vancouverite at vancouvercondo.info March 22nd, 2011 at 9:37 am– “My neighbours (late 60s, early 70s) have no retirement plan other than the government so have decided the way to fund the rest of their lives is to go into the development business because, as they say, real estate only goes up. They HELOCed the hell out of the teardown they’ve been living in for 30 years (never had the money to maintain or fix up) and purchased a house down the block for $1.5M ($150,000 over asking and they were the only offer). They were in a panic to get the money before March 18th because they needed the full 95% of assessed value of their own house to be able to do their deal. They are expecting to sell the development for over $3M when it’s completed – the lot they bought is 33′ x 120′ half a block in from a busy street on the west-side. I see a world of pain in their future – they were scrambling to find cash to pay for liability insurance on the development site.”
Such a profoundly illustrative story it is hard to know where to start:
– Many are relying on RE for their retirement funds.
– Many believe that RE is the way to quick wealth. This couple are aiming to get ball-park 50% return over less than a year (assuming about $750K cost of build). That kind of return only comes with high risk, but the risk appears to be invisible to Vancouver RE players.
– Local speculators are buying westside properties.
– Banks are forwarding large HELOCs for dodgy projects.
– HELOCs are fuelling RE speculation.
– At least some of the pre-18-March demand was mortgage deadline related.
– Current sentiment includes urgency.