A Vancouver RE Bear Unashamedly Anticipates Schadenfreude – “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.”

“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. I’m ready. I got my shorts for when the tide recedes. Schadenfreude.”
Mike Hunt at VREAA 6 Jun 2012 1:08am

25 responses to “A Vancouver RE Bear Unashamedly Anticipates Schadenfreude – “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.”

  1. Ralph Cramdown

    I’m not as unabashed as this guy. I’m in a similar situation, though not averse to ‘good’ debt. I know the financial toll is going to be terrible, and I won’t be immune from the fallout. I don’t believe in the extensions to Schumpeter’s “creative destruction” thesis which have been built by the Austrians, viz a massive purge of excess debt being good for the system, no matter what the short term consequences. But at this stage, I see it as inevitable, no soft landing here.

    I rationalize by saying “given that it’s inevitable, I’d rather it happen sooner rather than later.” And I will enjoy the purge of lazy, ignorant RE agents (say the bottom 80% or so), mortgage brokers, and the smiles from the faces of all the people who claim it’s different here. And I’ll have no qualms about bidding low — really low — when the time comes. It will come. We shall overcome.

    • I hear ya Ralph. Makes me glad I have not been living there all these years. I might feel pretty resentful too watching all the neigbors and friends live it up like royalty and blow all the equity on gadgets, clothes, nice cars and European vacations.

      I keep hearing about how many of these people have been throwing it in the faces of their friends who didn’t buy and bragging up storm as they were turned into overnight millionaires. Secretly we believe they are wasteful and ignorant. Guys like Mike might even hope there is a special place in hell for all the people that made the renters feel bad over the years. He can probably relax and not worry too much though.

      The vast majority of people never cash out before the correction and the rest carry the burden of debt for much of their lives. They do pay for the good times through future sacrifices. Just be happy for the opportunity you will have to buy back in at the bottom. For Vancouver, that is a generational opportunity.

  2. Chumpay le Chump

    it is irrelevant how we feel about what will happen. It will happen just the same. Having been through the experience of losing my family home as a child, i don’t wish that upon anyone. However, the need for fairness that lives within me requires that we return to the way things ought to be, and that means a great many will suffer.

    however, they will suffer only the shattering of their illusion- the illusion that it is possible to get something for nothing.

    I will enjoy watching the 80% of RE industry people return to their former careers as servers and bartenders. This city has become so high on the douche factor in the last 10 years, and it is all due to cheap credit. I am looking forward to the day when real people who provide real value or produce some real good are the ones who get ahead and are driving the economy.

  3. This bubble will affect even the people that don’t own RE. How? Unemployment. Many Americans are having trouble finding jobs. Student graduates are not able to find jobs after school in their field. Low unemployment could spike property crime and other types of crime. I do care about this bubble popping. To all the ones that do believe this is coming, prepare for the worst and don’t even think about picking up the wreckage. The wreckage is there for a reason. Good luck to all ya!

    • reality check

      BC economy will be destroyed if real estate crashes. the sale of homes and the spin off it provides is a huge huge chunk of our economy. Everyone will suffer greatly. Renter or not the only difference is that renters can leave to other areas that may not be destroyed

    • “Student graduates are not able to find jobs after school in their field.”

      Isn’t that happening in Canada as well?

  4. I am simply adverse to overpaying. Only a brainwashed sucker would want to blow a mill on “land value” and still need to throw down another 1/2 mill to make it liveable.

  5. I am still amazed that some people are still bullish about Real estate. I had a sit down with a friend and he told me all about his condo purchasing. Apparently him and some friends are gathering investors to purchase up pre-built condos before the presale and buying them in bulk to get a better price then the public. He asked me if I was interested. I told him I was a big bear on RE since last year. I went on to tell my bearish side and made comparison to other bubble countries like the US. I’m not sure if I was insulting him by doing so. But that’s how I feel and I want as many people to know that I think RE is correct, significantly. So I’m sitting at home wondering if I just insulted him by being so bearish. I know that’s what he does and that’s one of his jobs to make a living. Some people just aren’t bearish as us here. People will continue to be bullish until they are taught a lesson (aka USA). At these prices, long term investments could likely not work out. So, until people start losing money, they will continue being bullish. 70% of the population are all thinking alike, and for us, we are the small percentage that believe in the bust. 😃

  6. “I don’t care”

    I care too.

  7. i don’t give a rat’s ass either. that makes 2.

  8. “…just couldn’t wrap my head around the idea of being tied to a loan for 20+ years”

    it’s called a mortgage. Either you agree with the concept or you don’t.
    Not many buyers are paying cash for their first home…you’re not buying a quart of milk, or a flatscreen TV – this is a huge life-defining asset.

    • Abet east side home is almost 900k. Put 20% down and likely a mortgage for over 30. After interest rates goes up, how the fuck is one going to pay off this monster loan? the market is turning, let’s get the popcorn and coke ready.

      • I will lay a bet unemployment goes up before interest rates. Housing is already going down and no rates increased. But what should we expect? The media is awash in stories of gloom about the world economy, Greek failures, potential Lehman events, Black Swans and financial discord. It is a wonder anyone is buying at all. They might be deluded but we have got to hand it to people who still have enough faith everything will be fine that they sign the paperwork and take on a lifetime of debt.

        Doesn’t anyone play odds anymore? The odds are not good.

  9. Not sure who first said it but an expression I have come across in the past is a maxim of the emotionless of how the system purges excess credit and debt. Perhaps it is from the Austrian handbook…….” In the end all debts will be paid, either by the lender or the debtor”.

    And that just tells us that where debtors are unable or unwilling to service obligations that banks and other lenders will take the haircut and the losses. This of course is the risk for our banks who will be making small prayers that Canadians won’t just walk away from their homes (like plenty of Americans have been doing).

    One way or another though, all this excess will delever or be paid down.

  10. is that really Schadenfreude? i don’t know but the text reads closer to wanting for an atonement and return to ‘normal’? atonement, revenge, a desire to see things resolve, etc., these do not necessarily include Schadenfreude … but they are a personal indulgence to the extent they are taken to extreme … eg. i get no pleasure from regarding the withdrawal symptoms but i do want to see an end to the addiction …

    • ee chubster, as long as you feel pleasure when considering other people’s pain, I’ll call it Schadenfreude. If it’s about making tons of money and the only way of doing it is for others to suffer, maybe the pleasure centre is a bit different.

      Who knows. I gave up “feeling” long ago.

      • yes, i agree with that. but the sentiment, of the text at least, is “i don’t give a rat’s ass” not “i plan throwing a party to watch them sink” … an important distinction, imo …

      • yes sir_nem, a cogent contribution on commonly-exclaimed emotives, with discourse on degrees of detachment … and now perhaps tangentially (fool_me_2X), a different sort of contribution …

  11. An exegesis on the origins of Schadenfreude/Anomie…

    The old ‘social contract’/civic society was predicated on consensual, truly democratic governance [vs. mere process] contextualized by a visibly functioning egalitarian meritocracy where effort/talent were rewarded with upward socio-economic mobility… Or at least, that was the prevailing myth (one variant is better known as, “TheAmericanDream”)… Equality of opportunity if not necessarily outcome.

    However, as each GoodBurgher individually decides that ‘society’ isn’t working for ‘him’ anymore and resorts to asocial modal-adaptions to advance indvidualistic goals/ambitions with little or no regard for the externalities… ‘Society’ [as currently constituted] ceases… Normally, this is where conventional scholars would drag out a pithy Hobbesian quote… But since TropicThunder, we have something much better at our disposal…

    • I’m trying to decide if you’re in general agreement with the poster or suggesting some food for thought.

      • Food for thought, Dr. J. Granted that there will be no shortage of ‘just deserts’ cases – there will be far more in the ‘collateral damage’ category.

  12. In other news Schadenfreude/Anomie… imagine how the following Guardian piece will be received in a once vibrant society where the ‘Austerity’ experiment is, really, just beginning…

    [UK Guardian] – Concierge firms boom as the rich flee to London: For £5,000 a month, the capital’s wealthy émigrés expect the unobtainable at a moment’s notice

    …”London is facing an unprecedented surge in the number of companies offering concierge and other special services to the very wealthy, as new groups of rich emigrés relocate to the UK to escape instability abroad.

    Russians have been joined by Indians and continental Europeans among the overseas buyers that have purchased 60% of the prime property available in central London in the past few years, according to estate agents. The growth in foreign purchases appears to be matched by the growth in companies that are willing to do anything for their clients – any time, any place, anywhere.

    Alistair Gill, the manager of Mayfair Concierge, which started business last month, said companies such as his were there to open doors, simplify procedures and obtain the unobtainable for those who could afford it. “While times are tough, there are still a lot of people who enjoy a high quality of life – who are cash-rich and time-poor. It’s a growth market,” he said.

    Clients typically pay a retainer of around £5,000 a month, for which they expect 24-hour service but still must meet all other costs. Neither the price of the services nor the economic climate has had much effect on demand.”…


  13. It does look like it will be a long wait to get to the bottom. Stickiness on the way down may mean the correction easily takes in excess of a decade. This is not just a casual comment. We note that the US market has already been in decline for 5 years and no bottom is yet in sight.

    Should we really be all that different here? With our debt levels?

    I really am anticipating an initial sharp correction followed by many years of continuously falling prices. Demographics alone determine that is the outcome. For another perspective though here is a quote from a radio interview with Professor Steve Keen on why the private debt delevering process is sure to be long and agonizing in the West.

    Says Steve…..
    “In the 1930’s we had deflation running at 10% per annum for a couple of years there. And the major reason is, I believe, is that in the 1930’s it was the business sector, the non-financial business sector, that was largely in debt.

    Its debt ratio at the start of the crisis was 120% of GDP. And therefore, businesses were the ones who were insolvent when the crisis hit and their reaction was to cut prices to try to drag customers in their doors rather than in the neighbors doors. They all did it. And what you therefore saw was dramatically falling prices and debt was paid down but the prices fell faster than the debt fell.

    So you had really, really serious deflation.

    This time around the non-financial business sector peaked in America at about 70% of GDP. Large, but far less than the great depression…and sustainable.

    And it is now the household sector that is deleveraging from a much higher level of debt than they had back in the Great Depression. It was roughly 25% of GDP back in the 1930’s. It rose because of deflation but it did not get too high.

    This time we are starting at four times that level.

    The trouble for households is they can’t delever anywhere near as fast as business. That’s because business can get out of debt any of three ways. They can go bankrupt, they can stop investing and they can sack the workers. Households find it very embarrassing to go bankrupt. It is very hard to stop consuming and you can’t sack the kids. Consequently it is a very slow grinding deflation. When it comes to what the Central Banks and Governments are doing about that process, they are really afraid of systemic breakdown.”
    Listen to the whole interview here:

    • Ralph Cramdown

      Actually, some smart cookies ARE calling various bottoms in the US market. The important ones are resales, nominal prices, real prices, and new home sales. Down there, the smart money’s consensus is that expectations are driving prices. In the rest of Canada, the fools are crying affordability is the measure. In Vancouver, of course, it’s all pixie dust and unicorns.

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