“Friends are still in denial, scared because they paid $1M for house on a 25×100 lot in Vancouver Main area last year and don’t want to believe they are about to lose all their equity.”

“So it has begun to pop. Friends are still in denial, scared because they purchased last year and don’t want to believe they are about to lose all their equity in the next year. They paid 1 mill for a 25×100 lot house in vancouver main area, they had 30% down so they can afford the downturn. But who really wants to realize it. I can’t wait to buy in the same area, with a bigger lot and nicer house for 1/2 the price. Btw, I personally sold a few months ago, now renting for cheaper than my mortgage. New place is double the size, nicer area, yard, and so on.”
Finally at VCI 3 Jun 2012 9:26pm

90 responses to ““Friends are still in denial, scared because they paid $1M for house on a 25×100 lot in Vancouver Main area last year and don’t want to believe they are about to lose all their equity.”

  1. Lol good luck… you sound like a great friend.Even if your wishful thinking is right and the market dips its brutal to see that your excited for your friends to lose money.

    • Those friends that rub their purchase in your face and tell you your an idiot renter every time you visit don’t deserve some tit for tat?

      Come on, you’re a renter, behave like the shrinking violet peasant you are!

  2. reality check

    What a true comment swing level. All the bears on here are salivating at the prospect of homeowners getting creamed. Even their “friends” so it would seem.

    • None of my actual friends, or family in Vancouver can afford to own a home..so I hope the market gets creamed!!!!

    • ” All the bears on here are salivating at the prospect of homeowners getting creamed.”

      Frankly I can never be sure if someone claiming to be emotionally wounded is truly wounded or acting that way to get some sort of break. A sad state, but one by which I ensure I am properly hedged: it’s not about fairness or compassion, it’s about the price.

      As I have mentioned before, the best thing I can do for those suffering financial hardship is show no emotion. I’ll save my sympathy and compassion for volunteer work at BCCH.

  3. Well, the reality is that we’re all going to get creamed. Some worse than others.

    But even those of us who have been prudent are going to end up paying for those that weren’t. Whether via the CHMC falling apart or just strain on the social safety net eating our taxes.

    And, I think that all of us on this blog have friends and family who have made decisions that may not have been wise. I, certainly, don’t take any glee in their upcoming financial strife. But, on the other hand, they are all adults and really can’t blame anyone else either. So I hope that they start to take the best possible precautions in what looks to be diminishing time.

    • I gotta say that i’m glad to have come across this site. Most of the people I hang out with don’t generally live life thinking doom and gloom. Interesting to see the argument of Real Estate not being a good investment (after due diligence of course). Let’s be honest, even if the prices go down 50%, your still not going to buy.

      “If you don’t like something, change it. If you can’t change it, change your attitude.” – Maya Angelou

      Lol!

      • “Interesting to see the argument of Real Estate not being a good investment.”

        There is lots for you to read, then.
        Markets change. Don’t assume your recent patterns will be continued.
        For instance:

        ‘Homes are a risky long term investment’
        R Shiller
        http://www.leighbureau.com/speakers/RShiller/essays/homes.pdf

        ‘History says home real estate is a bad investment’
        http://www.cbsnews.com/8301-505123_162-57369547/history-says-home-real-estate-is-a-bad-investment/
        (Also mentions ‘recency bias’)

        The 100 year chart
        http://www.ritholtz.com/blog/2009/07/update-case-shiller-100-year-chart/

        Lots more, that’s just from the first few hits…
        Amaze your friends!

      • Swing Level

        Two words – Analysis Paralysis. No investment is going to be 100% guaranteed…. unless you want government bonds. Good luck with those returns… Whenever I or any of my friends look at any investment, of course risk assessment is the biggest thing. Some common sense in the mix always helps. The results speak for themselves.

        ps. you left the (after due diligence) out of the quote you posted.

        pps. Looking at these numbers is like getting freaked out by the high AVERAGE home price and not taking into account the homes in the West Side.

      • Running with the herd, are you, Swing Level? If there is one common trait amongst the people here it is a general disgust with what most of us consider poor decision making on an issue that has very negative ramifications for everyone. The results, as you say, may speak for themselves but that fact only holds true at the bubbles peak.

        What about all the rest of the time?

        That’s why your thinkng stinks and its what got so many into trouble in the first place. Plenty of folks are underwater already in just the past 24 months but they still have 28 more years to run on their mortgages (or more). So unless you are going to to be the first to leap of the cliff that is already here you should really cut the bravado and start thinking a little harder.

        Or not. Just sit tight and be patient. Equity will vanish as easy as it came.

  4. You will be renting for a long time, if you think the prices are going to drop 50%. I have bought and sold a lot of properties in the last 20 years and anyone that has sold and has waited to buy has regreted. There a lot of cost associated.

    1) Real Estae commision
    2) PTT
    3) Equity gain lost by renting
    4)Mortgage Penalty

    So the prices has to drop considerably to justify the loses above .Good luck I don’t see a 50% drop or anything close.

    • 3) Equity gain lost gained by renting

      Fixed that for yah!

    • So you missed the last bubble??? If you’ve been for 20 years you would have seen the problems from the last bubble and seen the price drops from then. And the 50% drop that will be over 5-7 years. Not an immediate drop but still long enough for people to be put off from real estate, and the drops will probably continue for 10+ years. The last bubble took 15 years to recover.

    • I’d like to comment here regarding the ethnicity of this home buyer. Look, this ain’t HAM here. This is a Caucasian family. HAM won’t by a silly 25′ lot and a piece of crap 90 year old home. Next time you clowns blame HAM, look in the mirror first.

      • Many of us here (perhaps most?.. perhaps almost all??) believe that local buyers high on cheap financing and stories of never ending price increases have blown this bubble. ‘HAM’ was/is a prominent sideshow, but a sideshow nonetheless. So, don’t typecast anybody as ‘HAM-blamers’.

      • Did anyone blame Hot Asian Money in this thread?

    • Cripes Shawn, 50% is just a starting point for this bubble. Vancouver is not immune and it is because of globalization. We are all interrconnected now and in case you did not notice we have a deflation underway right across the globe. That is what has put much of Europe in recession. It is what a contraction in GDP is all about in China and it spells major trouble for anyone holding debt in this puff-ball of a housing market that can not be sustained anymore. Hell, even the US will be back in recession once the election is over and you almost be assured we will see growth sputter and slow in this country too if commodities keep slumping from the drop in demand. I think the folks here have it just about right, Shawn. Half off homes from current levels is well within expectations when a bubble of this magnitude gets blown.

  5. We’re “salivating” at an apparent end to insanity. How on earth is a total teardown on some tiny lot on some nondescript road in a town where virtually everything else is already crazily expensive worth more than what most people make in twenty years? Answer: Speculation, realtor- and media-fueled lies, and a culture of credit. It HAD to end. And now it seems it is.

    • reality check

      Sorry Gord but I don’t see your dream happening. Yes I am not saying there won’t be a modest correction as there always is but 50 or 60 % that I do not believe. Interest rates are going to stay low for a very very long time and stocks are going nowhere. People are looking for a place to park their cash and real estate especially in Vancouver is one of those places. The other thing is that if you by some bizarre turn of events get your wish and real estate plummets so will our whole economy. You will also be f***ked.

      • One event does not necessarily trigger the other. The economy could remain just as it is (which in itself ain’t so great) and BPOE RE will suffer tremendously regardless. As for “parking cash” in YVR real estate, I’m no investment guru, but I personally couldn’t think of a worse place to currently park anything. It’s pure speculation – the opposite of “parking” cash. And as this bubble burst gains momentum and is fully recognized in the mainstream, it will only appear more unsafe than it already does.

      • reality check ->
        1. The moment prices clearly declare their downward direction, buyers will evaporate, demand will become supply, stealth inventory will come to market, etc, etc. Things will become non-linear in a way that will surprise people used to approaching “supply-demand” as though it’s arithmetic.
        2. Correctly noting that things will get rough if prices collapse is NOT an argument that prices will not collapse… it is rather a pure form of primitive, wishful thinking.

      • Ralph Cramdown

        Interest rates are going to stay low for a very very long time and stocks are going nowhere.

        I’ve been working on a portfolio (for an older family member) of stocks with fat earnings and fat dividends. Do I care whether the price goes up? No, I don’t. There’s a vast difference between a stock that goes nowhere and pays me 7% and a house that goes nowhere and pays 2% — and that’s BEFORE diversification.

      • I think you are finally getting it Reality. We KNOW we are all f***ed this time around. That is why we are so disgusted with the smug attitude of those who keep pimping the bubble higher.

      • At this particular ‘juncture’ a brief anthropology lesson could prove instructive….I was thinking, “Cargo Cult”… but then I found this:

        http://tinyurl.com/27en6oa

        [NoteToEd: Puleeez!, there’s got to be a way to work this into a permanent SideBar illustration. TeeHee!]

        [NoteToNem: Thanks, as always, for the suggestion, but on this occasion we’ll pass. 😉 – ed.]

      • For those of you thirsting for a more scholarly treatment of the phenomenon….

        http://en.wikipedia.org/wiki/Cargo_cult

    • That or there might be a crazzzzy chance that someone else out there makes more than you?

      • Swing Level ->
        You are misreading the argument.
        People here aren’t arguing that Vanc RE is overvalued because we can’t afford it, we are arguing that Vancouver RE is overvalued because it’s overvalued.

      • reality check

        But I doubt you can afford it VREAA and that is why you are so bitter

      • Swing Level

        @Vreaa what kind over argument is that lol??? “it’s overvalued because its overvalued” Everyone has their own financial situation. Calling it overvalued depends on who you talk to… definitely a case by case situation.

      • Bulls assume that all bears are bears because they can’t afford to buy Vancouver RE.
        They are wrong. There are bears who can afford to buy but choose not to because of their assessment of the market.
        So, the point of that (knowingly provocative circular) statement was that bears are NOT simply bearish because they can’t buy; they are bearish because a considered analysis of the evidence leads them to conclude that the market is screamingly overvalued. In other words, they think the market is overvalued because it IS overvalued.

        It is far more worthwhile to discuss the market at hand, rather than to guess as to the motivation for the arguments that others make. But, it’s definitely fair game to discuss possible motivation for arguments.
        Who is letting their “book” interfere with their ability to see the market for what it is?

      • Ralph Cramdown

        Calling it overvalued depends on who you talk to… definitely a case by case situation.

        This isn’t the fine art market we’re talking about here. Most people pay their mortgages or rent out of their paycheque. It’s easy to compare a mortgage payment to the monthly rental of a similar property, and it’s easy to compare the net yield of a rental property to that of another investment. You can always find someone who assumes above average price appreciation and is willing to carry the investment at subpar returns while he waits, but that someone can’t always find financing.

      • “Everyone has their own financial situation. Calling it overvalued depends on who you talk to… definitely a case by case situation”

        Ha! Good one Swing. That is just a perfect summation of what got us into this mess. It all depends on who you talk to all right. Like you for example? Or maybe like how Global finds time to interview twits instead of actual experts? The market is most certainly not overvalued on a case by case basis. It is absolutely overvalued by every metric and measurement known to analysts. Just because someone can afford to buy does not make it less so.

        Yesterday I read that the top 1% of income earners in Canada made north of 240,000 dollars pretax per year. So even for some one-percenters Vancouver is historically overpriced at more than 4 times income!

        Case by case eh? Make me laugh.

      • what vreaa means is…if it’s overvalued to him it must be overvalued for everyone. Classic ego-centrism at work on this site.

      • Swing Level, reality check and formula1’s argument consists of basically this: just because that chocolate bar is $100 doesn’t mean it’s overvalued! There’s a lot more people that make more money than you! You’re just bitter because you can’t afford this chocolate bar!

        On the average, most families can’t afford real estate in this city. Obviously there are exceptions to the rule, but exceptions don’t make the rule.

        I can afford the chocolate bar. I just don’t want to pay that price for it. So, like vreaa said, it’s overvalued because of historical and fundamental factors.

        When, not if, the crash happens I fully expect RE shills of your ilk to disappear from this site since you won’t be able to handle the schadenfreude released upon you.

      • “…just because that chocolate bar is $100 doesn’t mean it’s overvalued! There’s a lot more people that make more money than you! You’re just bitter because you can’t afford this chocolate bar”!

        Chocolate bar is a poor example.
        How about hotel room? When you go to Banff you can stay and the Fairmont Banff Springs or a bed and breakfast. The price of the Banff Springs is many times higher. Is it worth more money to sleep in luxury? If you can afford it why wouldn’t you.
        What you’re waiting for is for Banff Springs to dip to bed and breakfast price – just so it matches what you think a place to lay your head ought to be worth. Banff Springs might offer incentives during “low season” but the cost will never dip anywhere close to bed and breakfast. BTW, they probably give you the chocolate bar free with your room rental.

  6. reality check

    I also want to comment that not only do I not think the poster’s friends will lose all their equity, I think they got a great deal to buy a sfh for only $1,000,000 near the city core. In 15 to 20 years they will be laughing all the way to the bank

  7. reality check

    Are you kidding me Gord!!!! Homeowners lose 60 % of their equity, construction dries up and that is not going to affect the economy???? Just look at the US. Yes I’m sure you will be just fine. By the way all investment is pure speculation, that is the definition of most investment choices. What do you think the stock and bond markets are. Speculative investments.

    • Yes, but when people buy stocks and other instruments, they are very aware that they are speculating. Especially after the events of the dot.com bubble and 2008.
      But even then the majority don’t do their speculating using 10:1 leverage as people routinely do with RE.
      And, as important, they don’t do it under the cozy guise of being a responsible citizen providing a home for their family.

      • reality check

        So your argument is that real estate is more speculative than buying stocks and bonds? Am i understanding you correctly.

      • In the BPOE, right now, RE is FAR more speculative than a diversified stock/bonds/cash portfolio. How on earth can you argue differently?

      • rc -> Buying a property in Vancouver at present, with leverage of 10:1 (10% down), is a massive speculative bet. When it comes to whether that is more speculative than stocks and bonds, you’d have to be more specific about the latter trades — but, by and large, yes.
        Your recent experience with RE in Vancouver leads you to believe RE is a safe bet.. it isn’t.

      • Ralph Cramdown

        Yes, but when people buy stocks and other instruments, they are very aware that they are speculating.

        There’s a continuum in stocks, from Moose Pasture Mining Co. Ltd. through Lululemon and Manulife to the big 5 banks and the telecoms, to preferred shares. If you’re buying an established company with solid earnings and a reasonable P/E ratio, you’re not really speculating. If it pays a fat, sustainable dividend, even less so. There’s plenty of people who invest in stocks who don’t consider themselves speculators. Ask me when I buy, and I can tell you right away whether this position is investment or speculation. It’s the same in real estate — if you’re talking reasonable NOI’s or decent cash on cash returns, it’s an investment, but if it’s based on assumed appreciation, it ain’t.

      • I draw a thin line between the words speculation and investment. For me, speculation is where I buy a junior mining stock knowing full well I could lose every penny of the money I put down. An investment on the other hand is one where I give much more consideration to the risks and I have a high expectation of a positive return.

      • “Buying a property in Vancouver at present, with leverage of 10:1 (10% down), is a massive speculative bet”

        you may be right on the money about this.
        But do you think that people won’t buy homes because of short term loss of equity?
        Let’s use the almighty Japanese market as an example since your posters like to cross reference it. Housing has been stagnant or down for decades. Did people buy and sell homes during this time?
        Get a grip vreaa.
        Just because it’s a pure investment for you doesn’t mean everyone looks at real estate this way. Again, egocentrism.

      • “Just because it’s a pure investment for you doesn’t mean everyone looks at real estate this way. Again, egocentrism.”

        I had this discussion with my wife who does know much about finance and wants to buy a home. Although I do think about the investment there is alot more to it then that. I would buy a home if I could truely afford one and live the way I want. It is about quality of life for us more then simply owning a home for the sake of owning. When 80%+ of our income would be going into our home and we would have to forego vacations, eating out, doing the things we like, etc. then there is not much to live for. We can rent, max out our RRSP’s and TFSA’s, and still do all this. We are both 26 years old and are both in a much better position than many in their 30’s who own. Our net worth is greater and we have a better lifestyle, with less worries about money.

      • “We can rent, max out our RRSP’s and TFSA’s, and still do all this”.

        sounds like you favour the investment side – this is your personal choice. Others are choosing differently

      • 4SlicesofCheese

        “sounds like you favour the investment side – this is your personal choice. Others are choosing differently”

        So you are going to put your kids tuition on a HELOC?

    • Of course they are. I completely agree. But investing some of your money in a diversified portfolio is a hell of a lot different than putting all your money (and most of the money you’ll earn in the next two or three or four decades) into a single “asset” that’s likely at (or more precisely, just past) its peak.

      • reality check

        And how do you know that most people have done that? All I can say is that I wished I had put all my available money in real estate over the last 10 years instead of having a diversifies portfoliio. Sure my stocks and bonds have increased but not like my real estate has.

      • Ralph Cramdown

        All I can say is that I wished I had put all my available money in real estate over the last 10 years instead of having a diversifies portfoliio.

        If you’re going to pick post-hoc winners, why not aim higher? Apple would have outperformed your puny real estate play, as would have CGI, IBM, and any number of great stocks.
        P.S. I assume you mean Vancouver real estate, rather than Miami, Edmonton, L.A. or Bozeman real estate.

    • 4SlicesofCheese

      I find it ironic you are suggesting looking to the US for an outcome of an economy after the bubble burst, yet you think everything here is fine.

  8. reality check

    Don’t agree VREAA. Real estate always has ups and downs. You cannot underestimate the psychology of people wanting a place to call home. It is a primitive urge which will override other fears. Buying a house to live in is not like other investments and this can’t be underestimated.

    • You mean as we are seeing now in the US, in Ireland, in Spain, etc etc??
      C’mon, how can you argue that in the face of so much contrary evidence?
      When RE drops, it ceases to become a “place to call home”, it becomes an unattractive ball-and-chain, and people run a mile.
      Even though fundamentals are looking good in many parts of the US, people aren’t stepping up. Why so, if the desire for a “place to call home” is so powerful?
      It is you who are misunderstanding the nature of the human psyche.

    • Hello “reality check”. I agree that the psychology to own a place of one’s own is very powerful. After all, I am sure many people following this blog, and Vancouver RE in general, have the same desire. But that’s not the issue. It is about affordability. Incomes compared to prices. The housing crash in so many other parts of the world was about the imbalance that developed as money became cheap and too many stopped viewing a home as a place to live, and started to view them as a means to easy wealth. True, some succeeded. But that is history now, what matters is the present and future. Do you really believe this can go on indefinitely?

  9. reality check

    I think you are confusing the lending fundamentals of those countries with what is going on in Vancouver. There is a difference between prices being too high to sustain further price growth and people unable to maintain their payments and dump the properties onto the market due to foreclosure. Are you saying that most people in Vancouver will be foreclosed upon?

    • reality check ->
      Foreclosures are a tiny, tiny subplot, and, like rising interest rates, not at all necessary for the implosion of the Vanc RE spec mania.
      Vancouver RE prices are at levels that are 2-3 times those supported by fundamentals such as rental income, wage income, and GDP. People have only been overextending themselves into Vanc RE because they were convinced (as you remain) that prices will remain strong (that, for instance, paying $1M for a SFH on a 25×100 lot in the Main street area would look like a brilliant move in years hence). All buyers have been speculating on future price strength. This is a fact.
      Once prices start to drop, they will be seen to be capable of dropping, and the desire to overextend into RE will diminish greatly. There is fresh air between where prices are now, and where fundamental support for prices comes in, a long way down. Sure there will be some buyers on the way down, but there will be far far more wannabe sellers.
      This is what happens when a spec mania implodes.
      We’re no different here from those other bubbles; slightly different flavours, but all the same animal.

      • Good line. There is a lot of fresh air between here and where fundamental support for housing kicks in. It seems a pity we all have to go off a cliff together to find out where that final support is though.

    • I think you are confusing what you are trying to say, in general.

      I took the 3 minutes to reread the dialogue between you and VREAA/Gord. You ought to pay closer attention to what you’re reading, you’re clearly not understanding the arguments laid out.

      It takes a few necessary ingredients to heat up an asset class, for real estate the principal ingredient is loose monetary policy.

      What we are now seeing is the slow unwinding of loose lending. The demand can remain high, but if Joe Plumber, John Lawyer, Dan Carpenter, and Alice Nurse can’t access 750k in credit to buy a house on Main Street their desire to buy is worthless. This is what depreciates RE, a mass wave of foreclosures is not necessary though may be a result of a lack of accessible credit.

      Its also worthy to note that a lot of Vancouver buyers are equity buyers, people who purchased a condo few years ago, made a few hundred in equity and leveraged that into a house. This once again relies on the assumption that condos and entry level properties appreciate at a proportionate rate to that of SFH. This has not been the case in Vancouver over the last few years, a whole pool of move up buyers is now sitting idle as their equity is nowhere near high enough to leverage up into a bigger residence.

      This of course left us with the flavour of the month, “HAM.”
      I won’t bother to get into explaining that, it should be clear to a blind man by now that “HAM” won’t save us… if it ever existed.

  10. reality check

    I just noticed the oxymoron in the title of this post. If his “friends” are still in denial then why are they scared???

  11. I’ll add one more thing just because now I’m pissed off. Earlier in this thread “reality check” said: “But I doubt you can afford it VREAA and that is why you are so bitter.” That’s such typical bull bullshit. I believe our buddy Scam Good said it best when he proclaimed those who don’t buy must suffer from “real estate impotence.”

    Anyway, not once did VREAA come across in tonite’s discussion as anything approaching “bitter.” And making cracks about what he or anyone else can afford is bordering on asshole-ism.

    When you can’t use logic because logic has long since left the building…

    • “not once did VREAA come across in tonite’s discussion as anything approaching “bitter.” And making cracks about what he or anyone else can afford is bordering on asshole-ism”

      agree with this. Vreaa comes across as polite, intelligent, and thoughtful.
      Whether vreaa can buy or not is irrelevant. His/her analysis of this market is way off course.

  12. Schadenfreude. I’ve been renting for a while, I have no debt, bunch of money saved and invested in a pretty diversified portfolio, and I’m extremely happy with my current job. Could’ve bought, like many others did… I mean rented from the bank, but I didn’t. For some reason, as opposed to the grand majority, I’m still scared shitless of debt, I hate owing money, and just couldn’t wrap my head around the idea of being tied to a loan for 20+ years. It’s kinda hard to explain to the average Joe why Lucy the hair dresser lives in a 750K McMansion, while Mike Hunt the engineer “hasn’t been able” to do it. I do want this correction to happen. I don’t give a rat’s ass about the families who will lose their houses, or the investors that will lose their rental properties, or the carpenter who will lose his window framing job. Many relatives and close friends have done the 5/35 or 5/30 deal. They’re responsible adults who signed the dotted line and now have to live up with the consequences. Yes I’ll be affected too… but you know what… I don’t care. Higher taxes, zombie economy, unemployment, doom & gloom, financial crisis, ..whatever. At least I won’t have an underwater mortgage. Man that’s one scary thought. Im ready. I got my shorts for when the tide recedes. Schadenfreude.

  13. “reality check | 5 June 2012 at 11:00 pm |
    But I doubt you can afford it VREAA and that is why you are so bitter”

    LOL what a silly comment! C’mon reality check, u can do better!

    • Its OK, Yanz. We all know thats what a debater says when he is losing the argument or has no case. The cheap shots are supposed to inflame the opponent and create an emotional environment where they lash out and start making mistakes. Amazing how childish it looks when you see it in print though.

  14. quod me nutrit me destruit

  15. book now … std, deluxe and premier 5 star … huge price increases coming soon! … http://tinyurl.com/84kx4km … pffft!

    • So are you going Chub? I took the trip once before. Fantastic. Or you could do it by rail and still stop along the way and see all the sites for a tiny, tiny fraction of the cost. I am thinking since you are looking that maybe someone wants to get out of town for a few weeks for a this summer.

      And hey, what’s 1400 bucks worth anyway. It’s like two weeks rent in Van.

      • 🙂 ‘da nile’ is a journey i hope to continue escaping from … however, if i did ‘the nile’, your ideal sounds much better … or motorcar or motorcycle … don’t like cruises – too captive for my tastes

  16. I can afford to but choose not to. Housing is not a good investment right now. About all who say it is really have no idea what a good investment is vs what is not, and I doubt have any experience with any asset classes other than houses. They do not know what long-run historical returns have been on real estate vs. anything else. They do not understand the effects of leverage on returns (both up and down). They do not understand the effects of 2% inflation over 50 years. They do not understand the correlation between risk and return. It is a waste of time arguing with these ignorant people that have never read a book on investments but claim real estate (at any price) is a good investment.

  17. 4SlicesofCheese

    If the economy tanks, which I think it will regardless of RE prices (China slowdown, Europe debacle), I might lose my job but I have a huge cash reserve, am mobile, and totally liquid.

    People who have mortgages are stuck in an already stagnating market where the only “marketing strategy” realtors provide is to lower prices.
    With savings rates at all time lows, how would they survive?

  18. “sounds like you favour the investment side – this is your personal choice. Others are choosing differently”

    I don’t really understand what you are saying? When I do buy a home, whether it be in Vancouver or elsewhere, I will likely hold my mortgage in my RRSP. What does that make it? It is not an investment decision to me, its 50% investment 50% lifestyle. Renting provides a better lifestyle due to the costs & consequences of buying overpriced real estate.

    And yes, there are prices when assets can be overpriced, even real estate. Owing $500,000 on a $250,000 property is not a risk that I would like to take with my future. I imagine it doesn’t feel good.

  19. groundhog.
    When you choose to “hold your mortgage” in an RRSP rather than an actual home you’ve made an investment decision, not a lifestyle choice. Thus, you favour the investment, not the home

    • No, I look for the best lifestyle for me for right now and for the years to come. When you spend $1,000,000 on a home, I am not sure how you completely ignore any investment component, especially when people are of the assumption the home will be worth more in the future?

      I do not own a home because of two reasons:

      1)It will decrease my standard of living
      2)It is a poor investment choice for my money.

      • Now I remember why I never comment on these forums, today is my first and last in a long time. Goodbye, Good luck to all.

        I do recommend before I leave that people read some old books (older then 50 years atleast), whether it be investment, philosphy, history, science or just fiction. It’ll put whats going on in our current world in perspective. Our problems and arguments today are not unique to this lifetime.

      • groundhog,

        You should not ignore the investment side regardless the $ amount you spend on a home – but I calculate my “investment” differently than you. I invest in my family and our comfort and security. This is worth more to me than the financial side that you obviously value more.

        not sure what part of this discussion you’re offended by – if you’re easily offended perhaps you should bow out.

    • formula1 -> You have misunderstood what groundhog is saying. Reread the comments.
      groundhog says “When I do buy a home, whether it be in Vancouver or elsewhere, I will likely hold my mortgage in my RRSP”, he/she is talking about how they will finance their purchase, not about having an RRSP instead of a home.

  20. And thank you VREAA for running a good site. Keep up the good work.

    • groundhog -> Thanks. Please consider continuing to add to discussion here, your thoughts are welcome and not all will misunderstand what you are saying.

      On that note, when you say “When you spend $1,000,000 on a home, I am not sure how you completely ignore any investment component” that is absolutely spot on the money…. Anybody who thinks that buyers and holders of Vanc RE are not speculating on future price strength is mistaken.

  21. The “You can’t afford to buy, nah nah nah” taunts just show who is able to participate in an intellectual discussion, and who can’t

    … I guess that’s a taunt of sorts 😉

  22. reality check

    Hi VREAA, I do apologize for my personal attack on you. It was uncalled for. However I still don’t buy your arguments.

    • Apology accepted.
      And I really do respect the fact that you don’t buy the bearish arguments.
      I can’t see why, because they are so persuasive. 😉
      But, that’s what makes a market a market.

      Somebody wise, interviewed at the end of a long and successful investment career, said that the thing that amazed him most about markets is that there is always two sides to any trade, a buyer and a seller… each of them thinks the other is making a mistake!
      Now, as formula1 likes to remind us, housing is perhaps different from other markets, because of the providing-shelter factor, but, in essence that buyer/seller insight still holds.

  23. Personally, I’m thankful that reality check is on the other side of the trade. If all us bears are essentially shorting housing then we need to be thanking reality check for being on the losing side of the trade while us renters make relative profits. Thanks!

    • reality check

      Well you are actually thanking prematurely because housing really hasn’t gone down yet. Also if it did, I won’t be selling because I don’t have to. It will just be a paper loss if a loss occurs at all

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