“My wife doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease.”

“I’m starting to feel a bit of angst. My wife (from the East Coast) doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease. Could get dicey.”
Patiently Waiting at VCI 29 Jun 2012 8:32pm

25 responses to ““My wife doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease.”

  1. Your wife is sensible. Your family… not so much. Family is great, but generally they aren’t financial advisors. Tell them that you love them, but to mind their own business.

  2. What’s not to understand?

    Wanting what’s best for your family does not necessitate “buying”, and one’s gender sould have nothing to do with coming to this conclusion.

    • TYS -> jesse was making a joke referencing the longstanding stereotype.. that of the wife pressuring the husband to buy. This reached a pinnacle in the US with a TV ad where the wife gets her husband to agree to buy. I can’t find the link right now, perhaps a reader has it at hand?

    • The internet makes joke making difficult. Especially use of sarcasm. (Seriously).

    • Generally speaking, women have the “nesting instinct” more than men do, and are very susceptible to the the manipulation by the RE industry, who understand this all too well and have no shame in using all the tricks. This is a generalization, of course, there are plenty of exceptions. And yes, Jesse’s comment is a LOL!

      Oddly enough, I suspect the pressure to buy from the family will diminish with price drops, not increase. That is inherent in bubble psychology, as the damage mounts people want RE less and less. Part of why prices undershoot fundamentals on the downside as well as the upside.

  3. Ralph Cramdown

    If all else fails, tell the family that you’ve got your eyes on a handful of nice places in Shaughnessy, and you’ll buy when one of them comes on the market at a price you can afford. They’ll think you’re crazy to think prices would go that low, but not as crazy as someone who doesn’t want to play the game at all.

    • Better yet tell them that you have your eye on some of those Shaughnessy (or insert high end area that makes sense) places but just need to wait until the 40 year ammortization comes back so that you can qualify – and of course it will come back since nobody can afford homes now except for the asians in the helicopters so the government will of course need to make the change once they realize their mistake.

      They’ll think you are being incredibly prudent!

  4. joe_blown_away_by_high_housing_costs

    In the early stages of the RE market correction, I think there will be a great deal of familial pressure on people to buy. Most people I’ve talked to think that the sluggish RE market is just a 2012 phenom. They think prices will go down a bit in 2012, but by next year RE prices in Vancouver will be rocking upwards towards the moon again. The thinking goes the time to buy is now or in the near future. I’m already starting to hear that in my family. There will be a lot of pressure to buy on the first dip as people won’t realize prices are still going to come down even further.

    I’m struggling with this one myself. Although I certainly don’t believe 2012-13 will be the time to buy, how will I know that we’ve reached the trough? I am very pessimistic about the future. I wouldn’t be surprised if RE prices decline for 20 years. I think the demographic part of the story is very significant. Baby boomers selling off homes bought 20-30 years ago to fund retirement, millenial generation is smaller than the boomers and have more student loan debt and less income earning potential due to globalization/structural changes in economy. The trough may be 20 years down the road so it may not make sense to buy for 20 years. But the pressure to buy will increase year after year as prices keep falling.

    • The alternative to owning is renting. So, one gauge to consider is the ol’ rent-vs.buy. Of course, this requires certain assumptions (guesses?), like how how much a property will appreciate over time, and how much you might earn on capital invested elsewhere. But if you use really conservative assumptions, and renting still comes out on top, then that could be a good indication not to buy yet. Right now, as we all know, the rent-vs.-buy equation is sharply skewed in favour of renting. There’s no surefire way to identify a trough (or peak) though.

      Agree it could be 20 years. Maybe longer. But I think the pressure to buy will actually decrease as prices fall. Investing is the one human endeavour where folks invariably do the exact opposite of what they should…

      • joe_blown_away_by_high_housing_costs

        Thank you for your response. My understanding is that price to rent ratios will not signal a trough, but rather only demonstrate that it may be cheaper to own vs rent or vice versa. Let’s assume for a moment that RE is on a downward spiral for 20 years. It may be the case that in just 5 years from now price to rent ratios may show it is cheaper to own instead of rent. So based on that, I may decide to buy in 5 years. But then I will watch my investment fall in value for another 15 years. Yes, at year 5 price to rent ratio may say it is better to buy. But at years 10, 15 or 20 it may be even better still to buy instead of rent.

        So the question comes down to the issue of timelines. Is this just a standard, run of the mill real estate correction? I’ve heard that typical downward corrections take about half the amount of time as the upward ascendan cy took. So prices increased in Vancouver for about 10 years, that means the downward part of the wave will take only 5 years. That means the trough will be in 5 years and 2017 will be the best time to buy.

        Or is this something much bigger than your typical real estate correction. Is this going to be the biggest real estate correction of all times? So many signs show our entire global economy is a giant house of cards. We may be at the cusp of a paradigm changing moment. RE prices may be spiralling downward for decades to come. I am still relatively young. I am quite content to rent for the next 20 years and then buy real estate in 20 years time for pennies on the dollar.

      • All good questions. Unfortunately, there are no reliable answers. It’s impossible to accurately call market troughs or peaks, except in hindsight, and the past is not necessarily an indication of the future. The best you can do is a rough assessment of value based on reasonable long-term assumptions.

      • “price to rent ratios will not signal a trough”

        the signal for the trough is retrospective. It can only be made after prices have risen.

      • Ralph Cramdown

        How to know when we’ve reached the trough? Some thoughts:

        1. Unlike stock markets, RE doesn’t generally bottom in a V shape, absent massive stimulus (which I’m not expecting).
        2. Read stats. Sales, sale/list price, MOI, building permits, residential starts, household income and debt.
        3. Read the old posts at Calculated Risk Blog, an excellent analysis of the US boom and bust. Also, look at Case Shiller city indexes and note how all the curves are about the same shape. And don’t forget about the difference between nominal bottoms and real (inflation adjusted). If houses start going up at 1%/year but inflation is 2%, they’re still going down.

        What’s your goal? To get your family into a house as soon as reasonably possible? Maybe you don’t need to wait for the absolute bottom. To get a house at the lowest price possible? Maybe the discount you get from a desparate seller makes up for being off by a year either way. Best return on investment? Maybe you want to wait until after prices start appreciating more steeply, rather than buying at the bottom and holding for another few years of near sideways prices.

        Maybe get a real estate license? Access to great stats, and the money you save in commission buying your place more than pays for the course.

      • Troughs are usually signalled by volume spikes. Watch sales volume, not prices, for market direction. Of course, picking a long term trough out of that is still hard, which is why you should always do the math. Your goal should not be to pick the trough, but rather invest when it makes sense with a margin of safety that compensates for the possibility that the market moves against you. We are a very long way from that I think.

  5. The funny thing about being ‘anchored to Vancouver’ when your homies are looking for you? Absent bilateral extradition treaties it can take them quite a while to pry you out of the harbour (why does that conjure visions of the TheSopranos and CementOvershoes?)… In other news RE, it’s definitely DejaVu DearReaders time as the next iteration of BigTrouble In LittleChina hits the screens!…

    [NoteToEd: Nem’s leader would have read: “It was all a crock!” – CorruptionCharges: KwokBrothers HokeyKokied to HongKongPokey]

    [G&M] – Vancouver condominium kings face charges in Hong Kong

    …”co-heads of a family business empire that is among the most powerful in Asia, but has also been plagued by vicious infighting and a bizarre kidnapping that caused a shift in control of a fortune estimated at more than $18-billion (U.S.). Now, brothers Thomas and Raymond Kwok are facing possible prison time after being charged with bribing one of Hong Kong’s top government officials in what is the biggest corruption scandal to hit Asia’s financial capital in years.”…

    http://tinyurl.com/bsyl9vs

    • Oh yes… What was that meme again?… Something to do with “OylmpicBoosts”…

      [BloomBerg] – London House Prices Plunge as Supply Rise Adds to Lull: Economy

      …”“The housing market remains heavily depressed,” Victoria Clarke, an economist at Investec Securities in London, said in a telephone interview. “It fits in with the general backdrop of consumers and households being very nervous about the economic outlook, and if supply continues to come on line, it’s possible we could see further price moves downwards.”

      In a separate report today, the Ernst & Young Item Club said that house prices will fall 2 percent this year, leaving them 8 percent below the 2008 peak in nominal terms, and down 24 percent in real terms. The group, which produces forecasts from a model similar to that of the U.K. Treasury, cut its forecast for gross domestic product and predicted no growth this year.”…

      http://tinyurl.com/bvwh9xt

  6. Achtung, HerrRedaktor! Comment DerStukken. Danke schön!

  7. Was ist das? Since when the wives are stamped like the ones that don’t want to buy a house on an overpriced market? What about the husband’s macho instincts – “The real men do not rent”?
    About the right time to buy and fundamentals – what would be the correct/fair price for the med. house in Vancouver given the current med income?

    • For the record, we believe that RE manias apply massive pressures on both men and women to purchase/own property.

    • Fair point, I won’t go through vreaa’s thousands of posts trying to find all “wife” and “husband” references. Suffice it to say the “nesting” instinct is unfairly given to one gender when the reality is it’s more evenly distributed.

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