Quality Of Life Calculations – “They essentially are having 20 years more enjoyment than if they lived in Vancouver.”

gse36 at RE Talks 23 Jun 2011 1:28pm
“I know 2 people in their 40’s who just retired in Toronto ($1.2M equity in Vancouver home, paid it off, bought $600k in Toronto, plus have investment savings (and will later cash out RRSP savings)). Actively invested.
They chose retirement in Toronto as opposed to working and living in Vancouver. Sure, they could buy a condo in Vancouver, but they wanted a house. Sure, it may not be as beautiful, but there’s something to be said about having 16 hours a day to yourself and spouse (assuming 8 hrs sleep) = 112 hrs a week.
[Compare this with] what they had before: 9 hour work + 1 hr commute each way (*2) + 8 hr sleep = 5 hr left to themselves 5 days w eek. = 25 hours a week + 32 on weekend = 57 hr a week. + all the anxiety and stress from their jobs + occasional overtime, etc.
They have 2x as much free time as before. They are in excellent physical shape, and go travelling a lot (yes, and back to Vancouver too), volunteer a lot. Basically doing all the things they enjoy. Contribute back to society, and help those around them. They felt this was more meaningful than paying the bank interest and paying for a modest house.
Given there’s 20 years to normal retirement age, and they get 2x more time to do what they want than others, then they essentially are having 20 years more enjoyment than if they lived in Vancouver. More importantly, it is while they are still relatively young.”

Two working, tax contributing citizens fall off the map because the price of their home hits ‘x’. This is one type of ‘misallocation of resources’ that occurs with speculative manias in RE.
This kind of move makes perfect sense for the couple, provided they do indeed have enough funds for 30+ years of retirement. It should be emphasized that their easy retirement is being funded by another couple taking on the opposite end of the deal: a very large lifetime liability.
This reminds us of a recently suggested strategy: Sell your house in Vancouver, buy 3 or 4 or 5 almost identical properties in the US (depending on city/state), live in one and live off the rental income from the others, retire.
How long can this kind of price differential last?
– vreaa

42 responses to “Quality Of Life Calculations – “They essentially are having 20 years more enjoyment than if they lived in Vancouver.”

  1. Yup, there’s something to be said for people that have such a lack of friends and family that they can move so easily. Sad really.

    • There’s this great technology that’s been invented called a plane. People can use it to visit family and friends.

      • There’s this other great invention that’s called, um, I think it’s “money”. I heard you needed it to make that plane technology bring you places. Apparently you can’t harvest it from the trees on the day you fancy visiting your friends on the other side of the planet. I don’t know much about it myself.

      • Dear TPFKAA,

        I would expect that if somebody made 1 million dollars off a house sale, they could probably spring for some plane trips. There’s also something called a phone, and the internet.

        I find this discussion is bizarre — in this story a nuclear family is not splitting up.

        Didn’t anybody have grandparents who retired somewhere warm? I didn’t think they were selfish — I loved to visit them every winter holiday as a kid. Are you all still living in the place where you were born? Didn’t anybody go away to college and make new friends? I

      • well, perhaps we are looking at this from different perspectives. I think James is making a commentary on modern society and the lack of investment by people in their community. It is the same sense of “investment” that Froogle Scott talked about in his posting on the riots. If these people were truly “invested” in Vancouver, it would be hard for them to leave; it would mean leaving their whole life behind, essentially. Of course, as you point out, we do not know their individual circumstances. And it is not their fault, or any other such people’s, that Vancouver and modern society in general disencourages this kind of investment. The recent thread on community building touches on some of these issues.

      • There’s this other great invention that’s called, um, I think it’s “money”. I heard you needed it to make that plane technology bring you places.

        Yes, there is this odd thing that in some places you have more of this money thing over at the end of the month than in other places.

  2. it’s not sad, some of us avoid commitments so that we can be more fluid with moving, careers and the like. Not everyone likes being parked in the same town with the same clique and job their whole life. The worst thing you can do is limit your options in life

    • wow. How do you avoid commitments?

      • you cant be serious with this question….

      • tpfkaa is apparently not a member of the male gender

      • “How do you avoid commitments”

        By not committing. Like… committing to a 35 year amortizing mortgage. I’ll give renterBears one thing, at least they’re honest they can’t commit; regular George Clooneys they are, the smartest man in Hollywood.

      • I am serious. Do you have kids/wife? I have forgotten how to avoid commitments. I lived in 6 different countries before the age of 23, but flitting around even the lower mainland seems hard if you take the wife, in-laws, kids’ friendships, their sense of stability, etc. into consideration. Committing to an area makes you more than a mere labour commodity servicing the economy of manufacture and consumption.

    • And what about friends? I left some “brothers of a different mother” behind, and I still regret the loss. But I guess friends are commodities too, like IPods. Just pick up some new ones.

      • Ya know, this couple may have had family and friends in Toronto. You’re assuming that they didn’t. Many extended families are not just located in a single city.

        And if you entire family does live in Vancouver? Well, you don’t have to move across the planet to find much less expensive houses to retire. You could move to Blaine, or the San Juan Islands, or Port Angeles, WA. Easy trip back to Vancouver.

      • friends come and go and having lived in 6 cities true friends you will keep contact with. why on earth would I settle down in vancouver. ? I have no interest in settling down period. the world is a big place. someone like me with dual citizenship to the USA can live basically anywhere in the US/Canada . Vancouver never impressed me enough to stay it’s not my town nor was it ever

  3. James; Z -> This may seem like very dry and business-like way of thinking about an aspect of interpersonal relationships, but economists would likely think along these lines: In the same way that you can calculate the ‘ownership-over-renting premium’ for a couple (the amount they would spend over renting in order to own rather than rent accommodation), you can place a ‘dollar value’ on the importance of friends and community connections for that same couple.
    Some people wouldn’t leave the same city as friends and extended family for any amount of financial reward; others would leave at surprisingly low reward levels. The population is distributed through that spectrum; everyone “has a price”, you could say.
    As the financial advantages of leaving a city increases, a greater percentage of the population will see the lifestyle advantages of leaving as being more important than the friend/family connections. This is simply how people function.

    Besides, many will argue that they can maintain their relationships, and perhaps even improve the quality of time spent with these ‘connections’, if they are at a distance but in financially sound shape. They may see that as better than being close by but distracted by perpetually financially distress.

    • “Besides, many will argue that they can maintain their relationships, and perhaps even improve the quality of time spent with these ‘connections’, if they are at a distance but in financially sound shape. They may see that as better than being close by but distracted by perpetually financially distress.

      the longer i stay in vancouver, the longer this situation continues and the more my relationships suffer. it’s brutal.

    • On the one hand speculators are gutting the communities of the West side by tearing down perfectly good housing stock and replacing them with characterless monster homes that often sit empty so they will remain ‘new’. This is a dry and businesslike approach to real estate but it is frowned upon.

      On the other hand, uprooting your family and abandoning your community to chase dollars and cents around the globe is a calculated strategy to maximize personal gain.

      Seems to me that each position is the flip-side of the same coin. You either value community or you don’t.

      I am with TPFKAA on this one.

  4. The other equation often done in Vancouver is: sell property in Vancouver and retire in [name your SE Asian country] for 1/3 of the cost of living. I know a few who have done it, but their concern is that once they do make the move, they will be priced out of Vancouver forever. Still, the cost of living in Vancouver is high compared to other locales so some very rational people are doing the math. The speculator’s dilemma!

    One acquaintance recently sold his Van West house and converted the capital to two condos, one in Vancouver, another in Hong Kong, and a few hundred K left over. Now they can spend the summers in Vancouver, the winters in Hong Kong; they have family in both cities. Not bad, eh?

  5. Isn’t this kind of easy money floating around going to result in government insolvency? and inflation?

    On the subject of which… I know this isn’t a doom blog, but how will this trend end? Chinese inflation at 34 month high, mainly driven by rising food prices:

  6. Did you guys catch this article in the Vancouver Sun?
    “In Vancouver, renting is a better option than buying”

    Truly interesting that such article to be published by the Sun…

    The dark clouds of the RE bubble burst are accumulating…

    • yes, a regular over at Vancouver Condo Info and GT lobbied hard with the editorial staff at the Sun to be allowed to write a rebuttal to the Cam Good article. They allowed him, and he did a damn good job.

  7. My husband and I sold our house (on the west-side) many years ago – many years too soon by anyone’s caculations – but having the cash freed up allowed us to put our two children through UBC without them incurring any debt. Our children went to UBC after having travelled the world with us throughout their childhood – every year we were able to take a “resort” or Club Med vacation as well as more exciting adventures as time allowed. We have been to India, Africa, Europe and many parts of Asia. If we had had our money committed to fixing up and maintaining a house (even though its value would have increased) we wouldn’t have been able to do the things that mean a lot to us, By the way, we rented the same house on the west-side for 20 years – we didn’t have to worry about the two new roofs, three new hot water tanks or the new furnace – it wasn’t ours. Yes, we would have made a fortune if we had bought and held on but instead we opted for lifestyle and have enjoyed ours immensely. We’re in our sixties now, kids are grown and happy and still looking for adventures in the wonderful world that is outside of Vancouver.

  8. I really feel bad for some of you that marginalize friendships and family. Clearly, if you can even argue that friends and family can be monetized shows that you do not have any very close friends or strong family ties.

    Quite unfortunate.

    • I agree. There is a distinct difference in the nature of a distance friendship and a daily community friendship. It is a distinction that appears lost on many. Of course, if you’re super rich, it doesn’t apply. Just burn some more jet fuel.

      There is, however, from a long-term perspective, a very strong argument for just staying put and not using vast quantities of fossil fuels to zip around seeing friends. So some say.

      • TPFKAA,

        oh yeah, I definitely agree with you. Renting makes a lot of sense and community building is important.

    • Vancouver is in an extraordinary situation — to the point that if I lived in Vancouver I would consider moving the entire extended family in an coordinated move somewhere else.

      In any case, 70% of income going to housing is not ok. Economic stress has potential to destroy family and ruin the future opportunities for children.

      At that point it is reasonable to consider moving away from some friends and extended family. But if the extended family is very close or perhaps living in the same household – it would make sense to consider moving together. And many people do have family and friends in other places. Not many extended families are entirely located in one location.

      • Fair points, and I have wanted to move in the past for similar reasons you describe. (The in-laws have been here for 22 years and are semi-dependent on us, and are hugely resistant to moving…)

        But, regarding the 70% of income into housing… since discovering that, hey, we can be renters AND still be a part of the human race, we are trying to make a fight of it here… leaving is not going to help this city rebuild a vibrant community. Sure, I would love the stability of an owned home, but it is all a matter of perception.

    • James, if everyone thought that staying put was best, there would be no one but first nation people here. “Quite unfortunate” indeed.

      In the extreme version of your view, why even move out? Live 3 generations under the same roof, eat all meals together. Some people like that, and some people don’t. Some people want different experiences, or see better opportunities for themselves and their children elsewhere. Who are you to judge?

      • hahaha. I cannot believe you just said that. “Quite unfortunate” if there had never been an invasion and genocide. It brought so much good to this continent…! Imagine all those savages running around without a good European telling them how to build cities. HAHA! It is a very fortunate thing we came. Ask any First Nations person how glad they are we didn’t stay put. The world is clearly a better place!!

      • I don’t intend to pass judgement on which situation is better, just pointing out the absurdity of anyone in Vancouver judging others for leaving family & friends in search of a better life, because that’s your parents or grandparents you’re talking about. Or your friends, if your social circle is open enough to include anyone not born here.

    • Well, I don’t think that you’re getting it.

      First off, there are friends to be made elsewhere too. Roots are good. But what good are roots if the only time that you get to enjoy family and friends is taken up working to pay an outlandish mortgage and commuting to get to said job?

      Second, living in BC but outside of the Lower Mainland, I can tell you that my savings accrue much faster than when I was there. Those savings are great for taking trips to see family down south.

      Third, extended family and friends are important. But immediate family (spouse and kids) are the most important. If I still lived in the L.M. I’d hardly ever see them due to job pressures and commuting. Currently I see them all the time other than at my job.

  9. this trick answer here is that you have to have owned that Vancouver detached home to be able to downgrade elswhere. This benefit works for all moves from high priced to low priced anywhere in the world.

    • Unfortunately for Vancouver, it doesn’t matter whether you are homeowner or renter – moving elsewhere is a significant upgrade in terms of the cost and qualitiy of life.

    • ‘trick answer’

      lol you really are just.. literally backwards.

  10. Meanwhile, back in Central China – an all too predictable ‘quality of life calculation’, “Meet The Rich Hero!” played out on the ‘CatWalks’ of Wuhan, Hubei Province… Eligible male candidates in China’s latest iteration of the ‘DatingGame’ were restricted to those with personal assets of at least 30 million yuan (USD$4.6M) and/or annual income exceeding one million yuan. It was unclear whether, as regards calculating bachelors’ net worth, event organizers were prepared to recognize MetroTown condo pre-sales assignments…


  11. are poster like Derp Derp encouraged to contribute the same old garbage here? is there no editor? Of do you only filter those with a view that is opposite yours vreaa?

  12. u mad bro?

  13. Chaz -> We moderate as little as possible… We have only had to delete a small handful of comments in the entire life of the blog… We have NEVER filtered any comment on basis of RE viewpoint.
    We do prefer coherent discussion and debate.
    ‘Derp’ plays the court jester, but he knows of our request to limit antics.

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