“I’m a stay home mom and my hubby is a lawyer making over $100K but we cannot live a decent life style here in Vancouver. We have decided to move out of province for a better paying job and affordable housing.”

“I’m a stay home mom and my hubby is a lawyer making over $100K but we cannot live a decent life style here in Vancouver. We are renting a 960sqft 2 bedroom suite in North Van but a nice three bedroom house cost about $3000 for rent. Vancouver is great but it really rains too much and to be honest the housing is the killer. It’s only for uber riches or those who have been here for a long time. We could move out of Metro Vancouver to other parts of BC but then salary would be much lower. We have decided to move out of province for a better paying job and affordable housing and good education for kids. Which city would fit the bill? I would be happy to pay $2000 for a newly updated 3 bedroom town house and the priority would be where good public education is.”
sora at mothering.com 27 Apr 2012 6:43pm [hat-tip Jeff Murdock (and ‘Anonymous’ at VCI)]

30 responses to ““I’m a stay home mom and my hubby is a lawyer making over $100K but we cannot live a decent life style here in Vancouver. We have decided to move out of province for a better paying job and affordable housing.”

  1. A lot of first time buyers don’t realize how qualification for a mortgage has worked historically since the about 1950. We have had multiple mortgages since 1987. In order to qualify for a mortgage between 1987 and 2006 (approx.), we had to prove income as follows:
    1. three most recent tax returns
    2. they averaged our income over those three years
    3. provision of pay stubs
    If you were self employed:
    1. three most recent sets of financial statements
    2. they averaged the income from those three years
    3. provision of pay stubs for any supplementary income
    We were never able to borrow more money than proven income could justify. With our last mortgage before all the EASY credit, the bank didn’t even want to give us a 25 year amortization, since we were approaching 50 years of age.
    Suddenly in about 2006 or so, we were able to borrow as much money as we wanted and didn’t have to prove anything. In addition, we were able to change our amortization in the middle of our mortgage term, without penalty (reduce our monthly payment). No income verification took place and we were offered a 30 year amortization automatically.

    Now everyone wonders how we got here? Lending money to people who can’t afford to pay it back is a recipe for disaster. Welcome to disaster.

    We don’t own a house anymore, we are sitting on a pile of cash and renting…happily.

    • pricedoutfornow

      What a great anecdote. I work in the financial industry and I see people with huge loans their incomes can’t justify all the time. It astounds me. I spoke with a mortgage broker who told me that in recent years, people would apply for a mortgage and show their notice of assessment from their tax returns. The income on the NOA would be about $10k, however they would state their income much higher, and the mortgage would be approved based on this higher amount. It was ridiculous. A mortgage broker from a bank also called me to verify that one of my clients was self-employed “Sure,” I said, “but he’s never actually made a dime from this business, in fact he’s always had losses.” The mortgage broker assured me that that was no problem, they just needed to know he was “self-employed.” And I know for a fact that this individual was not rolling in unreported income either, maybe a little ($10k at most) but not a lot. He and his wife are essentially living on credit. There is big trouble coming.

    • A ponzi scheme always needs fresh blood. When the prudent people in search of homes are used up, you move on to the investors. When the savvy investors are used up, you move on to the speculators. When the most savvy speculators are used up, you move on to the dumb speculators and the flat-out suckers.

      But the lending is like a shark, it has to keep swimming to live. The banks know this better than anyone. I suspect they know they are in a trap at this point, and can’t tighten lending in any meaningful way without bringing it all crashing down.

    • Not surprising, it’s one of the things OSFI is attempting to change next year.

      • Ralph Cramdown

        OSFI gets buffaloed:
        “Well the first rule of the B20 we were expecting also OSFI to reduce the loan to value on the HELOCs from the 80% to 65% and then there has been further discussion amongst the banks and the regulators whereby that 65% may not be on the individual basis, but maybe on a portfolio basis.”

        http://www.morningstar.com/earnings/PrintTranscript.aspx?id=39440664

      • Portfolio basis might work out if OSFI audits the life out of the portfolios. I’m assuming this rule is to leave room for the housing market to correct to the U.S. level without needing a bank bailout. In which case, sure.

        I don’t think OSFI considers it their purview to prevent said homeowners in the portfolio that are at one standard deviation higher than the average HELOC balance from declaring bankruptcy.

    • I agree with pricedoutfornow, that was a great anecdote. The kids just have no idea how hard it used to be to get credit. The banks put us through the third degree and a meat grinder too. After the big meeting with the loans officer we went home and sweat bullets not knowing if we would be approved or not. Nobody would ever dream of being rude or difficult with the bank manager either. He had the power over you and word would get out to the other local branches. Lord knows, you might not get a chance at a loan anywhere else if you crossed the wrong guy.

      Now every jerk gets approved. The more you scream and kick and cry the more money they give you. Maybe it is all funny money after all. Even the banks don’t have respect for credit risk so why should customers care to appease them.

  2. Move to Coquitlam. A 3 bdr TH will cost $1600-$1800 a month.

    • Tee hee. Didn’t you read? Primary income is a lawyer and they want good public education. :mrgreen:

      • So kids in poor neighborhood don’t deserve good public education and should resign to the fact that they will forever be poor and second class??

        Ok, I know this isn’t what you mean but seriously, I think if nothing else, poor neighborhood should be getting extra efforts/resources/etc than rich neighborhood just to balance things out and give those kids at least somewhat equal footing with the rich kids. But then rich people will just come in and buy up the neighborhood…..*sigh*

      • That, or the “perception” that certain schools are worse than others is in the mind. Perception perception perception.

      • Good public schools? U must be dumb then.

      • Ralph Cramdown

        Kids in poor neighbourhoods DO deserve more and better, even if only because it benefits us all, long term. Living in Ontario, I’m living my principles — my tyke only gets 1/2 day JK this fall even though SOME neighbourhoods have had full day JK for two years now. I’m OK with it, even though I’ve never thought of my family as privileged.

  3. I lived in Vancouver during the nineties….started a family and moved back to Ontario. I was in Vancouver last week for 9 days of work and leisure…..stuck around and visited friends during the week. One thing’s for sure, people don’t seem any happier, busier or living differently in Vancouver than in Toronto. Most people hate the rainy weather and most are equally stressed about the cost of living. Previously, I have had strong desires to return to Vancouver but, during this trip, that desire has all but disappeared. The cultural and business amenities do not befit a city the size of Vancouver – still not much going on. Also, pay scales relative to the cost of housing are horribly disproportionate to earnings – compared to my earning potential in Toronto. My earnings are 30 – 50% higher in Toronto for the same work in Vancouver. I don’t know how you folks afford to live there – good luck when the interest rates rise! Although I REALLY miss the geography of the place, there are other places in Canada where $100,000.00 salary still means something.

  4. Ottawa. I rent a beautiful 1800 square foot townhome for under $1500 per month. Utilities come in at about another 300 tops. Great neighbours, great landlords and great hood. I’ll rent here for ten years if I can. Unless a significant RE correction makes it worthwhile buying.

  5. 4SlicesofCheese

    Kinda OT

    Just read this in the May issue of WeVancouver

    http://www.wevancouver.com/lifestyle/mydigs/153745795.html

    In recent years, Wilson says it has been a sellers’ market, but she says in the past month, the market has started to become more balanced, moving towards a buyers’ and sellers’ market.

    “It’s a good time to buy,” says Wilson, who has been in the realty business for more than 20 years. “It was a sellers’ market for so long. But now, interest rates are so great right that it’s a good time to be coming into the market.”

    • “It’s a good time to buy”

      A cardinal sin for a Realtor is to pronounce on market direction instead of current conditions.

      It’s never a “good time to buy”. Rather, the market is priced at $X based on pieces of evidence exhibits A through G and sellers are willing to negotiate. Any Realtor who deviates from this should be prepared to be shown the door.

      • Strange that. When ones LiveLiHood depends on TransactionVolume…

        It’s…. A L W A Y S a ‘good time to buy/good time to sell’.

  6. VREAA can you please headline this awful article? it made me ram my fists on my desk: http://www.theglobeandmail.com/news/british-columbia/land-rich-boomers-buying-nests-for-their-young/article4226095/

    • LOL, true dat.

      What a pleasant read. It’s still about the earnings though.

    • More irrefutable proof there is no subprime in Canada, at least like the States. Why save for a downpayment like a sucker when Mom and Dad have done it all for you?

      Maybe there is a reason that banks require borrowers to show they have saved for a downpayment from their own incomes. Recently it’s been hidden by rising prices and the availability of refinancing through lines of credit but, from my experience, home ownership costs more than the headline numbers. Maybe the ability to save for that old stodgy downpayment is a dry run for the ability to save for those unforeseen repairs and events that tend to happen to these assets. Maybe ownership isn’t as simple as paying a mortgage and property taxes.

      Just saying, sometimes the stuff that looks stupid to many based on past “overly-prudent” lending practices was that way for a reason.

      Nah!

    • My grandparents bought me, my sister, and my cousin houses in west vancouver in the 70’s and even i think that article is ridiculous…

    • Joe_Blown_Away_By_High_Housing_Costs

      Check out this exchange in the comments section of the Globe and Mail article linked to by evilfred above:

      “AHappyGuy:
      That’s why my wife and I just bought two condos as rentals so when our 6 year old twins grow up the can have thier own places or sell then for down payments

      wezvv:
      Can’t tell if this is sarcasm . . . I call a top.

      AHappyGuy:
      What is a top? This isn’t sarcasm. It’s what we’ve done.”

      So a happy guy buys two condos for his 6 year old twins (who won’t need them for at least another 13 years) and he has no concept of what a “top” is in the context of the real estate market. Wow!

    • Joe_Blown_Away_By_High_Housing_Costs

      That article is just brilliant! The term ‘risk averse’ comes up three times in the article. Vancouver real estate is the investment of choice for the risk averse baby boomer investor. What a joke! What investment could be riskier than Vancouver real estate at this particular juncture?!

  7. This person wants to pay $2000 for a 3BR townhome. The going rent for a recently-updated 3BR townhome in Coquitlam, and maybe New West and parts of Burnaby, is about $2000/month. So what’s going on? They want to rent a townhome for $2000/month in a “nice area”. Um sorry on that front, the housing bubble, whether real or not, isn’t really the issue, at least directly.

  8. (113 dwellings) times ($777k/dwelling) does not equal $88B. Must be 113 thousand.

  9. Why bother with renting – for $2000 per month you can easily buy a nice SFH in Calgary or Edmonton with minimal downpayment ! Only fools throw away $40,000 – $50,000 per year in pre-tax income renting a townhome in the sticks.

  10. … people have been importing black swans, breeding them at home … and now, they’re getting loose and looking to cause trouble … http://tinyurl.com/833xzht
    … survivalist general interest item … http://tinyurl.com/6nuzvr7

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