Spot The Speculator #32 – “I feel working for a living is a waste of time after reading this. 200k gain in a little less than a year, it’s insane.”

From a thread started by eyesthebye at RE Talks 28 Mar 2011 1:24pm
“An easy 200K flip. 45 east 48th Ave.
Purchased in June/2010 for 665K; no recent work done.
Now on the market again for 849K.
Less than one year later – easy money.”

Taipan 2:05pm – “Its gambling isn’t it!? That’s not investing it’s plain and simple gambling.”

eyesthebye 2:27pm – “On the contrary, it looks like Vancouver real estate is the opposite of a gamble.”

FuturePorscheOwner 4:51pm – “I feel working for a living is honestly a waste of time after reading this. 200k gain in a little less than a year, it’s insane. Does anyone have a million dollars they want to lend out? I wanna buy a crappy vancouver special.” [Speak to your bank manager, they’ve helped out thousands of others! -ed.]

The sentiment expressed by the last commenter, that honest hard work for regular income is a “waste of time”, represents one of the most sinister effects of a broad speculative bubble on a community. – vreaa

23 responses to “Spot The Speculator #32 – “I feel working for a living is a waste of time after reading this. 200k gain in a little less than a year, it’s insane.”

  1. a little bird

    A 30% flip.

    This one is a 40% flip in less than a year.
    MLS®: V847558
    2009 Sep 14: sold $2.31M
    back in mkt 2010 Aug23: $3.8M
    The new house next door sold around $5M two months ago, and it is vacant.

  2. Taipan is one of very few people over at RET who *doesn’t* say housing will continue rocketing to the moon forever and ever and ever. He argues with information and common sense. The FOOL! How could he ever hope to have an impact in that hive of realtors, property speculators, and owners in justify mode.

  3. I can guarantee that 200k profit was looking like a “gamble” a few months ago. What’s the bet they stay at the table? They’ve hit a winning streak!

  4. It is frustrating to me that hard work no longer pays as well as speculation, but I can sleep well at night and get huge satisfaction from doing a great work for my clients. My gamble is that the skills, experience, contacts that I have made in my industry will pay off more in the long run than speculation!

  5. Well – i have made money in investing in RE by buying in a pool – can afford better houses and the margins are higher (and losses, if they ever occur, will be lower).

    The problem with speculating, and if you are honest, which I am, the tax bracket is high on profits (no breaks on loses – but hat has never occurred!).

    Sure, stay in school and get a BA in Sociology – I chose a different path and am raking it in.

    • Ornamental Tepee Usury

      yeah, wouldn’t want to do any of that boring learning bullshit, would we?

      i told an asian house flipper ‘friend’ that i wanted a History degree – he laughed in my face and told me “there’s no money in that!”

      and that’s the story of how our cultures and values differ.

      • His/her ancestors would be truly ashamed, TeePee – evidently, something was lacking in their Asian household as regards due homage to Confucian values… Grasshopper, I pray you shall never abandon your quest to master ‘historicity’… Therein lies true wisdom. 😉

        http://tinyurl.com/qma4oz

      • Further to my prior remarks, TeePee…

        This Sunday past there was a ‘disturbance in the force’… when this guy:

        …”[who] lived largely, coming out of the mountains and spending a year at the Corcoran School of Art, and drifting west where his immense talent had him spending a lot of time with Hunter Thompson and the giants of the era and writing for all manner of publications. He believed deeply in booze and recreational drugs, which in those years was perhaps not a view unique to him. Shortly before his death he told Vi and me about having met some local Mexican folk here of Indian antecedents and going up in the hills one night to do mushrooms, and lying out half the night watching the stars swirl and dance. He lived for years on an Indian reservation without electricity, worked as an editor for Military History magazine, likewise for an agribusiness magazine flogging pesticides, and told horrendous stories about what we actually eat.”…

        …Joe Bageant, lost his battle with cancer.

        Here’s the thing, TeePee… The ‘Lozs’ in this world come and go, and are inevitably, ‘soon forgotten and seldom missed’.

        The rest of Joe’s story is here:

        http://tinyurl.com/4bre4xx

      • Flogging a Dead Horse

        actually, buddy was my one of my bosses at a five diamond hotel – and he was Korean – after I told my other boss “this will be good for your future professional development: go fuck yourself” – he handed in his notice approximately a week after i handed in my much less formal notice. i like to think i inspired him. 😉

        he told me about his property in a sun belt state (still plummeting) and how america still runs the world (ah, the faith of our dependent asian vassel states in the empire) and he gave me a lift to my basement suite in his german sports car – i told him i lived completely hand to mouth – and i’m five years older than him. he was shocked.. stories of poverty always scare the shit out of people. really that’s just the default human condition.

        but i was as equally shocked to learn of his entire teen years spent alone in canada as a satellite child. to me, that should be illegal.

        there are many different forms of suffering and i’m happy that wasn’t one of mine. nice guy, actually, i wish him well.

      • Flogging a Dead Horse

        thanks for the link re: Joe Bageant – i’ve heard of Deer Hunting with Jesus..

        it’s unfortunate that HST’s entire social circle is basically dead 10-20 years too soon. we need them right now more than ever – at least they left notes.

        “Drop acid, not names.”

        if there was anything this generation needed…

      • ‘Flogging Usury in an Ornamental Dead TeePee’, we need to talk about your ‘flair’….

        http://tinyurl.com/4vkju6e

        😉

  6. Ornamental Tepee Usury

    “New money is always crass.”

    easy come, easy go – “future Porsche owner” will piddle it away on garbage soon enough.

    red envelopes, anyone?

  7. That’s the problem you Vancouverites will probably end up facing in the near future. With so much money to be made flipping houses at ever-inflating prices, there’s no incentive to actually develop the city’s economy.

    When the music stops and housing no longer generates untold billions for the city, what will drive its economic engine?

  8. The values of a community are, to a certain extent, expressed by how income is distributed to members of that community. That distribution of monetary reward shapes the way in which people prepare and educate themselves to take on different roles. If you want good ‘x’ professionals in your community, you have to reward them for doing their jobs well.
    In more ‘normal’ times (closer to the historically average norm), individuals who want higher income choose fields that necessitate study and hard work.
    There are always investors, speculators, entrepreneurs, who attempt other endeavours for higher returns, but, they take on higher risks for those returns, and those risks are very apparent to the community (the risk takers intermittently blow up).
    And, in normal times, you still have those who choose to study and acquire skills that lead to lower incomes, sometimes very little income, but they do so because something about the field itself ‘pays’ them in a non-monetary fashion. Thus the artist or history teacher who could be running a retail outlet but choose not to.

    The problem with a massive, sustained speculative bubble such as the one we have in Vancouver RE 2003-2011, is that it profoundly distorts the income reward system within the community.
    This is, at the very least, very distracting. Prudent citizens working hard for an honest wage see very large amounts being made with apparently little effort or risk, and they question their own work and its relatively merge financial rewards. For them, it has a demoralizing effect.
    Just as sinister, it shapes job choice: Young people become realtors rather than study to become engineers.
    It also shapes the way skilled people use their time: Established professionals become condo flippers and, if successful, retire early.
    Money becomes disconnected from work. People come to think it’s the norm to make large amounts of money, quickly. A frontier mentality, a gold-rush mentality, gambling mentality, prevails. People hear of fast acquired wealth and they begin to think ‘fast and loose’. Appetite for risk increases, people take chances. It’s ‘hustle or be hustled’. The prudent are punished and the gamblers are rewarded.
    Politicians are influenced.
    The whole economy re-arranges itself around the new reward system.
    Resources are misallocated.
    When the bubble bursts (as it always, always, does) the whole process reverses, but it takes many years.
    This is why many of us see such serious consequences for Vancouver over the next decade.

    • Kudos!

    • Good comment.

      On the artist/musician front, in normal times, in cities with actual diverse economies, these people are compensated by the community. In Vancouver I see little to no cultural critical mass intertwined with the economy. That, in my view, is a solid indication the city’s wealth is illusory and illiquid.

      • Ornamental Tepee Usury

        vreaa that was beautiful 🙂

        but yeah, the art scene here is limited to self-aggrandizing hipsters, unfortunately.

        there is no ‘edge’ – because the ‘edge’ does not pay in a place like this – it would make people uncomfortable with what they’re doing.

        all i see are paintbrush splatters over anime fusion type drawings – and then they call it ‘pop’ and charge $2000 per piece.

    • “Prudent citizens working hard for an honest wage see very large amounts being made with apparently little effort or risk, and they question their own work and its relatively meagre financial rewards. For them, it has a demoralizing effect. Just as sinister, it shapes job choice: Young people become realtors rather than study to become engineers.” – VREAA

      Yes, VREAA – it’s pernicious and inimical to/corrosive of social harmony. And by the way, you’re in very good company, VREAA (depending on you feel about Nobel Laureates/John Bates Clark recipients).

      [VanityFair/Joseph Stiglitz] – Of the 1%, by the 1%, for the 1%

      “First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.”

      http://tinyurl.com/4y3rbc2

      • Thematic addendum…

        [AlterNet] – Winner-Take-All Politics: How Washington Made the Rich Richer — And Turned Its Back on the Middle Class {Here’s why the economy become more risky and unreliable for most Americans even as it has created vast riches for the well-positioned and well-off.}

        “The mystery, further, is not just why the have-it-alls have more and more. It is also how they have managed to restructure the economy to shift the risks of their new economic playground downward, saddling Americans with greater debt, tearing new holes in the safety net, and imposing broad financial risks on Americans as workers, investors, and taxpayers. The rising rewards at the top, as startling and important as they are, are only a symptom of a broader transformation of the American economy. The deeper mystery is how our economy stopped working to provide security and prosperity for the broad middle class. The deeper mystery, the mystery that has yet to be systematically outlined or unraveled, is the rise of the winner-take-all economy.”

        http://tinyurl.com/3czruhh

  9. These examples aren’t successful flips. Just because the place has been relisted doesn’t mean it will sell for that amount (though in this speculative environment, I guess it probably will.)

    As far as making the big bucks in real estate, those profits go away faster than you think. First of all, real estate is illiquid. Many many speculators who are plowing their profits from previous deals into new real estate will be caught holding expensive units that they overpaid for and suddenly can’t give away. They might have five good flips under their belt and be ruined by the last one unless they’ve been very wise with their previous gains.

    Second, the average person earns over 40 to 50 years. Bubbles come and go, and that “big money” can’t compete with the money made over a career. So you made $200k in a flip. That’s nice, but it doesn’t make you rich. You go out and buy the BMW, overpay for a bigger house (which will also lose value), take a couple of vacations, live like a big shot. The bubble bursts and all that is gone in a year or two. Fun while it lasted. What is your skill set again? Because the real estate industry is now nonexistent.

    It is gambling.

    • Flogging a Dead Horse

      have you been in some of Gordo’s beautiful new casinos lately?

      as a society we will be paying for the gambling culture – whether it’s flipping or roulette – for decades – it causes untold damage to people’s lives. often there is such a significant amount of shame associated (as with any addiction) that it causes the people who have been harmed the most (families) to NOT seek out the help that is provided by the taxpayer through the system.

      from a University of Chicago Cultural Psychology paper:

      “This latter aspect is especially pertinent in the case of the Chinese, whose social norms and cultural history have portrayed gambling as “a way of life” for many generations, particularly among males (Reylu & Oei, 2004, p. 1096). Reylu & Oei offer that when one contrasts this Chinese cultural depiction of gambling with the historical condemnation of gambling among Muslim cultures, or the reserved approval that gambling has historically received in Western cultures, it becomes easy to see how the increased level of exposure and identification with gambling as a lifestyle and tradition could lead to increased gambling behavior among the Chinese. They argue that the collectivist orientation of Eastern cultures may further promote the retention of socially-endorsed gambling behaviors.”

      i think i’ve ground this axe enough..

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