“My Confession: Bought a house in 2003, around $400K on the East side. Sold in 2005 for around $600K. Thought I did great. Now that same house is probably valued around $1.1-1.2M.”

“OK here’s my confession:
Bought a house in 2003. around $400K in the East side. Sold in 2005 due to personal reasons, for around $600K. Thought I did great.
Thought I will wait out the house market because it is too overvalued. Still waiting. Now that same house is probably valued around $1.1-1.2M.
I still believe it will crash, been following this blog and others for ages. But so far no luck. Been waiting 7 years. Very tough with all the friends and family saying I’m stupid.
However, renting a beautiful house on the west side in a neighbourhood I could never afford to buy in, so life is good overall. Actually living in a house nicer than all my friends and family for the monthly cost of a mortgage on a crack shack in east van.
So not feeling too bad actually! Still looking forward to the crash… hope it happens this year.”

popgoesthebubble at VCI 1 Jun 2012 7:53pm

It’s tough being a bear in a speculative mania.
The crash will be a ‘process’. It certainly won’t happen in a single year.
– vreaa

52 responses to ““My Confession: Bought a house in 2003, around $400K on the East side. Sold in 2005 for around $600K. Thought I did great. Now that same house is probably valued around $1.1-1.2M.”

  1. pffft! “After China Rate Cut, Bases Loaded for Bernanke Testimony” … http://tinyurl.com/6wgxpyu … yellen prefatory comments … how hard he swings probably indicates how bad things are getting in bank/credit space … funny how dow has best day, right after having worst day of year

    • It looks like they played their cards close to the vest today. Although the market rolled over later in the day, it still managed to hang onto yesterday’s gains and close in the green despite suggestions that QE3 may not be imminent. Very predictably, the goldbugs got taken out to the woodshed again. I’m sure there will be plenty of nonsensical chatter in the coming days that the US economy is still headed in the right direction and that more stimulus will only be deployed when/if circumstances change. Powder is therefore kept dry for another day meaning short sellers can’t go all in and must continue to stay on guard. Pretty clever IMHO.

      • sometimes it’s just not worth paying attention to … and often only becomes clear retrospectively … today was one of those, imo … if they actually get to fomc and then say no qe3 or similar, that would be news … and if so, credit/equity markets would get shredded … it’s really sad that everyone has to analyze this stuff … i just don’t see any action that says there is the stomach to take pain … otoh, whenever they talk easy, they do easy … until the pattern changes, it’s what i position for +/- a bit of funny bets here and there

      • Don’t be too surprised by the turn of events Bullwhip. Keep in mind that what crisis interventiuon generally needs is…..a crisis. We don’t have one. Not yet anyway. What we do have is a lot of alarm bells going off but there is not yet a certified “Lehman” type event to trigger Fed action and so the markets will have to cool their heels.

        Too many seem to forget that we had severe corrections in the past (prior to easing and QE) where nobody ever considered supporting equities. Investors were left to deal with losses in their own way and this situation is no different. Why should it be? If we are going into recession then stocks will fall to reflect that as the normal barometer.

        This idea that the government should step in every time the stock market hiccups is plain daffy to be honest and nobody worth his salt really expects Mr Bernanke to drive a fresh round of emergency stimulus just because we look to be going into a contractionary period.

        He needs much more than that to pull the trigger.

      • @f. yes, that is what the fed should do – nothing. but can’t ignore they haven’t done that in a very long time. and there are no signs they plan to start. having gone so far out on the moral hazard limb/ledge, they are the only ones left supporting govt debt markets. if they do not step in with increasing levels of support, the crony complex (roughly 3/4 of banks and 1/2 of govts) gets wiped – rightly so. just don’t see it happening voluntarily.

  2. The Achilles heal of the bear camp is always timing. Nobody really knows when prices will return to normal and so the bulls constantly seize on this one weakness and use it to their best advantage.

    As long as the market is still going their way they can point to charts and graphs and momentum and make fools of everyone who is worried over a potential price collapse. They have had the upper hand for years already and it is only in the past months some are switching sides.

    Too late though as demand withers and homes sit vacant.

    We here know who the real fools are though. It is pretty obvious that short term speculative thinking combined with multi-decade mortgage debt is a recipe for disaster. Hell, it is a disaster already for pretty much everyone who bought with 5% down in the last two years. They are already underwater in a declining market and yet still don’t see the danger.

    As I mentioned a few days back….your house might be a great deal for the first two years of the mortgage during a period of euphoria. But what about the next 28 years? Some of those will include times where prices cascade lower and that time now approaches. Patience is the hardest thing for buyers to learn. It is an idea that is almost impossible for the bear camp to convey.

    The crazy part though is that we need those fools at this point in order to bring the necessary excess that will demand the correction we all know is necessary. In that respect then, the greater fools are the fodder for eventual recovery.

    Most of us here just don’t want to be one of them. So let them be right for now.

    • They are only under water if they bought n Van west with 5% down. I don’t think a person with 5% down will buy in Van west. Only the HAM areas are down slightly. The rest of the REBGV, have seen flat or even higher prices. West side prices softening does nothing for the ones that are priced out. we need Van east and the burbs to see this kind of decline to really get the ball rolling. Rich people areas don’t count. They are in a league of their own.

      • This is a good point. However, there is a trickle down effect. If the west side boomers can’t get x for their overpriced home, then they can’t pay y for a overpriced 2 bedroom condo and have anything meaningful to hand over to their kids. Not that they all have kids, but that’s one scenario where people are cashing in.

      • “I don’t think a person with 5% down will buy in Van west.” Snort. “Rich people areas . . . are in a league of their own.” They’re poorer than they (and you) think.

  3. Good points Farmer, but I think our time is finally nigh… Take a look at the recent article naming BC as the province with the highest average household debt.

    http://www.news1130.com/news/local/article/370753–average-household-debt-in-bc-is-160-000-report

    weighing in at roughly twice the average household INCOME can’t be a sign of sustainability, prudence, or a healthy future economy.

    • Yikes. 160,000 average? That is pretty sobering under the circumstances. All those people had better hope Europe recovers, China booms, The Japanese open their borders to immigration (or start having more kids fast) and that England does not sink under a mountain of debt like Spain seems to be doing……something tells me the odds are not that good. The optimism the article mentions suddenly seems like a pipe dream.

      • actually, they’d better hope that none of that happens, so as to keep interest rates as low as possible for the forseeable future while they pay back that debt. If the world recovers, rates will rise.

      • 4SlicesofCheese

        Pay back debt?
        It has been proven that people are acquiring more debt than ever BECAUSE of the possibility of continued low rates.

    • “The average household debt in this country, including mortgage, credit card, line of credit and loan debt, is just over $112,000; but for us on the west coast, it’s nearly $160,000.”
      I’m actually very surprised it so so low, given what that total encompasses, and we are speaking of households here, not individuals.

    • Renters Revenge

      Average household incomes in BC are currently around $70k. Over 200% debt to income is NOT sustainable.

      • My point was, given RE valuations in this part of the world, am I the only one surprised at these numbers? Wouldn’t you have expected that with large mortgages comes large debt loads? Or are people in BC rapidly paying off these large mortgages. If I “owned” a million dollar shack and only owed $160,000 I would feel pretty good. Are we bears making too much of the small 5% down group who purchase here? I honestly expected to see numbers in the high 6 figures. I’m stumped.

      • Look at ownership levels in Vancouver, Allen. Also, keep in mind that average prices are seriously skewed by just a few neighborhoods as another poster pointed out earlier. Third, a large number of Vancouver home owners have substantial equity as they have owned there for decades already. High mortgage debt to income ratios are focussed on those who have participated in the bubble for the past few years and who have little real ownership. They are the fodder for the machine.

    • I think we’ve got housing speculators hidden in this group: “Here in BC, we’re more optimistic about getting ourselves out of the red fast; 28 per cent of us expect to be debt-free by 2013, compared to 17 per cent across Canada. A third of British Columbians expect to be in the black by 2017, compared to 37 per cent nationally. ”

      Wages in this province don’t support optimism that we can pay down faster. I think it’s people planning to sell. The Minsky moment approaches.

  4. Yes, now you are renting from an owner that appreciates you helping paying off thier mortgage. Congrats are in order.

    • Does your bank send your thank you cards for the interest payments you pay on your mortgage?

      • And does the city of Vancouver sends a thank you card for the property taxes paid?
        And how about Home Depot and all the contractors for all the business given to them?

        It might be better to be an owner just because you get more thank you cards 🙂

    • It’s either them or the bank. They are saving gobs given their chosen standard of living. Haters gonna hate.

    • Ever heard of a pareto-efficient transaction? It is one in which both parties benefit. Maybe the landlord is making money, and maybe renting is the most economical option for the tenant at this time. Not every free market transaction has to have a winner and a loser you know. Why is this point always lost on the “Renters are just paying someone else’s mortgage!!!” crowd?

    • Evh, why don’t you state your case with (current) numbers rather than some vague emotional argument?

      In my case, the owners are paying every dollar of the mortgage loan back themselves. It’s like a savings account with no interest, except it needs a new roof and perimeter drain once in a while. Plus a hefty fee to cash out.

      In other words, zero return on investment. I just hope it takes them a few years to figure it out.

      • “I just hope it takes them a few years to figure it out.”

        Yeah. Many renters live in ongoing fear of their landlords acquiring basic math skills.

  5. Ralph Cramdown

    Thought I did great.

    You DID do great. I trade stocks, and I use limit orders all the time (i.e. buy, but not above x, or sell, but not below y). It’s a really great feeling when my sell order gets filled at what turns out to be the high for the day. It means, selling on that day, I left no money on the table and could have done no better. Nonetheless, one of my maxims is “always leave some money on the table for the next guy.” If you try to sell at the absolute peak, you’re relying on snagging the last idiot in the market who didn’t see what everyone else saw, and competition for that idiot will be FIERCE.

    Of course it sucks to sell something and watch the price continue to climb far beyond what you thought likely, but hopefully you redeployed your cash into something which was also going up, and playing “woulda, coulda, shoulda” gets you nowhere.

    • The old story is that Warren Buffett missed the .com bubble. I guess we’re all speculators, in our own unique ways.

    • If your trading strategies have made you consistent money over the long term then you have figured out what 99% of the population never do. It is impossible to time the markets perfectly. No one can predict the absolute top or bottom. Simply getting the direction right and making any money whatsoever is challenging enough. In my experience, being overly bearish at the wrong times (esp when trading stocks) can be lethal. I know countless people who made the right call more or less in 2008, yet somehow wound up losing their a$$es as they failed to recognize that the big green bullet train was headed towards them.

      • Ralph Cramdown

        I don’t know that I could say “consistent,” I’ve had slumps. I’m completely in awe when they announce that Goldman or Morgan had a perfect quarter, or only lost money on two trading days. But if you diversify, don’t buy overpriced stuff, and buy solid companies when they go on sale because of short term hiccups…

    • The stock analogy is a good one but could be looked at a different way:

      – let your winners run
      – markets can go higher/longer than you think
      – don’t give up strong hand status

      But the big one for me is, you only make what you can imagine making. Your imagination is your built-in self-limiter.

      Small thinkers don’t make big gains.

  6. When that same house drops below what you intially sold it for, and then drops again for what you intially bought it for, you’ll know you did the right thing. It’ll take probably 5 years to get there, but its already started and when it does get there its gonna feel like it happened overnight and you’ll be grateful that you got out of the madness.

  7. Appreciate the comments on personal debt. I’ve been looking at individual debt without mortgage ($37,000), now we have a more complete picture..

    • where can I find the stats for that break down?

    • Well even that’s not such a bad number, just a new Honda or some lingering student loans. And so that only leaves $123,000 in average household mortgage debt. Either these numbers are way off, or BC homeowners are richer than we think.

  8. Don’t feel too bad, you can’t see the future. I wish my family called me stupid for something that left me 200K better off.

  9. Pepe’sConfession… A CautionaryTale Espana…

    “Banks and politicians made us think the economy was very solid, but it was all based on housing and construction. We thought we were much more rich and powerful than we were.” – Pepe de Uriarte/Madrid, 32, Unemployed Publicist

    [BloomBerg] – My Self-Esteem a Mess Is Refrain for Spain’s Unemployed

    …”The crisis in youth unemployment was exacerbated by the collapse of Spain’s once booming construction industry, which lured young people out of school for wages of 2,500 euros a month, said Fernando Fernandez, an economist at IE Business School in Madrid. Now, they’re back with their families, waiting in vain for another job that will pay that well, he said.”…

    http://tinyurl.com/cdv6xwg

    • indeed, concur and also … http://tinyurl.com/7zdqowm … meanwhile, hollande lowers the retirement age (lol!) – which (imo) is equivalent to declaring economic war on german savings …

    • To even begin to understand Spain, I had to crack open books on the Franco regime.

      The story my relative tells (he’s from Catalonia) is that his mother grew up in a small apartment and they would pay a man by the minute to boil a hambone in their pot for their protein content. That wasn’t so long ago. Spain was playing catch-up coming from a prolonged depressed state that extended before the adoption of the Euro.

  10. vancouverbubbleman

    this market will fall for years imo. i see westside homes dropping their ask prices by up to 25% and still no buyers. the foreign buyers are no longer buying here and without them we will fall to where the locals…those that are not already owners ( not many left ) ….will be buyers. eastside and the burbs will crash along with it all. people can barely afford their mortgages at record low interest rates…many need to rent out their basements just to afford their payments. wait till rates rise to normal levels- wait till prices are down and the locals can no longer refinance their mortgages to pay off all the debt they accumulate each year spending more than they make (very common….i know so many who load up on debt every years and pull “profits” out of house to pay off debt) -there is great trouble ahead and it will take years for us to find stabilization at much lower levels. I’m not sure why so many have not paid attention to all the housing bubbles that have broken and crashed around the globe ….we are no different here- the same will happen here and has just begun. it won’t be a quick event it will take time. it takes time for people to realize their house is not worth what they thought it was and they eventually drop listing price……once it becomes apparent to all that we are dropping…the last few who feel they missed out and are dying to buy will be buyers…..once they are done…we will continue to fall and don’t count on foreign speculators to jump in again…..they won’t buy into a falling market to try and catch a falling knife. my advice is don’t over-lever yourself, live within your means, do the math to see if you will be able to afford for mtge payments if your rate doubles at a minimum..if you can’t i’d sell now, and brace yourself for a lot less dinner talk about how much people are up and how you have to get in.

  11. 4SlicesofCheese

    http://thethirtiesgrind.com/2012/06/07/absurd-vancouver-property-of-the-week-june-7-2012/

    This making the rounds on Facebook now, from people I have never discussed RE with.

    • +1000

    • about a block from the going out of business rug place in used to be a whitespot bldg, cousins lived near there, area sort of half-floods when rains constant+heavy enough – drainage from QE mtn

      • You do know that the water reservoir is right under QE Park so the water fills that up, not the neighbourhood? Relatives must have some other sort of water problem.

      • been gone a long time so don’t know if things have changed … but, most yards front and back in that area got pretty soft and pooled water during heavy rains … it must not drain well from there for some reason … for example, note SE corner ppty at cambie/25th is built up on a 2-3 ft high retaining wall (i’m thinking somebody studied the situation and decided to spend a bit extra) … then, heading east along king ed, 1st block southside, most plots are graded up to about 6″ -12″(rough guess) or so from sidewalk level

  12. As an alternative to that $3.5 million “recently renovated” house, may I suggest (with $286451 left over for decorating) a 22 room palace (plus out-buildings) on 6 hectares of gardens, lawns, ponds, woods and even moats. 52 kilometers from Paris, in a rather tony neighborhood.
    http://www.french-property.com/vp/nv/ds/paris-ile-de-france-seine-et-marne-melun-residential/id/382406/#

  13. I bet a year from now you will look back and consider yourself one of the lucky ones!

  14. Observer:
    Huh? If you live in the area you drink raw runoff from the parking lot? How primitive!

    Yes, there is a large reservoir at the top of QE park, but that is storage for clean treated water from the North Shore, not storm drain murk with cigarette butts and an oil sheen.

    • Alex is right, all our potable water south of Burrard Inlet/Indian Arm is piped across from the North shore. Better hope the pipe doesn’t break in an earthquake or there will be some thirsty, thirsty Canucks in Shaughnessy (to say nothing of Richmond where they’ll have water galore, just the salty, silty, up to the eyebrows kind).

      • Well if the pipes break and the bridges fall there will also be some hungry folk over in North and West Van with no access to food delivery. Maybe they will trade? They might use Seabus in a pinch to ferry fresh water from North Van in trade for food from Downtown…….Makes you wonder actually what might happen. I am SURE it won’t be goodness and cupcakes with sugar sparkles.

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