“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004.”

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004. When I met my wife she had just purchased a condo in Surrey for $135k. We moved into it and met a tough-as-nails older woman who had been a realtor for 30 years and lived in the building. She shared the history of the building with us. Units had originally sold for $170k but a leaky condo adventure had dropped the value down to $70k, many lost their homes but those that were left were holding out for the prices to return to $170k. I asked her how long that would take. She pondered it, referred back to her 30 years of experience and said. “Probably 10 years.”

Almost exactly one year later in mid 2005 she came to us to tell us she could get $160k for our unit if we wanted to sell and move to a larger unit. We took her up on it and bought a larger unit in the same building. We got an over ask offer of $164k and bought a bigger unit for $170k. A year later and I was now working in Burnaby, a crappy commute. The condo needed a new roof and we had an assessment of $5000 that we had to take HELOC to pay for. We got a call to check out a place in a co-op in Burnaby near my work. It was perfect for the family we wanted to start. When we returned from checking out the co-op there was a flyer under our door. Our friendly realtor had just sold a comparable unit to ours for $240k.

Our families told us we were nuts to sell and rent. I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k. My sister explained that I didn’t understand because I didn’t have kids yet how important it was for us to have real estate holdings to leave them. I decided that when I did have kids, they would be better served having me home for the two hours I would have been commuting then having a condo in Surrey 50 years from now. We pulled the trigger, the realtor actually sold the place to the same people who had bought our previous unit and we are now renters in Burnaby.

I knew nothing about real estate when I met my wife, she had bought into the market with an inheritence and had a bit of trouble walking away from ownership. But strata drama had shown her that she didn’t really own much of anything, she couldn’t rent her place out, she couldn’t decorate the way she wanted, she could have the pets she wanted, it was really a lot like living in a co-op. Except your crazy neighbours are toying with a massive chunk of your equity when they make silly rules. (They tried to make the building a 55+ while we lived there).

But ultimately it was that chance conversation with the realtor when she genuinely predicted a slow, steady increase in value that paced with inflation that tipped me off to the anomaly that was this price increase. I watched it shoot up and I was not prepared to sit back and watch it drop back down, taking my windfall with it. My wife is glad we made the move too, now she tries in vain to explain to her friends and family that they are headed for financial ruin if they continue their real estate delusions. But we all know how that goes.”

lexlimo at VREAA 27 Feb 2013 9:42am

Thanks for your story, and for all your other comments on the blog, lexlimo.
– vreaa

53 responses to ““It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004.”

  1. Scotia morning note March 1, warning institutional clients about Bloomberg Magazine April cover story on Canadian housing bubble. Suggesting to clients they switch out of banks/mortgage names into asset managers (who, BTW own an awful lot of bank shares, but never mind that). #bailing #ratsleavingsinkingship

    • Ralph Cramdown

      There was some interesting speculation yesterday on BNN that UK banks would aggressively headhunt senior management from Canadian banks, in an out-with-the-bad-in-with-the-good move which would also please their incoming BoE governor.

      • UK wants to borrow the Canadian experiences to inflate their local property value at least in the short term. Just wait they see how the Canadian housing bubble bursting in the coming months / years, all those recruited Canadian bankers, and their new BoE governor will be sent back to Canada (without a job).

      • Real Estate Tsunami

        Are the rats following the Pied Piper?

      • Please take the CMHC management team with Carney and watch the real estate in Britain go up 300%

    • Speaking of ‘WarningNotes’…

      [CBC] – B.C. visual effects artists say work being sent overseas

      The difficulties facing the industry were highlighted at the Academy Awards last Sunday, when VFX supervisor Bill Westenhofer accepted an Oscar on behalf of Rhythm & Hues, the VFX firm largely responsible for the imagery of Life of Pi. Despite working on several successful, award-winning movies, the firm — which has an office in Vancouver — was forced to file for bankruptcy just days before the Oscars ceremony.

      Westenhofer attempted to broach the company’s problems during his Oscars speech, but was cut off by the band before he could go into any detail. Visual effects companies, responsible for creating computer generated imagery (CGI) and combining this with live action footage to produce finished films, receive tax credits currently set at 33 per cent of labour costs in B.C.

      But under pressure to keep costs down, many VFX companies are underbidding for work, undercutting each other and outsourcing projects to countries with cheaper labour.

      http://tinyurl.com/asegtag

      [NoteToEd: There’s an old saying in the PixFerBuxBiz… “You can earn a fortune in this business, but you can’t earn a living.” Nem’s Varietyese/Slanguage leader would have been: LifeOfWhy? – Rhythm&HuesOscarBlues]

  2. Cyril Tourneur

    “I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k.”
    Gap up is always a buy signal, never mind fundamentals.

    • … for momentum players.

    • I still check that property on MLS periodically because I’m curious to know how much money I could have had if I miraculously timed it perfectly. And I’ve never seen a unit listed for more than $270. And I have no idea if any of them ever sold for that, there was always people listing and pulling to test the waters in that place. The realtor said that she didn’t think it would ever get much higher than $250k because at that point it was bumping up against the considerable townhouse stock in the area. Then again, she was trying to convince me not to ask for more than $240k and we have already established that even her considerable experience was not worth much in a speculative mania.

      • Real Estate Tsunami

        Again, that shows the fallacy of believing “The Experts” particularily those who are being paid for being experts.

      • lexlimo, any chance you can us your realtor’s name? She sounds like one of the good ones.

      • @matt I’m not actually sure she’s still in the game. She seemed to be only working a handful of listings even back in 2006 when we moved out. She was an excellent realtor, but she was also a bit racist. I still feel a little dirty for letting her get away with some of the things she said in front of me but it felt like a bit of a test to see which “side” I was on. I kept my disapproval to myself because she was taking care of my real estate situation so well. Probably another anecdote in there, the things we are willing to overlook to cash in on a speculative mania.

    • Real Estate Tsunami

      Lot’s of references to rats lately on this blog. Sign of the times?

  3. What an interesting headline today. Kudos to this couple for both recognizing the opportunity and actually taking the leap. The world needs more independent thinkers.

  4. Is Vancouver the new Calgary?

    “Giants of the energy industry are suddenly setting up offices in Vancouver instead, and it looks like they’re here to stay. At least four major energy companies have opened offices in and around Vancouver over the past six months.”

    http://ca.finance.yahoo.com/news/vancouver-calgary-180000885.html

  5. A bit off topic but I just noticed a City of Vancouver legal notice in paper advertising an information session on laneway housing. The gist of it is the city is going to re-zone the remaining single-family districts in Vancouver to allow laneway housing and, more significantly, the city is going to “discuss” how to make laneway housing more “liveable”- I read this as the city is now going to allow bigger and more intrusive housing in backyards all over the city. This by-law change will probably keep the single family market ebullient for a while, at least until the developers run out of money.

    • You’re assuming single family home owners are well capitalized.

      • Real Estate Tsunami

        Yes, a fat assumption.

      • I’m not assuming that the single family home owners will develop, I’m predicting that developers might try to buy up lots in the hopes of building the maximum (appears to be unlimited) square footage that the city will allow. I wouldn’t be surprised if the city is thinking of allowing more sites like the one at 8th & Macdonald to proceed.

      • Realtor behavior

        Or CMHC giving homeowners another heloc to build for a mortgage helper instead of forclosing, even it sounds silly though!

      • UBCghettodweller

        >8th & Macdonald

        Nearly everything that’s wrong with Vancouver since about 2003 summed up in one lot.

    • As a home owner and landlord, after our experience with our current tenant, who actually isn’t even that bad compared to others, why, if you could afford a million dollar home (which is what most new builds are going for now) would you put up the hassle of renting it out? What I find hiliarious is I see 2 million dollar plus homes in the east side building laneway houses and multiple suites. Unless you are a pure investor (which is rare as most investors buy condos, and the overseas investors are all gone), I will not go out of the way to be a landlord. If you really must rely on that mortgage helper for your 1 million dollar plus home you cannot afford it. (As soon as our tenant leaves, my wife and I will not be renting our home out again)

      • I agree. The only real difference in having the SDH versus TH or condo is the privacy/independence and some green/quiet space at the back – flowers, small scale gardening, suntanning, friends gathering. With the lane house taking away all of it, plus lots of responsibility for the upkeep of the suite and potential problems with the tenants – it doesn’t make any sense.

      • There is no backyard to speak of at the beginning on a 33 x 1xx.
        In North Van where the standard is 50 maybe doable.

      • pricedoutfornow

        Yes, I always wonder why people have been so eager to buy that SFH and get tenants in the basement. After spending a weekend at my brother’s house in Calgary, where he rents the top half of a house with people in the basement, which involved the cops being called over the drunk guy downstairs-I figure it’s just not worth it to “own” that house and being forced to have tenants in the basement in order to meet the mortgage payment. What kind of quality of life does one have when you have to deal with people in the basement (even if they aren’t that bad, there’s still the hassle of dealing with noise issues, parking issues etc etc). If I ever own a SFH there won’t be any tenants in the basement, otherwise wouldn’t it be better just to own a townhouse?

  6. Cyril Tourneur

    Only 71 sales last month in the predominantly SFH West side. Doesn’t look much like ebullience to me.
    http://www.yattermatters.com/2013/02/hair-cut/

  7. Canada Mortgage and Housing Corp. is making no apologies over its tactic of not disclosing a house has been repossessed when it puts the home back on the market.

    “We don’t want to attract low-ball offers,” said Mark McInnis, vice-president insurance underwriting, servicing and policy with CMHC.

    http://business.financialpost.com/2013/02/28/we-dont-want-low-ball-offers-cmhc-firm-on-hiding-foreclosure-information-from-buyers/?__lsa=56d3-4a73

    The only thing I can think of is how glad I am of not being a homeowner. What a manipulated, deceitful, bullshit RE market we have. Even the effing government lies to keep it as artificial as it can be. Nothing good can come out of that. We’re on our own.

    • Can you imagine if Zillow/Redfin could operate in Canada?

      • By the time the spec mania has completely deflated, and committees have been set up to find out ‘why’ (?!!) this happened, and how ‘we’ can ensure it doesn’t happen again, I wouldn’t be at all surprised to see serious suggestions and even a move towards:
        1. a Zillow like equivalent in Canada
        2. the CMHC (or whatever the future equivalent is) being forced to be transparent about foreclosures and other matters.

      • The CMHC has no right to exist, not now and moreover in a post bubble future.

      • [#Oooopsie]

        Speaking of the merits of full disclosure…

        BREAKING NEWS: The Premier’s Deputy Chief of Staff has just resigned… something to do with EthnicVotes… Could this be why?…

        [CBC] – Chinese community outraged at Liberal ‘ethnic vote’ plan

        …”In the leaked document, you can see the wording in it, how they want to manipulate our community — not just our community, but the entire multicultural community,” Chu said at a news conference Friday.

        “It’s full of disrespect.”…

        http://tinyurl.com/a9n2g2t

        [NoteToEd: Oh well, there’s always EcoDensity®/LaneWayHousing and LNG, I suppose… As for the DeputyChiefOfStaff who fell on her sword for the ‘GreaterGood’ – for once, I’d wager on a ‘SoftLanding’.]

  8. Seeking knowledge...

    The Vancouver mayor knows that if he doesn’t do anything, property taxes and building permits will drop substantially while on his watch. This is just a way to keep the money flowing until he steps out of the limelight. He’s letting the next poor sap make the budget cuts while he is painted as the one who made Vancouver the BPOE with the bike lanes, green initiatives, and high density housing.

    • You’re right about our mayor pandering to his special interest groups but I did note an interesting story evolving on the steps of city hall… the Toigo family (owners of the White Spot chain) own a piece of property at 12th & Cambie and have been trying to get city permission to build a residential tower. The city is balking because they don’t want the northern view of city hall blocked by a “monolith”. The Toigos are on their second kick at the can next week in an attempt to have their proposal accepted. Funny how densification is just fine for the rest of the city but not so good for the mayor and his cronies.

  9. You should never wait, now is the right time (according to this senior professional lol).

  10. it took a few years for people to realize Japan wasn’t coming back. In fact, I bought Japanese mutual funds in 1991/92, the stupidest investment i ever made. Don’t put it past people to continue buying Canada RE

  11. The americans couldn’t find it within their sanity to come up with a deal to stave off sequestration. Get ready for recession pt 2, where the BoC will further reduce interest rates to wait nevermind

  12. Carioca canuck

    I train automotive dealership employees how to use my employer’s software for a living…………….yesterday, one of my clients was a woman who used to be a realtor for 6 years on Vancouver Island……….and last week I had another ex-realtor on Vancouver Island with 20 years of experience. Both left the RE industry recenetly, and just entered the car businss.

    That’s about 4 of them I have encountered in the last month alone.

    • Just what we all needed. Ex-realtors hawking used cars. Didn’t I say they would all end up in the repo business one day. This is how they get there in a round about kind of way.

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