Monthly Archives: November 2011

Ottawa Perspective – “People in Vancouver are so delusional that they can see a house for sale at double what one would pay elsewhere and feel that it’s a bargain.”

“I was out in Ottawa a few weeks ago visiting with family. It was interesting speaking with family friends who were absolutely aghast at the neighbour who had just listed their house. Can you believe it was listed at $375k??? I just laughed and said it was just a matter of perspective.
People out here in Vancouver are so delusional that they can see a house for sale at double [what one would pay elsewhere] and feel that it’s a bargain. All sense of reality is gone as it appears that many have lost sight of what the value of house actually is. It’s really sad.”

– Not much of a name… at vancouvercondo.info 8 Nov 2011

Poster ‘patriotz’ at VCI has revealed that they have moved from Vancouver to Ottawa, and posted [VCI 8 Nov 2011]:
“Another warm sunny day in Ottawa. Here’s what I get for having given up on the “best place on earth”:
– more cultural activities
– people who are polite and say hi to you on the street
– neighbourhoods that feel like neighbourhoods
– ethnic diversity but not segregation
– no homeless people outside of downtown
– breakins are regarded as newsworthy
– much better job opportunities”

“We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard.”

“My wife and I have good jobs in high standing professions. Between us, we have five university degrees in hard science fields (with a sixth at the doctoral level underway) all from top three Canadian universities. We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard. We are good with our money and have solid nest egg already built. We cannot justify spending 80% of our income to be able to afford a single family home anywhere within an hour of the downtown core.
We also visit Seattle regularly. In Seattle, we would both make double or more than we would here in Vancouver, with housing at half the price, and the same climate. Similar circumstances exist elsewhere in Canada. While our families are here, we want to start our family in a place where we can provide our children with opportunities, not where every last dollar goes to real estate.
To put a point on it, people like my wife and I are being groomed by our employers to take on senior leadership roles in their organizations down the road. The problem for our employers is that we won’t be here – we can’t have the family we want, along with quality of life we desire and can easily obtain elsewhere.
I look forward to leaving this real-estate obsessed burg. Unless things change, things are going to get a lot worse here before they get better.”

– Vancouver In The Rearview at VREAA 6 Nov 2011 8:06pm

News1130 Radio Poll – Is it smarter to rent or buy in Metro Vancouver?


News1130 Poll, 9 Nov 2011
[hat-tip ‘TPKFAA’]

“At moments during our house hunt, I felt in my gut that something wasn’t right. We’d go to open houses for $400,000 homes and see lines of couples in their late 20s waiting to get inside. I kept wondering where all the money was coming from. How did all these people make so much?”

“I felt we could afford around $350,000. We called a real estate agent named Mitch, and suddenly we were looking at houses that listed at $500,000 or more.
It felt a little crazy to be shopping for houses that cost half a million dollars, but my income was growing rapidly. Everywhere I looked, people were being rewarded for buying as much house as they could possibly afford, and then some. There was this excitement in the air, almost like static. I started to think that if I didn’t buy a house right then, I would never be able to afford one.
At moments during our house hunt, I felt in my gut that something wasn’t right. We’d go to open houses for $400,000 homes and see lines of couples in their late 20s — younger than we were — waiting to get inside. I kept wondering where all the money was coming from. How did all these people make so much?
But prices just kept rising, and when people kept buying, that made it seem safer. I knew from my work as a financial adviser that following the crowd could be costly. But like everyone else, I felt safer in a crowd.”

– from ‘How a financial professional lost his house’, Carl Richards, NYTimes 9 Nov 2011
Remarkable story, be sure to read the whole piece. Hat-tip to Ray for the link (and to many other readers for alerting us via e-mails: clearly this story resonates for many of us.) -ed.

Peddling Influence In Municipal Government – Civic Politicians and Vancouver’s RE Industry

In March 2011 we calculated that Christy Clark received more than 50% of her campaign funds for the race for the leadership of the BC Liberal Party from RE-related industry.

Now, at the Municipal level:

“In this case, the money speaks a lot. If you look across the range of contributions and you try to group them broadly, the property development and construction business is the largest collective group of contributors.” – Patrick Smith, political science professor, SFU
– from ‘Running Against Developers in Condolandia’, Ben Christopher, The Tyee, 9 Nov 2011
[hat-tip ‘Jeff Murdock’]

“It’s clear that Vision Vancouver and NPA received a lot of funding from development companies during the last election.” – Nicole Benson, Candidate, Neighbourhoods for a Sustainable Vancouver (NSV)
The Tyee, 9 Nov 2011

“Both main parties are completely beholden to real estate developers, more so than any time in the city’s history. This isn’t good and I have to wonder just how much monied backslapping and handshaking is going on. This is how the BC Liberal Party imploded, by allowing their donors and top, most accommodative friends unfettered access to the keys of the province: No door was off-limits, no industry remained unmolested–friends and insiders ravished them all.
Well, look for Vision’s attempts to destroy the viaducts to be one such example. The developers with the most to gain are Vision’s biggest corporate cheque writers…that’s if you don’t count the American money of unknown origin, pouring in from the radical, left-wing Tides Foundation.
And this isn’t an issue for the NPA to raise? Of course it is, but they can’t, seeing as though the same monsters, who buy favour, are writing them cheques as well.”

Alex Tsakumis, on his blog ‘Rebel With a Clause’, 7 Nov 2011
[hat-tip ‘Nemesis’]

“Vision’s executive director, Ian Baillie, insists that there is no quid pro quo relationship between campaign donors to his party and the candidates they support.”
The Tyee, 9 Nov 2011
[Don’t you love it when these guys say this with a straight face?
Why would companies possibly give money to politicians if they didn’t want to curry favour?
What else could possibly be on their minds?
– vreaa
]

“The house was on the market for 3 months but finally sold for 4 times what I bought it for only 13 short years ago. I am now out of the market and renting for the time being and I feel really good.”

“I bought my first house in 1998 on the west side after saving up a 15% (60k) down payment. I did do some market research and personal finance calculations before I bought. I concluded that prices had been flat for the previous 10 years, and that I could reasonably carry my mortgage (at a 6% interest rate) based on my income at that time. Over the years I built up significant home equity but barely reduced the mortgage amount (partly by choice and I chose to invest extra money elsewhere – you gold bugs can rejoice). Until very recently I had no intentions of selling my house, and I was quite pleased by the 50-150k year-over-year gains suggested by my city property tax assessment. However, due to some recent changes taking place in my life (mostly opportunities), coupled with a nascent awareness that Vancouver house prices were “extremely expensive” it seemed like a good time to get out of the market. I did some more research that included looking at house price to income ratios and other house affordability metrics, personal debt levels, and global/national economic trends, and concluded that Vancouver prices were at dangerously high levels based more on speculation than fundamentals, and that a significant near term market correction was the most likely outcome. So not wanting to get trapped in a down market I decided to put the house up for sale in early 2011. The house was on the market for 3 months but finally sold for 4 times what I bought it for only 13 short years ago. Needless to say I think I made out very well. The point I am trying to make is that I was lucky because I wanted to buy at a time when prices were relatively low, and lucky (and perhaps just a little bit smart) because I decided to sell at a time when prices were probably topping out (won’t know for sure until a correction has actually played out since speculative bubbles can remain far longer than market fundamentals might suggest). I am now out of the market and renting for the time being and I feel really good, and I mean really, really good. Zero debt, highly liquid investments, and cash. If somebody were to ask me today if I would buy back into my old neighborhood at today’s prices my response would be a very emphatic no, whether I could afford it or not. At this time there are far more lucrative, not to mention far less risky investments than Vancouver real estate where I can park my savings. For any person contemplating a real estate purchase today that is based on maximum financing (leverage), assumptions such as flat interest rates, steady employment, and a stable to growing Canadian economy, the downside risk is just way too scary. So to conclude, not only is the property ladder strategy unlikely to work in the current market, it has to potential to financially cripple a highly leveraged real estate buyer for many, many years to come if (and more likely when) a significant price correction comes. …
Whether you are a speculator, or just need a place to live, there is a good time to buy and a good time to sell (or if you prefer – there is a bad time to buy and a bad time to sell).”

– ‘Feels good to be out’ at VREAA 6 Nov 2011 5:31pm

“Welcome To Vancouver. Now Buy Some Real Estate”





– photos by ‘ams’, who writes:
“Just came back through YVR international arrivals and got pictures of the real estates ads that you see once you clear customs and are on your way out, there are two billboards inside and two outside. The last time I went through YVR it was all Real estate ads, today only four.
Most world airports, in the international arrival area, greet you with some ads for local companies, or the local economic development explaining how great the city/region is for business.”

[thanks ams. – vreaa]

“At the time he absolutely believed it 100%, and so did I. How did we get sucked in? I figured it out: It’s possible to have your ego get so pumped up that it completely destroys all logic and common sense.”

“Little vignette. During the dotcom bubble when our company stock was flying while we rushed crap out the door just to be able to book the revenue, I overheard from my cube one of the sales guys ask: “How is it possible customers go along with this and we still get paid?” to which, our GM very loudly proclaimed: “We’ve worked very hard and earned it!”. This will stick with me forever. The reason being at the time he absolutely believed it 100% … and so did I. Our GM was a very sharp guy. So how did he get sucked in? How did I get sucked in? Took me a bit, but I figured it out: It’s possible to have your ego get so pumped up that it completely destroys all logic and common sense. So, let me ask the bulls, AFTER all that you can see laid out before you (San Diego, Phoenix, Miami, Las Vegas, Shanghai, HK, Spain, Ireland, Greece, blah-blah-blah), how can you think this will end differently for you? Have your heads really become that enormous? (PS. Homer wrote a nice little volume about this.)”
– chubster at VREAA 6 Nov 2011 2:44pm

Spot on regarding “can’t happen to me” psychology.
Amazing, isn’t it?
Completely relevant to why so many Vancouver owners/buyers see the dots but don’t connect them.
– vreaa

Property Prices Collapse in China – “When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse.”

“Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun”…
Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate. Even state-funded experts are more pessimistic. For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.
When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse.”

– excerpted from ‘Property Prices Collapse in China. Is This a Crash?’, Gordon Chang, Forbes, 6 Nov 2011

Effects on Vancouver RE?:
1. A very, very small direct negative effect (a handful of prospective buyers who may have been dependent on funds from these Chinese projects will now be unable to buy here)
2. A very much larger indirect negative psychological effect:
— Things “Chinese” and things “Real Estate” can ‘crash’.
— ‘China’ feels closer to home for Vancouverites than does ‘Ireland’, ‘Spain’, ‘Phoenix’ etc.
— The simple experience of hearing ‘32%-off’ and “price cuts of 50%” has a bracing effect.
– vreaa

“Over 17 years, he increased his earning power by a massive 6-fold, and yet even he wasn’t able to keep up with housing prices in Vancouver.”

“I had a conversation with a friend the other day. He and his wife live in Dunbar and have done so since 1994. When they bought their house, they paid $500,000-ish. At the time, he had about 80k down from another property he bought in a distress sale 5 years earlier and sold prior to purchasing the new house. He made it clear that this kind of windfall gain on the sales was NOT normal for Vancouver at the time – it was two lucky “right buyer at the right time” situations. At this point, he and his wife were in their mid thirties and he was taking in somewhere around 100k./ year. He ended up starting that mortgage at about 4.5 times their income (500-80)/100. Over the next 18 years, his career progressed and he was made partner in a successful professional services firm downtown. He managed to increase his average income to somewhere between $500 and $600k / year, where it is today. I asked him: now, in 2011, houses on your street are routinely selling for somewhere in the neighborhood of 2.5-3M. Would you EVER consider buying you’re own house today? His answer: of course not.
Now one might argue: Why would someone be any less likely to pay 2.5M when they make $550k than they would be to pay $500k when they make 100k? (at about 5x each) Well, first, he’s now in his fifties and his propensity to avoid risk is higher. Second, there are far fewer jobs in Van that reliably pay at that level. In bad years, he pulls in 400k, good years maybe as high as 700k. However there are many jobs & careers that reliably pay 100k, so borrowing 5x at that level was far lower risk. There were many firms that would have paid what he was making then, but now, there is only one, and even that income stream isn’t “dependable” at its highest level.
The crazy thing about this talk is that the only thing that progressed in the intervening period was his ability to make money relative to everyone else – the people at the level he was at in 1994 are still making 100k/ year! So over almost 20 years, he increased his earning power by 6 fold, and even he wasn’t able to keep up with housing prices in Vancouver.
ANYONE who thinks the current prices are sustainable is out of their minds.”

Ridiculous at VREAA 5 Nov 2011 10:57am

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”
– Rudiger Dornbusch, MIT economist, as quoted by John Hussman 7 Nov 2011

Paul Kedrosky Features Vancouver Flip On ‘Infectious Greed’ – “Vancouver Bidding-War House? It’s Being Flipped for 78% (Annualized) Gain”


“Remember that Vancouver house that went for $2.55M ($655,000 over asking) in a 25-person bidding war last April [2011]? Well, the house is back on the market a mere six months later for an asking price of $3.5m, or an annualized 78%. (This house originally went for $531,000 in 1996.)”
Paul Kedrosky, Infectious Greed, 28 Oct 2011

US commentators have a perspective on these things that is sorely lacking locally. – vreaa

Policies On Housing #3 – Sandy Garossino, Independent Candidate for City Council

[Sandy Garossino had been invited by e-mail to be heard as part of this series. Her office indicated she would respond to our questions. While we await that response, here are excerpts from an interview she did with Andrew Wit and Sean Antrim in The Mainlander, 5 Nov 2011. The whole interview is a ‘must-read’ for those interested in the issues. Thanks to readers who alerted us to this interview. -ed.]

Andrew Witt: … I think that everyone recognizes that there is an affordability crisis in the city. In 2008, Vision Vancouver was elected on a platform that would address housing, homelessness and the affordability crisis, but we all know they have done little to tackle the problem. How will you address this issue, and what distinguishes your platform from that of Vision Vancouver?

Sandy Garossino: Almost everyone that I have heard discuss this sees the affordability issue. I’m talking here about broadening this beyond homelessness and subsidized housing, but also market housing for the average working person. Almost everyone who talks about this, talks about it in the simple supply and demand equation, and their point is to increase supply. Because I deal with Asia, I understand capital markets in Asia, and I have dealings there, this seems to me to completely miss the true nature of the issue and the challenge that we confront. Just to give you a little bit of a background, our median income levels in Metro Vancouver place 20 out of 28 urban regions in Canada. Our median income levels for 2010 were below Sudbury, Windsor and St. John’s Newfoundland. We have the highest real estate prices in Canada, relative to median income. We have almost the highest real estate in the world. Relative to median income, we are 56% higher than New York City and 31% higher than London, so there’s clearly a serious distortion in the market. One of the first challenges we have is we don’t have the data. We don’t have information that can pin-point exactly what is going on and the extent to which capital is entering, and the extent to which that capital is non-resident, and how much that is affecting the market. We need to know a lot more than we do. But based on anecdotal information, which is turning out to be corroborated in news reports, it looks like global capital is having a massive impact.
I don’t know if you saw the CBC report, where on Cambie Street bungalows were sold for an average of $3.4 million to a mainland Chinese buyer. So, this is a non-residential purchase, we know there is a flight of global capital. What most people, even many people in land development and even many people in government are not perhaps cognizant of, is the extent to which rules in other parts of the world are creating a funnel effect that is driving global capital here. The challenge is not that there’s inflow of global capital because in some ways it could be quite beneficial and benign, the problem is that it is pooling in a single asset class, residential real-estate, where there is a compelling public interest. We’ve got median income levels at Sudbury levels, and we’ve got average real estate prices that are twice the average of Canadian real-estate prices. When people are feeling that they are choking, it is because they are. It is not only choking individuals, it is choking small businesses, because there is no disposable income. Businesses can’t recruit people, they can’t recruit talent, and universities can’t recruit talent. It is corroding the entire local economy, which is primarily a small medium enterprise economy. So what to do?

Sean Antrim: Bob Rennie, when he was recently speaking to the UDI, argued that it is not money coming from around the world. He looked at all of the property taxes were going out, and found that only single digit percentages of them were going to mainland China, or even just out of the country.

Sandy Garossino: I was quite struck by that analysis, because if you or I own property in a foreign country, you would have a property manager in that local environment, and that property manager would take care of all of those things. It is completely irrelevant where property taxes were mailed to. We need better evidence. Anybody who lives on the West Side, as I do, knows how false that is. There are people in my community who describe that they are the only occupied house on their block. There are houses sitting empty. We have a situation where in the marketplace, we have excess housing. We’ve got residences, thousands of them, both single-family homes and condominiums sitting empty. Well, we’ve got a rental crisis. We need to start looking at the levers. And what can be done? I don’t have the answers because this is a really complex question, but obviously we don’t want to shock the market, because that would take a bad situation and make it infinitely worse. So my approach is to ask what are the surgical tools you could start to use. So on rezonings, if we are going to be doing spot-rezonings which at least in the short-term foreseeable future we will continue to do, those rezonings should perhaps be made conditional on all the units being occupied, regardless of who the owner is. Because off-shore owners frequently do rent out their property, and often when they do they rent it below market value, that can be useful. There’s no reason in the world that we should be rezoning properties to build towers that are not going to be fully occupied. Everything should be fully occupied.
Secondly we should be looking at some of the solutions that other countries and cities have looked at like Singapore, which creates zones. Some zones are totally open for the international market, and some zones you can’t buy in unless you are a resident.

Sandy Garossino: ” … let’s look at the low-hanging fruit. Empty condominiums, and empty residents are investment properties, they should be taxed. If it is the case that business subsidizes residential housing, it should be subsidizing residential housing, not investment units. Investments should be taxed at the business rate. I would be looking for those kinds of mechanisms. We should be looking much more closely at the nature of capital that is coming in. It can be perceived as a threat because it is operating in a negative way, that has pooled so much. It is also an opportunity – one of the real interesting features of this capital is that, generally speaking, I think it is individuals, and they also have a tolerance for lower rate of return on income, lower return on investment, than the local developers. One of the challenges of STIR is that local developers actually want a decent return, or a lot of return, on their investment. That is really difficult when you have really high bank costs, but actually the non-resident investors are prepared to live with empty-units. Return on investment is not their primary objective, they are looking for something else. We should be looking to channel that investment into rental housing, channel it into financing some of these more innovative situations.”

Sean Antrim: “Bob Rennie has talked about “social housing condos” as people buy them as investments, I’m not sure if that is what you are talking about?”

Sandy Garossino: “I am thinking in concept. I think we actually need all of the players at the table, we need developers, they do understand planning costs, and we need everybody at the table, rolling-up their sleeves and really saying “OK, we are going to crack the code on this,” and we’re going to find solutions that are not going to destroy the equity that recent young buyers, the last thing they want is anybody who is actually able to shoehorn themselves into a property and for them to lose their house because we have a crash. We can’t have that.”

Andrew Witt: “You have served on a number of different art-institutions Boards. In Vancouver there are a lot of art spaces that are under erasure, especially under the threat of real estate speculation.What is your strategy to fund these projects as well as maintain Vancouver’s dynamic artist-run culture so that it is not displaced entirely.”

Sandy Garossino: “I see this in the broader context, in cultural context. The real cause of the problem, is that real-estate prices are off the charts. Being able to fund small boxes and little spots here and there is not how you instill energy and dynamism in a cultural community. My daughter is an artist living and working in Montreal. She is in the music scene, she is rising. Things are happening there. Why? It is not because of her space, it is because she is around other exciting artists and musicians. They have a a whole scene there. It is not a typical postal-stamp place that is affordable. It is about having an environment which is artist-friendly, where it is possible to be an artist where other artists want to be.”

Sean Antrim: “Why should people vote for Sandy Garossino on November 19th?”

Sandy Garossino: “Because we do need to get new voices in and, in particular, if you look at the development issue, there’s just a huge amount of money being poured into the parties and we need to have much more wide-open ability for interesting people to come forward. The other reason is that I will attack this affordability issue, and I’m going to get right to the heart of it, and not tinker around the edges and say there, we’re done. We’re not done until people can afford to live in this city.”

[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing‘ for an introduction/rationale for this series.]

Worshipping At The Church Of Home-Ownership – “Pledging to never to be homeless again, she embarked on a single goal: becoming a homeowner.”

Tasha Brown counts herself as a victim of Calgary’s last economic boom.
The 2006 spike in housing prices and the near zero rental vacancy rate spawned a variety of illegal real estate schemes, and Ms. Brown, then a part-time child care worker, full-time single mother of three, lost a hefty damage deposit to a scam.
The situation left her family temporarily homeless and shuffling between church basements for shelter.
“It was three months, but it felt like three years,” Ms. Brown recalled.
Pledging to never to be homeless again, she embarked on a single goal: becoming a homeowner. And just a few months ago, the 33-year-old woman and her children, aged 15, 11 and nine, finally moved into their first home.
But she couldn’t have done it without help.
Ms. Brown’s quest for financial comfort lead her to Momentum, which was at one time an arm of the Mennonite Central Committee of Alberta. But from its past focus on employment programs aimed at new Canadians, it has expanded to include small business and computer training, micro business loans and personal finance education.
In the last 10 years, 12,400 people have gone through the Calgary-based group’s financial management courses, with 3,000 participants in the last year alone. The courses teach everything from household budgeting to managing credit cards as well as where to find deals and how to use coupons.
“It’s an everyone issue,” said programs director Jeff Loomis, “But financial literacy has a disproportionate impact on people with lower incomes.”
The non-profit organization also offers a matching program for people to “earn while you learn” as long as they have their eye on a “productive asset,” such as education for themselves, their children or to buy a home.
Momentum has a number of funding partners including governments, businesses and other charitable organizations. It offers a three-to-one match with a cap, but it usually means if a participant saves $50 a month, Momentum will kick in another $100.
“If we can get more funding from business and from government, then we can have more programs,” Mr. Loomis said.
It takes a long time and a lot of work to save, but over the past decade, 80 people have use it to help purchase their first home. Ms. Brown was one of them.
She also added to her savings through another Calgary charitable group, the Owen Hart Foundation That organization, which was established by Martha Hart in memory of her late husband, a wrestler who died during a performance, also offers a savings match program to those who have completed the Momentum financial education program.
Between both programs, Ms. Brown amassed enough savings for a 10-per-cent down payment on her first home – a two storey with three bedrooms, two bathrooms and a fenced backyard. Her mortgage payment per month is less than what she was paying in rent.
“They helped you step by step,” Ms. Brown said of the programs.
She is also working full-time and has a home-party business on the side to put away more savings.
“We will never be homeless again,” she insisted.


More than three quarters of Canadians are not fully confident with their math and money skills, and more than half say they could use some help. … The poll, conducted by Ipsos Reid, also found that respondents saved on average, $211 per month, but a shocking 40 per cent didn’t sock away a single penny. The admissions are particularly striking at a time when household debt, driven by rock bottom interest rates, has risen to a record high, which even prompted the International Monetary Fund to raise red flags.

– excerpted from ‘From homeless to home owner‘, Globe and Mail, 4 Nov 2011
[hat-tip 4SlicesofCheese]

So now homes are “productive assets”, and all fiscally responsible citizens must own one, even if they can only come up with one third (or is that one sixth?) of a 10% downpayment. This is the ‘financial literacy’ that is being taught. Hallelujah!
“Lifelong Debtorship? One house each, first door on the left.”
– vreaa

“I got on the “property ladder” 14 years ago using my RRSP savings to buy a 500 sq.ft. condo, then I moved up to a 2 bedroom, then a townhouse, then a 1/2 duplex, and now am the proud owner of my dream 4 bedroom westside home for my family.”

“You lazy spendthrifts have no one to blame but yourselves…I got on the “property ladder” 14 years ago using my RRSP savings to buy a 500 sq.ft. condo, then I moved up to a 2 bedroom, then a townhouse, then a 1/2 duplex, and now am the proud owner of my dream 4 bedroom westside home for my family. Hard work and saving money, keeping my head down and saving and investing like previous generations. It worked then, it still works now. It is doable. Great condos are available in Gastown right now starting at $200k, not that much different than the $165,000 I paid for my first place Downtown in 1997.
But everybody wants the easy life, no one wants to work for it!”

r_dub71 at Vancouver Sun, 25 Oct 2011, 11:49am

We believe 98.37% of the anecdotes we read.
Granted, we err on the side of gullibility.
We are more the librarian, less the prosecutor.
But, even we found this story too ‘cute’.
Hard working property ladder climber or hard working Gastown condo salesman?
(“You’re not buying a small box for $200K, you’re taking your first step to securing your dream home!”)
OK, let’s assume it’s all true: We’d really like to see the math on the sales-prices and mortgage debt for each of the 5 deals, and to see the current networth:RE ratio.
Anybody care to come up with some hypothetical numbers for climbing the ladder the way he/she claims?
Has that worked through the mania?
Don’t the higher rungs get further away each step? (Yes, they do.)
Sure, you build (paper) equity, but you fold it into a higher buying price, and take on more mortgage debt, each step.
– vreaa

“I have grown up in this city and love it, but add me to the list of people seriously considering moving away. I simply can’t afford to take on the risk that paying $1M for a house and relying on ongoing record low interest rates for the next 20 years requires.”

“Add me to the list of people seriously considering moving away. The prices in Vancouver now are insane. Its quite depressing as I have grown up in this city and love it, but I simply can’t afford to take on the risk that paying 1M for a house and relying on ongoing record low interest rates for the next 20 years requires.
As well, the business economy in Vancouver sucks and is getting worse not better. Do some research and look at how many major head offices have LEFT Vancouver in the last 10 years (mostly from being bought and HQ moved). We don’t have many high paying private sector corporate jobs left in this town, and a few land developers, real estate agents, and pot growers aren’t going to fill in that gap. Right now it appears that a lot of these places where I live are being bought with overseas money, but how is that creating a sustainable real-estate market?
Its sad, but it appears my next home will be Toronto. It sucks, but at least they have high paying jobs to go along with their real estate prices.”

– kmanvan at vancouvercondo.info November 2nd, 2011 at 11:39 am

“In my late 20’s; university grad; secure job; happy about how I’m doing professionally. The only depressing part is that owning a place of mine own in Vancouver is fast becoming a dream rather than an option.”

“Being in my late 20’s and happy about how I’m doing professionally relative to my goals (university grad and a well paying secure job), the only depressing part is that owning a place of mine own in Vancouver is fast becoming a dream rather than an option. The alternative is buying east of Burnaby/Coquitlam and then driving daily out to Vancouver … by the time I save up enough for a down payment and mortgage (giving it 5 years realistically). It has nothing to do with a desire to live in upper class neighborhoods, rather somewhere in the city I’ve grown up in rather than be pushed outwards just because of bad luck and timing.”
– sam_i_is at reddit, discussion of ‘Going Going Gone’, 13 Oct 2011

Lawyer Couple in 30’s – “Neither of us feel entitled to owning a freestanding home in Kits. You’re missing the point if you think that’s the problem. Fact is, we don’t want to be renting a small apartment in our 40’s.”

“I’m in my 30’s as is my wife. We’re both working lawyers and have a baby on the way. We rent a two bedroom apartment in East Van. We’re essentially the couple in the article except we live in a more affordable neighbourhood.
Recently we gave notice at our place and are packing our bags to leave Vancouver as we feel like we’ve been priced out of the housing market. Neither of us feel entitled to owning a freestanding home in Kits, and you’re missing the point if you think that’s the problem, but we also don’t want to be renting a small to mid-sized apartment in our 40’s which is the reality of housing in metro Vancouver. The fact is all of our friends who are in their 30’s, have kids, and can find work elsewhere have already left for more affordable pastures, either to the Island or to Langley. Those who are tied here due to their work end up commuting two hours a day and dream of finding jobs elsewhere.
I don’t know what the solution is, but there’s definitely a problem here even if you don’t want to admit it.”

– mizike at reddit.com discussion of Going Going Gone article, 13 Oct 2011

“What finally did it for me was not being able to expand my business because my suppliers had fled the city. I don’t think there is any future for Vancouver. There are too many interested parties in positions of influence making money from the status quo.”

“Vancouver was never a career mecca but up until a few years ago it was possible to survive in Vancouver on Vancouver wages. I always loved the Vancouver weather, the multicultural nature of the city and the hopes and dreams for an urban utopia by the sea.
That all ended when speculation went wild. Of course real estate prices went so far beyond the means of someone earning a living in Vancouver that it is both hilarious and sickening at the same time. The rental market also became absolutely terrible (unless you enjoy living in the spider-infested mouldy basements of speculators or the expensive upper floors of a poorly-maintained house that is in constant danger of being flipped by its speculator).
What finally did it for me was not being able to expand my business because my suppliers had fled the city, industrial leases and commercial property taxes were being affected by the inflation of residential prices and industrial land was being taken over to build condos for speculators. Never mind that it is impossible to attract middle-class workers to move to Vancouver.
I could not have been a greater enthusiast for Vancouver. I was involved in the community and City Hall. Now I feel anger and resentment. I feel I have been betrayed by my own government, which has facilitated the displacement of Vancouverites by using government policy (low interest rates and taxpayer-backed CMHC guarantees to reckless lenders) to fuel speculation in Vancouver. I am also unhappy that the Federal government has encouraged the Robber Baron class of arrogant Communist Party cadres in the People’s Republic of China to deposit their ill-gotten flight capital in Vancouver real estate. I cannot compete with that kind of foreign wealth and I am not interested in being run over by a Chinese teenager street-racing a Lamborghini Murciélago in Vancouver. I lived on the west side of the city and that is the part of Vancouver that has been most-purchased with money from the People’s Republic. The west side is the low-density side but it is half the geographic area of Vancouver. It seems like the best part of Vancouver has been purchased by China (and not Canadians of Chinese descent in Vancouver).
In a very short time, Vancouver has gone from being the gumboot paradise by the sea to being a tense situation with a rapidly falling standard of living, reduced career opportunities, an economy based on real estate speculation and no hope for someone trying to make an honest living in Vancouver. It seems that Vancouver has become a playground for rich, evil douchebags making money elsewhere and a living graveyard for the middle-class Vancouverite making a Vancouver salary.
I now live in another Province. I made a very expensive move to flee the madness. I miss my home Province but I could not afford to live there anymore. I will cherish the good memories and I will try not to think about what Vancouver has become. I don’t think there is any future for Vancouver. There are too many interested parties in positions of influence making money from the status quo.”

– Runawayscreaming at vancouvercondo.info November 2nd, 2011 at 8:34 am

“We can technically afford to buy a house in Vancouver, but I can’t help look at basically everywhere else in the world, and see how much less we’d end up spending on housing and how much more we’d get.”

“I can empathize with the sentiment here. I’m myself entertaining the idea of leaving. I guess me and my wife are slightly in a different position though, while we could technically afford to buy a house in Vancouver I can’t help to look at, well basically everywhere else in the world, and see how much less we’d end up spending on housing and how much more we’d get.
The rents in Vancouver aren’t very high compared to many other cities we’d be thinking of moving to but I’d be hesitant to start a family in this town due to the risk of having the rented dwelling sold and us being forced to house-hop around.”

– slurker at vancouvercondo.info November 2nd, 2011 at 9:33 pm

“I left Vancouver for a lot of reasons. I keep reading Vancouver housing blogs because honestly, you guys are at ground zero in the Canadian housing bubble and from a sociological standpoint, it’s fascinating.”

“I left Vancouver for a lot of reasons. I had 2 career streams to choose from, IT/management and culinary. To be honest I couldn’t find a job in either, and neither could a lot of my culinary school buddies. Most of them left Vancouver.
I left 2 years ago almost to the day and I’ve had a much easier time of it since then. I’ve climbed the ladder quickly, going from a technical consultant to Morgan Stanley ro a technical project management role, and currently I’m a senior business analyst specializing in cloud based IT solutions, specifically Salesforce related engagements. My salary has climbed accordignly. While I’m making very good money now, it wouldn’t be enough to even consider purchasing even a shit shack in Van.
While I found Vancouver beautiful, I think in a lot of ways people are deluded. I’m sorry, but you don’t have “the best weather in Canada”. It’s not cold in winter but you guys have the darkest, dreariest winters I’ve ever experienced, and I’ve lived in Ottawa in February. The city’s surroundings are beautiful but that’s about it.
The worst thing about the place is the whole nature of the housing market. The numbers on renting there and in Toronto might be similar, but they don’t tell the whole story. The rental stock in Vancouver is *awful*. Most of the apartments I saw were in horrible shape.
Worse is the stigma around renting, which happens no where else in Canada. There’s this whole weird vibe around renting, it’s like there’s something wrong with you.
I finally got tired of feeling like no matter how smart or well educated or determined I was, I was never going to get ahead in Vancouver. It’s a pretty place and I don’t mean to slam the city but I’m glad I left. I keep reading Vancouver housing blogs because honestly, you guys are at ground zero in the Canadian housing bubble and from a sociological standpoint, it’s fascinating.”

– scullboy at vancouvercondo.info 2 Nov 2011 4:34am
[This is an update. ‘scullboy’s story was previously featured on these pages]

We agree the Vancouver housing bubble is fascinating. Each time it appears to have reached ultimate fever pitch, it takes it up a notch. Things look precarious. – vreaa

“When I tell people we rent our house, their eyes change. It is as if there is shame in being a tenant. People need to borrow heavily to lead a normal lifestyle. This is not what we want.”

“Deirdre Marconato regularly hears her neighbours and acquaintances say that Vancouver is “the best place on earth.”
“It’s a very pretentious phrase, but it is accepted as an immutable truth,” she said.
Ms. Marconato also thought that Vancouver was a great place when she arrived in 2008. She and her husband, who has an international career as a financial analyst, had decided to sell their flat in Hong Kong to move to the West Coast, where Ms. Marconato was born. They wanted to settle with their daughter in a friendly neighbourhood, close to good schools, ocean and mountains.
But when we spoke to her in her upscale West Vancouver neighbourhood in late June, Ms. Marconato was busy packing her last moving boxes. Her adventure was coming to an end after three years in Vancouver, with the family now returning to Hong Kong.
Upon arrival in Vancouver, the Marconato family soon saw that something was amiss. They were well-off, and used to the cost of living in Hong Kong, but they were shocked when they saw the local Vancouver house prices. They initially decided to rent.
However, being a tenant in Vancouver is to be part of a subclass, Ms. Marconato soon realized. “When I tell people we rent our house, their eyes change. It is as if there is shame in being a tenant,” she said.
Community life in West Vancouver is not what she imagined. “At least 60% of homes in my neighbourhood have been sold over the last two years. Many are empty. It’s a very cold atmosphere. We invite people over, but it is never reciprocate. I lived in London, Paris, Singapore and Toronto, and I have never experienced a situation like this.”
Furthermore, West Vancouver is not immune to crime: several gang shootings took place in the district in the last two years. A student of the high school attended by her daughter was stabbed outside the school.
A few months ago, a headhunter contacted Ms. Marconato’s husband to offer him a job in Hong Kong. The decision to leave was made quickly.
Ms. Marconato is disappointed that her “Canadian dream” has ended.
“I do not understand how people live in Vancouver,” she said. In Hong Kong, life is expensive, but wages are high. Here, jobs are not highly paid. People need to borrow heavily to lead a normal lifestyle. This is not what we want.”

– from ‘Fièvre immobilière: quitter Vancouver’, by Nicolas Bérubé, La Presse, 15 Oct 2011
[translation by Google; paraphrasing by your editor].

Carney ‘Not Complacent’ About Level Of Household Debt or Housing

“Bank of Canada Governor Mark Carney said, in testimony to the Senate Banking Committee, that he isn’t complacent about the level of household debt in Canada or the state of the country’s housing market.
The Bank of Canada has highlighted in its financial stability report the risks posed by record levels of household debt, and Carney said in a speech in Vancouver earlier this year that there are signs some local housing markets are moving away from fundamental values.”

– Bloomberg, 2 Nov 2011

Another oblique and lukewarm show of concern.
When the housing bubble implodes, BOC will say they ‘warned’ Canadians of the risks.
Well, Canadians are not listening. They continue to borrow as much as they can; two out of three new mortgages are at variable rate.
We know that the BOC can’t raise interest rates in the current environment, for fear of dangerously slowing the economy. But Mr Carney could use his considerable influence to lean on Mr Flaherty. If the government sincerely wants to do something about the over-borrowing, they should tighten mortgage lending. But they won’t do that, because there are too many interests vested in the continuing speculative mania in housing.
– vreaa

“It’s not normal that you can sell a condo in Vancouver and with the profit buy a 5 acres piece of land and build a house somewhere else in Canada.”

“It’s not normal that you can sell a condo in Vancouver and with the profit buy a 5 acres piece of land and build a house somewhere else in Canada. We moved to the Eastern Township of Quebec, 75 min. from Mtl, it’s not like we moved to some third world country, despite what your opinion is on QC. And that we were both willing to quit our job to do so, again not normal.”
– Ultraman at vancouvercondo.info November 2nd, 2011 at 12:31 pm

We believe this is sound logic.
This kind of ‘abnormal’ pressure caused by value discrepancies will reconcile.
– vreaa

“I left Vancouver earlier this year to work in Germany. People are still shaking their heads as to why I left. They kept telling me to buy even though mortgage would have been 2.5 times my rent.”

“I left Vancouver earlier this year to work in Germany. People are still shaking their heads as to why I left as I had a decent job (also above the average) and kept telling me to buy (even though mortgage would have been 2.5 times my rent) I now live in Germany where renting isn’t frowned upon and my rent combine with car payment is just under a third of my take home monthly salary. There are a zillion challenges to living here, but affordable living is NOT one of them. What’s interesting though about German real estate is that the word bubble is never thrown around. Housing prices go up very slowly (a bit beyond inflation so it seems) so no one’s getting rich, but no one’s losing their shirt either. You buy a house as a place to live in and slowly build equity, not as a means of getting rich. And, renting is a perfectly acceptable way of living, even well into your 50′s.”
katherine with a k  at vancouvercondo.info 2 Nov 2011 3:48am

patriotz – “Well I guess it’s time to come out of the closet and tell everyone I have left too. Not to become a homeowner again, which I don’t aspire to in the near future, but for better job opportunities and quality of life.”

“Well I guess it’s time to come out of the closet and tell everyone I have left [Vancouver] too. Not to become a homeowner again, which I don’t aspire to in the near future, but for better job opportunities and quality of life.
But I’ll keep following [Vancouver RE], because it’s fascinating – in a repulsive sort of way, like Eraserhead.
I’ll put together a post on my new city shortly”

– patriotz at vancouvercondo.info 2 Nov 2011 at 5:13am

This is, in our opinion, big news.
‘patriotz’ is a frequent poster at VCI whose intelligent comments and thoughtful analysis we have followed for years.
Another loss to the city. The deleterious effects of this speculative mania are becoming more obvious by the day.
– vreaa

“Bottom line, a whole party of folks talking about prices going down? No way… The grown kids of the retiree couple told us oldies we were nuts as real estate always goes up in Van.”

“I was at a Halloween party of Shaugnessyites this evening.
Most of the breadwinners, high income pros, wealthy retirees and so on (all but one a man) were talking about the tanking RE market.
Some were HAM, most local second gen to long time Canadians. All but three (1 HAM, 2 local old money) were mortgage free. The host was talking about having to sell a Whistler property with a hefty haircut to loosen up cash needed for private schooling.
Bottom line, a whole party of folks talking about prices going down? Does that suggest an opinion/sentiment change?
No way… The grown kids of the retiree couple were calling bullschtit! They told us oldies we were Nuts as real estate always goes up in van. Limited land and the whole world wants to move here.
We’ll see, oldies who remember previous recessions vs. young ones who weren’t even around when I had my first hangover…”

– ‘Marco from the bestest place on the smallest part of earth’, at greaterfool.ca, 29 Oct 2011 2:57 am
[hat-tip CW]

Windsor – “$200,000 house purchased by two teachers. Did I mention Windsor has a similar household income to Vancouver?”


Homeowners Les Leck and Julie Burns still have some frames to hang and other fine tuning after moving into their ($200K) home on Northway Street in South Windsor Tuesday, Nov. 1, 2011.

“Thought I’d share this article from the Bizzaro universe of my hometown of Windsor, Ontario:
-$200,000 house purchased by two teachers
-most popular homes are those in the $100,000-$200,000 price range, which made up about half of the 397 sales in October
-New home sales have picked up this year after a lull in the last half of 2010 following the imposition of the HST
Did I mention Windsor has a similar household income to Vancouver?”

– ‘KC’ via e-mail, regarding ‘Housing market has started to turn corner, analyst says‘ from The Windsor Star, 2 Nov 2011

Policies On Housing #2 – Joe Carangi, NPA Candidate for Vancouver City Council

Here are my answers to your survey.
Sincerely, Joe Carangi, NPA Candidate for Vancouver City Council

1. What do you see as the main housing challenges facing Vancouver?
The lack of affordable housing is definitely the number one issue facing residents in Vancouver or for those who are wanting to move to our beautiful city.

2. What measures do you propose to address those challenges?
I do believe that we need to look at ways to encourage home builders to build affordable housing as part of any project City Hall approves for said developer. Also the LEED standard requirements on the building of new homes needs to be eliminated or reduced as it adds around 25% to the cost of new housing for environmental technology that is unproven (ie. Olympic Village). The City also needs to work with the Province to see if tax incentives can be granted (aside from First Time Homebuyer’s grants) to again allow for residents to purchase a new home or to make more stringent requirements for oversea buyers who buy homes for speculative investments yet chose not to live in Vancouver.

3. What is your policy on housing densification?
Housing densification has its place depending on the area in the city that this is to occur. It makes sense to build more housing units near skytrains to take advantage of this important transportation ameniity. Other areas of the City would may be ideal for such densification because it could take away from the character of the area.

4. Would you support policies that would lead to a drop in real estate
values?

This is a tough one. As a home owner I do not want my home to drop too much in value but that said a correction is definitley needed in our city regarding real estate prices.

5. What is your own family’s housing situation?
I was lucky enough to purchase my condo in 2005 so it was somewhat affordable back then. Today, this same home would be nearly double the cost.


[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing‘ for an introduction/rationale for this series.]

Open Invitation To Candidates and Parties In The Upcoming Vancouver Civic Elections – Publicize Your Position On Vancouver Housing

“On November 19, 2011 Vancouver residents will vote for 1 Mayor, 10 Councillors, 7 Park Commissioners and 9 School Trustees in the municipal election.”
– City of Vancouver, 2011 Election Information

We see approaches to the challenges of housing as a central issue in the upcoming elections. The following is an excerpt from a letter that has been sent to specific candidates and parties and is posted here to solicit positions from any entities involved in the elections who may not have received an e-mail but would like to make their position known. Positions will be headlined, and linked in the ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing’ post and sidebar.
Formal replies via e-mail, please, to vreaa@hotmail.com

Dear Candidate:
_Invitation to publicize your position on housing policy._
The ‘Vancouver Real Estate Anecdote Archive’ (VREAA) is a local blog that focuses on the personal stories of Vancouver citizens meeting the challenges of housing during a real estate price boom.
We are currently running a series of posts called ‘Policies On Housing’ in which we feature the positions of local political groups/entities who may end up shaping future policy.
We would like to invite you to lay out your policy in that regard, around the following questions:
1. What do you see as the main housing challenges facing Vancouver?
2. What measures do you propose to address those challenges?
3. What is your policy on housing densification?
4. Would you support policies that would lead to a drop in real estate
values?
5. What is your own family’s housing situation?
Your answers to these questions will be headlined as a separate post, and discussion will ensue.
This is an opportunity for you to have your position on this central issue publicized and debated.
Please send your reply to: vreaa@hotmail.com
Sincerely
‘jesse’ (frequent contributor at VREAA) &
‘vreaa’ (vancouver real estate anecdote archivist)

—//end

“Man, I really hope some candidates engage on this. Definitely prepared to listen and consider making choices based on what candidates say here on this issue.” – Royce McCutcheon, Vancouver citizen, reader and poster, VREAA 2 Nov 2011

‘Well-Connected Local Player’ – “People are tapped out. Ownership rates are now at the highest. Not pretty. However, overall, the market will likely fall only 10%.”

“An increase in rates or a reduction in credit would cause this whole house of cards to fall – and many people are afraid of that and won’t openly talk about it. The Gov’t is out of ammunition – people are tapped out – ownership rates are now at the highest – – HAM?  Well – look at the latest from the Chinese market. We’ll get some for sure but this will not be like Spring 2011.  This will likely lead to a fairly good decrease in the price at the high-end of the market.  However – overall – the market will likely fall only 10% (my prediction) as these things never happen instantly.  But a 10% reduction will take a lot of the people at the bottom into negative equity – – which as you know slows the market more as they cannot sell to move up.  Not pretty.”
– “A well-connected local player”, quoted by Garth Turner, greaterfool.ca 1 Nov 2011

Have access to all the dots; line up all the dots; then, fail to connect the dots because, well, the conclusions you’d reach are too painful.
This ‘well-connected local player’ lays out (some of) the reasons for the market being so vulnerable, is bright enough to be able to calculate some of the consequences, but is unable to state the logical conclusions.
What are the consequences after a 10% drop that takes “a lot of the people at the bottom into negative equity”? Exactly, further market weakness.
“The market will likely fall only 10%”? – After the 200%+ run-up of the last 10 years, a 10% pullback isn’t even a pullback, it’d be expected normal market fluctuation; ‘noise’.
This market is ripe for a very big, multi-year crash, taking prices down at the very least by 30%, and more likely by 50%-66%.
The ‘well-connected player’ finds the consequences of such a move too ghastly to contemplate, so they simply don’t entertain the possibility.
– vreaa

“I am 36, an IT consultant, and my wife, 34, is a teacher. Combined we make 140k/yr. We live in Cloverdale. You have to make sacrifices in life. It’s not unusual to have to make these tradeoffs in a large city.”

“I am 36 and an IT consultant and my wife is 34 and a teacher. Combined we make 140k/yr. We bring home roughly 7k/mo and our mortgage payment is $1200/mo. We live in Cloverdale.
Instead of buying up more and more house for myself, I put $1500/mo into my RRSP’s and another $200/mo in my kids’ RESP’s.
And if it wasn’t for the daycare costs (to the tune of $1200/mo), we’d be doing even better. I have no car payments btw either as both my cars are currently paid off as is my motorcycle.
You have to make sacrifices in life – live in an East Van condo or live in Langley. You can get a nice place in Langley for under 500k. But you’ll spend a lot of time commuting.
It’s not unusual to have to make those tradeoffs in a large city.”

– rainman_104 at reddit.com discussion of ‘Going Going Gone’, 13 Oct 2011

It’s common in Vancouver that, when owners are advising prospective buyers, they talk of ‘sacrifice’.
But there are different kinds of ‘sacrifice’: the ‘sacrifice’ that comes with austerity and prudence, which is admirable, and the ‘sacrifice’ of accepting very poor value, which is foolishness.
– vreaa

Spot The Speculators #64 – “I was thinking before we bought that it might be difficult, it might be a big challenge, but when we got the home we found things were okay.”


Kamal and Raman Khangura have a new home in Abbotsford — and the mortgage to go with it.

“Young homeowners Raman and Kamal­preet Khangura say disciplined saving is the best way to banish financial fear.
The Abbotsford couple have so far kept their heads above the debt that threatens to drown many young British Columbians. The Khanguras keep an iron grip on their spending and salt away every dollar they can.
In February, the couple — without help from family — bought a $527,000-home in Abbotsford, paying $27,000 down. They have a $2,000-a-month mortgage payment.
That’s a lot of debt. And Raman, 26, admits to having had some passing worries before buying the house.
He reassured himself by going over the details of the financial plan he and Kamalpreet, 27, had prepared.
“I was thinking before we bought that it might be difficult, it might be a big challenge but when we got the home we found things were okay,” he says.
“We’re careful with our money.”
The Khanguras have no other debts and are determined to keep it that way. Credit cards are paid off each month. Their line of credit will only be tapped in the direst of emergencies.
The $1,000 a month they get in rent from a basement tenant is tucked into RRSPs. Mortgage payments come strictly out of their salaries.
Kamalpreet works as a certified dental assistant. To boost their income, Raman works two jobs — a full-time position managing a trucking repair company and a part-time bookkeeping job.”

– article and image from ‘Young British Columbians struggle the hardest with debt’, Paul Luke, The Province, 29 Oct 2011

20-somethings. 2011. $27K down, $500K mortgage. “Careful with money”. (eyeroll)
Repeat: 20-somethings; modest income; $527K purchase.
This is not “care”, this is not prudence, this is gambling.
For people who “salt away every dollar”, it’s going to be torture for them to watch a torrent of downward prices leech away all of their savings and then some; perhaps up to five times their savings. – vreaa

(BTW, what are the likely mortgage variables that get you $500K for $2K per month? Are they on variable rate?)

“Once I get my PhD, I’m out of here. It’s not that the grass is greener elsewhere, it’s that the grass is greener pretty much anywhere else. The only way I lose is to convince myself that Vancouver is worth being financially crippled for.”

“Once I get my PhD, I’m out of here. It’s not that the grass is greener elsewhere, it’s that the grass is greener pretty much anywhere else. I can move to nearly any other city in Canada or the United States and find either more job opportunities that pay more in my field of expertise or about the same job opportunities with a substantially lower cost of living- sometimes both. The only way I lose is to convince myself that Vancouver is worth being financially crippled for.”
– waxmonkey at reddit.com discussion of ‘Going Going Gone’, 13 Oct 2011

Very well put. – vreaa

“He’s an intelligent person, but he bought in 2009 so he’s highly leveraged, financially and opinion-wise. He agrees it’s a bubble but I’m not quite sure he understands the full implications.”

“I stopped by my old job to visit. Boss mentions Vancouver RE. Says that he doesn’t think it’s going to go down because it’s been recession-proof. Doesn’t think it’s going to go any higher mind you, thinks it should stay the same for awhile. Also buys into investor-immigrant theory.
He agrees it’s a bubble (but I’m not quite sure he understands the full implications). It might be that by bubble he means it’s just unreasonably high. He’s an intelligent person, but he bought in 2009 so he’s highly leveraged, financially and opinion-wise. Changing his POV might be admitting to a gargantuan mistake.
Kind of upsetting since he’s a relatively new/young researcher, and the size of the mortgage will probably detrimentally impact his family’s life.
Sometimes I think along the same lines, but I can’t bring myself to seriously believe it. There’s just no way he can be right. This has to end sometime and it won’t end in a flat-line. It’s not that I want to say “I told you so” to him, I just wish others didn’t fall into the same trap. The longer this goes on, the more people become absorbed, and the harder the eventual fall.”

Moe at VREAA 31 Oct 2011 12:20pm

There is a subgroup of owners who see that the market is frothy, but woefully underestimate the kind of collapse that happens when a speculative mania ends. These are the folks anticipating a 10%-15% pullback, ‘tops’. – vreaa