College Student Living With Parents In $7M “Piece Of Junk House” – “I have had to sit through countless dinners where my parents friends bragged about foreign investors leaving notes in their mailboxes making cash offers on their houses and how they could “cash out” at any time. But they didn’t.”

“I am a college student living at home in a house assessed at 7 million dollars. With that price tag you would expect a mansion right? Nope. The house is 90 years old, doesn’t have insulation or a proper heating system. My parents bought the house in 1985 for 450,000. Adjusting for inflation that is 860,000 in 2012 dollars. That is the most I would pay TODAY for this piece of junk house. However we do live in a quiet area in the UBC area and the property itself is quite large with a premium view, but even those factors do not begin to justify the difference between the assessed value and the inflation adjusted price my parents paid 28 years ago.
Luckily my parents were smart with their finances and a large correction in the market will not affect them. My parents have avoided using any paper gains in the property even when their coworkers and friends kept pestering them to take out loans against the house to buy condos and rental properties. These same coworkers and friends have been driving around in fancy leased cars and enjoying nice vacations every year while my parents worked hard to pay off the mortgage. I have had to sit through countless dinners where my parents friends bragged about foreign investors leaving notes in their mailboxes making cash offers on their houses and how they could “cash out” at any time. But they didn’t. Now that they do want to sell they are finding the market has cooled and no on wants to pay peak prices for their homes. Very few people are prepared to spend 15 million dollars on a home in a cooling market.”

Robert Borden at VREAA 8 Jan 2012 3:43pm

42 responses to “College Student Living With Parents In $7M “Piece Of Junk House” – “I have had to sit through countless dinners where my parents friends bragged about foreign investors leaving notes in their mailboxes making cash offers on their houses and how they could “cash out” at any time. But they didn’t.”

  1. Had another conversation with my dad the bull yesterday. He says RE always goes in cycles and the prices will be back in 5-10 years. I told him I think prices will drop and yes, prices will be back but not in our lifetime. He vehemently disagreed and told me he would sell when the next cycle comes to finance his retirement.

    • Your answer should have been: “Dad, you don’t need this complicated plan to assure us there is no inheritance. We weren’t expecting one anyway.”

  2. I don’t get it; they can sell today for 5MM but won’t because the market is soft. They need lessons at being rich.

    • “They need lessons at being rich”

      I had the exact same thought when I read this anecdote!

    • Yellow Helicopter

      Hilarious, and so true!

    • UBCghettodweller

      It boggles my mind that people don’t act and effectively win themselves a small lottery jackpot even if they “lose face” and take an offer for much less than peak prices or have to end up a lowly renter for a while until prices correct.

      Many people in the Point Grey/Kits/Dunbar area are obviously well off because of their professions and not leveraged to the hilt since they bought two or more decades ago, but few are so rich where several million dollars in cash isn’t a considerable sum of money compared to the rest of their assets.

    • “Be fearful when others are greedy and greedy when others are fearful”. – a bearish confirmation signal

  3. RE- Cycles
    It will be a LONG time(if ever)before we see this kind of bubble again. This was no cycle, this was an intentional bubble blown up to disguise underlying economic disasters.
    The FED tried and is trying hard to blow it up again but it isn’t working. We are getting closer and closer to taking our medicine every day.

  4. Any rational person in this situation would sell.

  5. He’s right about the cycle, but to get close to the heights we saw last year it’ll take 15 years after a big crash, not 5! I’m from Switzerland and we’d a big collapse in the early 90’s and now it’s just like Vancouver for the last 4 years with those low interest rates… For the case below I’d put a killer price under 7 and try to sell it quick then rent and wait for the crash! Big money and a good transaction to make there, if you’re smart.. Don’t wait too long, once the market crash you can sit on your shitty house for years….

  6. If they book a FRACTION of their paper gains they’ve still won the lottery. And they’ve been enjoying nice cars, vacations, and day spas all this time.

    Boy, what a bunch of dummies.

    • Yes, but they bought in 1985.

      • vreaa 28 December 2012 at 1:04 pm: “Sure, earlier buyers will still be somewhat ahead (not all that impressive if you account for inflation), but you think that this will make the evaporation of that ‘wealth’ any less painful?”

        Tell me vreaa, how painful would that 1 or 2 million dollars, nice cars and vacations be?

        vreaa: “…the vast majority will end up riding their paper profits all the way down again…”

        In order for these people to ride their paper gains to zero we would have to see their home valued at 1/7th it’s assessed value.

        You don’t know when most people bought, and even if prices go down to 2001 levels ( your prediction ) early buyers will be sitting pretty.

      • Naked Official #9000

        Loyal cadre! It is so good to see you!

        Continue the good fight!

        Once again, you have caught the disharmonious splittist “vreaa” in his web of lies and tautalogical disinformation!

  7. “And Vancouverites wonder why they are characterized as money-hungry, real estate obsessed cultural philistines. Vancouver is the kind of city which would bulldoze the Roman Colliseum to build a Condo development called “Colliseum Mews”.” – Peter Pan – 7:40 PM on January 9, 2013

    [G&M] – Patrons Lament Closing of Waldorf After Sale to CondoDeveloper

    “In August 2012, the landlord’s attitude changed overnight and it was baffling.” – Waldorf Entertainment Director Thomas Anselmi

    http://tinyurl.com/bbkcw6n

    [NoteToEd: Surely… a collapsing property market had nothing to do with the Waldorf owner’s renewed interest in liquidating his holdings ‘tout de suite’? NoteToSelf: Etymologically and poetically, it would be infinitely more satisfying if, henceforth, we referred to condo salespeople as Suite Touts.]

    • We will headline the Waldorf at some point. Thanks, Nem.

      • There’s also the lament from the actual Waldorf site. I posted the URL yesterday, FWIW.

        I agree with Nemesis; the Vancouver of today has very minimal appreciation for the past… what little past there is compared to places like Rome.

        If any of you ever read Geist magazine (a cultural treasure in the otherwise wasteland of the lower mainland), it has so many anecdotes and even articles on small cultural gems that still exist. But those simply highlight all that Vancouver has lost in the past couple of decades in the flurry of building meant-to-be-a-highrise-slum glass towers all over the place.

    • Suite Touts? Your diphthong is showing.

    • One for the archives… [#CouldBeWorse]…

      From this….

      http://tinyurl.com/aj72e3s

      To this….

      [UK Guardian] – Battersea power station homes go on sale: The development includes flats, townhouses and penthouses, but the prices are not for the faint hearted

      …”The Circus West development will see 800 homes built around the south London landmark, which is the largest brick building in Europe and has achieved international fame as the backdrop for films and TV programmes and the cover for Pink Floyd’s 1977 album Animals.

      The development includes a mixture of flats, townhouses and penthouses together with offices, shops and leisure facilities, and is the first phase of seven. By 2024 there will be more than 3,400 homes.

      Residents will have access to an elevated garden, and prices are similarly lofty: studio apartments start at £338,000, one-bed flats at £423,000, two-bedders at £613,000 and three-bed flats at £894,000. Anyone with their eye on a penthouse will need to be able to raise at least £6m”…

      http://tinyurl.com/b382qhg

  8. “These same coworkers and friends have been driving around in fancy leased cars and enjoying nice vacations every year while my parents worked hard to pay off the mortgage.”

    – I highly doubt this person would have been tuned into matters like this as a young child (when the mortgage was likely paid off and mom and dad began putting that college fund together)

    – “stay at home” student has zero life experience, credibility and real world knowledge. Just enjoy the free laundry, wifi, cable tv, second hand Lexus, home cooked meals, allowance for gas/clothing/food/entertainment, that “premium” view of Spanish Bank etc and keep quiet. So what if mommy and daddy don’t cash out at the top? Obviously you’ve got a lot to learn still if you believe the real rate of inflation over the years has only been 2% and that the home you live in is an uninhabitable “piece of junk”. Please remind them to remain “smart with their finances” when it comes time to gifting you a d.p. on your first home.

    – btw, this must be one hell of place if they bought for $450k in ’85. My parents bought their place in MacKenzie Hts for $120k in ’84.

  9. “Luckily my parents were smart with their finances..”

    Yet they are not smart enough to trade their POS asset for $7M.

    • If they had sold, either down sized or rented, then stay at home student would have had nowhere to live. 😦

      • specialfx3000

        Fair point. Parents wouldn’t be able to help out kiddo too much since they only have $7M in their bank account.

      • Why would they have to downsize? They could have sold for $7M, keep $4M and use the remainning $3M to buy a large house on the West Side near UBC or a palace anywhere else.

        This anecdote is a bit odd…

      • @ bubbly

        I didn’t say they HAD to do anything. My point was that IF they sold on the premise that prices would correct sharply, they would presumably trade down either in terms of location and/or size (or rent). This, in turn, would further compound “stay at home” student’s pain and suffering (and we can’t have that now, can we?). It would be “odd” for them to do otherwise. No?

        Kid would also look like a complete hypocrite if he/she were to go on and accept gift of d.p. for over priced condo from parents, who suddenly have all this cash to burn now and no further need to be “smart with their finances”.

      • And my point was that they should have sold even if they didn’t think that prices would correct. Of course, the compromises they would have to make, would be brutal.

      • Robert Borden

        This anecdote came from me. My parents are far from wealthy. bullwhip29 most of your assumptions are far from true. The reason I stay at home is I attend UBC so I cannot justify spending 1500 dollars a month renting a basement suite when my parent’s house is literally 15 steps away from the university. As a family of 6 we have 1 car and I use the bus 99% of the time. I’ve held a job since I was 16 and every penny I spend comes from my income. Never been given an allowance or money in my life. The most exotic vacation I’ve been on with my family is to Toronto.
        Honestly my parents do not want to sell and have never wanted to. They are first generation immigrants and to them the house symbolizes the “Canadian Dream.” All the sacrifices they made brought them to owning this house. Sure 7 million dollars is a lot of money. But handing down the house to one of their children and seeing their grandchildren grow up in a prestigious neighborhood outweighs anything they could do with the 7 million. This may be hard to believe for most people.

      • It’s totally illogical.

      • Real Estate Tsunami

        Robert, have you and your family ever considered taking to a tax expert?
        To my knowledge, 50% of capital gains tax applies to inherited assets.

      • Talking to a tax specialist now is a really good idea if the plan is to pass the house along. One child should be put on the title now. Not all of them, for reasons that should be explained by a professional.

      • @ Robert Borden
        Not that I am trying to split hairs or anything, but you originally said your parents DID want to sell but that the market had cooled etc…and now you are telling us the opposite. Hey, I have no problem with you ripping me for making “assumptions”, but you’ve got to get your story straight first.

        Anyway, while I’ve got your attention, why would your seemingly old fashioned, conservative and well grounded parents host dinner parties for a bunch of douche bags who parade around in fancy leased cars, enjoy nice vacations and brag about all the money that they could make?

      • Robert Borden

        AG Sage,
        I believe my older sibling is on the title, but will confirm with my parents. Thanks for the heads up. Real Estate Tsunami thank you too.

        bullwhip29
        After re-reading my original post it looks like my pronouns were misused and confusing. What I meant in the original post was my parents friends are currently trying to sell and are unable to. I think the reason they are not dropping their prices substantially is because they don’t need. One family in particular wants to sell their house for 200% of assessed value but then on the flip side wants to purchase a new downsized home for 50% of assessed value. You just can’t have it both ways.

        The one luxury I had growing up was I went to a private school (on a substantial scholarship) in Vancouver so most of the children come from high income families. Rich snobby people became friends with my parents after I was friends with their children. I guess when you keep hanging out with the same kids your entire childhood, the parents become friends as well.
        My friends have very skewed views on their financial futures. They expect six figure salaries after finishing undergraduate degrees. Any house located east of Oak and south of 41st is “ghetto.” I find it funny that they hold these views when mom and dad have purchased their multi-million dollar condos for them and if they were to go and apply for a mortgage themselves they would not be approved for ANY house in Vancouver.

    • Yellow Helicopter

      Bullwhip, you’re being a bit harsh on Robert. Whether you agree with his parents’ decision to hold on to the home or not, it is their decision, not his. He seems like a nice guy, and is working on getting his education and eventually contributing to this city. Why pick him apart and his anecdote, which we surely don’t do with all the others?

  10. Roberts parents are immigrants to Canada (like mine) and have paid off their mortgage (like mine) and have an opportunity to cash out and be millionaires (like mine), but they are not (like mine). I’m as bullish as one can get but do I think my parents are fools? No, they just have a different risk profile than I do; one that perhaps matches their path to Canada and their age. The house they are in right now is not a mansion but it suits their needs and is paid off. They would rather accept their current lifestyle of stability rather than gamble by selling and renting. Sure odds are stacked that they would make out like bandits however there is still the unknown remote possibility that things keep going up and they end up on the short side of a trade. I respect their decision and don’t ever try to convince them one way or another. When they start to tell me that I’m throwing money away on rent…well then this bear bares it’s teeth and claws as my risk profile is totally different.

    • I sense a trend emerging.

      My parents are the same way. First generation immigrants, entirely dedicated to home ownership. Completely bullish, not interested in selling despite turning their $60,000 down payment into nearly a million dollars.

      And like others, they too preach the ”buy buy buy” mantra, regardless of any logical facts put before them. I have since learned to avoid the topic, much like trying to disprove the existence of God to a devout Christian.

  11. i never been to a place where people talk so much about real estate… i guess Vancouverites cherish their home value so much because there is no decent jobs or industry or any real wealth in this city

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