Monthly Archives: May 2011

HK To Vancouver And Back – “We returned from Hong Kong as expatriates 3 years ago. As a born Vancouverite, I wanted my daughter to finish school here. Now I realize that there is no future for her here after university. She certainly will never own a property here.”

DM at VREAA 21 May 2011 4:41pm
“We returned from Hong Kong as expatriates 3 years ago, I guess we thought we were suffering from burn-out after 8 years and felt it was time to settle down. We rented a property in West Vancouver and my husband, a financial analyst eventually landed a job after 2 years. Working for a small Canadian firm was pretty dull and after tax it was pretty much impossible to make ends meet. Our idea of living in a community where you knew your neighbours and the kids played on the cul-de-sac until dark never materialized as we saw houses being bought and sold and often left empty. House flipping here really is a sport and it certainly doesn’t build ties to the community. The only friends we have made on our street, ironically, are another expatriate family who were acquaintances from Hong Kong. Go figure.

We were certainly looking for the lifestyle of the skiing and the fresh air, but that all becomes a little stale once you have fought for parking at Grouse or are gouged doing ANYTHING in Whistler all while avoiding kamikaze stoned boarders who do not care if they obliterate an entire family. It’s all a bit overrated. The amount of time one spends in traffic here is ridiculous: I can’t understand the logic – we won’t cut down a single tree to expand a road to manage traffic but we will let everyone idle in our cars while merging from four lanes to one on the Lion’s Gate, all while we pump gas fumes into the air. And our government wants to encourage more migration to Vancouver when the citizens we have here can’t get anywhere. Nuts.

Consequently a new position in an international bank in Hong Kong came up, starting tomorrow, pays more than double the Vancouver salary. Thank god we did not buy a property here, because I am not convinced we would have sold it and broken even. While rents in Hong Kong are definitely higher, Hong Kong tax allows you to deduct 50% of your annual rent off your gross income before you calculate your 15%. And the government is so efficient that when they run a surplus (which happened at least twice while I lived there), they give every citizen and permanent resident a tax rebate. Yes, folks this is true. This year, we both got a cheque for the equivalent of $800 Cdn courtesy of the government of Hong Kong. When they ran a deficit as they did during SARS, all government employees took a 5% salary cut. Your employer pays your health care costs unlike here, where the employer deducts extended health off your income. If we need to see a specialist, I can see one the very next day. Health care is excellent and yes, you can find an excellent doctor who will take you on as a patient and give you 45 minutes if you need it. Our daughter had pioneering kidney surgery in Hong Kong 3 years ago that is still not offered anywhere in Canada.

Believe it or not general day to day living expenses (other than rent) are not more expensive than here, transit is excellent, cheap, clean and safe thereby eliminating the need for a car entirely. Hong Kong is an international airport with direct flights to numerous destinations all over the world. How hard is it to leave Vancouver and get to a sunny destination without taking multiples flights that cost an exorbitant amount? With a decent salary and low taxes, when I get fed up with the pollution, I can be on a deserted beach in 4 hours in a 5 star resort for a 1/3 of the cost of a trip to Hawaii .

As a born Vancouverite, I wanted my daughter to finish school here and make friends. Now I realize that there is no future for her here once she finishes university and she certainly will never own a property here. Will we come back ever? Yes to visit the extended family. But, we’ll never live here again, even when we retire. There are plenty of other sunny, less expensive destinations to choose from. Vancouver is a nice place to visit but living here is just not all its cracked up to be.”

Thanks for sharing your story, DM. You and your family appear to be returning to HK for a number of valid reasons, the effects on Vancouver of the speculative mania in housing are only part of the story, but important nonetheless.
We note how “she will never own a property here” has almost become synonymous with “there is no future for her here”.
We agree with commenters on various threads who continue to point out that renting in Vancouver is inexpensive and a viable option, but one has to acknowledge the powerful way in which the housing bubble has caused many who rent to feel disenfranchised. – vreaa

BC Realtors As Influence Peddlers – “Number Of Times BCREA Positions Reflected In Government Policies: Target Met.”

BC has about 18,000 realtors, 10,000 of whom work in Greater Vancouver.
In 2009, 36,257 properties were sold in the Greater Vancouver area, for a total dollar volume of $21.5 Billion.
“The biggest industry in this city is real estate.” – (from recent Peter Ladner/David Berner interview).
Christy Clark, leader of the BC Liberals and premier of the province of BC, received more than 50% of her leadership campaign contributions from RE related industries.
Don’t expect provincial or local governments to make any policy moves that would threaten the speculative mania in local real estate. – vreaa

Here’s how the realtors keep track of their influence: the following from the ‘Advocacy’ section of the BCREA 2009-2010 Annual report, p8

“One of my best friends has decided to move to Australia. Early 30s, born in greater Vancouver, 2 university degrees. Buying is completely out of the question. Would like to stay but for the high cost of living and low salary.”

human at VREAA 29 May 2011 at 11:38am“One of my best friends has decided to move to Australia with an Australian woman he is dating. Early 30s, born in greater Vancouver, 2 university degrees (one professional), can’t make enough money as a renter to save anything. Buying is completely out of the question for them. They would like to stay here but the high cost of living and low salary is driving the decision.”

human -> Pity about losing your friends. If it’s any consolation, we do like your handle! (Same race as us here at VREAA; please send us more of your kind.) – vreaa

Misallocation Of Human Capital During Speculative Bubbles – “What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

JRoss at VREAA 29 May 2011 11:50pm, in response to a comment suggesting that a couple who are both academics at UBC looking for accommodation in Vancouver shouldn’t have an attitude of “entitlement and elitism” and should consider “some homes in Renfrew area that require some elbow grease for <700K with revenue suites" –
“I lived on < $900 month from a TA at UBC in Point Grey for several years so I could obtain an advanced degree. My wife did same. Why would I or anybody else do that if there were not the potential (potential, not promise) of some future reward? That is not entitlement. That is a meritocracy.
Question for you my obtuse friend – What do you call societies that depart from meritocracy? What tends to happen to them in the long term? And just exactly who are the 'elistists' in same?
You seriously think that is is entitlement for the dentist who fixes your kid's teeth, or the doctor who treats your wife's cancer, or the lawyer who writes up your real estate contracts, or the CA who does your taxes, or the pharmacist who had the misfortune to graduate 25 years after you, or the professor who teaches all of them, to want some chance at a reward commensurate with their efforts? Seriously, what is wrong with you?
You do realize there are very nice places in the world where people who EARN such qualifications are afforded a better life than an 80 year old house in a marginal neighbourhood with strangers in the basement? Why would anybody who is possessed enough of their faculties to EARN one of the aforementioned careers not question what it has bestowed on them and realize they might be better off elsewhere?
You seem to think that we should all just accept the status quo and sign up for a lifetime of debt that will fund your retirement with wealth that came your way mostly because of the accident of the timing of your birth and you actually have the balls to call ME entitled."

Very, very eloquently put.
A speculative mania in real estate causes misallocation of resources. JRoss highlights how people with skills useful to a society can be forced away because of a profound perversion of normal reward dynamics. People are avoiding Vancouver because of these forces. The detrimental effects on our society are mostly hidden during the boom leg of the bubble, but will almost definitely compound other negative aspects of the inevitable deflation.
Forcing hard-working, talented and useful members of our society to avoid Vancouver is just one aspect of this misallocation of human capital. Other manifestations include (1) young people being drawn into short-term-attractive construction work (rather than studies or more sustainable lines of work), (2) professionals decreasing their hours worked or retiring early (as a result of perceived paper profits in RE), (3) people in useful professions selling their homes and leaving the city (because the capital accumulated in their home has hit life-changing levels), etc. We personally know of individuals in each of these categories, and related personal stories have appeared on these pages. People do unusual things in unusual times, and we’re living through unusual times in Vancouver by virtue of our overly-expensive real estate. – vreaa

“Even with good salaries we’re not finding anything within 10-15km of our jobs. Our limit is $500k, or $650k with a suite. We could look further out, but then we might as well live in a different city.”

MM at VREAA 26 May 2011 5:46pm“Even with good salaries we’re not finding anything within 10-15km distance from our jobs. To be specific, our limit is $500k, or $650k with a suite. Even further out (pomo, coquitlam) we’re struggling to find a place in that range (but in that area we’d expect some kind of private yard, and not have to deal with $50-100k renovations to bring it to reasonable standard). We could look further out, but then we might as well live in a different city.”

“I am helping my mother-in-law shop for a house in Coquitlam or Surrey, but the sellers are stubborn as hell.”

ppan RE Talks 25 may 2011 6:28am“I am helping my mother in law shopping for a house in Coquitlam or Surrey, but the [sellers] are stubborn as hell. She has a budget of $700k, but it can not get her very far for a newer detached house. Often sellers want $50K above asking price/$100K+ over assessment value. I understand you can argue that the market is cooling down. That is what I want to see too. But in reality, I found it very difficult to find an ok deal.”

“Before emigrating to Canada, I used to see pictures of nice locations all across Canada, nice and affordable houses and recreational facilities that made me dream of a better life.”

Crion at May 20th, 2011 at 6:28 pm
“Before emigrating in Canada, I used to see pictures of nice locations all across Canada, nice and affordable houses and recreational facilities that made me dream of a better life. I told to myself that it would be impossible to be poor and to live and work in a country with only 30 million people and huge resources like no other country on the globe.
Now, 10 years later, two kids, lots of drug/gang related activities around me and higher daily prices on everything, I have a bank owned crappy life just because I bought a crappy house in Vancouver just to have a roof above us. And I’m continuously thinking what to do in order to afford my new “dream life” … maybe work 16 h a day, maybe put together my own little grow up just to make money that I need to survive.
And I’m looking with envy at the cheap and the amazing houses in Florida while dreaming to have my crappy house in Vancouver still standing when I’ll be debt free …. see you everybody in 30 years. This is unfortunately what this country can offer us at this time. Maybe in another generation. And I’m still wondering who’s enjoying all the good things that Canada has to offer to its citizen.”