‘Going Going Gone’ – Vancouver’s ‘Generation F’

Jesse alerted us to an excellent article: ‘Going Going Gone’, by Tyee Bridge, Vancouver Magazine, 1 Nov 2011. We will headline some extracted personal anecdotes in coming days, but, until then, we suggest the whole article as a must read, and headline it here for discussion.
Excerpt:
The dilemma many employers face, says Michael Heeney, a principal of Bing Thom Architects, is that once their employees want to have a family in their 30s and early 40s, they leave the city. “When they have one child in a two-bedroom apartment they can get away with it, but as the child gets older, or they have a second child, it really doesn’t work very well here.” When they leave, he notes, they don’t go to Surrey and commute, but light out for distant centres like Chicago. “These are people who are at their absolute most valuable, because they’ve been working in the business for 10 or 15 years. They’re the backbone, the boiler room of your business. And we’re losing that investment. In many ways, our most significant export is talented people.”

101 responses to “‘Going Going Gone’ – Vancouver’s ‘Generation F’

  1. is this your full time work vreaa?
    Who pays you to spew here?

    • diablo [aka Rollie/Rusty/etc/etc; (yawn)] ->
      It’s a labour of love and fascination; part of my life-long search for truth.
      Nobody pays anyone to do this kind of thing; why would they?

      BTW, I don’t think you answered my recent question:

      1. What percentage of your net-worth is in Vancouver/BC RE ?:
      (a) 80%
      (b) 100%
      (c) 400%
      (d) 500%
      (e) >1000%

      • At one point I wondered if VREAA might be a grad student in economics / sociology / etc. If that were the case, the information gathered here would make for one heck of a thesis!

    • Ever had a hobby?

      I bicycle, non-commuting, about ten hours a week. My recreational reading is at least that much. Some people manage to make time for worthwhile activities, even if they don’t generate revenue.

      So who pays you to troll? 🙂

    • yeah stop ruining the market vreaa!!!!!!!!!!!!!!!!!!!!!!!

      u r scaring the buyers

    • It sure would, Jeff. But the Academy is so chary about ‘biting the hand that feeds’ these days.

      NoteToEd: The BargainBasement ‘PsyOps’ will intensify in the coming weeks/months. ‘Gird yer loins’. The coming vitriol from the NewlyDispossessed might surprise. Even you.

  2. pricedoutfornow

    From the article: “As people realize that real-estate prices are not going to revert to 2002 levels, Toderian counsels the need not for mass exodus, but for a shift in culture and attitude”

    Well, I refuse to believe that that won’t happen. Others have given up but I won’t. I still see an economic time bomb coming up in terms of people’s household debts. Heck, just yesterday the news was commenting on how many seniors have taken out debt to buy real estate in the past few years. Well guess what? We youngins just can’t afford to buy those expensive properties when Grandma and Grandpa decide to cash in. This won’t continue forever.

    • pricedoutfornow -> We agree with you.
      It’s interesting that all articles dealing with affordability challenges take it as a given that house prices won’t crash. They simply don’t entertain that possibility. Yet that is precisely what is going to happen.
      There will still be challenges for Vancouver regarding housing in future (along with all other aspects of city planning) but the terrain will look different once the speculative mania implodes.

      • I agree with you. The thing is, even with a 50% crash, a SFH in Vancouver will still be way beyond the reach of median income families. To get affordability back, we need prices to go back to 3-4 times average income, which means somewhere around $300k. Even though I’m a strong believer that the market will experience a significant correction in the near future, I still have a hard time to believe that prices will go down far enough to be affordable once again.

        The parents of a friend just moved to Vancouver, from Mainland China. They bought a (big) house in Dunbar. They got their PR (I think my friend probably sponsored them), don’t speak a word of English, but have no intention to go back to China. They are retiring here and will stay with their daughter to help look after the kid. By just looking at the house and the car, you know they are loaded. These people are not speculators, not even “investors”. They just bought a house they need for the extended family and intend to live in it for years. They probably over-paid for it, but I don’t think they really care. If the market crashes, it will not matter to them.

        This is just one example and I don’t know how many of these rich families have moved to Vancouver. If this is a common situation from foreign buyers, the market may, after all, be more resilient than we think.

      • pricedoutfornow

        i just don’t understand how journalists can write these articles and not even entertain the possibility that there may be a housing crash. Meanwhile, in many other countries around the world housing prices have crashed and a lot of (paper) wealth has been lost. It’s like having a teenager who watches all his friends get into horrific accidents while drinking and driving, then shrugs, grabs a beer and heads out on the road. Why do we think we are so invincible?

      • “how journalists can write these articles and not even entertain the possibility that there may be a housing crash.”

        It is still worth considering the possibility — however remote you may think this possibility is — that prices stay high for an extended period. The city needs to plan what to do in that “worst-case” scenario.

        If prices drop precipitously, the problem is mostly solved IMO, though measures to repeat future events should be openly discussed and implemented, perhaps to a more attentive audience after the true magnitude of such a housing crash is properly understood.

    • Makaya.

      Your HAM family maybe paying cash here. But they may have also borrowed loan with 120% interest loan back in Wenzhou.

      Lehman Bro. also have lots of money to invest at same time.

    • “As people realize that real-estate prices are not going to revert to 2002 levels…”
      … two paragraphs later…
      ““It doesn’t go the other way once a city attracts that international attention,” says Smith. “Thirty years ago, San Diego was seen as a small town; now it’s a major city.””

      Bad comparison. San Diego is at 2002-2003 levels
      http://www.zillow.com/local-info/CA-San-Diego-home-value/r_54296/

  3. An interesting article. Though I’m not privy to what wasn’t quoted based on those interviews, I can’t help but feeling they’re missing the elephant in the room. The city has a speculative bubble problem — just look at rental yields — and is, like other cities in similar situations, prone to significant and violent asset price swings during financial crises. The comparison to Hong Kong is apt in the article’s context, though its past record of volatility (a fact not mentioned) should be giving investors some pause.

    There are simply no shock and awe approaches to solving Vancouver’s high housing prices and affordability issues that is on the table in any broad public discourse, probably because no addict likes entertaining detox, not least when they’re on a high. Hard problems are hard.

    • Agree completely.
      Almost all serious ‘players’ have been co-opted in that they almost all own RE (PR and often investment RE to boot). For purely personal reasons it is very hard for them to entertain price drops as a ‘solution’ to anything. Yet that is what is going to happen. Hard ‘solution’.

  4. Well that was a depressing read. Maybe if the city started electing Mayor and Council that aren’t from/ wrapped up with the property development biz, we might get policy makers that actually care and will do something about this runaway freight train. Perhaps Brent Toderian will be less smug when Van-based companies start moving with their talent.

  5. here’s some advice vreaa
    Take the time you spend on this site, upgrade your education, upgrade your McJob. Learn so you can earn. If you aren’t making enough money to afford to buy a home, start making enough to afford to buy a home. And if that isn’t attainable here, move.

    • diablo/Rusty/Rollie ->
      We’re guessing something like 200%-300% of your net-worth is in Vancouver/BC RE.
      Correct?

    • Do you even try any more? Come on diablo. They aren’t paying you for this poor level of effort, are they?

      I knew you lost when you brought out the ad hominem attacks. Now it’s just plain sad.

      • yeah rusty has been burned a lot on this site and I mean A LOT. Like every time he sticks his head up,,,, WHACK!

        Im really surprised he hasnt given up yet. What a mightly and stubborn neurosis that must be at work!

    • I’d love some ideas as to what kinds of educational upgrades one would suggest to accomplish this.

      The whole article is about people who are promising and ambitious (and likely well educated) who can’t make it here. If you have any specific advice as to how someone could make a better choice–please pass it on. What educational jump would increase someones earnings into affording an average home in Vancouver?

    • Be sure to tell VanMD over at VCI what you think of his McJob.

  6. “There seems little hope that Generation F will steal a happy ending from a depressing decade. A market drop of 40 percent—as seen in several U.S. cities in the real-estate meltdown—still wouldn’t put a median-income family within reach of a three-bedroom home in Vancouver. “

    Actually it would. The mistake is looking at underutilized bungalows as the benchmark property instead of a marginal property such as a townhome (which is the way the City has been progressing for decades for anyone who has looked at the city’s longer-term history) or what Statscan politely refers to as a “duplex” (what many in the City incorrectly refer to as a “single detached” home).

    The City’s current policies of two-tier housing — basement suites, laneways, and other low-paid amateur landlord-esque jobs to pack in the bodies — displeases many in the middle classes who have better things to do with their time, including being more active in the urban community instead of arranging for suite showings.

    It seems so obvious to me that a giant middle-class-oriented-dwelling rezoning effort is long overdue, something that would help ameliorate the pressure the same middle classes are putting on subsidized and purpose-built housing once designed for lower income tiers. Of course such dwellings are best erected when land values are much lower. If only there were a way to do that… But that would require a blue-sky epiphany that high land values are actually the problem, and more, reasonably controllable.

  7. 4SlicesofCheese

    OT

    Where your taxes go.

    http://money.ca.msn.com/taxes/gallery/top-10-places-your-tax-money-goes?cp-documentid=30966112&page=9

    9. HR & Skills Development Canada

    Your contribution: $1,069.97
    Percentage of total tax bill: 17.78 per cent
    Total government spending: $46.9 billion

    Human Resources & Skills Development Canada’s mandate is to offer economic services to help Canadians buy homes, find work, get skills training and move into retirement. The agency provides funding for The Canada Mortgage & Housing Corp., the Guaranteed Income Supplement and Spousal Allowance and Old Age Security.

  8. your problem vreaa, is that you’re measuring your net worth by how much money you have. This is why you consider yourself a failure. You need some cognitive behavioral therapy so you can start defining your success differently

  9. I was in my early thirties when the last RE boom (helped along by Hong Kong buyers) went bust in the late 80’s. It was the first really big increase in house prices many people saw in their lifetime. At the time no one knew what would happen, then the market dropped…a lot. Most of the boomers would remember that event. The difference today is deep down inside, boomers know what’s going to happen. But, many, many people are trying to buck the system by creating the false belief they can keep the gravy train rolling a little longer. I think everyone knows (realtors, government, boomers) the market will fall, they’re just trying to prop it up a little longer. Vancouver was the first to reach the stratosphere, so it will be the first to flatline, then fall like a rock. Then the crash will ripple outwards to the Fraser Valley, Victoria and Kelowna. Right now you are either witnessing the peak or you are witnessing the other side of the peak. But it is a long ways to the bottom, price wise and time wise.

  10. further to this,
    If the city approved development projects that had a % of units that were suitable for families then we wouldn’t wonder why folks are leaivng.
    “Maybe if the city started electing Mayor and Council that aren’t from/ wrapped up with the property development biz…”

    Honestly, how many 1 or 2 bedroom units does one city need? Start forcing developers to provide 30-40% of their project that’s family appropriate.
    Of the 2013 condos for sale in Vancouver now only 7.6% are 3 or more bedroom.
    If you want to add some blame for lack of affordable family homes you can tack on greedy developers and co-conspiring city council.

  11. jesse/vreaa
    when you sit in your armchair and judge others, expect others to sit in their armchair and judge you. The thread, “spot the speculators” is a good sample of what happens on this site.

    • Judge the message, not the messenger. Separate the subject from the thesis. I know critical thinking is hard so keep at ‘er.

  12. “I’d love some ideas as to what kinds of educational upgrades one would suggest to accomplish this”.

    a couple with 2 professional degrees are able to afford an east Vancouver detached home with 20% deposit if it’s a first purchase. Nurses, teachers, engineers, etc. make 75K each. Some nice starter detached can be had around 700-750K. Caveat…making your first purchase a detached home is not advisable. Rolling equity from a sale of a condo/townhouse would dramatically reduce mortgage payments.

    • Royce McCutcheon

      1) Your salary numbers are flat out wrong, at least for the first two. Few if any teachers or nurses in the first decade+ of their careers are earning that much.
      2) Please link to some examples of these ‘nice detached starters’ in Van East at the quoted prices you give (which, of course, are still 5x the annual pre-tax fanciful salaries you listed).

    • There is significant duration risk embedded in those prices. Quants are telling lenders to back away from Vancouver. It’s a hard point to get across but low rates are not a savior of high prices. It seems incongruent now but that’s investment bubbles for you.

    • 4SlicesofCheese

      My friend tried rolling a townhouse into a SFH.

      Still on the market since July, two price reductions.

      They are in the market for a million dollar house. After the reductions/renos/agent fees they are breaking even from when they bought 2 years ago. That is not including their crazy strata fees, taxes etc.

      They do say SFH at 1 million in passable BBY are being snapped up quickly.

    • Wow. How many Vancouverites make 75k. Remember, Vancouver is not a head office city with such jobs. Also, what is the probability of both spouses making 75k each. The usual set up is that one spouse makes 75k while the other is making maybe 40-50k because when starting a young family one spouse has to delay career gratification and support the other spouse’s career aspirations – we can not both be burning the midnight oil and raising kids.

      At the low Vancouver salary levels by the time one makes $75k they already have about 10 years post graduate experience. This generation already bought homes around 2002 before the circus came to town. They do not need to buy a starter home. It is people with 5 or less years post grad work experience really needing a starter home.

      Hypothetically, if your assertions were true for a second. 20% down payment on a 700k house is 140k. How many people have 140k savings? Also you would need money for closing costs. Even if I had 140k saving, I would not waste it on some ugly Stucco dump in East Van. I could buy (outright) a newer house with a 2 car garage in Seattle, Phoenix, Las Vegas. That NAFTA TN visa is indeed a God send. I could enjoy the same Vancouver weather in Bellevue and still visit family every other week, and still pay a quarter for housing.

  13. “Starter detached.” “East Vancouver.” “700-750K.” Dia-blow, I tried not to jump on such an incredibly easy target, but good God man, can you please explain how sinking three-quarters of a million smackeroos into some World War II-era craphole (and that’s precisely what’s available at that price point – I just checked) stuck square in the middle of the nasty old east side of the Best Rainforest on Earth (TM) is a smart idea? Please elaborate.

  14. 88 houses below 750K in East Vancouver now.
    If you can’t find something suitable on two professional incomes perhaps the problem is with you, not the inventory. Or maybe it’s the income???

    • Royce McCutcheon

      Great. Feel free to link to the ones you think best represent ‘nice starter homes’.

      “If you can’t find something suitable on two professional incomes perhaps the problem is with you”

      Here are teacher salary data. When I look at Vancouver, I only see the very highest pay grades making around what you suggest. Maybe I’m reading things wrong?
      http://www.bcpsea.bc.ca/bc-teachers/collective-agreements/teacher-salary-grids.aspx

      From talking with multiple nurses, my understanding is that a base full-time RN’s salary is around ~50-55k.

      Let’s ignore the acceptability of any Van East homes you might present. Having formed your affordability thesis on the basis of overestimated salaries, perhaps the problem is with you? Seriously – most people in these jobs who haven’t worked for >10-15 years aren’t earning what you seem to think they’re earning. Your ‘2 professional jobs’ couple probably more frequently has a post-tax income that’s better pegged at 60-80k (most teachers and nurses I know weren’t able to secure full-time positions here until a few years after their training completed [if they’ve managed to secure full-time gigs at all]).

      Forget VREAA’s question about how heavily you’re invested in real estate. I want to know how old you are. You seem to have no idea of the job/salary realities of people in Vancouver under 35 or 40 (including professionals).

      • Wow. At a Calgary engineering company a document control clerk makes 40-50 $/hr on contract and has loads of work. It sucks to work in Vancouver. But you can Sail & Ski on the same day so I guess it’s OK.

    • diablo, it is possible to do as you say, and the bank would agree … but why do it?

      You’d be stretching your finances from day one. Any savings would have gone into the down payment, and there wouldn’t be anything left to rebuild meaningful savings. Need a new roof or even just major car repairs, and you’ll be eating into the equity. And better hope your jobs are secure!

      All that for what may be considered a “teardown”.

      It’s time to say “Sorry, but I’m not paying THIS MUCH for THAT!”

    • My husband and I make a combined income of around $150k. We bought a house on the North Shore after a relative died (fixer upper, below market value, no realtors involved, no property transfer tax), with a $300k down payment from the sale of our last house. And we still had a hard price ceiling of $640k, which meant about a $2k monthly mortgage. If it hadn’t been a family property that I knew inside and out and planned on keeping for many many years to come, we likely would not have bought in this city again.

      I cannot IMAGINE purchasing anything in the price range you’re quoting on a $75k income unless they had a gigantic downpayment, especially when you factor in the points other posters have made up-thread about salaries, career progression and the unlikelihood of two spouses making more than $75k each in this town. It’s not just unaffordable, it’s insane. Nobody with any sense would do it. Instead, they leave, and I can’t blame them. I’d do the same thing in their shoes.

  15. diablo, come clean with your real estate holdings and total mortgages you own. Seriously….sometimes the thought of seeing people like you crash and burn, getting depressed and suicidal are the only thing that keeps me going in the dark rainy season. I used to love Vancouver and don’t ever want to leave, even for higher pay and better opportunities, not it’s the opposite. I never realize why until recently, it’s people like you!

  16. How about when one of the income earners goes on maternity leave? Plus, the rolling equity thing would only work if you bought a condo 4-5 years ago. People graduating now from school are utterly SOL.

    • Momma doesn’t get maternity leave.

      Maybe two weeks – just like in the States.

      Friends don’t let friends take on too much mortgage debt.

  17. “Here are teacher salary data. When I look at Vancouver, I only see the very highest pay grades making around what you suggest. Maybe I’m reading things wrong”?

    you’re reading the wrong data correctly.
    A teacher in Vancouver usually starts outside the city and brings several years experience when they finally make it back here. Ergo, the avg salary of a Vancouver teacher is higher than outside the city. The pay scale does not tell you anything about the experience level of the avg Vancouver teacher.

    Regarding the 88 houses. What is suitable for me may not be suitable for you. You think that none are suitable – that’s your choice.

    Finally, with only 19% of all properties in Vancouver being detached homes, it’s quite easy to find 2 professionals who make 150K/year in line on Sunday at open houses. Those who work part time or are at base pay grid need not apply

    • “it’s quite easy to find 2 professionals who make 150K/year”

      True, though I think you’ll find that 19% are SINGLE detached. There are as many and then some of “multifamily”, which includes townhouse, and detached with suites, which when you think about it are pretty much townhomes, just rotated 90 degrees.

      • “…detached with suites, which when you think about it are pretty much townhomes, just rotated 90 degrees.”

        Brilliant insight.
        Did you just now coin that, jesse? ….because it’s spot on, and has ‘eureka’ heuristic potential.
        And, BTW, all your discussion regarding density increases and ‘land hoarding’ make sense.
        But I’m still uncertain as to how that would effect land prices right now: If you suddenly declared that all SFH lots on the Westside could be built to 3 or 4 town-homes, what would happen to the price of lots? There would suddenly be a potential competing supply of thousands of town-homes.

      • I think there is a problem where scarcity combined with uneven capital distribution results in inefficient land use. It’s difficult to know what would happen to land prices given this.

        The direction of prices won’t matter much, IMO. There are enough “marginal” low-density dwellings to increase density over time.

        There is nothing to say that certain parts of Vancouver could remain low-density, but the City as a whole should understand the consequences of this. I think the City will find itself under greater and greater pressure to increase density, to the point where existing owners in low-density areas will soon be in a distinct minority, if they aren’t already.

        BTW density increases in low-density neighbourhoods are nothing new, either explicit like Kits/Mt.Pleasant/Westend/Cambie over the past couple of generations or implicit like everywhere else. In my view large inefficient dwellings are detrimental to a City’s economy (I’ve seen it in SE Asia from the last investment boom of the ’90s), so there are stark choices the City has to make. In my view it’s better policy to match dwellings to contributing denizens. On that front I think Bridge’s article is correct about changing what the median homeowner can expect in the next 10-20 years. Based on price signals starting well before the most recent bubble, it was only a matter of time.

        Oh and this does not justify current prices, far from it. Just don’t expect a 3:1 price-income on a west side bungalow. Maybe 5:1 or something. Who knows.

    • 750K “starter home.” Let’s just take a step back and think about how insane that sounds.

      And if prices don’t go up, that “starter home” will be your home for the next 30 years.

    • Royce McCutcheon

      So wait… what? Your ‘2 professional income’ couple is older, established in positions based outside of Vancouver proper, and then moving INTO the city to take more senior positions here once they’ve made a life in a different region (and ignoring people slightly lower down the chain WITHIN Vancouver looking to get promoted in the area they’ve worked in all along)? And when these couples do move here, this established (read: older, potentially with kids) couple is buying a ‘starter’ place in Van East? THAT is your take? Just want to make sure I have this right.

      Nice dodge on the 88 places in Van East by the way. People have different tastes, huh? No kidding. I asked which ones YOU thought were acceptable as ‘nice starter homes’.

    • Households making more than $100K represent 180,000 households in the city. Or about 20%.

      So your couples making $150K represent ye olde marginal buyers.

      • There’s not a decent professional engineer over 40 earning less than ~$150k a year in Calgary (with bonus, options etc.). And Calgary is an engineering town, so there are lots of us. Why do you Vancouverites allow yourselves to suffer so? Move on. Get a life. You’ll never look back.

  18. Simple suggestion – Metro Vancouver or province of BC applies a dollar cap to mortgage insurance. We can argue about what the limit should be, but I’m thinking about 400k:

    The usual 1% down – max house is 404k
    Only just high ratio 19% down – buy 493k house.
    Diablo special at 750k – requires 350k down, no insurance needed, bank decides if the risk is worth it.

    HAM continues as usual. Normal people are held back. See what happens. We don’t need the federal government or Bank of Canada to make these decisions, we need local leadership for a local issue.

    • “we need local leadership for a local issue”

      Well that should include publicly lobbying all levels of government to make them aware of the situation.

      What can the federal government do? They can impose stricter capital reserve requirements on all mortgages of Vancouver properties and tie them to local incomes. They can cap CMHC loans. They can increase income tax scrutiny based on those who aren’t declaring suite income (a simple cross-reference of addresses would point to the offenders). They can set up MOUs with foreign countries about tracking foreign income.

      The provincial government can allow cities to collect property tax surcharges for properties deemed to be inefficiently using land not commensurate with a long-term density strategy. They can even defer these taxes until time of sale; no doubt if housing crashes the cities’ revenues will be in need of some assistance anyways.

      The local government can impose aggressive zoning changes that produce long-term growth in-line with the income make-up of its contributing residents. It can come to terms with its disingenuous basement suite building code loopholes and start producing sustainable density for a broad income, age, and family demographic.

      The local government can start changing its school board philosophies and start figuring out how to repopulate underutilized neighbourhood schools (on the east side mostly) and that means asking some heartfelt questions about what would bring children and parents, with the provincial dollars they garner, back into the public system.

      Start admitting you may not actually be in control of the situation is one step. But understanding who, or what, IS in control of the situation helps a lot in terms of public awareness. The only thing the City is powerless over, in my view, is its addiction to speculation.

      • “The provincial government can allow cities to collect property tax surcharges for properties deemed to be inefficiently using land not commensurate with a long-term density strategy. They can even defer these taxes until time of sale; no doubt if housing crashes the cities’ revenues will be in need of some assistance anyways.”

        Easier to implement – triple the current income tax rates on all properties. Since this comes right off the “rental yield” it pressures prices downward. Collect at time of sale on needs-tested basis (as you suggested). Proceeds go to whatever you want (it’s not about the proceeds, it’s about raising the cost of ownership outside of house price).

        High prices are a negative externality – they hurt society. A pigovian tax attempts to discourage the externality by making it more expensive. The BC carbon tax is a pigovian tax.

        I would rather buy a cheap house and pay a ton of property tax than buy a house at today’s prices. It’s much more “generationally” equitable because it diminishes the role of timing in housing cycles.

      • I visit Houston occasionally and have learned that prices there were never frothy. I’m told that city taxes are commonly 4% of assessed value, but there are no state taxes. If the province and the city collaborate for a net zero change to the tax code, speculation ceases as the cash flow requirements will be too onerous for speculators. It seems crazy but it works in Texas.

  19. yank,
    A starter home is a condo.
    You’re creating expectations that cannot be met

    • Royce McCutcheon

      “A starter home is a condo.”

      Good luck trying to convince young Vancouverites of this notion if prices continue rising and they become increasingly attuned to how much further their dollars will go elsewhere.

      “You’re creating expectations that cannot be met…”
      …unless you choose to move anywhere else in Canada or the US. Which is what increasing numbers of young people your tax dollars paid to train are doing.

      You like to say that Vancouver prices are justified and sustainable because of demand. But you also seem keen to avoid acknowledging that there are consequences tied to these high prices regardless of whether they are justified. You seem to not believe that people this city needs – and it’s youth in particular – might be pushed out. The proof is in the inflated salaries you cite, your dismissal of other people’s stories regarding recruitment challenges, your ad hominem attacks on differing POVs, etc. If you were strictly a real estate investor who 100% believed that prices wouldn’t tumble, you wouldn’t need to minimize the impact of high prices the way you consistently do. So what are you reacting against? If you are actually a landlord, is it that you’ve had a harder time getting quality tenants lately? Do you have children and maybe the prospect of a city that excludes its own youth is bugging you a bit? Did you recently hear some firsthand account of your own about someone leaving town or having issues recruiting in your field?

      Do me one favor: if prices tank – whether this year or 5 years from now – please keep coming back here and posting. Or at least promise you’ll remember us. Because we’ll be remembering you.

    • Now condos in Vancouver are priced at 750K?

      oh my.

      If I was living in Vancouver I would rent and save to purchase a home when I left the city. Then I would buy a place outright (or build) and retire to Costa Rica, Ecuador, or maybe Seattle if I decide that I don’t need too much sun.

  20. “… I asked which ones YOU thought were acceptable as ‘nice starter homes’”

    Something with three suites I can rent out and a double garage.
    My needs as a landlord are much different than yours for a principal residence

    • Royce McCutcheon

      Huh. You brought up ‘nice starter homes’ and cited a specific price range in a specific area… and after being asked for examples, you’re now talking about your needs as a landlord. Well okay then.

      Are you taking suggestions for a 4th (or 5th or 6th) alias? Because I have some suggestions.

    • You are not a landlord.

  21. house prices rise = more property tax
    cutting development up into smaller peices = more property tax
    make immigration easier = more taxes
    increase total immigration #’s = more taxpayers.
    more home sales = more property transfer tax
    densification = more taxes
    etc. etc. etc.

    This is why you’re fighting a losing battle.

    • “make immigration easier = more taxes”
      “increase total immigration #’s = more taxpayers.”

      Ask the europeans what they think about that…

    • So we agree that the way to ameliorate property bubbles is more taxes. This isn’t about doing what’s popular, it’s pointing out the solution and taking credit for what could have been avoided if TSHTF.

      It’s a can’t lose strategy. I’m serious.

    • Can you say Ponzi?

      Face it – you are losing when you buy Vancouver. As more people figure this out, your slumlord properties will also be losers, particularly if you consider the opportunity cost of holding over-valued property.

    • Fighting what?

      Really – I don’t get who you are fighting.

      Bears who are worried about fundamentals don’t think anybody needs to do anything for a housing crash. It’s the definition of a “bear.” In terms of activism and education, it sounds like commenters would like to alleviate the social and economic disaster that most likely awaits. But as veera has noted, the dye has been set.

      Of course, I also think the Eurozone is also in trouble. Clearly I’m not an optimist. Happy to be wrong.

    • Every time you see something in public policy you don’t understand or don’t like, remind yourself, “The provincial and local governments are broke.” Usually you’ll then be able to figure why that partiicular thing is happening.

  22. I didn’t think I would see the day come in Vancouver, its here. This is capitulation; resigning to excessively high prices continuing indefinitely and/or leaving.

    The blog-o-sphere bears have always pointed to various cases, as usual bears were early and over zealous. This is what capitulation looks like on a market wide scale, this is what will reveal that our RE market is surprisingly more local than previously thought.

    The prospective buyers who are now leaving or sitting out, are precisely the “rich foreigners” that were imagined to be bidding up RE. The locals have priced themselves out of this market with their willingness to load up on debt, and bidding on ever increasing RE.

    Whats particularly great about this situation, is that it requires no “black swan” to trigger. This is unfolding precisely the same way as it has dozens of times before, in re markets and equities alike. Buyers, foreign or not, are no longer willing to spend for the sole reason that prices are too high.

    How long will the decline last? No idea, but I feel confident in saying that a sustained decline is upon us.

    • Pretty much agree with you, Burt.
      There is an exhaustion to what we’re seeing at present: lots of MSM stories about people leaving, even many bears now apparently resigned to sustained high prices. Perhaps the most intense form of capitulation is long-term bears buying in disgust — we haven’t heard many stories like that, yet.

      From the perspective of the broad group, the very most unexpected thing that could happen now is for prices to begin their plunge. From a contrarian perspective, the top likely is indeed ‘in’.

  23. The city acts as a revolving door, attracting young people in their 20s, then turning them back to where they came from or to another urban centre as they reach the family years. For those who grew up in Vancouver, of course, there’s no revolving door—only an exit sign. “This,” says Michael Heeney, “is the double-edged sword of being the most livable city in the world.”

    😀
    Nobody sees the irony here?

    • Yeah, bizarre, hey?
      “The most livable city in the world provided you leave”

      Right up there with:
      “Housing in Vancouver is affordable provided you omit the unaffordable housing from your calculations”.

  24. “A silver lining”

    A software developer that worked on one of my projects has moved to Ontario. Another one announced that his wife is pregnant and once the baby arrives, they are moving back to Europe.
    In the past few years, I have been looking for several software developers for my business. The positions were mostly for senior or at least intermediate developers and were advertised on craigslist, BCTechnology and Monster. The funny thing was that for every single position from all sources, the pool of applicants was virtually the same – same people and most of them were not very skilled. Out of those few that were skilled, some left or are leaving soon.
    Recently, I talked to an IT recruiter. He told me basically the same thing – there are almost no quality people and he sees the same applicants again and again. He said that he has never seen such a shortage.
    So there is the silver lining – if you are a quality software developer, it should be easy for you to find a job, because many quality people have left.
    However, salaries for these positions are still lower than in Toronto or Montreal. That may eventually change in bigger companies. I doubt that small companies can afford to pay more, because the owners need to make money too.

  25. Some of the salary figures you people throw out there are pretty accurate. The problem is that for newer grads, there are little or no jobs in their field. Just from casual discussions with friends and relatives, there are no jobs in teaching, specialty doctors, nurses. It takes years for some people to get a full time teaching position. The younger generation will be forced to make serious choices about where they want to live and how they want to live.

    • doctors and nurses have full time jobs right out of school, but not sure about teachers

      • Wrong, diablo, wrong… not all doctors have full time jobs right out of school (and don’t use residency training as your example of a full time job). I concede that if you are a family doctor (like myself), that there is high demand for those services either in a locum capacity or in a more permanent clinic setup. But I have friends who are nephrologists, gastroenterologists and various types of surgeons who are still trying to find a proper staff position. For now, they rely on filling in for doctors when they go on holidays or covering call on weekends. Far from what one would consider a full time job. And for the record, these are not lazy people. You can only do so much when the health authority decides to cut elective operating room time by 20%.

        My good friend’s wife is a nurse who is thankfully employed in a full time position. You should know however that there has been a nursing hiring freeze in place over the last year in some of the lower mainland hospitals. She has said that if she were starting out today, that she would at best be “casual” which is code for they call you when they need you… again, not a full time gig fresh from school.

        Thanks VREAA for keeping this site up… don’t let the haters get you down. Oh and by the way, one of my friends from residency (currently in Toronto), took a pass on moving to Vancouver after coming over for a week and seeing first hand the property prices. Just another example of Vancouver losing out on young professionals needed to upkeep our society.

      • Teachers have to go through a completely ridiculous setup where they work as a TOC (teacher on call) or a substitute until they have enough seniority to apply for a “real job”. This means working on call for at LEAST 2 years, all over the lower mainland. You never know when you’ll be called, how long your gig will be, or what to expect. Try paying rent on that. It’s exactly the same crap as the ambulance service.

        Lots of young teachers aren’t interested in this, and they just leave. Three friends of mine who graduated in the past 5-8 years have done this. These are skilled people with master’s degrees and in two cases, previous careers in social work or early childhood education which they had quit to go into teaching. The jobs just are not there, or hadn’t you noticed that they’re busy closing schools?

  26. Diablo you are dead wrong about teachers. Most teachers spend anywhere from 1 to 3 years working as Teachers-on-Call before they get a continuing contract. That’s getting paid by the day, no regular salary. If a teacher with seniority wants to move to another district the chances are slim to none, because the district would rather hire a cheap new teacher than an expensive older teacher.

  27. A close friend who graduated last year as a gastro specialist from UBC, finally got his job offer and green card in eugene, oregon. I visited this September for a house warming party: 8.000 sq.ft lot, 3.400 sq. ft house built in 2008, helper suite on the main level, self contained with rear entrance (rented at $ 1.220 / month, including utilities, cable, internet), double garage, radiant heat, hrv, cetral air condition and vacuum. Constructed with red brick, energy star type windows, two fireplaces, gas stove, good quality laminate flooring, etc, etc. He bought it for 328.000, after bargaining for 3 months, initial asking was 375.000. the funny thing is that we are in the same field and his income is almost double of mine, of course there are things like medicare, but the cost of living is much, much lower than vancouver, gas, groceries, utilities, etc. are all lower. Oregon is a state which is tax free, this also helps. I am considering leaving as of now, its too much to pay for the views, rain, and short summers.

  28. “A starter home is a condo.”

    Vancouver is the only North American city where a starter home has to be a condo. In other cities the choice between a condo and a detached house is a lifestyle one, not usually a financial one. I have an accountant uncle with his own CA practice in Toronto but chose a condo because he did not want to be bothered with maintenance, considering he lives alone and works like 60hrs a week.

    We young families are not demanding starter homes in West Van but just a basic bungalow in New West or Surrey. In other NA cities I will be able to buy a basic, older, 3 bedroom rancher for not more than $200k. Guess what? those are the sort of cities a lot of young professionals are now moving to. You will only wake up when you can not find a family doctor because all the young doctors have gone to the States or Ontario.

  29. http://www.vanmag.com/News_and_Features/Gone?page=0%2C0

    “When Vancouver planners talk about increasing affordability, they’re talking mainly about helping the city’s most vulnerable”

    “For those who couldn’t or didn’t buy in—who were outbid, came late to the party, or sat it out waiting for a massive market correction—real estate has been a dismal science”.

    “…tens of thousands of middle-class households are getting a hard lesson in diminished expectations. Unless the members of Gen F want to raise their children in a one-bedroom condo, their salaries will qualify them to be no more than permanent renters in Vancouver. This is a well-known phenomenon in cities like Paris and New York, but it’s a recent development here, one taking an entire cohort in their 20s, 30s, and 40s by surprise”.

    “For a long while we’d been looking down our noses at people shelling out what seemed to be exorbitant prices for tiny, well-marketed properties. We waited, a bit haughtily, for the oft-predicted crash to bring prices back down to our level. While waiting in this particular basement for the past three years, we’ve paid $40,000 to our landlord”.

    “One thing that has changed in the past year is our perspective: we no longer believe a crash is inevitable, or that it would make any real difference to us”.

    “The longer I’m out here, the more I’m convinced this market is unstoppable. If this was any other regional city, prices would adjust. But that’s not how it is here,” he says. “I don’t want to sound like we’re feeling sorry for ourselves, because we could happily move back. But we realized that Vancouver is not a regional market. Real-estate-wise, it’s not really Canada anymore.”

    He sees the Vancouver market as ripe for a correction, but says prices will likely rebound and in the long term remain high.

    “It doesn’t go the other way once a city attracts that international attention,” says Smith. “Thirty years ago, San Diego was seen as a small town; now it’s a major city.” Smith also points out that what Vancouverites are experiencing is a common problem globally. “If you live in the big city, you live in a smaller space. That a teacher cannot afford to live in the city she teaches in, that’s common in cities all over.”

    • Yes, those are very relevant passages to quote from the article.
      It summarizes a position that is contrary to ours: the argument that we have reached a permanently higher plateau of prices, and that we have become a kind of “New Monaco”; “not really Canada anymore”.
      If this is indeed the case, then any price dips will be shallow.
      As you know, we disagree: we do not see prices as sustainable; we see a massive amount of speculation in the market, we see the potential for a very big price crash.
      We will simply have to wait and see how it plays out.

  30. we continue to believe that price dips are supported at a shallow floor with pent up demand.

  31. I’d just like to point out to the Gen Xers commenting that the job scene in Vancouver has changed little since the ’70s. It’s always been difficult to find decent work. The economy in the lower mainland has never been diversified enough to support a good cross section of job opportunities. The well paying jobs come and go with commodity prices — as they always have. The service industry cannot pay a living wage in any large city. Vote with your feet. See the world. Come back to BC when you can bring cash.

  32. Any ideas on what prices will be like on Bowen Island in ten years? I will be the market for a retirement home then.

  33. For Diablo and the Occupy Vancouver crowd – to crack the top 1% of individual income earners in Canada your CRA income has to be about 185k.

    2005 median (net) wealth for 35-45 year-olds was $140k. That was already an upward RE market (by the way) so “actual contributed savings” of the age group was probably less.

    Nice numbers to know.

  34. Wanted to get to 100 comments! I am not sure of Vancouver magazines political stance but using the term Gen. F. seemed a bit over the top – kind of like a typical high end home owner – not realizing the damage done by the high pricing.

  35. Diablo,

    You are a mad man. Seriously, I mean it.

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