“We sold our big, two story, 4 bed Kelowna home. We made a profit of only $30K after selling for $100,000 lower than its highest appraisal value just before the 2008 drop. Unfortunately we [had] refinanced and spent the equity on, you guessed it RE!!!
We moved closer to Vancouver not by choice, but for job transfer. We are renting a house for $1900/mth. My husband hates it and feels we are throwing money away!! If we were getting this place cheap, then perhaps it would be ok and we could sock away the savings!!!
We know there will be a market correction, but we are still looking to buy something in the $500,000 range-rancher or something that will be marketable in future! We only have 10% down, but payments will be less than $1900/mth. We have to borrow the 10% down from family (good rate/pymt plan) since we declared bankruptcy last year. Long story but got caught in the real estate speculation hype and lost everything! Well not everything, we have a condo in Kelowna we can’t sell, but at least it is rented!! Mtg is $312K, prop value $300K. Cash flow is negative marginally. We also lent money from our home equity during the boom, when we refinanced. They have defaulted and have not paid us back. We hold a 2nd mtg on their property in St Catharine’s which is not worth much now!!!
Does it make sense to buy? We hope to be here 5 yrs. We are in Langley where we feel any correction would be much lower than in the city. We would be happy to break even and at least enjoy our own place for a bit. We have kids that would like a place to call home!!”
– Sarah’s story, as told by e-mail to Garth Turner and featured at greaterfool.ca 11 Dec 2011
Stop them before they borrow again!
Shouldn’t these guys by now have signed a “keep me out of the casino” voluntary exclusion request?
Just to read the story is difficult and exhausting; the living of it must be mind-blowingly hectic.
Remember when people would buy or rent, and then get on with their lives?
Speculative manias offer people fertile terrain in which to screw themselves up.
– vreaa
Vancouver Real Estate Anecdote Archive 
Wow imagine being transferred to Vancouver given the housing situation. Plum transfer it is not.
The bear spotted downtown and the timing is very symbolic.
‘$30M’ – profit of thirty million; sorry VREAA, you just converted an RE sceptic to a RE believer – I am jumping into the market right after breakfast!
EIABubble -> believe it or not, folks in the ‘financial services’ sectors talk about ‘$30M’ for 30 thousand, and ‘$30MM’ for 30 million (a thousand thousand). We’ll correct to $30K for clarity sake.
you need a license to sell RE but not one to buy RE. shouldn’t that be the other way around? i’m not a socialist because i think in the end it is coercion but i do share most of their objectives. if you have such leanings, don’t you think people should need to pass a test before risking financial suicide?
An opinion piece in the Sun today discusses some uncomfortable economic conditions for Vancouver. Not much new in it for people who follow this blog, but seeing these concerns voiced in the MSM signals more change in the “most livable city” narrative.
“While the inflation-adjusted income of men has declined significantly over three decades, that of women has increased. The decline for men has been so great, however, that the pre-tax income for both men and women combined has still declined in Vancouver by about 20 per cent between 1977 and 2007”
http://www.vancouversun.com/business/Opinion+Real+earnings+show+decades+decline+livable+Vancouver/5844828/story.html
It would have been very worrisome if women’s pay didn’t increase since 1977 with the increased education and participation in the workforce. However real wage has gone down and taxes has gone up and up. I really wonder how long the gravy train for government employees, especially the management fat can last.
No, no, please don’t stop them….we need people like these to buy, buy, buy. Helps make the eventual crash harder and faster. Yeah I know taxpayers include me are the hook but since we are on the hook anyways, what’s an extra $5K or $10K?? It’s not like we are talking about real money here. 😛
Though seriously, people with analytical problems are not going to be stopped no matter what, sometimes it really is best to just stand out of the way and let them go where they may and face the consequences. It’s really too bad that analytical and critical thinking are no being taught in school and the few courses that requires those skills are being dumb down because you know, it’s too hard!
Also what’s up with using the “M” for thousands?? I really don’t get it.
“Also what’s up with using the “M” for thousands?? I really don’t get it.”
2011 = MMXI
Thousand = Mille (French, Italian) = Mil (Spanish)
But yeah, you’d think the French could follow the metric system, since they invented it.
If there weren’t places where it realistically could be millions, it wouldn’t be so confusing.
Cool thanks! I never knew it’s from the French/Italian/Spanish.
Sad to say, this sounds like the emails we get from some of our clients (fortunately not too many). One week they’re moaning that they’re in dire financial straits, the next week they email “I’ve just been to the bank and they’re going to lend us $XXX to buy another house!” (even though they’re barely making ends meet on house #1 and have massive consumer debt to boot). For the past few years I’ve been advising people on how they can manage things financially (get out of debt, pay off credit cards, consider selling the house etc). I’m giving up!!! Nobody listens. I’m going to start giving out free shovels at client meetings-might as well help them dig their own graves.
We only have 10% down, but payments will be less than $1900/mth. We have to borrow the 10% down from family (good rate/pymt plan) since we declared bankruptcy last year. Long story but got caught in the real estate speculation hype and lost everything!
Good Lord. Maybe I’m being hopelessly naive, but will they actually be able to find someone to lend them money so soon after declaring bankruptcy?
Plenty of willing lenders. 10 seconds on Google:
http://www.loanbox.ca/blog/how-do-i-get-a-mortgage-after-bankruptcy-in-canada/
http://yourequity.ca/bankruptcy_mortgage.html
People don’t realize how easy it is to get a mortgage if they are motivated and get just a little “creative”. There is no such thing as “can’t qualify” – just look around and try somewhere else.
what happens in the case of having an underwater mortgage at the time of bankruptcy? The person would be left in debt because the bankruptcy would not clear the outstanding mortgage balance…couldn’t this be a game changer?
And again, someone doesn’t know how to properly calculate the cost of home ownership. It should be: Mortgage+Mortgage Insurance+Insurance+Taxes+(maybe) Condo Fees+Heating+Maintenance.
Well, as long as it is marketable in the future, who cares, right?
This is too common.
The realtives should get ready to kiss that 10% goodbye… Another reason why you should never lend money to relatives.
OT but pretty funny.
A little outdated.
This is off-topic but I highly recommend to listen to the interview recently given by the president of Iceland to CBC radio.
After letting its banks go bankrupt, after doing exactly the opposite of what IMF was recommending (bailout banks and austerity measures), after being put on UK’s terrorist list along with Al Qaida and the Talibans (!), Iceland has recovered and is enjoying this year a 3% GDP growth…
It’s definitely worth listening to him. The main message of his interview: the protection of our democracies are more important than the protection of any financial interest. I can’t agree more with that.
The interview starts at 9:00
http://www.cbc.ca/video/news/audioplayer.html?clipid=2175162753
Good listen. Long tails are long. 😯
Correctamundo! Regular folks would take it on the chin for a while letting the whole financial system go down. But afterwards, they would continue on just fine and without the shackles. Wall street should never have been bailed out. There was a chance to end this when the subprimes blew up. Now, we will likely have serial currency crises.
Iceland did exactly the right thing. I can understand protecting the depositors but bondholders who should be doing their homework? No. Plus, government has explicit deposit insurance but never bondholder insurance before the crisis. To stiff the taxpayers to protected the bondholders so the financial system wouldn’t collapse is a load of BS. I mean if the bondholder aren’t saved, all those bank branches, ATM machines, computer IT infrastructure is going to what disappear?? Plenty of companies operates fine throughout bankruptcy and really banks is not that much different.
Bondholders have to learn they are not depositors… Do your damn diligence… Moral hazard has made them believe they have all the benefits of depositors and none of the downsides…
Interesting how much pressure was put on Iceland to tow the IMF’s playbook.
Iceland had a good advantage because of its natural resources, educated workforce, and ability to quickly reform its political and financial system. Markets have marked a high degree of trust Icelanders learned from their mistakes. The southern periphery of the Eurozone, unfortunately, has a more complicated track record.
His words about China were complimentary. Interesting too…
“His words about China were complimentary. Interesting too…”
Indeed, it was interesting. Let’s not forget though that Iceland is strategically located in the Atlantic Ocean, at equal distance between Europe and North America, and not far from the new arctic shipping routes. I don’t think anyone should be naive about the underlying reasons for China’s help… However, it turned out that they didn’t really succeed in “seducing” Icelanders as much as they probably hoped for:
“Iceland Rejects Chinese Billionaire’s Land Plan” (http://tinyurl.com/877qzdy)
(btw: that story sort of reminded me of the reason given by the Chinese when they bought the aircraft carrier from Ukraine: “The Varyag was bought for a mere snip, $20m, by a travel agency claiming they would use it as a casino off Macau. No surprise that it ended up in the hands of its real owners, the People’s Liberation Army.” http://tinyurl.com/3ljqrcy)
I found that what was really interesting in that article was the hypocrite attitude of the US, “we’re sorry, we can’t do anything for you guys”, and more importantly the bellicose attitude of the UK. If I were Icelander, I would be outraged at the attitude of the Brits (and I think they are). It’s in bad times that you recognize who your true friends are, and now Iceland knows very well where the US and UK stand. That should also concern us in Canada. If we ever find ourselves in deep trouble the way Iceland found itself, we shouldn’t count too much on our “friends” from the South.
The true precious gift we received from our ancestors is democracy, which is the only thing you have left when everything else falls apart. What’s happened in Italy and Greece is really concerning, because it’s, in my opinion, nothing else than a coup d’etat from the plutocrats. I agree that Greece has a lot to be forgiven for, but it’s no reason for taking away their democracy. If Greece had followed Iceland’s footsteps, it might have been in better shape today.
@Makaya, I wouldn’t be surprised at all with the US reaction; many of the nonperforming assets were through American entities on American soil as well as exposure to European entities, so taking any stand would be difficult. I guess diplomacy isn’t about who’s your “friend” in times of need, it’s about the bottom line 😦
Grímsson’s harshest words were reserved for governments who are taking on large public sector obligations without explicitly putting it to a democratic vote. Ireland is a sad case of this, the last act the previous Dáil undertook was passing some punishing austerity measures before being destroyed at the polls. Greece and Italy are in line to do the same.
One obvious difference with Iceland is that they were always outsiders to western Europe, so losing face among the plutocracy isn’t as big a deal. Not so for the rest. Besides, what does Greece know about democracy anyways?
Will Iceland adopt the canadian dollar?
http://www.afponline.org/Article_Detail.aspx?id=10737419422
@ renters revenge
very interesting! I think it would be a mistake for them to adopt the CAD as their currency. A devalued krona is a strong competitive advantage for its exports right now. It definitely has some inconvenience as well, but it surely helps the country get back on its feet. As it seems now, prolonged economic performance will help get the krona stronger.
“what does Greece know about democracy anyways”
Priceless… 😉
I agree with you, in times where cupidity and greed are the most cherished values, friendship is all about “how much can I benefit from you”. It’s been that way throughout most of History, no reason to change it now. As a founding member of Nato, he probably thought that the US and UK would show a bit more sympathy and solidarity towards his country. With only 300K people living there, it wouldn’t have been too painful for them to help. He was probably surprised to find so much hostility coming from the UK (much more than from the Netherlands, which also lost quite a bit in the failing of the Iceland’s banks).
I did a bit of research about the Chinese guy that wanted to buy land there. This is hilarious…:
““Nature there is very beautiful,’’ said the 55-year-old former Chinese government official — batting back allegations that the deal could give China a strategic foothold into the Arctic Circle, where melting ice caps may one day open more shipping lanes and potentially save a fortune in transporting goods.
But the 1 billion Icelandic kronur ($8.8 million) deal has been put on ice for now by the Interior Ministry, which has written to Huang asking him why he wants to buy so much land — 300 square kilometers (120 square miles) in all, or 0.3 percent of the country’s territory.
Huang’s background in the Chinese communist establishment has fueled some of the speculation that the land deal may be about more than just tourism and a love of nature.
He founded his company, the Zhongkun Group, in 1995 after working in the government’s propaganda department and Ministry of Construction.”
http://articles.boston.com/2011-11-19/business/30420054_1_chinese-tycoon-iceland-akureyri
Selfish investors being selfish? The horror! 🙂
Since Huang was shown the door by Iceland one expects the next logical locale on his bucket list is Point Grey.
“one expects the next logical locale on his bucket list is Point Grey”
Not sure about the strategic interest of Point Grey for the Chinese military, with the Everett Navy base just a few hundred miles south 🙂 Doesn’t look too appealing, does it? But surely: “Nature there is very beautiful”.
Maybe his next move is Macau?
http://www.economist.com/node/21541417
it’s pretty clear that govts don’t speak for most citizens, definitely not in the present. i don’t know if they ever really did. eg1. most americans are for a full withdrawal from iraq/afghanistan – there is a single presidential candidate with that platform. eg2. most europeans want out of the euro – what are their leaders busy doing?
One question – Can you use the borrowed money to down pay the house? I think there is a regulation again this from bank.
Yes, there is some nominal regulation against this, but it is routinely bypassed and brokers encourage people to borrow. I know a few people who borrowed money for their downpayments.
I just don’t understand all the fuss about this Chinese guy wants to buy a small piece of Iceland. This guy just want to get some publicity inside the China to further establish his status there. 8m is a small change to him.
Let’s get real, if Chinese government really wants to buy that piece of land, they would probably come up a way better, much cleaner company/owner to front the deal, or may be even find a white guy / or a 3rd party to be the front.
This Huang guy is ex government official. So what? Let me tell you, you can ask any Chinese that are in this age group, they were all more or less on government‘s pay roll 30 years ago, as there were much of private enterprise 30 years ago.
I am also getting tired about some comments on this board that paints every penny HAM as dirty money. There is dirty money, but there are also show biz money, dot com money, IT money, resource money, and host business money etc etc.
Get off your moral high horse!!
I would argue that in China “dot com money, IT money, resource money” are allowed to be due to dirty means. Doubt the honest guy would stand a chance in those businesses.
As opposed to the honest Wall Street money.
“small piece of Iceland.” 300 square km… or 0.3% of the entire country! To build a golf and a hotel? really?
“There is dirty money”. That’s the point. One dollar spent in Vancouver earned using labour/child slavery, environmental destruction, theft, bribery, corruption or all illegal or immoral means is one dollar too much.
“Get off your moral high horse!!”
This is called compromise and cowardice… no thanks 🙂
lol @ idea of free enterprise/organic entrepreneurship within totalitarian one party state / command economy 😛
lol.
wu mao?
@makaya
context is a mf
people like doesn’t matter are the people that we should be weeding out
To change topic :), I’ve just finished reading the book “All the devils are here – The hidden story of the financial crisis” and I recommend it to anybody interesting in understanding the suprime crisis in the US.
It talks about how the crisis started, how it unfold and how it ended, from multiple perspectives (Fannie/Freddie, Investment Banks, Mortgage Brokers, Government, Regulators, etc.). It’s full of details and is purely “fact-based” (very limited politics in it). I learned a lot reading this book and can’t stop thinking about the parallels between CMHC and Freddie/Fannie. I just hope we’ll be lucky to have a different outcome, although I’m not very hopeful.
they missed the point on the role of the fed, without which none of it would have been possible. every important regulatory check and balance was undone except the one that mattered most, interest rates – these were price fixed, fully regulated. if greenspan had truly been laissez-faire, there would not have been a greenspan put to bail out the wall street banks for s&l, ltcm, dotcom. the market setting interest rates would never have allowed the leverage to create a housing bubble. true laissez faire capitalism allows things to fail that should fail, no matter how large. crony capitalism backs favored interests at the expense of everyone else.
We have to borrow the 10% down from family (good rate/pymt plan) since we declared bankruptcy last year.
——————————————-
How could they even get mortgage financing from any bank given they declared bankruptcy last year?… The minimum credit score is around 680 for CMHC insured mortgages, so I highly doubt they’d be able to get a mortgage, despite the fact the banks seem to be approving anyone who can fog a mirror these days.
lol – mouthbreathers
yup, this one smells.
Yet another fabricated story from Garth Turner’s site
Who would spend time making-up such a story?
To what end?
Do you not think that there are people doing this kind of ridiculous borrowing and buying?
Posed this above, but in case you missed it:
Plenty of willing lenders. 10 seconds on Google:
http://www.loanbox.ca/blog/how-do-i-get-a-mortgage-after-bankruptcy-in-canada/
http://yourequity.ca/bankruptcy_mortgage.html
People don’t realize how easy it is to get a mortgage if they are motivated and get just a little “creative”. There is no such thing as “can’t qualify” – just look around and try somewhere else.
I was trying to count how many times this couple has been spanked by real estate.
1 – House in Kelowna – Bankruptcy related to that?
2 – Condo In Kelowna – Worth 12K less than paid for
3 – Condo in Kelowna – Costing money every single month…
4 – Friends house in St Catharines – They own 2nd mortgage, not worth anything probably, been defaulted on
I feel bad for these people, they are being preyed on by themselves. No doubt they read and enjoyed “Secrets of the Real Estate Cycle” by Don Campbell. I wonder how they will feel when their latest scheme falls awry.
GG at worldhousingbubble.blogspot.com had a good point about borrowing: whether it’s borrowed from the bank, relatives, or your own savings account, it’s similar: you can deploy capital for a return in various places and if you choose to gift or invest for property, that’s a de facto investment with open-ended repayment terms. The capital performs poorly, the rigidity of a loan does not abdicate poor yields on personal capital.
This family is subprime. They may be being treated as “prime” but the way they conduct their finances puts them close to junk grade by any normal measure.
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