Spot The Speculators #82 – “They are “borrowing” wedding rings until they can afford to buy real ones as they are maxed out 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.”

Posted on 7 April 2012 | 42 Comments

“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.”
– ChemGuy at VREAA 5 Apr 2012 1:30pm

This entry was posted in 05. Where do Buyers get the money?, 18. Spot The Speculator and tagged Anecdotes, British Columbia, Bubble, Canada, Housing, Real Estate, Relationships, RE_ATM, Speculators, Vancouver. Bookmark the permalink.

42 responses to “Spot The Speculators #82 – “They are “borrowing” wedding rings until they can afford to buy real ones as they are maxed out 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.””

Van guy | 7 April 2012 at 7:59 am | Reply

Idiots! 😱
jesse | 7 April 2012 at 8:02 am | Reply

One of the 10%, according to Overlord Carney.
- chubster | 7 April 2012 at 8:16 am | Reply
  
  supposing c and f were genuine …
  - jesse | 7 April 2012 at 10:23 pm |
    
    Carney and Flaherty used the “turbo” bonus, and now leading in MarioKart, they, and we, actually have to start driving. I do think the dudes recognize it was a temporary thing.
    
    I still believe low rates are no free lunch. I find it fascinating that so many of the articles and editorials published in Canada are affixed on the notion that it will be higher rates that will kill Canada’s overburdened housing sector. I disagree it is a necessary condition, and back it up with no relevant higher degree to speak of. That should be enough.
Nemesis | 7 April 2012 at 8:11 am | Reply

…”God forbid what will happen to them if (when) the value declines.”…

No worries… just ‘FlipThatPlot’… for, as it happens, DeadOrAlive – when it comes to YVR – there’s no escaping the ‘market’ (albeit, on the BrighterSide, current residents of ShaughnessyMausoleums who get in on the ‘PreSales’ will feel right at home)…

Quote of TheDay!

“If you want to be in Vancouver, which a lot of people do, we’re the only option.” – Mountain View Cemetary Manager Glen Hodges

[G&M] – In Vancouver, real estate to die for

“It’s some of the hottest real estate in one of Vancouver’s most in-demand neighbourhoods, and it’s up for sale for the first time in nearly a quarter century.”…

http://tinyurl.com/7bkpv7l
- Nemesis | 7 April 2012 at 8:18 am | Reply
  
  Meanwhile, back in Blighty… (Déjà vu, DearReaders?)
  
  [FT] – London property: Door to a cloistered world
  
  …”Liam Bailey, head of residential research at Knight Frank, a rival agency, says: “The wave of money that has been flowing into London property over the past three years has been supercharged by one key theme – political risk. The world’s wealthy, especially in emerging markets, are nervous about arbitrary rule and policy change in their home countries and how this might affect their ability to protect their wealth. So they are moving money, and increasingly their families, to more stable environments. These house purchases are effectively triple A-rated bond investments – which happen to have a London address on them.”
  
  If homes that were once just well-located bricks and mortar have morphed into something more akin to a reserve currency, that creates a big distortion to the residential upper tier.
  
  However, Mr Bailey is among a growing band of property experts suggesting that London’s prime market – the top 5 per cent of the housing stock by price – is barely at the start of a sustained rally, underpinned by increasing uncertainty elsewhere in the world and the resulting push towards personal wealth preservation.”….
  
  http://tinyurl.com/7hgaahd
- jesse | 7 April 2012 at 8:21 am | Reply
  
  Let’s just say when I die I’ll be in Vancouver, at least my carbon will be, after being pushed though the palms of the Igors in the UBC dungeons. A most fitting end for one involved in the sciences.
  - Nemesis | 7 April 2012 at 8:41 am |
    
    Alternatively, Jesse – you could always opt for Plastination™ and ‘Tour’ like a RockStar!… Dr. Gunther von Hagens is always looking for volunteers!…
    
    http://tinyurl.com/zbblo
  - rp1 | 7 April 2012 at 2:34 pm |
    
    The chinese carbon will squeeze you out.
  - jesse | 7 April 2012 at 3:10 pm |
    
    I’d check the carbon content of anything from China. Too much or too little and stuff tends to… er… crash
  - Nemesis | 8 April 2012 at 7:05 pm |
    
    Funny you should say that, Jesse…
    
    I originally thought to post this on your TeraNet offerings… Because… Well… Graphics will only take you so far*…
    
    *Senor Cabellero, if you’re reading this… You’ll know why I’m going to ‘sport’ you a really Sauve Chute OneDay, when we eventually ‘Do The Dirty’ and see if she’s ‘AeroB’.
  - Nemesis | 8 April 2012 at 7:16 pm |
    
    Redux… For ‘Purists’*… In the unlikely event….
    
    *Take a ‘miniature’ from the cart, lean in to your SeatMate… HoldHands… Give each other a TrulyLong Deep’Frenchie’ (LastChanceSaloon – GenderBeDamned) …CrossYourFingers… &Remember… The ReallyImportantStuff…
  - jesse | 8 April 2012 at 8:16 pm |
    
    And full circle, who gives a flying f*ck if you have expensive wedding bands when the rudder develops a hairline crack?
  - Farmer | 8 April 2012 at 8:45 pm |
    
    Or an O-ring failure in your solid rocket booster on take-off.
    
    http://en.wikipedia.org/wiki/Space_Shuttle_Challenger_disaster
    
    Yeah. I swore like hell that day too. Could not believe it was such a stupid mistake. Same as pumping up the countries home values to boost the economy but watching instead at lift-off only to see it all burst into flames.
- MM | 7 April 2012 at 11:34 am | Reply
  
  die now or be priced out forever
  - Nemesis | 7 April 2012 at 4:34 pm |
    
    Damn but I wish I’d written that!
pricedoutfornow | 7 April 2012 at 9:35 am | Reply

Speaking of Whistler, at the last family dinner, my sister in law was moaning about the latest rental numbers from her Whistler condo-apparently they are horrible for the first 6 months of the year. I don’t know why she even bothers, they’ve never made a dime on this so-called “investment”. By my estimation, they’ve lost about $100k in the past 10 years. Right now, the condo’s only worth what they paid for it (ten years ago). I expect it to keep going down. Negative equity IS happening in BC, despite what global news tells us-I know someone in Kelowna who has a condo she bought for around $250k, is now worth $165k. The mortgage is still well over $240k (she refinanced, didn’t put down much, and the CMHC fee added to the mortgage as well). I don’t know why Global TV keeps flaunting real estate-what about the stories from the rest of the province where people are clearly pessimistic about real estate? My last visit to the Okanagan, I had people tell me things like “I couldn’t sell it today for what I paid for it” and “The house is worth $100k less than what it was a year and a half ago”. I don’t know why Global TV keeps acting like real estate’s such a hot commodity, when clearly the rest of the province is in the dumps. Guess they want to keep that part a secret so people continue to buy buy buy in Vancouver! (sorry, a bit off topic)
- Gord | 7 April 2012 at 11:27 am | Reply
  
  Why? Because…
  
  …This segment brought to you by Re/Max.
- E.G. | 7 April 2012 at 8:29 pm | Reply
  
  True enough. When I tell people in Vancouver about the Okanagan, or Whistler, or Victoria, (or Calgary), I just get blank stares.
chubster | 7 April 2012 at 9:42 am | Reply

weekend OT light crystalline fare, nice to share … something for the ladies and lady-likes alike, i like

gentlemens, if your ears matter, the gwyneth analog is not credible
- Absinthe | 7 April 2012 at 10:38 am | Reply
  
  Nice! Thanks, Chubster.
  - chubster | 7 April 2012 at 12:16 pm |
    
    apparently somewhere in the book of mormon is written thou shalt be hot
    http://www.hotmormons.net/default.htm
    i am conducting a personal experiment to see if its the abstinence. leave you to appreciate the mild ironies of this related number i found
    
    it’s just nice to know the world isn’t full of seriosos. now if someone could tie this thread back to the topic at hand, i can be absolved. ciao.
Paul Streppel | 7 April 2012 at 9:46 am | Reply

Average total consumer debt, excluding mortgage debt, by province, as of Q4 2011:

highest:
$37,276 British Columbia
$33,643 Alberta
$27,755 Saskatchewan

lowest:
$18,376 Quebec
$19,959 Manitoba
$22,734 New Brunswick

Average consumer debt excluding mortgages has been rising steadily for 6.5 years, although the last quarter showed a slowing of the pace to less than 1%

“The continued deceleration in the annual growth of total debt is the bigger story” Thomas Higgins, TransUnion VP of Analytics and Decision Services.

credit data from TransUnion taken from a story in Financial Times, February 23, 2012
- AG Sage | 7 April 2012 at 12:51 pm | Reply
  
  Yet another credit bubble reaching peak.
  - Farmer | 7 April 2012 at 7:27 pm |
    
    OK, maybe I can add a song to the growing list here. Not my usual style but here is Don Ho, singing “Tiny Bubbles”. It is the classic bubble song. You know, bubbles are great if you can just contain them to beer, wine and champagne!
- Renters Revenge | 7 April 2012 at 1:25 pm | Reply
  
  “The continued deceleration in the annual growth of total debt is the bigger story” Thomas Higgins, TransUnion VP of Analytics and Decision Services.
  
  That IS the bigger story. My guess is that most will assume that decelerating credit creation is a good thing – it isn’t.
  http://theeconomiccollapseblog.com/archives/credit-crunch-2010
  - Paul Streppel | 7 April 2012 at 11:07 pm |
    
    It’s hot stat, i agree. When people begin to reduce their debt they are saying there isn’t anything worth investing. Banks know this acutely, and will raise interest rates accordingly. I hammered my personal debt down by 38% in the last week of March to drive it home… Is there anything worth investing in without assuming substantial downside risk, including precious metals? I don’t think there is.
- E.G. | 7 April 2012 at 8:32 pm | Reply
  
  Man. Once again I’m below average. This time by $37,276, seemingly.
  
  Sometimes this all makes me feel like a chump. I’m worried that, when the shoes really start to fall, the turkeys with the debt will get help from the gub’mint. At my expense.
  
  It happened in the Excited States. No reason it couldn’t here.
MBA | 7 April 2012 at 9:54 am | Reply

I can feel the pain. It really it emotionally difficult to watch people you care about swirl into the abyss and feel so powerless.
- Zedsded | 7 April 2012 at 6:25 pm | Reply
  
  When they finally feel powerless that’s a good sign. Until then, let them learn.
Ridiculous | 7 April 2012 at 6:46 pm | Reply

I have no debt and am sick and tired of constantly subsidizing (and by corrollary, encouraging) these status seeking mathematically illiterate fools against my will through government sibsidies and zero interest rates. All the bragging and “advice” that I have had to tolerate for the last half decade will be moot when the foreclosure wave starts rolling. I can’t wait. Borrow all you want. buy Buy BUY!… Idiots.
- Farmer | 7 April 2012 at 7:30 pm | Reply
  
  If you are mad at them now, Ridiculous, then you will be furious after they lose their houses to a foreclosure and start competing against you for the best rentals with the same entitled attitude that wrecked the economy in the first place.
  - gokou3 | 7 April 2012 at 9:28 pm |
    
    …. or when the losers (winners?) whine and whine to the government for help, begging for loan writedown (like they do down south). Your tax dollars at work, of course.
  - Farmer | 7 April 2012 at 11:00 pm |
    
    Sucks but it’s true, Gokou3.
    
    Renters will subsidize home-owners through taxation, subsidy and various transfer payments thus ensuring the losses of those who were wasteful and profligate are never fully crystallized while gaining no absolute benefit for themselves.
    
    In other words…you got screwed if you didn’t play the game,
  - jesse | 7 April 2012 at 11:10 pm |
    
    “you got screwed if you didn’t play the game”
    
    I think Taleb wrote, and I paraphrase, I take comfort in knowing that my more earthly path, hedged appropriately, has a better outcome than the median of those who flew too close to the sun.
    
    There will always be those who will succeed and excel in spades after being reckless but lucky. You can never hope to beat these, but will beat their countless fallen comrades by a country mile.
  - Farmer | 7 April 2012 at 11:25 pm |
    
    Happily you seem to have appreciated my frustration expressed in the last line of my prior comment, Jesse. I think it is just rotten that those who were behaving in a fiscally prudent way, saving and investing, will now bear more of the weight of the downfall than those who acted foolishly and in haste.
  - jesse | 7 April 2012 at 11:36 pm |
    
    @Farmer, I think that those who acted “foolishly and in haste” (the “grasshoppers”) will end up with, in net, a larger burden than the “ants”. This was certainly true in the US — there simply wasn’t enough $ to make a massive dent in the debt burdens of overextended homeowners even though more than a few cramdowns and bailouts have been used. I don’t have the numbers in front of me but I do recall reading that most (not all) of the deleveraging to date has been borne by the debt holders and not by the taxpayers.
    
    The ants will end up giving up some of their savings for sure, (and we are already — look at negative real rates!) but it’s likely less than the average grasshopper. And yes a few grasshoppers will get away with it. Life’s not fair but hey still better an ant, so goes the fable.
bubbly | 7 April 2012 at 11:07 pm | Reply

Idiots. They are borrowing money for a wedding when they could borrow for a downpayment and buy another condo. The more mortgages you have the more upside you get. Obvious, eh?
El Ninja | 8 April 2012 at 9:13 am | Reply

Vreaa and fellow readers, have you seen this article? Sorry if it’s been discussed here already, but I am so blown away I just had to point it out…

http://www.vancouversun.com/business/First+time+buyers+have+options+that+important+down+payment/6419013/story.html#ixzz1rSvUmsEY

Actual advice from one of the “mortgage experts” quoted: “Buyers can borrow the down payment through a line of credit, personal loan or possibly cash advances against a CREDIT CARD.”

Yes, people. Interest on your credit card is 18%, but it’s all good, because Vancouver real estate is going to the moon!
- midnite toker | 8 April 2012 at 9:49 am | Reply
  
  Wow , I did the same thing when I was 21 – used my credit card for a downpayment . The only difference is that was for a motorcycle!
  - Farmer | 8 April 2012 at 11:13 am |
    
    Speaking of which….since we are now at the top of the asset cycle in this country it is a good time to consider unloading anything that would serve you better as cash in the bank. Waiting until later will just yield lesser and lesser amounts over time. Especially as housing deflates. Examples are Motorhomes, second cars, the antique that you just know is worth a fortune and any resort getaways or Timeshares. Consumers are already stretched but still “feel” wealthy as the correction has not become obvious to the general public yet. Imagine how much poorer they will feel as housing prices decline and job losses begin to mount. You get the point. For all things there is a season and this is the season to get rid of assets that could potentially see steep declines in the coming months and years……or you could do like most other people. Hold on and sell at the bottom when you really, really need the extra cash.
    
    [hopefully that did not post twice…computer is haywire today]
- MM | 8 April 2012 at 9:48 pm | Reply
  
  “Buyers can borrow the down payment through a line of credit, personal loan or possibly cash advances against a CREDIT CARD.”
  
  Yay! Best banking system EVER!