhere else in Benelux. Southern France is very nice, but expensive, Italy too… Spain on the other hand is very nice and mostly reasonably priced. I go there very often and despite the economic crisis, life seems good there. Or maybe the Andalusian desert grass just looks greener only if you don’t have to live there…?

      Vancouver is currently not the best place for life. It may be, once it is humbled by a giant real estate crash. But that may never happen…

      • Restaurant Unemployee

        i can remember when i was in high school,

        gas was 39c a liter – i could fill my tank for $12.

        there were deer and bears everywhere in coquitlam.

        what the fuck happened? lol

    • LAF -> Thanks for the further thoughts.
      Are you willing to answer my question about Vanc RE and net-worth?

    • I dare say your analysis is fundamentally correct, Laf – albeit I would venture that a majority of YVR bound migrants are attracted/motivated by other factors (barring a few far-sighted individuals)… i.e. – people who are really worried about political risk/environmental catastrophe would more than likely opt for ‘home-steading’/permaculture in the hinterlands vs. night markets/congested tower blocks in Richmond (or False Creek for that matter).

      For what it’s worth, James Lovelock [propounder of the Gaia Theory] has always favoured the Pacific NorthWest as one of the few global regions likely to ‘weather’ climate change well – or least better than most alternatives (as have a variety of CrayKraken powered climate models/simulations)…

      In 2006, writing in the UK Independent – Lovelock predicted, essentially, a climate driven mass extinction event occurring prior to the end of this century… (of course, as any political scientist could tell you – people will tend to be pre-occupied with other more ‘pressing’ concerns as conditions deteriorate; the current spate of conflicts in MENA (and South Asia) may be the last which are fought for oil…

      The next will probably be for water.

      Climate and mass human mortality – JamesLovelock

      http://tinyurl.com/yhyu6yf

      [NationalGeographic] – Global Warming Effects Map

      http://tinyurl.com/2bzd9d3

    • @LAF your “read” on Vancouver is not shared by most of the world’s major corporations. If it were we would be seeing rents increase. No such dice. Even resort towns have high rents!

      I’m not you but I’d rather rent in Vancouver and spend decent $ on a pied-a-terre in some other city. It sounds better at parties when I sly in the French.

  6. Restaurant Unemployee

    the idea of vancouver as safe haven from all of these catastrophic events is also laughable.

    there’s a nasty cloud of cesium 137 headed this way right now.

  7. Watch CBC’s early news tonight at 5:30 pm. about our real estate.
    @Melster, middle-class immigrants from Shanghai and Beijing today each family own 2-3 condos with a total value of C$2M easily.
    Not everyone who lives and works in those cities are bona fide residents, as their children will not be allowed to continue tertiary education there but must apply to universities in their parents’ home cities/towns; same rules apply to purchase of properties.
    Your acquaintance does not have to struggle in a crappy basement suite, there are good housing and plenty of good paying jobs in nearby Calgary.

    • Middle class in Shanghai make less than $10k/year and a downpayment for a modern Chinese condo is 50%.

    • Restaurant Unemployee

      you HAVE to attend university in your parent’s home city?

      yeesh.. what part are you from?

      • RU, residents cannot move and live in big coastal cities in China , as you can do so as you please from Toronto to Vancouver to Montreal!
        Similar cases in St Patersburg, Russia and Prague, CRepublic.

      • Restaurant Unemployee

        anon:

        i am already familiar with the constraints on freedom of movement for ‘average’ chinese (those not in the party)

        what are your personal opinions on that sort of situation?

        are you allowed to have one?

      • RU, my opinion is immaterial lest we risk complicating a simple issue. If you switch off the sound of this news report, the message is straight forward. Beijing Residence Permits = Privileged Purchase Cards, a hot item for sale on taobao.com. Other tricks include false divorce, fake marriages, fake social security. No constraints are too hard to maneuver!

      • Ornamental Tepee Usury

        what exactly is taobao.com?

  8. @VREAA: About 15-20%.
    @ Nemesis : You are probably right about the proportion of people coming to Van for reasons other than societal breakdown and food, water and resource security. Thanks for the references. I will look at them now. For you, check out http://www.chrismartenson.com/ and see “the crash course” @ bubbly ; Europe ( minus England) definitely has a really nice work/life balance, and gorgeous places to hang out, but damn its expensive. I do not think most people in Van realize how cheap most things are ( besides house prices 🙂 @ jesse: That’s a valuable observation and one I hadn’t considered. I am going to research it further. It is odd that multinationals wouldn’t be investing here to attract all of the “high value” immigrants and Canadian graduates of top Uni’s. Too bad about the tech startups like Ballard that had so much promise in the 90’s.

    • LAF -> Thanks for the reply (5.33am, 26 March).
      Okay. You are saying you bought a house in Vancouver, and the current market value of that house makes up 15-20% of your entire net worth. Is that correct?

      If that is correct, at the average SFH market value of about $1M, your net-worth is $5M-$7M, give or take.

      We are of the opinion that higher net-worth individuals should be comfortable buying RE in Vancouver that makes up roughly 25% of their net worth, or less, IF the convenience of owning is greater than the inconvenience of that property dropping 50% or more in the coming crash. In your case, LAF, a 50% drop will only result in a 7.5-10% drop in your net-worth, not a disaster. [Compare with a FTB who puts their entire modest net-worth into a 10% deposit on a house, who will then lose 5 times their net-worth in a 50% drop in house values. That is a disaster.]

      We do have questions for you, nonetheless:
      – Are you happy with the idea of living in this $1M property? I’d imagine (actually, I know) that individuals with net-worth in the $5M vicinity find $1M Vancouver properties very sub-standard when compared with how they would be living elsewhere. This means that they likely want a house worth more than $1M, upping the percentage of their net-worth at risk.

      Secondly, a somewhat skeptical question:
      – If the Vancouver house only makes up 15-20% of your net-worth, why did you say “I worked my ass off to earn money in Europe, and saved up enough to buy a house- in Vancouver.” — Surely, with your net worth, you would have been able to buy a house earlier and easier than that?
      Are you trolling?
      Or is your math wrong?
      Please let us know.

  9. LAF: What “things” are cheap in Vancouver? We’ve already, of course, eliminated housing, which pretty much wipes out the average guy or gal all by itself. Fuel? (Most expensive in Canada.) Groceries? (Most expensive in Canada.) Taxes? (Tell me what *isn’t* heavily taxed.) General cost of living? (To the moon, Alice.) I suppose health care is cheap if you don’t mind waiting months for anything substantial, but the fact remains that this is one hell of an expensive place to live.

    I do not have personal knowledge of Europe. Are you saying it’s far more expensive there? Because as far as North America goes, we’re the king of overpriced.

    • As ridiculous as it might sound, Alex, these things are – in the final analysis – all relative. For example, the monthly ‘nut’ on my former/modest CoalHarbour ‘pied-à-terre’ was substantially less than the monthly lease would have been on a parking spot anywhere in central London. A parking spot. 😉

      • soothsayer

        But you are making a ridiculous comparison between one of the world’s recognised financial centres of the world and Vancouver which is fast becoming an affliction for deluded Vancouverites.

        Without being derogatory to this fair city any comparisons with London are comical.

  10. LAF,
    If you wanna post in bear blogs, dont tell you own a house and love Van; you would be burried alive. On the other hand, tell ’em a crash is coming at 100% off, or keep bitching about RE, you would be embraced like a god.

    • Fred -> I don’t think you accurately characterize the discussion above, most of which engages sincerely with LAF, and LAF has themselves volunteered that responses are “thoughtful” and “valuable”.

  11. “most of which engages sincerely with LAF”

    “Are you trolling?”

    sincerely?

  12. Vancouver is not expensive compared to London or New York, it is expensive compared to how much working people make in this city. Salaries for the same proffesions are very low here.
    Why not compare tha salary of an engineer in London and Vancouver?

    • True. LAF’s point is taken. Having lived in Stockholm and Paris, I can testify the high cost of home ownership there. In the former city, one can purchase the right to live in a specific building if he/she does not own and/live part-time elsewhere. Both cities/countries offer the best social safety net for their citizens.

    • Average income in London for literally any job would be 30-40% higher than available in Vancouver.

      As for high flying finance type jobs I suspect the average City worker earns more in a month than the Vancouver equivalent does in a year – Credit Crunch included.

  13. @ Alex: I am comparing to cost of living in Europe. You are correct that in North America, Vancouver is very expensive, but then you’re stuck. Where do you go, Winnipeg? Cincinnati? OK Montreal is great, but its too cold in winters, too humid in summers. TO same. Then what? San Fran? expensive. LA? yha. What compares/beats Vancouver for the price? bring it on!

    • Well, LAF – strictly speaking… we’ve covered that ground here, before… 😉

      http://tinyurl.com/48wv2fx

      PS – personally, I prefer VeniceBeach/MarinaDelRay to the Hills (but the view from the Hills @ dusk is spectacular – and you don’t have to worry about tsunamis)…

      • OK, sorry for opening that up again :~ I am following the link you provided, Thx

      • Here’s a bonus Cali comp for you, LAF from VREAA’s archives (and architecturally speaking, rather more to my taste than Ashton/Demi’s shag pad)… with the added advantage of a walnut/pecan grove… 😉

        http://tinyurl.com/35k6pox

        PS – In HollyWood production circles, Demi’s ‘nickname’ is GimmeMoore…

  14. @VREAA : Trolling?
    I threw my opinion into the ring to test some hypotheses and my worldview. So from that perspective, if you want to call it trolling, I am guilty as charged. The responses back have mostly been very well considered, and have opened my eyes to aspects and emotions of Vancouverites and Canadians that I hadn’t considered. I spent 17 years living in Kits and PG and I loved it, but Vancouver got too small for me and I set out to see the world. Now I am older ( though not much wiser) have a pessimistic worldview of the next 20 years, and feel that Vancouver is a good place to go back to with my partner and kids. I am deeply conservative with my spending, and without getting into too much detail, am not looking for the “maximum house” for my portfolio, instead finding something modest. We may never come back, but I am happy to know that if the SHTF wherever we are, we have CDN passports and a house somewhere safe ( barring overdue seismic activity). So long story short, for me Vancouver is a safe haven, and this was the basis for my hypothesis that it is a good “long term play” for real estate values.

    • LAF -> As I noted above, I now realize you were not trolling, and I apologize for bringing up that possibility. I saw contradiction in your “worked my ass off to save for Vanc house”/house purchased for 15-20% of net worth; I now realize that apparent inconsistency was benign. Please forgive me.

      You see Vancouver as being a good safe haven and have bought here as a life-boat, of sorts.
      We respectfully differ in that we (a) don’t think that Vancouver is as insulated from political/economic/social/environmental distress as much as you do, and, (b) even if it were, we believe that RE here is still outrageously overpriced compared to fundamental value.
      You’ve bought a hedge of sorts, and that’s fine. We believe you’ve overpaid for the insurance. But, as we noted earlier, losing 7-10% of your net-worth in a Vanc RE crash will not be the end of the world.

      • @ vreaa : Thanks for sharing your POV. Although we don’t fully agree, I definitely see your points- it expands and challenges, but ultimately enriches my own analysis and makes me aware of risks that I had either not considered, or assigned a low importance to. I think we can all agree that Vancouver IS overpriced, and that a crash would help make house ownership accessible to more hard working folks.

  15. >> (thanks Economist and Forbes surveys)

    Vancouver being peddled as an RE paradise in these very media? Well, if you are a Fortune 500 CFO, maybe. But for mere mortals it’s the opposite of sensible, affordable and natural. Plus, I don’t know a single person who would base his strategies on what mainstream media say.

  16. Native Vancouver

    Hate to break it to you guys, but your macroeconomics stats don’t reveal all the scenarios in this city. If we are to go by these numbers then Vancouver should have crashed a long time ago. But there are a lot of factors that affordability does not measure. Vancouver is an extremely diverse city, I’ll list a couple of scenarios that shows you why you can’t just use a simple Price to Income ratio to determine this.

    1. Income, what do you define as income? There are a ton of people who have a lot of foreign income that we would never be able to track. I went to quite a few properties lately in Coquitlam in hopes of finding a place that I can afford. My findings are startling, detached houses in the nice areas are being closed within a week of listing. Here is the kicker, these places aren’t funded by mortgages, buyers have enough cash to cover it. I thought… wow…. I am speechless. I am willing to bet that to CCRA, these buyers might only be middle to even low income earners since they don’t make money here.

    2. I have an indian friend, in their culture, the entire family lives in the same house. The house may be owned by one member, but everyone supports the house. So the real income behind the house is actualy about 4 times the income of the owner. The chinese are even crazier, as we slap a nice big inheritance tax, the parent usually passes the money to the kid by paying the kid’s mortgage. Again, the incoem against the house is not the owner’s income, but the whole family’s. When you take this into account, your Price to ownership ratio becomes a lot better.

    In order to figure out where in hell we are going, I asked a chinese friend of mine a simple question, how much does a 2 bedroom apartment in an ok area of beijing cost. Answer, 500K Canadian. No wonder why they are buying us up like crazy, we are extremely cheap compared to their own prices. I am not happy about it, but to simply hope that this market will crash is not working. A lot of people have been waiting for 3 to 4 years.

    • I’ve heard all that crap before. You sound like a sleazy real estate agent.

    • Ornamental Tepee Usury

      you are basing your entire theory on chinese real estate not being a bubble itself.

      obviously, “the markets can stay irrational longer than you can stay solvent” yes yes we know – and in the mean time, i’m a very happy renter (with chinese landlords – 30 years in vancouver, no english – at least their sons play hockey)

      you need to watch this:

      http://www.charlierose.com/view/interview/10960

    • Once again we have this deluded comparison between the 3rd largest city in Canada against one of the World’s most populated countries (China) largest & most established metropolitan city (Beijing)with population of circa 25,000,000.

      There is no comparison & to try and perpetuate this nonsense is comical.

      • Polly Pollyanna

        so tonight

        a friend’s girlfriend told me her friends (a radiologist and i forget what the wife does – something with a similar income) just bought a 90 year old house for $900,000 at 55th and Fraser – i don’t think it’s their first property but we are all about 30 years old.

        when i brought up the insane rents we’re paying – and for those of us that refuse we have no options except the illustrious illegal basement suites of East Van, she said “well that’s what they pay in New York.”

        DRINK THAT KOOL AID – YEAH GET IT ALL IN YOUR BELLY

  17. another anec. opinion and it was labeled as “sleazy RE agent”.

    • I am a first generation immigrant and it seems that all these immigrant anecdotes seem to be the usual refuge of the unscrupulous RE agents.

      Due to the disparity between the fundamentals and RE values, most people do not have any disposable income. I was trying to sell my used car and it is amazing how 7-8K dollars is unaffordable for most people and are looking at financing, despite “owning” a 700-800K worthless and laughable box. This lack of incomes and debt also breeds more swindlers and charlatans.

      A truly amazing study of mass RE delirium

      • Ornamental Tepee Usury

        it will go down in history

        i am seeing the most incredible knockdowns being sold for 1mil+ all over east van – these are places that a few years ago no one would have touched with a 10 foot clown pole.

  18. Native Vancouver

    For guys who think that I am a sleazy realtor, well I can only say that I am not, but feel free to guess whatever you guys want.

    But I will say this. This market has been irrational for years, so instead of simply analyzing macroeconomic stats for the last 2 years and hoping that it would work, I figured that something must be wrong or else we seriously should have crashed a long time ago.

    My conclusions are based on anecdotal evidence rather than macroeconomic theory and would actually explain to some part of this. I can’t imagine how anyone in Vancouer can still afford a detached house with a regular job. So I took a look at who is actually buying these properties rather than sit and guess. I am also trying to buy a detached house cause I hate apartments.

    Chinese housing is in a bubble, but different markets react to bubbles differently. The chinese government apparently is trying to put a limit on how many houses you can own or something like that. Which I guess causes even more people to come abroad and buy. Btw, these people aren’t classified as foregin money, because they are like landed immigrant I think, so they are technically local.

    So I don’t know what else to tell you guys, but this is what I found. My conclusion is that waiting for the detached market to go down is like wasting all your earnings for the next few years. I could be wrong, but I used to be negative and it costed me dearly.

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