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.”

Five Couples Lost To Vancouver Because Of RE Prices – “In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming.”

Sheesh at May 28th, 2011 at 10:23 am
“In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming. They are all highly educated professionals and the ridiculous cost of living in Vancouver relative to the professional salaries and opportunities available have them suddenly running for the hills.
I don’t know if it is coincidence or if this is a sign of a larger trend, but I feel like we have all waited a really long time for things to get better here and now, in our 30s to early 40s, we are tired of sitting around waiting for a piece of the pie to come our way.
One couple both have MBAs but have had trouble finding work here that lives up to their potential. A corporate recruiter told them staying in Vancouver will kill their careers; one has already found work in Toronto so we expect both to be gone in a few months.
Another couple, both with Masters degrees, is moving to Edmonton. The husband found a job there and they have just put in an offer on a house. They can buy a beautiful house for grown-ups there for the same monthly costs as renting a dark, dank one-bedroom in the West End.
Another couple have met with an immigration lawyer about moving to the States. They can sell their place here and, with the equity, buy a sweet little house in a trendy neigbourhood in Portland for $300,000.
We also know a Canadian/English couple that were going to move here after living in Japan for many years but, after a real estate tour of each city, chose London, England, as the more affordable option!
The last couple that wants to leave is us! Unfortunately, our jobs are keeping us in Vancouver for now. But we have a young son and just don’t see Vancouver as a place where we can raise a family, save for retirement and have anything left over to buy a place.
All of us, by the way, would pick Vancouver as their first choice. It just seems like the city doesn’t want us. At this rate I really have to wonder what kind of place this will be in five or ten years. Can money launderers, speculators and offshore investors really make Vancouver “The Best Place on Earth?”
There are lots of nice places to live in this world; looks like a lot of us that didn’t get in on the ground floor are setting off to find another one.”

We share this poster’s concerns. Speculative manias in real estate cause misallocation of human capital, and our city is going to be poorer for it. – vreaa

“I was born in Victoria BC. I bought a condo in False Creek in 2001 for $275K, sold it for $735K in 2010 and moved to Orlando Fl.”

Z at VREAA 28 May 2011 at 5:55 pm “I was born in Victoria BC I bought a condo in false creek in 2001 for 275, I sold it for 735 in 2010, with mortgage as a dual citizen I moved to Orlando Fl. The cost of living is way, way, way less. You can get a palace for 300k with a pool. we have better weather more entertainment and cool cities to visit like Miami beach and Tampa, Daytona beach etc.The only thing vancouver has over us is, less driving, a better view, and less crime. Sometimes I miss the rain at night and how easy it was to get around van. but I would never go back. Vancouver is bland, boring and the people were rude, unfriendly and dull.And Plus the people here look cleaner and less wore out for some reason( I cant put my finger on why). I notice here in Florida, they also have more manners. Vancouver is a weird place”.

Condo Sales Apparently Hot – “Good times for Metro-Van Real Estate…!”

MultipleOffer at RE Talks 28 May 2011 7:04pm“Eight West Living in New West sold out both phases of the development today in 2 hours. 100+ lined up at the New Water project by Polygon in the ‘River District’ of Vancouver (7000 new homes to be built here). At least 50 sales from what i understand and people lined up now for tomorrow. Good times for Metro-Van Real Estate…!”

Spot The Speculator #38 – Moved here 5 years ago; Already owns 3 properties in Greater Vancouver; Buying more

Narrator:“Rose Li moved here from Mainland China five years ago, she already owns 3 properties in Greater Vancouver, and says new government investment restrictions in Beijing is driving Chinese money out of the country.”
Li: “China government has published a lot policies to restrict or decrease the bubbles in China real estate market…” [Interviewer paraphrases and repeats that statement]

Narrator: “There are cheaper properties elsewhere, but they are investing here because they see a better upside. They know there’s a lot more money in China looking for a place to invest, and as more of those buyers decide West Van’s the place, these prices should rise even further.”

[From Global TV news item, ‘Mainland Chinese Buying West Vancouver’, 27 May 2011 ]

Speculators, Local/Foreign – “There are cheaper properties elsewhere, but they are investing here because they see a better upside. These prices should rise even further.”

From Global TV news item, ‘Mainland Chinese Buying West Vancouver’, 27 May 2011
Narrator: “Properties in West Vancouver are attracting bidding wars these days, and selling for up to a half a million over the asking price, and, as with Richmond, the market is being driven by mainland China. March this year set an all time record for sales, up 57% over last year. But it’s only happening here, sales in neighbouring North Vancouver, and most of BC for that matter, are down.”

Jill Wiersma, Realtor: “Well, the last several months we’ve seen an incredible boom, largely driven by the Mainland Chinese. … Everytime we see a high-water mark of a new price, it seems to get beaten the next week.”

Narrator: “There’s hot and then there’s sizzling hot. This teardown property on Hayward avenue listed for $1.24M, there were more than 500 prospective buyers (90% Asian), there were 26 offers (22 Asian), the property sold for $1.57M.”

“There are cheaper properties elsewhere, but they are investing here because they see a better upside. They know there’s a lot more money in China looking for a place to invest, and as more of those buyers decide West Van’s the place, these prices should rise even further.”

A public conversation has commenced about possibly restricting off-shore speculators, and there may be place for some such limits. We still believe that this activity is but a sub-plot to our deep and pervasive local RE speculative mania story. It would be sensible to consider limiting speculative buying in general, something that has long been suggested in the blogosphere.
In this regard, we like many of the suggestions that jesse made recently [jesse at VREAA 27 May 2011, 6:29pm], about measures that could be taken to limit speculation:
1) Eliminating government-backed insurance of investor loans
2) Capping government backed insurance of owner-occupied loans and increasing deductible on all remaining government-backed insurance
3) Imposing larger capital reserve requirements for loans in regions where the price-income ratio is above the long-term average.
4) Allowing subdivision of wide lots and re-zoning for front/back duplex structures.
5) Increasing residential property tax rates
6) Charging surtax on unoccupied properties and enforce attempts to subvert it.
7) Enforcing secondary suite building codes
Note that jesse’s suggestions target speculative activity broadly, and that the ones likely to have the most effect (1-3) actually involve removing stimulus rather than imposing limits.
We would expect there to be very considerable vested interest resistance to any such measures. As Peter Ladner and David Berner agreed in the recent interview posted here: “The biggest industry in this city is real estate.” – vreaa

Fraser Valley Sales Drop Substantially – Realtors: “We Warn You Not To Panic”.

From 12 May 2011
Realtors in the Fraser Valley are warning people in Abbotsford and Mission not to panic after property sales in the two communities dropped substantially in April.
There was 33 per cent decrease in sales for detached homes in Abbotsford last month compared to sales in April 2010. The average price for a detached home in Abbotsford went down 4.1 per cent in April 2011 from a year ago – $452,175 from $471,695.
In Mission, the number of sales fell even lower. Sales of detached homes tumbled by 42.1 per cent from April 2010, and 48.4 per cent from March to April.
The numbers were similar throughout the Fraser Valley in April, as property sales were reduced 15 per cent from what they were in April 2010, according to a report put out by the FVREB.

The recent news isn’t necessarily something to worry about, said FVREB president Sukh Sidhu.
“I have seen these ups and downs before. What’s happening in Abbotsford and Mission now is you have a buyer’s market. It’s not a trend. If you have three, four, or five months of going down then we would look at it. There could be various reasons for this.”
One of the reasons, Sidhu said, may have been the recently concluded federal election.
“That could’ve had some effect,” he said. “People were distracted, they wanted to know what was going to happen, who was going to get in . . . people like to know before they make a major purchase decision because [the election] could affect them drastically.”

[Another thing that all local buyers in recent years have wanted to know before buying a grossly overpriced house, is that prices are going up. Now that buyers in Abbotsford and Mission know that that is not necessarily the case, we’ll see how many of them ‘make a major purchase decision’ in the coming months. Bubbles often start their deflation from the periphery, and work inwards. This one may be doing the same thing.
Ground zero/Epicentre = Westside Vancouver. – vreaa.]

Speculative Thinking – “I get thoroughly confused when my friends admit that prices are too high but still expect them to continue higher. So, they conclude, buying now is still a good idea.”

debtified at 25 May 2011 11:59pm“I am in Vancouver right now and the air is definitely bullish on real estate. I get thoroughly confused when my friends admit that prices are too high and still expect it to continue to go higher without an end in sight. So, they conclude, buying now is still a good idea (and selling now sounds like an even crazier idea!).
The 20-somethings I know want to buy houses and they do at the first opportunity. Most who have bought are definitely sub-prime.”

debtified’s friends personify the thinking behind the speculative mania: They buy (or won’t sell) even at high prices based on the certainty that prices will continue to rise. Yet it is highly likely that none of them considers themselves a ‘speculator’. We continue to contend that almost every buyer, and many ‘holders’, in the Vancouver market, are, in essence, speculators. – vreaa

Have 25% Down For SFH, Refuse To Buy – “I feel we have probably avoided the biggest mistake of our lives. I call us ‘strategic renters’ – in more normal circumstances we would embrace home ownership.”

JCH at VREAA 26 May 2011 10:52pm“We narrowly avoided buying into this completely abnormal market, as we thought it was just annoyingly expensive until we started doing more research. Now I feel we have probably avoided the biggest mistake of our lives. I call us ‘strategic renters’ – in more normal circumstances we would embrace home ownership. (We DO have 25% (!) down for a lower mainland SFH, and could easily afford to buy but refuse to do so.)”

BC Recreational Properties Languishing On The Market

Taipan at RE Talks 22 May 2011 3:21am [An Australian watching the market with the intent to buy recreational property in BC] –
“Let’s put up a few of those properties that don’t sell and where prices keep dropping:

4161 Sundance Dr, Sun Peaks. MLS 102265. Originally MLS 84210. On the market for 569 days so far. Originally listed at $1.4m. Now down to just $998,500

2314 Sunburst Dr, Sun Peaks. MLS 103294. Originally 80161. On the market for 792 days. Vendors cant sell. Originally $800,000. Now down to just $639,900.

Other examples:
MLS 78874. No change. On the market 1238 days. Price drop of $80,000 to $895,000
MLS 78860. On the maket 872 days. Originally Listed at $639,000, and with 7 price reductions to $499,000.

Peter Ladner Personal Anecdote – “My home that I bought in 2000 is now worth about four times what I paid for it. But I have four kids, three in their 20’s and one in their 30’s, and they’re never going to be able to afford to live in Vancouver.”

Peter Ladner shared this personal anecdote in his recent interview with David Berner on Shaw cable television, 25 May 2011. We’ll archive it here:
“I think about my own home that I bought in 2000, it’s worth about four times what I paid for it now. … I have four kids, three in their twenties and one in their thirties, and they’re never going to be able to afford to live in Vancouver because they’re not already in the market.”

Peter Ladner – Correct Concerns, Questionable Attributions – “Is it always a good thing that property values go up?”

Peter Ladner interviewed by David Berner on Shaw cable television, 25 (?) May 2011. Thoroughly worth watching.

Excerpts from an early section of the interview:
Ladner: “Is it always a good thing that property values go up? The papers, the news: ‘Property values up – Good Thing; Property values down – Bad Thing’ … when you start to look though, at what happens in an ‘insanely hot market’ – which is how one real estate agent described this one – you can start to identify some bad things about property values being too high. … It erodes the economy of the city, because businesses can’t hire people. … Mining company CFO, six figure salary, cannot afford to buy a home in Vancouver. Another story about a couple, both surgeons, cannot afford to buy a home in Vancouver… Stories about companies that want to expand, they need workers, they can’t find them.. the young people can’t afford to live here… They recruit people from TO or Seattle or wherever, the people take one look at the housing market and say they can’t afford to move here, so now the company is thinking about moving to Waterloo… We have a declining number of head offices in Vancouver. …
You’ve also got a dividing rich and poor thing that destabilizes the society and leads to all kinds of unpleasant consequences… and new immigrants who want to move here, work hard, – it can’t happen…
If you’re in the market you are a multi-millionaire so there are a lot of people who love it this way and put a lot of pressure on to keep the ‘good things’ coming… but I think it’s time to look at the downside of it and say.. are we actually losing? … You get a resort town, it’s all hollowed out, there’s a few fancy people at the top, and a few serving them at the bottom, or a lot serving them at the bottom, coming in from Langley or wherever it is, crunched together in some little condo or basement suite, and you’ve got no real vibrant city… artists can’t live here, you don’t have a real community, and young people are leaving, and we spend all this money educating our kids and then they’ve gotta take off.. we lose all that money…”

A few thoughts:
Both Ladner and Berner raise some good general and specific points, and the whole interview is to be recommended to anybody concerned about the Vancouver RE market.
Most central to their discussion, Ladner expresses the desire to open a dialogue on possible restrictions to property ownership by off-shore buyers. He argues that lack of restrictions makes local RE a speculative asset for these investors and results in property being unaffordable to locals. He also emphasizes a “hollowing out” of communities that occurs with absentee owners.
Early in the interview, in the section excerpted above, Ladner also challenges the apparent broadly accepted wisdom that rising RE prices are a good thing, and he describes the dangers of becoming a “resort town”.
Later he makes excellent observations about the lack of dialogue on real estate issues being the result of so many vested interests. Both he and the interviewer point out that they are each sponsored, or have in the past been sponsored, by the RE industry! (“The biggest industry in this city is real estate.”)
Both Ladner and Berner agree in passing that even if foreign ownership was curtailed, they wouldn’t expect property prices to fall much at all, and that the city would still remain unaffordable to many. This is a very important point. It partly challenges the rationale behind Ladner’s concerns about foreign ownership in the first place. We think that it could be argued that both Ladner and Berner are avoiding the elephant in the room, namely the existence of a very broad and deep speculative mania, and the related very high risk of a price crash. It would be interesting to see either Ladner or Berner challenged on their price-resilience assumptions, and to be asked to consider the issue of local speculation. Ladner does at one point acknowledge that the source of the high prices may be related to interest rates.
So, we share Ladner’s concerns about the effects of overly expensive real estate on the community, he states many of them eloquently, and he should be applauded for publicly speaking out. We disagree with him, however, regarding the major cause of the insanely high prices: the cause of our housing bubble is inappropriately cheap financing/loose lending combined with local ‘speculative’ buying (a speculative component to almost every purchase), rather than off-shore ownership (which is important in its own right but far less so than local speculation).
– vreaa

Bullish Realtor – “Some people hear this and say ‘Wow, what a crazy price’. But I think the new buyers will do very well in coming years.”

From ‘Housing costs soar in Vancouver’, G&M, 20 May 2011
When Terry Vato listed a two-storey house in Burnaby late last month, he knew the sticker price would attract hundreds of prospective buyers.
At just under a million dollars, the 87-year-old, four-bedroom home was a bargain compared to houses 20 minutes away in Vancouver, the ReMax Central agent said. He was right. A week and one open house later, the property sold for $1.5-million – 50-per-cent more than the owners were asking.
“Some people hear this and say ‘Wow, what a crazy price,’” he said. “But I think the new buyers will do very well in coming years. This area has been undervalued.”

[“Wow, what a crazy price”. -ed.]

“My partner and I make double the median family income, have no dependents, and still can’t afford to buy.”

Chris at 25 May 2011 1:30pm“My partner and I make double the median family income, have no dependents, and still can’t afford to buy (or at least believe renting is more financially prudent). I think Vancouver has an affordability problem. It might not be felt by anyone who bought more then 5 years ago, but anyone trying to enter the market today is screwed.”

The world’s largest private equity firm sells all of its Canadian real estate.

From G&M 24 May 2011
“The world’s largest private equity firm is taking its money out of Canadian real estate to take advantage of surging demand for buildings, flooding the market with $900-million of office buildings.
Blackstone Group LP has conscripted CIBC World Markets to sell its 29 Canadian buildings just as life returns to the Canadian investment market, with cash-rich real estate investment funds looking to invest billions of dollars to expand their portfolios.”

“The danger of flooding the market like this is they are potentially depressing their own sale prices,” said John Andrew, a real estate professor at Queen’s University. “I hope they don’t see this as some sort of market peak. What is more likely is they want to take that money and invest it in other markets where there are more opportunities to buy at distressed prices.”

Smart money? Toppy? – vreaa

Sauder Economist – “It’s not sustainable.”

Excerpted from an article [ 25 May 2011] discussing a recent surge in sales and prices of properties on Vancouver’s North-shore:
A report on the Canadian real estate market released last week by RE/MAX pointed to a surge in the sales of luxury homes across the country, with overseas investment being a driving factor in the West. A May 19 report by Landcor Data Corporation, a company that specializes in B.C. real estate statistics, similarly pointed to China as the major force behind the Lower Mainland’s market.
But Tsur Somerville, a professor with UBC’s Centre for Urban Economics and Real Estate, cautioned against drawing such conclusions.
“Who knows?” he said. “It becomes very problematic sorting things out.”
Somerville did concede, however, that it was a plausible explanation.
“There is grounds for it in the sense that mainland China is the largest source of immigrants (to the Lower Mainland) right now,” he said. “Immigrants coming from China are disproportionately in the entrepreneur and investor categories; they’re coming in with wealth.”
Why it might suddenly be happening now, however, was hard to say, he noted. Somerville scoffed at the notion, floated by Landcor in an interview with the North Shore News last month, that it could be attributed to the Olympics, or to Canada’s recent designation as an approved destination by the Chinese government. “I would be very shocked,” said Somerville. “The approval by China affects tourism here; that’s not the same thing.”
One thing is for certain about the flurry of purchases, however, he said: “It’s not sustainable.”

To the best of our knowledge, this is the first time that Tsur Sommerville has been quoted as saying that anything about the Vancouver RE market is “not sustainable”. – vreaa

“So let me get this straight: If you ignore all of the expensive houses, then all of the rest of the houses are inexpensive? Brilliant!”

Extracts from ‘Busting the myths of Vancouver real estate’, by Frances Bula, G&M 25 May 2011
Mr. Bob Rennie [local Vancouver condo marketer], who commissions research on real-estate trends for an annual talk to the industry, said that once the skewed prices paid by a small group of mostly mainland Chinese buyers in Richmond and the west side of Vancouver are removed, housing prices are comparatively reasonable.
“When you’re looking at the numbers, you have to build a fence around the west side, where there are external forces operating that have nothing to do with local forces,” Mr. Rennie said.
Yes, he said, the sale prices on those houses have increased dramatically in the past year.
But that top one-fifth of the market operates in its own world and has almost nothing to do with what is happening with real estate in the rest of the region that is connected to the local-buyer market, he said.
Some expressed disbelief in Mr. Rennie’s assessment when it was delivered last week.

Mr. Rennie noted the average condo in Metro Vancouver sold for a mere $313,000 last year after the most expensive condos in the top fifth of the market were taken out.
Similarly, single-family homes in the top fifth of the market average $1.72-million. But once those high-end sales are removed from the price-averaging mathematics, home buyers in the rest of the region paid an average of $632,000.

From the comments section of the same article:
‘What did I say’ 25 May 2011 at 2:53am
“So let me get this straight: If you ignore all of the expensive houses, then all of the rest of the houses are inexpensive? Brilliant!”

Well said.
Remarkable that the Globe runs an article like this without any critical analysis.
– vreaa

“At 1 per cent, the Bank of Canada’s benchmark overnight rate is highly stimulative”.

From ‘OECD urges Bank of Canada to raise rates’, the G&M, 25 May 2011
“The Bank of Canada should raise borrowing costs within the next few months to show consumers and businesses that it has a grip on inflation, the Organization for Economic Co-operation says in a new assessment of Canada’s economy.”
…at 1 per cent, the Bank of Canada’s benchmark lending target – the overnight rate for loans between private banks – is “highly stimulative,” the OECD says in its biannual economic outlook for Canada and 33 other member countries.
“The OECD considers a neutral benchmark rate for Canada to be between 4 per cent and 4.5 per cent, a highly academic target that nonetheless demonstrates how aggressive central bank Governor Mark Carney has been in fighting the financial crisis.”
“The Bank of Canada should therefore resume the normalization of policy rates soon in order to pre-empt a broadening of inflationary pressure.”

“But in financial markets, the sentiment is much different.
The odds that the Bank of Canada will increase interest rates by September last week sank below 50 per cent for the first time since March, Bloomberg News reported, citing an analysis of trading of overnight index swaps, which are financial assets whose value is linked tightly to expectations of future interest rates.”

“Canada’s big banks, after prospering so long from a resilient domestic housing market, may soon start feeling some pressure as mortgage lending begins to cool down across the country.”

From ‘Canada’s Banks May Soon Show Their Vulnerable Side’, Reuters, 22 May 2011
“Canada’s big banks, after prospering so long from a resilient domestic housing market, may soon start feeling some pressure as mortgage lending begins to cool down across the country.”

“The household credit market is about three times larger than the business lending market, so a slowdown in the housing market will have a bigger impact than an improvement in the commercial lending market,” said National Bank analyst Peter Routledge. … “Generally speaking, we think you are going to see slower overall earnings growth from the bread-and-butter business, which is personal and commercial banking in Canada.”

“I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered.”

Brendon J. Wilson at VREAA 24 May 2011 10:33am
I returned to Vancouver from living and working in Silicon Valley for four years (I left after my MBA because Vancouver opportunities were lacking at the time). My wife and came back to start a family, and because we had grown tired of the Valley.
I interviewed at one company for a Chief Technology Officer position. When we got around to salary discussions, the employer indicated they would be willing to go as high as 90K. I pointed out that this was the salary I earned ten years ago.

“Oh you can’t compare a Vancouver salary to what you would get in Silicon Valley!”
“I’m not. That’s what I was paid ten years ago…in Vancouver.”
<awkward silence>

Ten years of additional experience, an additional advanced degree, plus international experience in the hotbed of technology in a significant role at a successful startup = no incremental value to a Vancouver firm.
Needless to say, I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered. For those of you wondering – the cost of living in Vancouver is about the same as living in California.
What is wrong with this picture?”

[When you add in considerations such as taxation and cost of accommodation, does California end up being cheaper? – vreaa]

“My wife and I talk about giving up and moving to the ‘peg (or equivalent) every day.”

Felix Wilcox comment on article ‘Housing costs soar in Vancouver‘ at The Globe & Mail 22 May 2011 7:35pm
“My wife and I live and work in Vancouver, $60-70K annual, no kids, and we talk about giving up and moving to the ‘peg (or equivalent) every day.”

Dr. Rusty Jekyll and Mr. Rusty Hyde – Ambivalent Landlords

rusty at VREAA 24 May 2011 at 8:18am
“3 of my homes have no mortgage. For my renters I choose nice families who need a break on their rent and charge a nominal amount. Maybe this is why our rent to price ratio is out of whack, too many generous landlords.”

rusty at VREAA 7 May 2011 at 7:17pm
“I’ve never discounted my rent. When a tenant moves I raise rent according to market. I think a stat showing lower rents is a suckers stat since the lower rents are on (likely) shitholes that are tough to rent in any market. A good rental in a good location is always in demand, and always increases.”

[For the information of occasional readers, Rusty is a pharmacist and landlord (but not necessarily in that order) who describes themselves as ‘all-in’ Vancouver real estate.
In frequent comments here, Rusty often takes others to task for inconsistencies he perceives in their argued positions.
Hey, we understand!… this market is driving everybody batty; the left hand doesn’t know what the right hand is intending, right? That’s why it’s called a ‘mania’! – vreaa

“Trying to hire for my IT based business was impossible in Vancouver, we have given up. People wanted ridiculous salaries, just to keep their heads above water. We can’t make the numbers work. We have set up shop in Halifax.”

‘Ralph Kramden’ at VREAA 22 may 2011 10:57am
“Trying to hire for my IT based business was impossible in Vancouver. The kids are all in debt up to their eyes and they wanted a ridiculous salary, just to keep their head above water.
I have been trying for a year to get staff – and we have given up.
Potentially we could hire 20-30 people, and we can’t make the numbers work.
Scratch one job creation situation for this burg.
We are going to be running our business out of Atlantic Canada – and have set up shop in Halifax, Nova Scotia.
We have already had 120 applications and the people are well qualified, and the Government in NS has been very friendly and helpful, every step of the way. We sold out here – (*people way overpaid for the apartment building I owned and our home in West Vancouver) and for the next few months, I am bi-coastal as my Family heads East.
We will never come back to Vancouver, and as a matter of fact, we don’t even want to visit.
The one negative is, we are going to have to look for a Caribbean getaway, as we realize that we will never go to Hawaii again.
Will we miss Vancouver? Not at all.”

[Note juxtaposition with last anecdote -> It’s tough for both employers and employees in over-expensive Vancouver. -vreaa]

“A few months ago I applied for a pretty advanced software engineering position at a local company. I realized that if a potential employer here asks you why you live in Vancouver they are just setting you up to expect a crap pay.”

ams at VREAA 20 May 2011 8:02pm“A few months ago I applied for a pretty advanced software engineering position at a local company, thinking I can get away from traveling east for doing consulting work. I was surprised that one of the questions that was asked in the interview was “Why do you want to live in Vancouver?” I thought it was a strange question but then right after that we talked about salary expectations and discovered my expectations and their were off by about 30K to 40K. That is when I realized that if a potential employer in Vancouver asks you why you live in Vancouver they are just setting you up to expect a crap pay. I think employers in this town think oh why yes you live in Vancouver you should be happy so shut up and accept crap pay because baby you are in Vancouver!”

[Note juxtaposition with next anecdote -> It’s tough for both employers and employees in over-expensive Vancouver. -vreaa]

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9j: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9j: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[The final instalment of Part 9; thirty suggestions over 10 sub-parts. Download the collector’s-edition pdf of the entire Part 9 here. Also available through the Froogle Scott sidebar. -ed.]

29. Think about what constitutes quality

Before our renovation, my wife and I referred to our house, somewhat affectionately and ironically, as “our East Van shitbox.” We seem to have stopped the practice, perhaps because the house doesn’t seem so shitboxy anymore. If I ask myself why it doesn’t, the thing that comes most immediately to mind is the dramatic transformation of the exterior. When we bought the house in 2003 it had outdated two-tone stucco, and junky, single-pane aluminum windows with skinny little frames. The overall impression was dreary and depressing, a remuddling of the way the house would have looked when first built — nothing fancy, but at least neat and solid, with fiber cement shingle siding (possibly asbestos-containing) and wood-frame windows. Now the house looks neat and solid again, and attractive, with wood siding and trim, and windows, which although vinyl, have beefier frames and nicely balanced faux mullions (those little rectangles in the upper part of the window). The curb appeal, to use a term favoured by realtors, has been greatly improved. I actually like looking at our house now, while being under no illusions that it’s anything more than an attractive little 1940s bungalow. That the exterior is what I think of first would seem to contradict everything I’ve been saying about the importance of foundations and systems, but there’s no denying the psychological and emotional impact of exterior appearances. Human beings are visual creatures.

I’d like to return to the comment Renting made about “a million dollar home in Vancouver [being] a piece of shit” (amusing in a surreal way, isn’t it?), a sentiment echoed by many commenters on Vancouver real estate bear blogs. It’s also a sentiment that exists among the broader population, perhaps owing to Vancouver’s widely publicized leaky condo crisis and the ongoing spectacle of entire buildings shrouded in tarpaulins, like giant crime scene victims. If we leave price aside, at the heart of Renting’s contention is the issue of quality. And quality in houses can be a tricky thing to define, because it can mean different things to different people, and can have multiple applications when talking about the seeming unity of a house.

Differentiating between quality of design, and quality of construction, can help clarify matters. Quality of design can be further broken down into aesthetic quality and functional quality (form versus function). Quality of construction can be broken down into quality of materials and quality of workmanship. If all four of these characteristics — form, function, materials, and workmanship — meet a good standard, that’s probably a good house, assuming the house has been well maintained, and the location is also at least reasonable. Erode any one of the four too much, or two or more of them somewhat, and that may be a house deserving of Renting’s description. But what, exactly, constitutes ‘good’? ‘Good’ is a highly subjective term, and one person’s ‘good’ may be another person’s ‘shit’.

Aesthetic quality is probably the most subjective of the four characteristics, and workmanship perhaps the least. The eye of the beholder has much to do with things. There are many forms of residential architecture, likely to appeal to or repel different people for different reasons. How does one compare the ornate turrets and verandahs of the late-nineteenth century Queen Anne style to the post-and-beam, mid-century modern, or either of these to a concrete condo or a vinyl-sided tract house? There’s such a difference of intention that comparison lacks enough common ground to be meaningful. We’re thrown back on to personal preference, which is fine, but it should be recognized as such. If we’re going to compare houses on aesthetic grounds, it’s probably more fruitful to compare individual houses within a particular form, having arrived at those forms that most appeal to us personally. A certain amount of objectivity comes into play when identifying the best examples of a particular form, and these more objective comparisons can be useful when it comes to making a purchase decision.

Aesthetic quality and functional quality can conflict. Some of us may love the way a stately Edwardian house looks from the street, but find the rabbit warren of little rooms inside quite unsuited to a modern lifestyle. The interior design of ‘ticky-tacky’ Vancouver Specials, and the older, rancher-style 1950s bungalows, makes very good use of available space, and facilitates good traffic flow patterns. These house are highly functional. However, for many Vancouverites — perhaps Anglo Vancouverites predominantly — Vancouver Specials typify lower quality, regardless of whether or not they are easy to live in and maintain, or are well constructed with good quality building materials. The main reason for this sentiment has nothing to do with quality of interior design or construction, but rather, lack of curb appeal. To many, these houses look like ugly, naked boxes.

By contrast, many people equate ‘character’ or ‘heritage’ houses, such as Swiss-chalet-style Craftsman bungalows in Kitsilano, with quality. They covet these houses and are willing to pay a handsome premium, even if interior layouts are less than optimal for current lifestyles and family configurations, and are difficult and expensive to reconfigure, building envelopes are sub-standard or failing, insulation and energy efficiency are poor, drafts blow in, and basements are low, dark, and damp, making for less than inspiring living conditions on the lower level. Prospective buyers, however, may be blind to these shortcomings because these houses have the architectural proportions and adornment, the ‘character’, the aesthetic quality, the beauty, that strongly appeals to them. In the minds of many, these houses hark back to an earlier time when things were better built — even if they may not have been any better built than more recent houses. It doesn’t matter. The patina of old wood, buffed by the hands and feet of generations, the quality of light through stained glass leaded windows, the muted gleam of brass doorknobs, gives many people that intangible feeling of solidity and security, of being connected with something physically and emotionally solid, with roots to a place, which in an increasingly mobile and globalizing society, and amid a built environment constantly in flux, can make people feel more psychologically and emotionally secure. You see yourself in a particular kind of house — getting back to that childhood stuff — and nothing else will do.

Swiss-chalet-style Craftsman bungalow, Kitsilano neighbourhood

Enter the heritage-style new house in Vancouver. Over the past decade, two styles have dominated new house construction in Vancouver: the boxy and unadorned new-style Vancouver Special, and the faux heritage house, sometimes built as a cleverly disguised front-and-back duplex. These new heritage houses blend aspects of different heritage architectural styles (which were often themselves an amalgam of even earlier styles) — the full two storeys of the Edwardian Box, the half timbering of the Tudor Revival, the roof brackets, tapered porch posts, and dentils of the California bungalow. A grab bag of Berelowitz’s “geegaws.” However, when it comes to materials, and workmanship, and building codes, these often spec-built houses are no different from the new-style Vancouver Specials they seem to be reacting against, or holding at bay. They’re the same house, with a different face. And they may be no better built, or even poorly built.

In 2003, when my wife and I were house hunting, we toured a heritage-style half duplex in Strathcona, one of Vancouver’s oldest neighbourhoods, traditionally home to immigrants and blue-collar workers, but now undeniably gentrifying. This house looked good from the street but up close it didn’t bear much scrutiny: outside, the corner of the foundation revealed badly honeycombed concrete; after we took off our shoes, we could feel screw or nail heads through the thin carpet; when sighting down the drywall I could see nail or screw pops were already starting; and an exterior deck on the upper floor used cheap 2×2 material full of knots, already cracking underfoot. Materials and workmanship were quite obviously crap. If these deficiencies were in plain view, what lurked beneath? And the tall, narrow layout enforced by the front-and-back duplex on a standard lot, meant small rooms, lots of stairs, and some awkward little spaces. The developer had approximated quality of a particular form, but profit-driven and sloppy practices in the other three areas — function, workmanship, and materials — betrayed a lack of quality.

I suspect that for many prospective home buyers, and especially inexperienced ones, the importance, awareness, or visibility of the four basic characteristics of quality in houses, and associated notions of good, from most to least, goes something like this:

1. form
2. materials
3. function
4. workmanship

So in neighbourhoods like Strathcona, and Grandview, which is perhaps also undergoing a certain degree of gentrification, and experiencing a spillover of younger Anglo buyers priced out of the West Side, the faux heritage house, sided and trimmed with wood, attracts a lot of interest. The houses sell at a hefty price, even if the rooms are not optimally laid out, and on close inspection by someone with a base level of knowledge, or just a sharp eye for detail, the materials are revealed as run of the mill — essentially, spec builder grade — or even cheap, and the workmanship is slapdash, almost guaranteeing additional problems beneath.

My suggestion for a revised order of importance of quality and associated notion of good might be:

1. function
2. workmanship
3. materials
4. form

First and foremost, you live in a house. You need it to work for you on a moment-by-moment basis. That’s function. You need it to be well-built, durable. That’s a combination of workmanship and materials, although I’d place the greater emphasis on workmanship. Middling materials used well probably trump higher-end materials use less well. And ideally, a house should in some measure appeal to your soul. However, this last characteristic is probably the most negotiable, and the most subject to change. And yet, ironically, it’s the one that probably most influences most purchase decisions.

You can play with the four characteristics of quality, and perhaps come up with others, ordering and weighting them in accordance with your own beliefs and values. And location, both general within a city, and specific, as in site influences, can outweigh or overrule any of these considerations. The key is to understand that ‘quality’ isn’t a single thing, that it’s made up of several components, and that no one component should blind you to the others. As for what ultimately constitutes ‘good’, while I think there are some standards that most people would agree on regarding durability (workmanship + materials) and function, each person probably arrives at his or her own definition of what ‘good’ means.

30. Take pause, and ask yourself what’s important

Once you start, it’s easy to get caught up in the house battle. One thing inevitably leads to another. You renovate part of the house, and the unrenovated part looks miserable in comparison. You decide to have a new bathroom fixture installed, or a few electrical outlets, and find out all the plumbing or wiring is shot. You want to rearrange a few partition walls but an old masonry flue is in the way. You remove drywall and insulation and discover water is seeping through the building envelope. You learn something about the seismic inadequacy of most houses, and decide you need to act. You see someone else’s fantastic new kitchen or bathroom or storage solution and — human nature being what it is — you want something similar.

What you come to understand about houses is that the battle is never won. With effort and expense you can gain the upper hand, but entropy is always at work — whether the house is a hundred years old, or new. You must continue to expend a certain amount of effort and expense to keep disrepair and disintegration at bay. But how much of your life energy and your life earnings do you want to consume in this pursuit? Many people find renovation, or woodworking, or home maintenance and repair, or gardening, rewarding and satisfying, and an excellent way of staying active. I count myself among these people, but there are also plenty of other things not related to houses that I want to do with my life. Over the last few years I’ve been out of balance, the house sucking up too much of me — unavoidable, perhaps, given the scope of what we did, and still plan to do, but perhaps that scope needs to be reexamined, or should have been examined in a more circumspect fashion to begin with. At the moment, we’re taking a much-needed break from major renovation. A financial break that allows us to pay down debt — the money associated with home ownership and renovation and what it’s doing to retirement savings in this city is a big problem — and a psychological break that allows us to rejuvenate by doing other things. One of the reasons for writing this series is to reconnect with my writing, which was shoved to the side during the three years of the reno. When I’m not writing, I’m not happy, as my wife could tell you.

And that’s what it’s really about. Happiness. Satisfaction. Feeling a certain measure of security and calm in an uncertain world. People who think buying, or building, or renovating a dream home will give them this happiness and security are wrong. Too many North Americans have internalized this fairy tale. A dream home won’t fix them, or their relationships. It may do just the opposite. Approached with prudence and an appropriate degree of balance, what a reasonable home can do — whether it’s a house or a condo or an apartment, whether it’s owned or rented — is provide a stable foundation for the life you’ve already worked hard to achieve.

Next episode

Part 10: “Doom Blogs”

My early mornings with coffee are no longer spent on RealtyLink comparing the relative merits and prices of listed houses to our house, and speculating how high the price of our place might climb. Now my early mornings with coffee become an inversion, reading the doom blogs and speculating how far the price of houses, our place included, might crash, and wondering if we’ll stay above water, in positive equity territory, or if the money we’re bleeding on the reno, chewing away at our equity, will be compounded with a crash progressively shrinking the amount there is to chew…

Financial details — our house

Asking Price: $355,000 Sale Price: $355,000

Down payment: $88,750 Mortgage (at purchase, Sep 2003): $266,250

Many thanks for a wonderful ‘Part 9’, Froogle Scott. We remain very grateful to Froogle for using VREAA as a portal through which to release his writings. When we’re doing renos, or even considering them, he’s our go-to guy — our ‘meta-contractor’. And, we’re looking forward to the rest of his Chronicles… – vreaa

Dunbar Sale Example – 5,089sqft SFH; 55×165 lot; $5.18M

3656 W 38th Ave, Vancouver (Dunbar)
5,089 sqft SFH, built 2009, on 55×165 lot
Sold 8 May 2011; Sale price $5,180,000

Nice house. Remarkable sales price.
With 10% down, 4% five year fixed, 25 yr amortization, that’s roughly $24K per month mortgage payments.
Yeah, we know, the folks who bought this likely put more down.
Regardless, the market is still valuing it at being worth $24K per month, whether the capital is yours or borrowed.
Overvalued by a factor of …… [insert your estimate here].
Noted, for the record, for future reference.
– vreaa

South Granville SFH Example – Price Rise Of 120% In Two Years

This Sale-Resale comparison care of ‘hazuchan’ at RE Talks 22 May 2011 2:21pm
6518 Angus; SFH in South Granville on 34×118 lot (smaller than average):
Listed $799,000 in April 2009
Sold for $1,000,000

The same property, May 2011, listed for sale for $2.2 million, for a price rise of 120% in two years:

[Is there anyone remaining who can’t see this is a speculative mania? -vreaa]

Very Late To The Party – ‘KVOS Real Estate 101 TV’ – “One-part reality TV, one-part lifestyle talk show, one-part investigative biography. Featuring the hottest trends in real estate.”

From 10 Mar 2011 [Hat-tip to ‘Proteus’]
“Real Estate and developments make Vancouver headlines constantly for good reason. We have the highest housing prices in Canada, one of the highest rental rates and a loyal following of development fanatics. Presenting KVOS’s Real Estate 101 TV, running each Sunday, featuring everything about real-estate-savvy Vancouver.

“One-part reality television, one-part lifestyle talk show, one-part investigative biography, Real Estate 101 TV will change the way people think about real estate,” Co-host, Crystal Carson shared. “Maggie and I will be taking the city by storm and showing the reality of real estate. We’re going to be answering every question you’ve ever had about real estate.”

Hosted by media personality Crystal Carson, and radio and TV broadcaster Maggie Cox. The dynamic duo will interview big-name real estate and development moguls and trailblazers. Feature segments go behind-the-scenes at the new BC Place Stadium and interview development industry leaders like David Podmore of Concert Properties and world-famous architect James Cheng, to the visionaries behind the Woodward’s project in downtown Vancouver.

With Real Estate 101 TV, Crystal Carson combines her unique blend of media, fashion, and real estate experience to blow the lid off real estate myths and help homebuyers and sellers navigate through an array of complex decisions. All the while, featuring some of the hottest trends in real estate.

The television series focuses on providing industry advice to help homebuyers and sellers gain an advantage in today’s competitive real estate market. Each episode features a “Real People, Real Problems” reality-based segment which showcases the real stories and real solutions behind common real estate problems.”

Very, very, VERY late to the party. Sign of a top?? (Nah, we’ve said that too many times before to be taken seriously…) – vreaa

RE 101 TV episodes available here. [Hat-tip to Aidan for the links.]
[“I just threw up in my mouth a little…” – ‘Polly’, on discovering this show.]

Prospects Look Better In The US – “Ambitious people have left”; “I think we’ll be leaving too.”

Whenever we hear fellow Canadians slagging off the USA, we are reminded of the guy who said that you can’t criticize Sigmund Freud without referring to concepts that wouldn’t exist if Freud hadn’t described them in the first place. Yes, the US can be criticized in almost innumerable ways, but ask yourself what your life would be like, materially, culturally, intellectually, without it.
The US ain’t over yet, and that’s a good thing.

‘rp1’, in a comment on these pages [VREAA, 22 May 2011, 11:40pm]  eloquently summarized an argument for currently preferring the US outlook to that of Canada. He also embedded an anecdote in which he describes himself and his family as likely leaving Vancouver. That would be our loss. Here’s his post:

Wall Street cheered a non-existent US recovery in 2009, and 2010 was mediocre, but it does appear the bottom is in for the United States. Do you read CalculatedRisk? If not, here you go: Household formation, Business lending, ISM Manufacturing, Construction spending, and Job openings.
With all five of those things in the black, there is no real doubts of a US recovery. It is happening, largely due to currency debasement and asset and wage deflation. Painful, but they did it. Canada did not.

Canada took the “Greenspan approach” and avoided a sharp recession and purging of debt by holding interest rates at 1% for 3 years. Household debt exploded, everyone bought more house than they could afford at normal interest rates, and now inflation is eating family budgets. Whatever advantages Canada had in 2007 are long gone. We have taken precisely the same sequence of steps that the US did in the 2000′s, with the same results so far.

A closer look at the data is frightening. By most measures, Canadian real estate was fairly valued in the early 2000′s. Not true in the US. Their prices started going up in in 1998. Four years later, with housing already more richly valued than ever before, Greenspan cut interest rates to 1% and housing went up further in defiance of all fundamentals.

Canada started later and rose slower, with a lot of genuine economic growth backing the early rise. But our prices detached from fundamentals by 2005. Interestingly, we seem to have gotten the subprime mortgages first. That would be zero-down, 40 year amortization, with no income verification care of the CMHC. The Economic Analyst has some nice graphs: House prices and rents across Canada, and House prices and inflation.

So in 2008, with housing already more expensive than ever before, the BoC starts slashing interest rates. And guess what happens? House prices rise in defiance of all fundamentals. And we keep interest rates at 1% for how many years? 2009, 2010, 2011? Yup.

In short, we have done the exact same things as the Americans, in a slightly different order, with largely the same result. How much of our economy is now underpinned by housing? What percentage of our job base? How many people put down the minimum and and require low interest rates to service the loan? Those questions had people yelling at Peter Schiff on Fox News in 2006. I’ll make the exact same call for Canada right now. We are toast.

For the US, I think we’ll see a slow but steady recovery driven by manufacturing and consumer spending. The best investment I see is respectable houses with 8% rental yields in Michigan, upper New York, and Ohio. A lot of these are 70k. They could be over 100k in a few years, plus or minus the currency, which I think will be a plus. The courageous long term investor can buy classic homes in Phoenix and fix them.

For young Canadian families, affordable housing is the #1 issue. Canada has not had it for 5 years, and it could be another five years before the combination of a good job and an affordable house appears in this country again. In the meantime, expect a shitstorm of people who expect things for free, so maybe the US is worth trying. The weather is certainly nicer.

For the highly educated and frustrated, why haven’t you moved yet? Seriously. The US has lots of jobs for you, and it is easy thanks to NAFTA to get them. Stop hurting yourselves and go live your life. Living in a different country is interesting, it’s good for you, and you can always come back. Things are not going to get any better here for a while. Certainly not in Vancouver anyways.

And there’s no need to tell the ambitious people. They’ve certainly left. I think we’ll be leaving too. It has been a torturous decision, with family here and everything. But we have our own family to look out for. I’m worried that if we stay we’ll do very poorly. We have not benefitted from the housing mania (the jacuzzi tax credit was particularly painful). We’re just going to be asked to pay for it all. We have already reduced our expectations but now it’s getting ridiculous. What a crummy deal. It’s just too much.”

Family Wedding RE Chat – “Despite the American relatives pointing out the ridiculousness of these arguments, there was no convincing the Vancouverites that it’s a bubble.”

pricedoutfornow at May 22nd, 2011 at 7:27 pm
“Went to a family wedding this weekend. American relatives were attending, and as usual as per social conversations in Vancouver, the topic quickly became real estate. The Vancouverites were jumping up and down, telling my American relatives that “Vancouver is different, it won’t crash here, we have Chinese investors, we have mountains.” Despite the American relatives pointing out the ridiculousness of these arguments, there was no convincing the Vancouverites that it’s a bubble, and it will crash here too, just like it has in their home country. Finally, the Americans realized there was no convincing these delusional, irrational people, finally one just turned away, and remarked under his breath “Well, sure sounds like a bubble to me.”
I think the Americans would know, they’ve seen this hype before (and are now buying properties in Florida for half price). They just shake their heads sadly and sigh “Poor Canadians, they will learn.”

“I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation.”

Smartinuk at discussion thread on affordable housing in Vancouver, 17 May 2011 10:18am“I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation. The housing situation in Vancouver seems to be a simple result of supply and demand.”

No, it isn’t, it’s the result of a speculative mania, driven by cheap money and local buyers prepared to overextend themselves to nose-bleed levels based on their fear of being ‘priced out forever’ and their greed regarding the promise of preternatural profits. Once gravity reasserts, things will return to normal range. Even graduate students may be able to afford to buy something, if they care to, at some point in future. – vreaa

“My husband and I both went to university, have good jobs, make good money, and we are in disbelief that we cannot afford to own property at this point in our lives with the incomes that we pull in.”

ACP at VREAA 21 May 2011 12:17pm“My husband and I both went to university, have good jobs, make good money, and we are in disbelief that we cannot afford to own property at this point in our lives with the incomes that we pull in. Granted, $200,000 is the new $100,000, but still.”

PostCardsFromTheBlastRadius #9 – The Okanagan Bust – ‘Roadside Attractions On Highway 97’

What, it’s raining you say!  And you haven’t the time or the ‘wherewithal’ to LoadUp the FamilyWagon and RegalInTheSplendour of SuperNaturalBC!…  No fear, DearReaders! – ‘Nemesis’ was able to secure the loan of a 48Pontiac Woodie…  So…  What ya waitin’ for!?  Hop In!  Cause, we’re gonna MotorThe’97! [if you’re feeling musical – go ahead and put the B52’s “Love Shack” into your 8Track]…

Yes!  The Okanagan ’97 Westside Road Interchange!  Like the sign says, it’s “The Best Place On Earth”!  And when has BC’s Department of Highways ever lied to you???

Yep!  SceneryGalore! [Look harder, it’s really there! – albeit, the hoardings do at times make it a tad difficult to appreciate]…

Pretty soon we’re coming across evidence of DealsGalore!  Yes! Galore! [Nem just loves that word].

See!?  “BlowOut!” Yes!  “BlowOutPricing!”.  Although evidently, this particular enticement has thus far proven unsuccessful – given that it was replaced last week with New! EvenMoreSpectacular! Signage.

And when you’re finally ready to PullTheTrigger on that Sweet Oki Deal – these Gals will help ya do it!…  Ok, Nem admits that he was first attracted to this particular BillBoard by the astonishing resemblance of MortgageBroker Deb White to actress/comedian Tina Fey.  More to the point though, it serves beautifully as an illustration of the nefariously pervasive (and socially corrosive) Culture ‘O Celebrity.

But it’s not just Celebrity they’re SellingYou.  They’re really in the business of promoting TheDream.  See?  Just look at that HappyCouple!!! Happy, because they’ve “Experience[d] the Advantages of Working with an EXECUTIVE!

And if RealtyExecutives doesn’t do ‘it’ for ya…  Well, Darn!  There’s always SUPERMAN!  Better known as Les York (of King Remax’s RoundTable).  Damn!  That guy looks so sauve I wouldn’t let him within 10Km of my Squeeze!…  Sincere, too!  And what a LogLine! “Les gets you MORE!

Of course, not all Oki RE ‘players’ are in the game for ‘accommodation’…  I’ll bet you’d be DarnSurprised to know that many of these astute PropertyOwners are actually INVESTORS!  And that’s where Dustin, Davis & Sean come in…  You could be forgiven for mistaking them for a BoyBand – but these guyz actually ManageProperty.

Ok. Now it’s starting to get a little scary.  “Kelowna Born & Raised”?  Please forgive ‘Nemesis’, Kathy – but that logline is more evocative of livestock provenance and/or BBQ potential than profession​​al competence​​/commerci​a​l savvy.  Indeed, ‘Nem’ is surprised that the copywriter didn’t add ‘FreeRange​​’ and/or ‘GrainFed’ to Kathy’s list ‘O NoteWorthy Achievements/Attributes.  Or, at the very least, exploit the ‘fervour’ of an important local demographic with a little ‘tweak’ along the lines of, “Kelowna BornAgain & Raised!”.

OK, ‘Nem’ disclaimer.  Hot brunettes are…  Well… UltraHot!  And when their stage name is “Lovin”.  They’re SmokingHot!   But why couldn’t Alina’s parents have gone WholeHog – and just called her Lotta!  What other Realtor could compete with that?  Just imagine, DearReaders – stepping into your new LottaLovin’ Home!

On the ProsaicSide however, we have Mr. Allan Taylor.  You will note the clever italicization of “IS”.  So, bonus points to Allan for typographical simplicity.  Still, there’s something to be said for ‘telling it straight’, without flourish (as VREAA constantly reminds me!!!).  So in all honesty, if ‘Nem’ were seeking agency – he would certainly include Allan on the UsualSuspects list of Realtors to interview (albeit, he’d have a tough time competing for Nem’s attention with his RegionalRival, LottaLovin!).

Now – I know you’ve all heard those stories about ‘difficult’ trading conditions in BC’s Interior RE markets.
Guess what!?  They’re true.
Indeed, things are so bad that Macdonald Realty Okanagan South has had to diversify into other ‘lines’.

Ah yes.  This is the Okanagan.  And, believe it or not, there are plenty more where this one came from.  Albeit, whereas most RegionalIndigenes are patiently waiting for an as yet unrealized ‘spiritual experience​’ – untold legions of UnderWater OkanaganPr​opertyOwne​rs have unquestion​ably already had their ‘ComeToJes​usMoment’.

Speaking of which…  A faded and cryptic GuidePost to us all!  Hey, Art is where you find it.

As ever, DearReaders.  Thank you!

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]


Realtor Opinion – “It will get harder and harder to enter the Vancouver Real Estate Market. This is just a fact of life. The majority of people have a very hard road ahead.”

Vancouver Realtor Jay McInnes, Sales Agent, Macdonald Realty, as quoted at, 20 May 2011“This is just the beginning. Affordability will be a factor from now on in the Vancouver Real Estate Market. [hasn’t it always been a factor? – ed.]  The rate that the city is growing and the product ranges that we are seeing, it will get harder and harder to enter the Vancouver Real Estate Market. This is just a fact of life if you are living and working in this part of the world. If you want all of the luxuries that the world has recognised we have here in Vancouver, the majority of people have a very hard road ahead.” … “Without a crystal ball, I believe the market (in general) will continue to slowly rise over the next few years (assuming world economies move positively forward). Don’t forget, after the recession hit in ’08 the Downtown Vancouver market was back to where it began (pre-recession) within 9 months! I greatly thank the conservative levels of Canadian Banking for that and I don’t see that changing any time soon.”

We beg to disagree with Jay.
The uncalled for Vancouver RE bail-out of 2008-2009 is something to regret, rather than celebrate. Like giving cocaine to a dying racehorse to get one last sprint out of it, the ’emergency’ interest rates gave unwarranted legs to our speculative mania, ensuring that the inevitable crash will be that much more destructive. 
And, regarding the “very hard road ahead”… let’s just say that ‘affordability’ will greatly improve… in the form of much lower ticket prices after the crash. – vreaa

“I moved to Vancouver from Holland 3 years ago, planning to buy a business, house and settle. Last year we moved to the States.”

left already at VREAA 20 May 2011 8:53pm
“I moved to Vancouver from Holland 3 years ago because my wife’s family lives there and many of my friends and family also.
Planning to buy a business, house and settle.
We had approx 10million CAD in cash. After looking at all possible businesses for sale for two years, we realised that there was really no opportunity to buy smth decent with cap rates higher than 3 to 4% same as what our money was earning on a savings account (most businesses were franchises, restaurants and other retail).
We rented for 2 years thinking that the RE prices will fall to reasonable levels.
It was not so much that we could not afford it but having come by our money the hard way, we realised that there was really not value in paying 1.5 million to live in very ordinary poorly build house. Weather was not so much an issue for us are we are used to rain and we really did not have bad whether the two years we lived there. The summers were beautiful, we liked it so much.
Last year we decided to invest in the States and moved here on an investor E2 visa. We bought an apartment building (42 apartments for 3 million USD) with a cap rate of 6.5%. The same building in Vancouver would cost 6 to 8 million.
And since we are here, I can tell you that once you get used to the San Diego sunshine, you can hardly dream of another place.
We just bought a house four ourself ( 860 000USD) with swimming pool and ocean view, lots of oranges in the garden, they are ripe and sweet now. Unbelievable how far the money goes here compared to Vancouver. Evth is cheaper. Vancouver is a TOTAL RIP OFF anyway you look at it. I will never regret the decision to leave.
Also, having worked for 27 years as an electro-mechanical engineer in Holland and having registered 7 patents during this period, and managed countless projects around the world, I thought I might get a part time consulting job in the industry , mainly to do smth useful and not get bored rather than to make money.
To my surprise no body recognised my credentials, I had to be registered to practice engineering there, and to do that is going back to school, pass all exams again, and once you do that you have to be coached for about 3 to 5 years by another professional engineer, almost mission impossible. I was stunned. It was the same thing for my wife, architect graduated from one of the most prestigious schools in Europe. Impossible to practice here.
Now, when you look at all the architectural junk that Vancouver is filled with, I really don’t know were they get those creative architects / designers…
I am so amused checking from time to time the blogs that helped me so much understand RE craze in vancouver and feel sorry for the people waiting on the sidelines.
I wish you good luck and hope things return to sanity sooner in the rainy city.
My advice:
Don’t let RE prices dictate your life plans, move on to where the sunshine is and life opportunities await. There are very little in Vancouver.”

[We are now satisfied that this anecdote is likely genuine, so we have headlined it. -ed.]

“I had a discussion about Vancouver real estate during a class break. Students started venting about the housing market.”

pessimisticprof at 20 May 2011 9:50 pm
“I had a discussion about Vancouver real estate during a class break and to my surprise a bunch of students started venting about the housing market. It appears it is starting to sink in that they will never be able to afford a house, and they scoffed at the idea of inheriting mom and dad’s McMansion – “That’s all they have for retirement – they will chew it up to fund their own expenses, so no hope of getting the house or help with a downpayment.” One student proudly proclaimed that he had just closed on a condo in Surrey for $300K – 30 year, 5% down. I asked him why he thought the bank would loan a kid like him so much money – he sort of looked confused, muttered “I dunno”, and admitted he had never thought about that. I took the opportunity to explain how CMHC and Ottawa had distorted the housing market by enabling people with no money (like him) to purchase property way beyond their normal capacity, leading to a huge but unsustainable increase in housing prices. When I got to the part about interest rates normalizing I thought he was going to toss his cookies! By the time I was finished his “great investment” was starting to look like a huge ball and chain. I think the rest of the class understood the message.”

Toronto – “A young lady at work told me she was thinking about buying a condo because her money would grow more in real estate than other investments. Well, last week she bought a presale, and so did her parents and her boyfriend.”

Markey at 17 may 2011 6:13am“A young lady at work (30+ Chinese) told me she was thinking about buying a condo because her money would grow more in real estate than other investments. I told her I believed that she would be having a Nortel moment if she bought now and I told her why. Well, last week she did buy and so did her parents and her boyfriend — from floor plans to a new development by the CNE that sold out in hours without ever having been made available to the public. She had only a few minutes to decide on the unit that she plans to flip once it is built, or to have a tenant carry the rent. According to her, foreign investors are buying Canadian real estate because, in this tumultuous world, it is a safe investment. She didn’t want to miss the opportunity. Now, I understand that a 30-year-old has never seen a real estate plunge, but her parents have. Do people really have such short memories?”

Pick Two, Any Two…

With homes on Vancouver’s Westside now averaging close to $2M asking price, take a look at what about half that amount, $1M, gets you in the US. [From ‘Million Dollar Homes Across America 2011’, CNBC, 13 May 2011]

Seattle, 3,790sqft SFH, $1.0M

Portland, 5,771sqft SFH on 33,000sqft lot, $1.2M

Honolulu, 2,148sqft SFH on 7,155sqft lot, $1.1M

Las Vegas, 5,702sqft SFH on 13,068sqft lot, $1.25M

Los Angeles, 3,500sqft SFH, $1.0M

San Francisco, 1,567sqft SFH, $1.25M

Manhattan, 1,000sqft apartment, $1.0M

Phoenix, 5,843sqft SFH on 39,413sqft lot, $1.25M

St.Louis, 4,000sqft SFH on 20,000sqft lot, $1.15M

Omaha, 5184sqft SFH, $1.05M

Anchorage, 5,818sqft SFH on 22,609sqft lot, $1.0M

Dallas, 5,686sqft SFH on 15,000sqft lot, $1.2M

For comparison, $1M in westside Vancouver gets you this:

4131 W 11th; 1,417sf SFH on 16.5×122 lot (a half a standard lot, or a twentieth of an acre)


“My wife and I are trying to start a family and we are seriously considering moving to one of the gulf islands when a baby arrives. I hate to admit it but it looks like Vancouver has got the better of me.”

manna from heaven at May 19th, 2011 at 7:03 pm“This market would have to move down dramatically for me to afford where I want to live. My wife and I are trying to start a family and we are seriously considering moving to one of the gulf islands when a baby arrives. We could buy a nice house with several acres outright and still have a very nice cushion. Doesn’t sound too bad does it? I hate to admit it but it looks like Vancouver has got the better of me.”

Seattle RE Price Growth A Tad Above Headline Inflation Since 1990

Chart from 28 April 2011.

Now at 4% p.a. since 1990.
CPI 3% over same period.
Will likely ‘undershoot’ inflation before this is all over.

[Hat-tip to ‘commenter-with-many-names’ for shouting this chart out.]

“In my condo building in New Westminster, there are 5 of 26 units listed this week. Usually, it’s around 1 unit.”

Andy In Vancouver at 17 May 2011 4:55 am – “In my condo building in New Westminster, there are 5 of 26 units listed this week. Usually, it’s around 1 unit.”

Academics Avoiding Vancouver – “A world-class scholar we were trying for years to attract to UBC ended up going elsewhere. He turned our offer down flat in one day after going around town with a real-estate agent.”

mjw at VREAA on 20 May 2011 at 5:45pm
“One issue that I have seen now for at least 5 years is that the most talented young academics NO LONGER come to UBC as a result of the insane cost of housing. Someone we were trying to attract for years to UBC (a world-class scholar, who is Canadian and who studied in the U.S. and Europe) ended up going to U. Alberta for a 150K per year chair position; he turned our offer down flat in one day after going around town with a real-estate agent. Instead we hired someone well down the list who is not remotely in the same league as this individual. Invariably, for our hiring we now make much longer hiring lists and end up going through a several rejections before the 4th one in line (typically a single young person just starting out with a rather mediocre record) accepts the job….. For the past year I not bothered participating in this hiring process. as it is clear that the process is excruciating and we are not getting the same quality people as we used to prior to 2005. Would you be concerned if the typical physician who stays in Vancouver is the one with family cash and a big inheritance and not the one who actually has the most skill in their profession?…. Perhaps reflect on this if you ever go in for surgery… The housing issue affects all working class people (blue collar, white collar etc…) who have local incomes…. Although our jobs are not so portable, and it will take some time to find academic jobs elsewhere, we are working hard to leave to a NON-WORLD-CLASS-CITY….. My view is that a “world-class” city does nothing good for 90% of the population besides attracting hordes of speculators from every corner of the planet…. we are not interested in this game…”

Local Realtor Calls Vancouver’s Housing Market “Unhealthy” – “At some point you’re going to have a lot of people burned big time. It’s not sustainable.”

From article by Jenny Uechi at 20 May 2011 [hat-tip to Vangrl] – Andrew Hasman [local realtor] has been in the business since 1993. “The local person is completely out of this market,” he said. While skyrocketing prices have made business good, Hasman said that the current market, with housing prices rising 10-15 per cent each year, is unhealthy. “Anytime you have extremes in markets, it’s never healthy,” he said. “You end up with a bubble. If the local economic base can’t support these levels, then at some point you’re going to have a lot of people burned big time. It’s not sustainable.”
[He] cited homes bought and traded like stocks and bonds and investment properties sitting empty, but some see the Chinese home rush as a bonus to Vancouver, while another sees it as a liability.
“Many people who buy here aren’t buying because they’re moving here,” said Hasman. “They’re buying on speculation or to park money here … There have been cases where people come and purchase 5 or 6 houses. No one needs 5 – 6 houses unless you’re speculating.”
Overseas buyers from Mainland China have been the driving force behind the price rise, Hasman said. “That’s what’s driving the market, really — of single family homes that have sold in the last 18 months, I would say, they’re conservatively 70 per cent, probably 80 per cent of the buyers,” he said.
He said that in many cases, the houses are placed back on the market within weeks, at a 10 per cent higher price, or simply remain empty.

We’d imagine that, once realtors are going public like this, a critical mass of folks are going to start seeing the bubble for what it is.  Tipping point nearby? – vreaa

Professional couple; Lived in Vancouver for 4 years; Moved to Calgary to better jobs; “It was ridiculous in Vancouver; we didn’t want to pay the bubble price to buy a tiny shaky box there.”

DWANG at VREAA 17 May 2011 11:25am“My family lived in Vancouver for around 4 years. We are not the millionaires from China but professional couple. I had a decent job at bank as IT engineer in Vancouver since we arrived 3-4 years ago, but my wife she couldn’t find any chance to work back in her field. She was a physician and has medical doctor’s degree. My family moved from Vancouver to Calgary just within 1 month. I got a higher payed job at Calgary before we moved in. And within 1 week, my wife got a offer at Alberta Children’s hospital as a medical researcher. Now she is happy and waiting for the new job started at the end of this month. Now we could relief a little bit and start enjoying the life. We are planning to shopping around within 1-2 years in Calgary to find a house for my family. Before it was ridiculous in Vancouver and we don’t want to pay the bubble price to buy a tiny shaky box there.”