Psychologist In Denial – “His house is the sum total of his life’s savings, the thought of it coming down 30% is more than he can stomach. He refuses to read about the US housing crash; he might even deny its existence.”

“People get very defensive about their housing investments. My own father is like that. He refuses to countenance the possibility that housing values will ever decrease in Vancouver. A retired psychologist, he poured just about all his money into his gargantuan home. Given that his house represents the sum total of his life’s savings, the thought of it coming down 30% is more than he can stomach, apparently. He even refuses to read about the housing crash in the US. I suspect he might even deny its existence.”
– Jim at Ben Rabidoux’s ‘The Economic Analyst’, 31 Aug 2011. [Hat-tip to Ben, whose site is a daily must-read for anybody trying to keep up with economic developments in Canada.]

Wow, quite a story.
Illustrative, and also poignant.
Retirees are overly dependent on RE for their financial well-being.
Blind hope is not a good financial planning strategy.
Being a (presumably) intelligent professional is no guarantee that you will be wise with your finances.
There is a strong tendency for people to ‘talk (and act) their book’.
Psychologists are human too.


It is very difficult for most Vancouver owners to apply sensible analysis to the market while past performance, optimistic headlines, rote slogans, BBQ-talk, and their own hope, distracts them.

– vreaa

23 responses to “Psychologist In Denial – “His house is the sum total of his life’s savings, the thought of it coming down 30% is more than he can stomach. He refuses to read about the US housing crash; he might even deny its existence.”

  1. Ah but he’s obviously not THAT type of psychologist so it’s not ironic.

  2. You had me at, “BBQ-talk”.

  3. Man, why do people want to have the massive West Side house? The uncertainty and stress from having having all my life’s savings in one “asset” would outweigh the feeling of being a huge success. But then again I also buy my vehicles used too…

  4. And you are his son?

  5. the son is in a hurry to rush the father to sell the house, put the father to the senior home and get the cash. probably the son cannot stomach his fortune still in the father’s name.

  6. why are these stories never first hand accounts, always heresay? Just more renter propoganda in my opinion

    • You hit the nail on the head. Renter propaganda is everywhere! Just open any newspaper and what do you see – renter propaganda! Turn on the TV, switch to HGTV and there it is again – renter propaganda! Switch to any Canadian news program – full of renter propaganda! It’s like we are living in the Third Reich!!!

    • Yet when anyone actually does share a first hand account you tell them they are full of shit, you disengenuous gas bag.

  7. I’m going to go out on a limb here and guess that the perps here are beneficiaries of the “investor immigrant visa” program.
    http://www.cbc.ca/news/canada/british-columbia/story/2011/09/01/bc-cars-impounded.html

    • I myself overheard in a dim sum place last year. Two kids were caught speed at 180mph at UBC.

      The driver was mad saying if they were in Shen Zhen, a phone call to his father would settle everything. Now he has to pay a fine.

      • DerpKeeper!, you do realize, of course… that in addition to his imminent citing of AdmiraltyLaw (let’s see now, I can never remember whether it’s Flotsam or Jetsam) prior to seizing the InternationalSpaceStation, that the YellowEmperor has been secretly preparing [for YEARS!] to mount a successful MotoGP and/or WorldSuperBike and Formula1 challenge!?…

        To paraphrase MaxwellSmart, “He’s ‘that’ close!”.

        And if you will permit me a momenatry digression… Agent99 was, like, SoHot! Brunette.

        Blondes are deadlier, though. And better company in the long haul [for some of us, at least].

        Prophesy: In the not terribly distant future… an emissary of the YellowEmperor will suprise, astonish and humiliate a YanquiElPresidentePorVidas… by presenting him [her?] with a ‘token of esteem’… to wit, a ‘souvenir’ snatched from the Mare Tranquillitatis… [which same will be returned at an unexpected time and place]…

    • There are tunnels dug under the Chinese state companies leading right here. A standard in post-communist countries.

  8. So this guy is retired, unless he has a reverse mortgage he obviously has more than his “life savings” tied up in the house. The guy apparently has a beautiful house in a pretty darn desirable location. I say let him be happy with that; no doubt he earned a lot of $ to pay for it. Now if he’s going to sit in a $3,000 leather reading chair in his second study sobbing that house prices fell 40%, let me be the first to suggest he’s hiding a bigger problem than being at the beck and call of an irrational market’s violent mood swings.

    • You know, for a guy who knows ‘MissExcel’ so well he doesn’t have to bother with ‘protection’ anymore… you sure do get ‘qualitative’. .;

      Ok, I’ll admit it… everytime the ‘quants’ came anywhere near me I’d do a Steve Martin/Sgt. Bilko: “Make the bad man go away.” (probably just jealousy or ExcelEnvy, or something like that)

  9. The real problem in a case like this is the father using the house as an ATM. A la refinancing or reverse mortgage strategy. Other than that all he lost was paper gains. Part of the whole getting rich in real estate schtick is that if you stay in the same house for 30-40 years, your mortgage gets paid off and the price of your house increases based on inflation, giving you a sizable nest egg when you sell the house and head off to the old folks home.

    The value of a house as a hedge against inflation is considerable. (Capital appreciation is another animal – that’s just timing and speculation) Anything more than that is just timing.

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