Spot The Speculators #81 – “If we sell we may not be able to afford to buy again and the house down the street is listed at $1.8 million right now. Prices will never go down in Vancouver cause its different here and has a lot to do with lack of land and the Chinese buying up everything.”

“Talked to daughter of a friend here in Vancouver. They bought in 2007 for around $750K… old 1920′s place and needs complete redo…still same old single pane windows, sloping floors, old wiring and plumbing. Suggested that they look at selling if they think its worth the $1.4 million they say it is and cash in on their lottery ticket, rent and wait for prices to come down then rebuy. The answer I get is “If we sell we may not be able to afford to buy again and the house down the street is listed at $1.8 million right now. Prices will never go down in Vancouver cause its different here and has a lot to do with lack of land and the Chinese buying up everything.”
I shake my head in amazement. I tried.”

Ronaldo at greaterfool.ca 3 Apr 2012 1:08pm

15 responses to “Spot The Speculators #81 – “If we sell we may not be able to afford to buy again and the house down the street is listed at $1.8 million right now. Prices will never go down in Vancouver cause its different here and has a lot to do with lack of land and the Chinese buying up everything.”

  1. How many unconsciously book these gains and change their spending habits in lieu, or Smith the gains.

    Probably more than one.

    • Renters Revenge

      More frightening is how this plays out in reverse. What happens to the local economy when the wealth effect evaporates?

      • There are going to be many factors that will ‘collaborate’ to make the downturn a profound one for Vancouver and BC. It’s unfortunate, but it’s the result of years of severe over-dependence on the RE bubble economy.

      • It’s a hard message to expound effectively. Debt levels in BC have risen significantly without concomitant wage growth. I am concerned that more than a few people are unaware this poses an elevated risk to BC’s economy. This does not mean BC absolutely faces a recession, severe or mild, but the signs are there that the probability and severity of a recession are more elevated now than they were 5 years ago.

        When someone says “risk”, I hope we understand what it means. Risk doesn’t necessarily mean a 100% occurrence. Some of the reports out of places like Central 1 don’t, IMO, give enough credence to the risk analysis in their reports, instead touting the “most likely” scenario then hiding the weasel words in the fine print. If they were in industries where risks actually mean something before the bad stuff occurs, they would be fired.

      • Hate to tell you, but it is going to be pretty bad. High unemployment, plenty of small business failures, bankruptcies, foreclosures and all the usual collateral damage like broken families etcetera. Hardly anyone ever talks about that end of it. It all goes underground. People are proud you know. Too many feel humiliated by losing it all and being wrong. Looks good on the surface until the repo-man takes the car or the banks nails an eviction order on the door and then everyone tense, standing around…biting their lip. Is that what they call stoic? For sure nobody ever really wants to talk about it. We won’t be writing in to say “told you so”, thats for sure.

    • I agree completely and can add an anecdote:

      My sister is getting married and planning their wedding. With a house and apartment in Vancouver and a condo at Whistler you would think they were flush but no… The entire wedding is on their line of credit and they are “borrowing” wedding rings until they can afford to buy real ones as they are maxed on what they can get on their HELOC’s. When I asked them why they don’t sell the condo or apartment I was told they need them to keep going up in value. I’ve given up giving guidance anymore but felt chills when I realized that they need the places to go up in value so they can increase their credit lines to maintain their current lifestyle….god forbid what will happen to them if (when) the value declines.

      • They know not what they are doing. I have given up entirely warning friends of the hazard. The amount of effort needed to convince them there is even a problem is just not worth it. In the end, most still doubt even when they have the charts and facts in front of their eyes. I find it utterly baffling. They are truly brainwashed.

        By the way, I loved that Carlin quote on another thread…..”think of how stupid the average person is, then try to comprehend that half the people are even stupider”. And then I laughed and laughed.

  2. Ralph Cramdown

    Same response from my SIL. They’ve gained and traded up three times, living house poor for about two decades now (ten year old Honda, only known vice is Whole Foods). I tried.

  3. Insert brain here, select wash cycle.

  4. What if you’re wrong? They’d end up never being able to buy-in again and it’d be all your fault.

    • No it wouldn’t. These owners are adults; they make their own decisions.
      Ronaldo is brave enough to share with them a perspective different from the one they are getting from the media, the banks, their realtor, their neighbors, their friends, and their family. Let them weigh the merits of all these opinions.

    • Renters Revenge

      Think about that…people priced out forever? How is that sustainable?

  5. Renters Revenge

    If nobody in this city can afford to buy their own house what does that tell you?
    Hint…we’re screwed.

  6. Told-you-so-in-2007

    OT, but interesting. Still a lot of talk from OFSI, but a bit of action too:

    Canada Boosts Housing Oversight as Banks Warn on Economy
    http://tinyurl.com/bwxtqg8

    “The country’s banking regulator, known as OSFI, said yesterday it will boost supervision of private mortgage insurers while examining “emerging” risks to the financial system in several areas, including residential mortgages. ”
    “The Ottawa-based Office of the Superintendent of Financial Institutions said yesterday it will produce a report for Flaherty on government guarantees on mortgage insurance. An OSFI spokeswoman, Leonie Roux, said the report would apply to private insurance providers such as Genworth MI Canada Inc. (MIC) and not CMHC.

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