“As a former Montrealer and current Mechanical Engineer, Vancouver isn’t that bad. Starting a family is very simple here. Do what my girlfriend and I do: rent and forget about buying.”

“As a former Montrealer and current mechanical engineer( B.Eng.), Vancouver isn’t that bad. The job market here is very bipolar, that’s all. If you work in the Forest\Mining\Import-Export industries, you’ll be fine. If you’re field is not related to any hard asset, then things are going to be bad.
If you’re in the F.I.R.E industry, then move to Toronto.
Starting a family is very simple here. Do what my girlfriend and I do: rent and forget about buying…”

Sebastien at VREAA 12 Apr 2012 10:39pm

23 responses to ““As a former Montrealer and current Mechanical Engineer, Vancouver isn’t that bad. Starting a family is very simple here. Do what my girlfriend and I do: rent and forget about buying.”

  1. “If your field is not involved in any hard asset, then things are going to be bad.” – Are you referring to real estate too?!

    • Hard assets refers to commodities. Things like iron ore, coal, copper, gold and potash. Soft commodities are wheat, corn, sugar, oats and cotten etcetera. We differentiate between those resources and housing because they tend to run on different cycles. Whereas commodities dug out of the earth or renewables that are harvested are tangible wealth at most points across the credit cycle it is even more apparent when real estate assets are actually net liabilites for most new owners. So, no. This is not discussing real estate assets and that is not a safe place to be invested at the peak of the credit cycle when prices are at their highest (in my opinion). Hard assets on the other hand are the gift that keeps giving. Better yet if you can get them on sale (like when everyone else is running away in a panic). Even as recession looms the costs of production fall which boosts earnings (the bottom line) and often yields increasing returns in the form of dividends and/or share values. So it is a good bet to own productive mines with quality assets and a solid dividend stream. Real estate on the other hand is what you want rid of….harvest gains in that asset and redeploy to productive uses which will offer real inflation adjusted returns. And don’t let the idea of an economic slowdown dissaude you. The world needs minerals all the time. It never ends and it never will end. If anything, we are running out of key resources and this play will only reward to the upside for many, many years to come. Both silver and copper, for example, are in global decline. Nobody is finding good mine sources anymore yet demand is constant to increasing. We will run out of cheap sources in this lifetime of ours by all rights. So pay attention kids. You will probably want some exposure to mines and the financial assets like stock associated with them. You want stuff that rewards you for ownership and offers an income stream if you can get it. Even at the depths of the worst recessions the big miners keep producing but as their costs fall your worth goes up. Usually. Not always.

      The preceding is strictly my personal opinion. Don’t invest on that basis. You should always consult a professional before deploying your hard earned cash into any stock, bond or security.

      • Feel free to add specifics. What are your thoughts on energy commodities?

      • Jeez, MM. Now why would you ask me about the one thing I never have any damn luck with? Oil is as bad as Gold in my books. It’s price is driven by fear and politics and rumours and dollar doomer disaster theories more than by fundamentals like supply and demand. Every time I think I know what it might do next I guess wrong. It’s like a damn curse. Sorry, not very helpful but I have little interest in it. Let the high flyers play that game.

    • It makes me really sad everytime I hear someone makes an argument that it is cheaper to rent than buy, If I mention that historically buying has been a better option than renting I know a lot of people will jump out and say but now it is diffrent, Debt to Income ratio etc….., real estate is overvalued 10% plus. Just think of it this way when you own over years your payments will become less (10 years later) but when you rent you rent will be the same or most likely higher 15 years from now. if you buy a place for $500,000 and have a good rate mortgage and your payment is $1800 a month, $800 goes towards principal and $1000 towards interest so add $200 a month for property taxes and $100 for insurance and $100 a month for maintenance, so not counting the money that goes towards principal you really are throwing $1400 a month in the pot. It will cost you $1500 to rent that place so yes you are paying $2200 a month but what it really cost you is $1400 a month. Over time let’s say 15 years you are paying a lot less interest so at some point you are paying $200 a month in interest plus expenses and then you are mortgage free. Can you ever be rent free when you rent ? now also look at the strong possibility that you property has appreciated quite a bit in a long run. you will here a lot of negative coments about buying versus renting. Do you realy think landlords that own multiple properties and are doing financially well will post comments like buy and don’t throw your money away in rent. Not likely they are more prone to get you to think that renting is cheaper and belive me may be in very short term it is but in long term it is not. Look at what percentage of inheritance that people get is from real estate compare to other investments. Please do not let the so called experts convince you that it is a better option to rent. Buy within your means and upgrade when tou can do without stress, do the sacrifice live in Langley for a few years if that is the only place you can afford, it is not the end of the world. I can make another 10 arguments that you should buy and thare are a lot of affordable properties in town if you are willing to relocate for a few years. I did it and that was the best thing I did. Live for today and also consider the future when you will need to live off your investments. Real estate in long term is a great investment. There are two types of people in this world, one that does it and the other type is the one that can come up with million reasons why they shouldn’t or can’t do it. Take the leap at something you can afford and ride the waves of real estate you will come ahead in the long run. Yes I agree Real estate is overvalued in Vancouver West side, Richmond and West Vancouver but there are other municipalities that prices have not gone up much in the last 2 to 3 years just go ahead an d find it. I have read most articles articles written by experts regarding real estate in vancouver, Keep in mind in reports and stats there are a lot of referance to vancouver west side when they talk about vancouver, don’t be fooled by that. If you buy a propery for investment then the timing is more crucial since you are most likely try to make a profit in 3 to 5 years, but if you buy to live go ahead and take a chance 8 out of 10 you come ahead if you plan to hold on to it for a while. Wish you all the best and stay away from people that are negative they bring you down, look at best poosible outcome and worth possible outcome and then make your decision.

      • Jeff Murdock

        Realtroll.

      • But it is cheaper to rent than buy Shawn. By a country mile. Nobody even has to fake those numbers.

      • Shawn are you really suggesting that irrespective of the relative valuations, it *always* makes sense to buy rather than rent? If you’ll forgive a car analogy, consider this: many people express a preference to buy a car rather than lease one. This position is sensible: own a car long enough and it becomes worth the higher capital expenditure, as the car becomes your property. However, this is only sensible because of the proximity of the costs of buying vs leasing (e.g. a monthly finance payment may cost more than leasing, but finance participants are compensated for this with ownership at the end of the term).

        What if a Honda Civic cost $100,000 to buy, or $10 a month to lease? Would you really still insist on the former?

      • With moderately elevated prices, the numbers for buying will eventually look better, equity-wise, but that’s approaching 20-25 years out. And that you don’t mind being all-in on a single asset class, in a zone overdue for a big earthquake, to boot.

        If it’s more than moderately elevated you may never see that value come back enough to cover opportunity cost, although you may feel flush when you sell. But in the meantime you will be trapped, so you will indeed get to find out whether the value ever returns.

      • There are two types of people in this world …

        Nice, drone on and on with numbers and logical-sounding arguments, then slip in a “have you got the right stuff?” emotional argument.

        I missed the part where you explain why Canada/Vancouver is different from other RE bubbles?

      • reality check

        Actually Ligsie, In many ways it makes more sense to lease a car than to buy one. You should always rent items that depreciate and buy items that appreciate

  2. “Farmer” – I was only joking. I think he also means in terms of a career.
    Go Canucks Go!

  3. Paul Streppel

    Scarcity or abundance?

    We’re wired to a worldview that’s geared to scarcity.

    Believe it, the challenge the world faces, is an adjustment to abundance. We’re a long ways there, but it has begun.

  4. Well, there’s certainly no scarcity of credit, I’ll grant you that. I hear the food and water isn’t too abundant in Western Africa, but they don’t buy homes in the West End anyway, so who cares?

    P.S. I sure hope Shawn keeps posting….formula1 needs a friend.

  5. ” If you’re field is not related to any hard asset, then things are going to be bad.”

    Speaking from experience, that’s utter nonsense.

    • How come?
      The only people I met and who are doing well are the ones working in fields that involve goods (Import/Export) and commodities. On the other hand, I’ve met a marketing guy with a MBA who was delivering pizza.

  6. Ligsie,I agree with reality check, it makes sense to buy assets that appreciate and lease assets that depreciate

    • Ralph Cramdown

      Good luck with that. My depreciation budget on the family car is $1k/year, and I guarantee you I’m in a far nicer ride than anything you could lease for $80/month.

      If you lease a car, there’s somebody on the other side of that trade who’s being paid the depreciation, cost of capital and profit. You’re smarter than the counterparty? Tax implications are far more important in the buy/lease equation.

      Back to real estate: Land appreciates, structures depreciate.

  7. MM, Thank you for your feed back, I agree my comment about there are two type of people in this word was not necessary, I had bad head cold and couldn’t sleep when I was writing that so there was more emotions than needed. It was more of a motivational speech than trying to insult anyone. I remember I had this poster from Michael Jordan in my room when I was a teenager and in the bottom said ” 100% of shots you don’t make will be missed”. People sometimes are so affraid of making a mistake that they don’t take action, my point was do your reasearch and take action. There is never a right time for big decisions. I apologize if I have insalted anyone.

    • I don’t think you insulted anyone, Shawn. We have all heard the rationalizations expressed before about buying versus renting and why renters are just “throwing money away”.

      Sometimes it is the buyers who are throwing money away though. Too many of them have gotten in over their heads and don’t seem to have the mental tools needed to cope with adverse circumstances.

      A woman I know of bought a Calgary condo ten years back. Good timing. It appreciated quite a bit and as time went by she borrowed against all the growth in equity to fund her new lifestyle.

      Well I just heard from her Mom that she is within one payment of losing that Condo, is out of work, has a mountain of bills that cannot be paid and is facing bankruptcy. In ten years she managed to put two mortgages against her own home plus a line of credit that has now run dry. She did not have the cash on hand to even cover strata fees this month.

      Now here comes the tragic part. She owns her Mothers house too. It was put into her name years ago (kind of a living will thing) and the idea was to set her up well in life so she could be in a strong position to take care of Mother when she retired. This dingbat has managed to borrow most of the value of Mom’s house too without Mother even knowing about it.

      So both houses are about to go up in smoke and naturally Mom was shedding quite a few tears as the realization dawned on her that the kid screwed up so bad she just made her own Mother homeless. The lady has been in the same place for 42 years and faces eviction when the bank takes it.

      All I am talking about here is an example of how families can get blown up in rising markets as they lose control of their finances or face employment set backs like this young woman has. It is so pathetic to me that she basically went from being a millionaire to going on Welfare within a decade and she is still not yet 39 years old.

      Total screw up. I will bet there are lots more like her in the wings. Savings rates are negative. What else would we expect? So it is not like we can blame any one person when the whole country (the herd) is operating in the same way from coast to sorry coast.

      In principal, Shawn, buying may be a sound idea. In reality though, principles don’t matter. This generation of buyers just seems incaple of seeing the risk inherant in borrowing beyond their means nor are they disciplined enough to know when to quit while they are ahead. Lots of them are now heading for the wall.

      Some are taking their parents with them.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s