Mayor Robertson Selling His House

912 W 23rd Avenue, Vancouver
2,922 sqft SFH
Asking price $1,950,000
Assessed (reportedly) $1,600,000

– for the whole story, see ‘Guess who’s trying to cash out of the real estate market in Vancouver?’, at ‘Whispers from the Village on the Edge of the Rainforest’, 9 July 2013
[hat-tip Burnabonian]

“I was really fortunate with how things worked out for me in real estate. I definitely took chances when I bought a few presale condos to flip back in 2004, but I was adamant at the time that there was room to grow for Vancouver.”

“I have moved on from residential and have been working in the commercial RE industry for over 8 years now. A lot less ups and downs and I get to deal more with businesses rather than individuals who tend to be less professional. Both sides of the industry have their pros and cons, but I love working with commercial brokers and tenants. I work for a large developer in town looking after their commercial portfolio in Western Canada.

A little about what has happened [to me]:

– Sold 2 of my condos that I bought pre-sale in 2004 in downtown Vancouver just by Rogers Arena. One sold in 2010 and the other in 2012. Both were 2 bedrooms that were purchased for $280K give or take and sold around $560K each. One I lived in with my family and rented out the other.
– Used the profits to upgrade to a spectacular 3-bedroom, 1600 square feet “new” condo in Fairview
– Have 2 lovely young kids
– Love condo living close to downtown with my family for the proximity to work downtown, restaurants everywhere and just the energy that the burbs don’t offer

I was really fortunate with how things worked out for me in real estate. I definitely took chances when I bought a few presale condos to flip back in 2004, but I was adamant at the time that there was room to grow for Vancouver. I still think it is one of the best places to live in the world and I am gladly paying for it by choosing to live close to downtown. I travel a lot internationally and every time my plane lands at YVR, I feel so blessed to be back home to such a beautiful place.

I took some chances, had some luck and stayed away from the extreme negative and positive views of posters on [RE Talks forum]. I would put myself in the Bull camp always, but that is only because I think you need to be ready to seek out deals – and this requires a pro-active mindset. One should never buy what they cannot afford (everyone agrees on this), but you should always be ready to buy a home when you need one (starting a new family, for example). Most of the original bears on [RE Talks] are gone, but I must say, it is funny to look back and see how wrong on the timing they were.”

– Property_Magnate at RET 24 Jun 2013 [cited by ‘WhipMaster’ (aka Johnny Horton, etc, etc) as an example of a story from a “winner” in Vancouver RE, VREAA 25 Jun 2013 7:14pm]

Nobody is disagreeing with the idea that one could have done well in Vancouver RE by buying in 2004.
And, please, nobody misinterpret the above anecdote as an endorsement for buying “a few” presale condos in Vancouver, least of all in 2013.
– vreaa

‘Canadians obsessed with real estate, poll suggests’ – “Just as many people reported talking about real estate on a regular basis as they did about hockey.”

Besotted.

“Most Canadians think about real estate on a regular basis, and a good number of them are obsessed with it, an online survey suggests.

That’s the takeaway of a recent poll by online home selling firm Zoocasa, where the real estate company commissioned Abacus Data to poll 1,000 Canadians online between June 3 and 6, 2013.

The poll found that 84 per cent of respondents across the country think about real estate on a regular basis, and 85 per cent have gone as far as shopping online for a new home in the past year.

“In ever increasing ways, Canadians seem almost obsessed with real estate. And it’s understandable,” Zoocasa president Carolyn Beatty said in a release. “For the vast majority of Canadians, their home is the largest purchase they will make in their lifetime.”

Nationally, more than a third — 34 per cent — described either themselves or a loved one as obsessed with real estate. In the Greater Toronto Area, which has the second-highest average home price in the country after Vancouver, the percentage of people who identify themselves as being obsessed jumps to 47 per cent, the highest in the country.

Zoocasa notes that the survey took place during the Stanley Cup Playoffs, and just as many people reported talking about real estate on a regular basis as they did about hockey.

Some 28 per cent of respondents say they have gone to an open house at some point in the past 12 months.”

– from ‘Canadians obsessed with real estate, poll suggests’, CBC, 20 Jun 2013 [hat-tip elchavo]
—

Not me!
I can quit whenever I want!
– vreaa

Living In Van-Couver – “There’s no way they can afford a mortgage in Vancouver. I know one emergency first-responder who lived in his van to save enough money to afford a downpayment.”

Mathew Arthur, a Vancouver-based designer, checks email in his converted 1987 Dodge Ram Prospector.

“Mathew Arthur ditched a renovated laneway house he shared with his two brothers to live in a cheap 45-sq. foot 1987 Dodge Ram Prospector for the next year. He’s part of the growing “van dweller” community in Vancouver, where sky-high housing costs have forced many to get creative.
The contemporary nomadic community describes itself as an “island of misfits, a family, a tribe” on a popular Yahoo! forum. Some have embraced mobile living out of necessity, while others like Arthur are doing it to challenge themselves.
“I had a good design job, but in no way found engagement in my life,” Arthur told The Huffington Post B.C.
The 30-year-old wanted to challenge his notion of comfort by engineering a personalized living space that would test his creativity.
“I iterated through ideas about living in a tent, a shipping container or a commercial space with no household amenities until I arrived at the idea of living in a van,” said Arthur in a blog he’s keeping to document his year-long nomadic venture.
In early December, Arthur bought a $500 used van off Craigslist from a farmer in the B.C. Interior. With the help of his family, the vehicle was gutted, cleaned of mice feces and rebuilt with $400 worth of furniture, wiring and insulation.
In the small space, the van has four main areas: the kitchen and sink, work space, storage and bed. Without a personal toilet or shower, he has a daily excuse to go to yoga for exercise and to use the studio’s facilities.
The difference has shown in his savings: his monthly rent has reduced from $850 to a $200 parking fee plus $50 for hydro.
The tiny living space has forced Arthur to be mindful of his use of resources; he’s producing less garbage by preparing simple, fresh foods, and is using less water and electricity overall.
“The one thing that I took for granted was the freedom to move room to room,” said Arthur of living in a house. However, the shift from a 700-sq. foot house to a van parked in an East Vancouver alley has its quirks.
More people go through the alleyway than he anticipated. He’s befriended a middle-aged woman named Edie who periodically strolls through collecting bottles from the neighbourhood’s recycle bins. The occasional drunk lovers’ midnight fight is also easily audible through the van’s walls.”
– from ‘Mobile Living: Vancouver Van Dwellers’ Nomadic Lives’, Zi-Ann Lum, Huffington Post BC, 27 Jan 2013. All photos Mathew Arthur.

“They’re a merry band of vagabonds, living in their vehicles not so much because they can’t afford rent or a mortgage — though that’s part of it — but to cast off the chains of mainstream consumer living.
They’re van-dwellers and RV gypsies, free as birds and believing that your possessions in the end wind up possessing you.
“I had all of this stuff,” said 30-year-old Shawn Linley, sitting in his Econoline RV in North Vancouver. “Stuff, stuff, stuff, so much stuff.
“I don’t want a gas-powered weed-eater any more. I don’t want a huge flatscreen TV. I don’t need ’em.
“I’m never going to live in an apartment again or buy another house.”
Linley, like many vehicle-dwellers in B.C., is a journeyman tradesman. There are no official numbers of how many people live in their vehicles in Metro Vancouver, but it’s probably more than people think.
There are little mobile squatters’ camps all over the Lower Mainland — beside treed North Shore creeks, in industrial zones, beside East Van and Burnaby parks and SkyTrain stations, and along the beaches of Kitsilano and Point Grey
It is a sub-culture that is by definition discreet and shadowy, moving every so often to avoid drawing attention.
“Basically, they’re untraceable, people who are good at flying under the radar,” said Judy Graves, advocate for the homeless with the City of Vancouver.
For the most part they have jobs, she said, at least seasonally.
“And some people just do not believe in paying rent, and there’s no way they can afford a mortgage in Vancouver,” Graves said. “In fact, I know one emergency first-responder in Vancouver who lived in his van to save enough money to afford a downpayment.”
– from Living in a vehicle confers freedom from ‘stuff’, Gordon McIntyre, The Province, 11 Feb 2013 [hat-tip Aldus Huxtable]

Spot The Speculator #96 – “In 2008, when I was 28 years old, I had saved $70,000, enough for a 20% down payment on a triplex in Toronto. I moved into one unit and the rent from the other two units paid for the mortgage and utilities.”

“I’ve always been very focused in my life. I was born a triplet and knew from an early age my parents wouldn’t be able to pay for many extras, or for postsecondary education for all of us. But I was determined to go to university and to buy a home of my own. So in high school I started working as a waitress for 20 hours a week. During the summers I took as many shifts as possible, often working seven days straight. I was a workaholic and should have cut back because my grades were suffering, but I persevered.”

“I earned enough to pay for tuition by living at home with my parents and commuting to York University. It wasn’t easy. I didn’t have a car so I used buses to make the two-hour journey to York and back each day. At one point I considered buying a car but was shocked when my dad showed me how expensive it was. I kept commuting every day for four years. Believe me, it was really depressing. I would get home every night and it was cold and dark, and I was tired. But I knew I was saving for my big goal of owning an investment property, which kept me going.”

“After graduating with an English degree in 2006, I had no student debt and $20,000 in savings from my waitressing job. Then I got a lucky break-I landed a job as an administrative assistant, paying $32,000 a year in downtown Toronto. In 2008, when I was 28 years old, I had saved $70,000, enough for a 20% down payment on a triplex in Little Italy. I moved into one unit and the rent from the other two units paid for the mortgage and utilities. Last year, I got married and my husband moved into the apartment with me. I’ve never doubted the triplex was one of the best financial decisions I’ve ever made.”

“The key for me was tracking my spending in a journal to see exactly where every penny was going so I knew where I could cut back and add to my savings. Most years I saved 70% of my earned income, which I used to pay for university and for the down payment on the triplex. By living at home a little longer than most people I was able to really beef up my down payment. That’s made me truly independent a lot more quickly than many of my friends who are still mired in debt.”

“Now my goal is to pay off the mortgage on the property as quickly as possible. I’ve done some renos over the years and I’m putting $500 a month extra on my mortgage to pay it off faster. The triplex’s value has also gone up. I bought it for $350,000 and it’s worth $450,000 today.”

– Angie Oliveira, 32, Toronto, as featured in ‘How to become a landlord’, Julie Cazzin, MoneySense 16 Jan 2013 [hat-tip proteus, who sent this link by e-mail and added “Saving 20k waitressing is a heroic accomplishment.”]
—

Angie has an admirably proactive savings habit. Because of this ability, she will quite likely do fine in the long run, but we suspect this will end up occurring despite her RE investment, not because of it.
Yes, she is describing a ‘cash-flow positive’ property (something unavailable in our city in 2008), but we’d like to see more of the math before being sure about that. Also, there is downside risk of increased mortgage rates, downward pressure on rents (TO condo glut), and unexpected expenses.
She bought a few years prior to the peak of a multigenerational bubble in real estate. If property prices drop 33% from the peak, she’ll likely still be able to maintain her ownership, but she will, on paper, have lost her profits and her downpayment. This is something we’d imagine would be particularly painful for her, given the hard work it has taken for her to accumulate her savings gains.
In that regard, it is interesting to note that it took her many years of extreme saving to accumulate $70K, but her RE purchase then rose in value by $100K from 2008 to 2012. In fact, she ‘made’ more on paper in RE than she did in entire income those 4 years, when taxation is taken into account. This is a good example of how RE price rises through the speculative mania have perverted the way in which people consider the relative value of real estate, money, work and saving; and how homes have become financial instruments as much as places of shelter.
– vreaa

Seeking Value In RE… And Other Spheres – “When my PhD is done, I’ll be more than happy to shake the dirt of Vancouver off of my shoes. Pretty much any other city I go to in North America has either a lower cost of living or better job opportunities or both.”

“Most of the new UBC profs I know live in tiny sky boxes, an hour commute out in the suburbs, or are up to their ears in debt. Remember that years of grad school followed by a half-decade of post-docing leaves them with very little savings. Either mortgage up or buy small and/or far out, because you don’t have a damn thing for down payment.
Honestly, when my PhD is done, I’ll be more than happy to shake the dirt of Vancouver off of my shoes. Pretty much any other city I go to in North America has either a lower cost of living or better job opportunities or both. The only way I lose as a trained scientist is by staying in the lower mainland. This is the sentiment amongst pretty much every other grad student I know who doesn’t buy in to the “best place on earth” dogma.
Vancouver has become a place where young people piss away their 20s in pseudoretirement and student debt and a resort town for the pacific rim economic elite and babyboomers who bought property pre-2001.”…
“I’ve seen a few professors trade up in the real estate market after being in Vancouver for several years. This usually was because they were able to buy a place in East Van, Kits, or Dunbar pre-2004 and trade up as the market got over heated in combination with their income plus the spouse’s… I also know of one person who related the market to a E. coli growth curve and pointed out that we’re hitting plateau phase right now as all economic nutrients have been used up and got the hell out at the peak. Maybe luck, maybe real foresight.”
– ‘UBCghettodweller’ at VREAA 17 Jul 2012 8:55am and 2:11pm

“As a highly trained specialist, it usually makes sense to go where your skills are valued and appreciated, and you can be financially rewarded for having those skills. It is difficult to argue that Vancouver abounds in such opportunities for highly trained scientists (there are exceptions, e.g., geologists and forestry-related scientists).”
– ‘Anonymous UBC Professor’ at VREAA 17 Jul 2012 9:39am

“I stuck it out as a postdoc for a few years and then, adios! And I’ll tell you, I’ve never looked back (although I visit from time-to-time… mainly just to remind me why I’m gone).”
– E.G. at VREAA at 17 Jul 2012 4:28pm

“I have a sister-in-law who graduated form UBC with a PhD in BioChem. just a few years ago. She would have happily stayed in Vancouver, actually she would have happily moved anywhere she had to, for a post-doc or tenure-track position. RE was not an issue, simply landing a good job was #1. My understanding is faculty positions are difficult to come by. A good friend of mine with a new doctorate was just offered a position at UPEI and he is extremely happy, again RE not a factor, just getting an offer was the trick. I sometimes wonder if we place too much weight on the significance of Vancouver RE in regards to career, especially in the early years. After all, renting is always a great option, even for professionals. Regardless, my sister-in-law landed at Stanford, and rents.”
– Allen at VREAA 17 Jul 2012 11:14am

“The phenomenon isn’t restricted to Vancouver (albeit, Vancouver’s RE market distortions arguably exacerbate it)…
Here’s a timely piece from NewsWeek’s Joel Kotkin on ‘GenerationScrewed’ that addresses those themes.”
– Nemesis at VREAA 17 Jul 2012 1:20pm

“Perish the thought there are vast expanses of undeveloped land in North America, ripe for the picking. Areas of California, once deserts and groves, turned into some of the most progressive areas on the planet over the past 40 years.
The “generation screwed” needs to figure out other methods of getting what it wants. Muscling in on the previous generation’s territory is likely going to meet with resistance. From that perspective it should be no surprise apartments are becoming smaller.”
– jesse at VREAA 17 Jul 2012 3:24pm
—

Wise people take advantage of resources that are irrationally undervalued, rather than getting in line to compete with the herd for resources that are irrationally overvalued.
– vreaa

“My parents, who bought their place in North Van about 25 years ago, have used Helocs several times to pay for scientology training.”

“My parents have used Helocs several times to pay for scientology training. Yes, they are full on couch jumpers. They bought their place in North Van about 25 years ago.”
– midnight toker at VREAA 17 Jun 2012 2:45pm
—

People have dipped into the RE_ATM for all sorts of things they previously wouldn’t have been able to ‘afford’, increasing their leverage to the RE market as they do so.
This spending will come to an abrupt halt when prices stall and reverse course.
– vreaa

An Ambivalence Of Riches – “Its HARD to leave once you’ve lived in Van. Had I never left Calgary I could have lived there for the rest of my life and been satisfied.”

“My husband and I moved to Vancouver from Calgary 3 years ago. In terms of employment and housing, were not doing so hot out here. So why do we stay and rent a crappy basement suite?…the reason is you think Calgary is nice and green until you move to Van. That’s when you realize how truly cold Calgary winters are and how not-so-green it really is (just some random pine and poplar trees spread out over fields, really). Its HARD to leave once you’ve lived in Van. Had I never left Calgary I could have lived there for the rest of my life and been satisfied (perhaps, happy) and would have never seen the weather and beauty Van has to offer. Now we have to make the difficult decision to go back to Calgary since living in Van has cost us a lot. We have family and friends back home (Calgary) and they’re all in their late 20′s like us, they’re getting great jobs, have money to travel, and are buying up 300,000 houses (not apartments, not townhouses…actual houses with 3 or more bedrooms and a backyard). My advice to anyone is, if you live in Alberta, stay there, don’t TRY Vancouver, it’s very hard to leave once you’re here just because of how beautiful it is.”
– LisaMK at VREAA 3 Jun 2012 1:07pm

Full and satisfying lives can be had in Vancouver and in Calgary… and in hundreds of other places around the globe.
– vreaa

A Little Family Drama – “If you hate your parents but just don’t know how to tell them, get into a real estate deal with them and the rest will follow.”

“Here’s the story of a little family drama a few years back:
A young couple in the family couldn’t afford the prices in Vancouver (how could that happen ?) so the in-laws offered to buy a new home with a largish basement suite to allow the young couple to get some equity going and thus be able to purchase a home on their own. The young couple bought into this idea and they were subsequently put on the mortgage as co-owners and they paid their half of the mortgage for the next 9 years.
After 9 years the young couple had aspirations of their own and 2 children so they went to the in-laws and said “We want our equity out now so we can buy on our own” . Of course, the boomer parents were outraged. “We won’t be giving you ungrateful losers anything, but you may leave at the end of the month so we can get a renter in”.
One lawsuit later, the house is sold and the proceeds divided up. The in-laws no longer speak with the young couple or their grandchildren. The young couple lives in a nice 3 bedroom town house on the fringes of Vancouver and the in-laws still have a mortgage on their new SFH . . . So, if you hate your parents but just don’t know how to tell them, get into a real estate deal with them and the rest will follow.”
– ‘1drs’ at greaterfool.ca 20 May 2012 1:05pm

“There’s a lot of peer pressure to move back home coming from family and friends, who don’t understand why anyone would want to leave the ‘best place on earth’. We feel a subtle undertone that what we’re accomplishing is worth less because we’re not doing it in Vancouver. As ex-Vancouverites born and raised, we can’t help but subconsciously agree.”

“My husband and I are both professionals in our early 30’s (medical and legal) who were born and raised in the suburbs of Vancouver and grew up in comfortable middle-class families. We both moved to Alberta after our undergraduate degrees at SFU, to pursue our respective professions at the University of Alberta (cheaper tuition and better regarded programs than UBC for both of us). After graduation (around 2008), we chose to stay in Alberta for a little longer to save up for a house in Vancouver. We’ve been following the housing market in Vancouver ever since and we read VREAA and Greater Fool every day. Following the market with the dream of someday moving ‘back home’ has become a ritualistic obsession, waiting for the day the market tanks and we can fly back to Vancouver with suitcases of cash. Needless to say, we’re still waiting and watching.

Since we left Vancouver, we have been the ‘outsiders’ in our respective families (both families are located exclusively within the lower mainland), flying home for Christmas and in the summer but missing out on the everyday family gatherings. There’s a lot of peer pressure to move back home coming from family and friends, who don’t understand why anyone would want to leave the ‘best place on earth’. We feel a subtle undertone that what we’re accomplishing is worth less because we’re not doing it in Vancouver. Of course, none of the people judging us have ever lived or worked outside of Vancouver. As ex-Vancouverites born and raised, we’ve had the ‘Vancouver superiority complex’ imbued in us and can’t help but subconsciously agree.

Both of us have held various jobs in Edmonton and have recently relocated to a small town a couple hours out of Edmonton for better career opportunities (i.e. to save up more money to move back home). Funny thing is, we’re actually starting to like it. Growing up, neither of us had thought much of the small-town life, believing small town folk were hicks (Vancouver superiority again). But, friendly people, a 5-minute commute to work, affordable housing, and stable jobs where we can easily make 3-4x what we’d make in Vancouver are awfully tempting. The cost of living here is much lower than Vancouver. There is no PST/HST in Alberta, and gas is about 30c/L cheaper. Housing in our town is fairly priced compared to the median family income. Alberta is also quite a beautiful province full of outdoor recreation opportunities, although it took us a while to appreciate its charms.

Young people in our town have amazing opportunities both to work and start a family. A colleague’s husband bought his first house at 18 (6 years ago), with money he made working in a skilled trades job. (By the way, detached houses under 100k still exist!) Because there is a REAL economy here, based on tangible things like trades, equipment manufacturing, outdoor recreation, etc, there are plentiful jobs available to anybody willing to work. I remember growing up and struggling to find a summer job in high school/university. I wouldn’t say jobs were plentiful growing up in Vancouver.

Sure, we can’t get sushi at 10pm on a Sunday, but going to Edmonton is an easy drive on the weekends to soak up some culture and go shopping. The irony is, in many ways the small town lifestyle is more cultured and wholesome than where we grew up. People take time for real self-actualization: gardening, baking, reading, travel, outdoor recreation, and community involvement. Contrast this with young people in Vancouver who either still live at home into their late 20s, or have moved out into 600k condos while earning 70k a year (if that), and go around driving luxury cars, thinking they’re hot stuff because they “own” a house in Vancouver.

If it weren’t for the family ties we have back home, we would not even be considering moving back. Vancouverites perpetuate the illusion of the ‘best place on earth’ either because they’ve never lived anywhere else and don’t know any better, or to justify a vastly overpriced lifestyle in which a person pays more and gets less than anywhere else in the country. To see the situation as it really is would be heartbreaking for most young people who’ve mortgaged their futures in an attempt to live a similar lifestyle to that they grew up with. Sadly, Vancouver has permanently changed, and it’s not just housing prices. Whether the bubble bursts or not, the social landscape of the city has been irreversibly altered and we’re not sure the ‘new’ Vancouver is a place in which we want our children to grow up.”

– ‘Watching And Waiting’, via e-mail to VREAA, 26 Apr 2012

‘W&W’ generously shares with us her complex, mixed feelings about living in Vancouver (or not).
It is often challenging for young people to make decisions about where to live (family, jobs, lifestyle, ‘social landscape’), and atypically large differences in RE prices add another significant variable. Over the last 5-10 years, the RE variable has become a game-changer for many.
– vreaa

“Recruitment to Vancouver for skilled health professionals is nearly impossible. I’m leaving, too.”

“I work for/with a large health organization in the lower mainland. Here is the bottom line:
Recruitment to Vancouver for skilled health professionals is nearly impossible. For very skilled, technical, health professions, out-of-city recruitment just doesn’t happen. If they don’t already live here, they aren’t coming. They can make more money ($5-$7/hour more, depending on the profession) in Alberta, with housing costs way lower to live in Edmonton or Calgary. For people with families and/or student loans, Vancouver is a non-starter. Our pay here is relatively low compared to other jurisdictions, and our cost of living is enormous. Plus, our employment scene really isn’t that great here for spouses – yes, there are jobs, but the professional ranks here are pretty thin. We don’t build stuff in Vancouver – in fact, I don’t know *what* it is we actually do here!
Yes, Vancouver is a pretty city with water and trees and mountains, but guess what – you can’t eat the scenery and more young families (the ones you want to recruit for the long haul) do the math and say ‘better value elsewhere’.
I’m leaving too – just got back from a weekend in Seattle and my wife and I said “and why do we stay in Vancouver?” We have five university degrees (three Bachelors, two Masters, one PhD in progress – in health sciences and engineering, in case you were wondering) and we can’t wait to pull the pin to move to a place where we can have a house of our own and be around people that do more than just talk about real estate.
As an aside, the bigger problem with real estate in this city is that it has turned the culture into one where everyone wants to be rich, without actually doing anything. Go to a city where people care about actually doing real work, creating value, building things….wow – what a difference in energy! More than anything, that is what Vancouver lacks, and unless that attitude changes, Vancouver will be condemned to also-ran economic status and will continue its status as an economic and cultural backwater.”
– ‘Vancouver in the Rearview’ at VREAA 25 Mar 2012 12:01pm

“Ryan and Laura Cain wanted three children. Despite having great jobs, the surgeon and physiotherapist say they couldn’t afford to stay in Vancouver.”

Announcer1: “The high cost of real estate in this province isn’t just an annoyance anymore, it’s life altering, quite literally” …
Announcer2: “Ryan and Laura Cain always knew that they wanted three children, but the decision to raise a family came with a compromise. Despite having great jobs, the surgeon and physiotherapist say they couldn’t afford to stay in Vancouver.”

Laura Cain: “We’re lucky enough that my husband’s work allowed us to actually move out of Vancouver because the housing was so expensive here and now in Cranbrook and there housing prices (are) much more affordable.”

Dr Ryan Cain: “You know, as a young surgeon starting out here the cost of living is something to consider. In the Kootenays its a little bit different and I’d certainly say you get a lot more for your dollar.”
—

Dr Paul Kershaw, UBC Early Learning Partnership : “You may be making six figures and still be having a mortgage of $600K for 700sqft and then you’re thinking about how do I have a couple of kids on my balcony?”

Announcer: “According to StatsCan, BC has the lowest fertility rate in the country, with more women giving birth over forty than any other province. In Canada they are also having fewer children than in other major Canadian cities.”

Kershaw: “Incomes have stalled for young families… they’ve actually dipped in BC.. and people have to pay for housing prices in BC that has gone up 149%”

– from Global TV News, 21 Mar 2012

[hat-tip Liggsie, Greenhorn, others]

Comment:
The speculative mania in housing is applying pressure on sensible people to leave Vancouver; this is bad for our city.
– vreaa

Video:

Vancouver’s Too Expensive For Entrepreneurs – “Last night during a meeting we realized that of five, only two of us aren’t thinking about leaving the city in the next year or two.”

“Over the past year I began working with a loose group of consultants; there are five of us who work together in complementary ways. We’ve taken steps towards forming a more formal business together, but last night during a meeting realized that of five, only two aren’t thinking about leaving the city in the next year or two. Vancouver’s too expensive to be an entrepreneur and have a family, and we all want other things – like retirement funds, or the ability to travel and take vacations, etc.”
– Absinthe at VREAA 20 Feb 2012 11:37am

“My friend in his early 40’s has basically considered himself retired for the last couple of years due to all this property appreciation.”

“Friend tells me the assessment of his Cambie corridor house has almost quadrupled in value over the last few years – now up to $2 million. The entertaining thing: he’s terrified because he doesn’t know how to pay the property taxes. He may have to get a real job. Basically he’s considered himself retired for the last couple of years due to all this property appreciation (he’s in his early 40s).”
– 604x at vancouvercondo.info 12 Jan 2012 at 8:55pm

Guy stops working in his 40s because of assumed market value of his house. Everybody see why this is so bad? Just one example of the misallocation of resources caused by a speculative mania in housing. – vreaa

“Sounds idyllic, living in a smaller centre with your cashed-in RE wealth but it’s not for anyone who is going to get older and require the care of a health care specialist.”

“My parents left a bigger city for a smaller town in retirement, and took their own parents with them (who were in their 80s). They soon realized that this was a big mistake, because health care in the smaller centres is just not adequate. Sure, you can see a family doctor no problem, but when Grandpa has a heart attack and needs to see a cardiologist regularly, or Grandma is going blind and needs an ophthalmologist, suddenly it becomes clear that driving 2 hours over snowy mountains to get them the care they need is just not feasible. Sounds idyllic, living in a smaller centre with your cashed-in RE wealth but it’s not for anyone who is going to get older and require the care of a health care specialist. And I sure hope my parents leave their smaller city before they get too old (which they are now seriously considering, giving their experiences with my grandparents).”
– pricedoutfornow at VREAA 25 Nov 2011 10:43am

“I guess I will keep watching everything and restrain myself from jumping onto the Vancouver housing bandwagon even though I missed the Shanghainese one.”

“I came to Raincouver three years ago. I was working and living in Shanghai for two years: it’s a nice city, more transparent and efficient than its counterparts in inner part of the country. More foreign investments and more job opportunities. And therefore more attractive for young people, either uneducated, educated or over educated 🙂 At that time I remember the main topics between colleague is either stock market or property price. There is pressure for me to buy apartment before I got married with my wife (we both live and work there) but I didn’t go that route by empty my pocket (not much) and by asking my parents for their help (not much they can do either). At that time, 2006-2007, the price of a 2-3 bed apartment in outer skirts of city will cost 7 to 10 times of my annual income with at least one hour (doesn’t matter you drive or not, could be two if you are not living beside subway) commute to work.
Well, I guess I’m lucky not be part of the housing party in Shanghai, but here in Vancouver, it’s definitely another show going. I’ve been here 3 years now and realized the house price was shooting up. I don’t know the exact price range here in Burnaby but some SFH will easily cost you 1mil. Consider all the fun facts undergoing these days: QE3, bailout, Euro crises, BPOE, HAM, I guess I will keep watching everything and restrain myself from jumping onto the Vancouver housing bandwagon even though I’ve missed a Shanghainese one.”
– GuyInBurnaby at VREAA 30 Nov 2011 12:59pm, commenting on “If I’d paid for it all myself, the price cut wouldn’t bother me as much, but there’s a lifetime of my parent’s blood and sweat in it. Developers’ profits are outrageous. The price they set when the housing market kept going up was far more than the real value.”

RE Price Effects On Grandparents, Daycare, and Working – “My parents thought it would be cool to live near their grandchildren, but that can’t happen at this point in the housing market cycle. Who will look after the kids?”

“It is heartbreakingly cruel, but the retired probably need to learn to love cheaper cities. My parents thought it would be cool to live near their grandchildren, but that can’t happen at this point in the cycle. Unfortunately the cycle may easily take us into their teens, so grandparents and grandchildren alike will miss the most magical people through the most magical period in their lives.
Which begs the question of who will look after the kids while we both work at professional jobs to accumulate enough wealth to de-risk potential home ownership (we can still do that, we’re young). Right now the answer is our awesome home daycare. Her revenue doesn’t cover the cost of her basement-and-garden space, but it’s okay because she bought the place a while ago. She can bleed out her RE gains through years of subsidizing me to go to work. If we lose her we might suddenly have to pay market price for the service. Market price is substandard facilities or care, because they can’t actually charge $2500/month: no one would go to work!”
– Zerodown at VREAA 25 Nov 2011 9:34am

Every word wise. – vreaa

Vancouver – ‘Lazy’? Or Successfully ‘Non-Ambitious’?

Inquiring minds want to know, “What makes Vancouver tick?”.
This interesting exchange recently at RETalks [23 Nov 2011 10:54am onwards]

rofina – “The better we can understand how money flows affect Vancouver, the better we can diagnose the issues. The reality of the matter is that we need to start being proactive in other ways than just hoping for a property crash. … The solutions need to be broader, rather than just focused on asset prices. The most realistic and net beneficial approach is one of bringing high paying jobs here.”

jesse1 – “The only competitive advantage Vancouver seems to have is attracting a subset of people who are willing to work for less than other parts of the country.”

rofina – “This is an interesting topic on its own. It has always puzzled me why Vancouver attracts lazy, non ambitious people. With how expensive it is, and how little nightlife there is you would reckon its not the ideal spot for a lifetime underachiever. Its a bit of conundrum in its own right.”

jesse1 – “In my view it’s not necessarily laziness, it’s a lack of business drive. A friend of mine who worked 10 years in Silicon Valley opined at how unsophisticated the business development climate is in general.”

kramster – “Non ambitious and lazy are not synonymous. Well, non ambitious when it comes to slaving for the man anyway.
Take me for example. I have to do a career development review every year. Each year I put that I don’t want to expand my responsibilities, I don’t want to move up the ladder, I just like it where I am. Because to move up would require me to go on Salary, which means the 200 hours of overtime I work each year would not get banked into time off that I can use to do the thing in life that so many people don’t. The part of your life where you’re actually having one. Not to be confused with the life where people get up and go to work with big ambitions to work harder, make more money, get divorced, get fat, lose touch with their kids, retire, get bored and go back to work and then die of heart disease. It’s an epedemic so widespread people mistake it for being the opposite of lazy. My ambitions exclude those things.
So to counter the lazy argument, and to shed some light on why it may seem that such a subset of society has taken up home here, consider the following. This season I rode my mountain bike 134 days. I went skiing 30 times and ski touring a number of times. What I did not do is go to the doctor, take medication, get sick, miss out on my family, lose touch with my friends, suffer from anxiety, watch my weight, buy something because it made me feel better or make me cool, scream at a stranger in traffic, eat emotionally or get depressed. Before I moved to this part of the world, I lived in a place that oozed all of the above and it was very hard to meet people that didn’t ask what you did for a living before they asked what you did for fun. Here, there are a much greater ratio of people that I can relate to, and they have moved here for the same reasons. To work less and play more. Lazy? You tell me if having a resting heart rate of less then 50 is a sign of laziness, or the product of putting your ambitions in the right places. Sometimes we need a good night’s sleep before we climb a mountain, hence the quiet nightlife compared to places with nothing better to do.”

—

Question for readers:
Is it possible to have a sustainable, self-sufficient society where everyone lives kramster’s lifestyle?
– vreaa

Seller Epiphany – “I sold and have $2M in the bank. My original plan was to wait until prices settled before buying a knockdown and building again. But a feeling has come over me I thought I could never have: I am beginning to hate Vancouver.”

Alex sold his house two months ago for $2.5 million. The buyers were Chinese, from Mainland China. “What else?” he asks. After all, this was West Vancouver. “They wanted our furniture too. We are now renting a furnished house. I have $2,000,000 cash in my account.”
“My original plan was to wait until prices settled before buying a knockdown and building again. But for the last two weeks a feeling has come over me I thought I could never have. Something snapped. I am beginning to hate Vancouver. I use to defend Vancouver to death against the East. Yes, I made lot of money here. But Vancouver is beginning to disgust me. The arrogant, snooty belief that nothing can go wrong here. The multiple offers for homes. The fact there is no industry or decent paying jobs here except if you are a Real Estate agent who drives around in a Porsche and advertises on billboards like a fashion model or actor.”
“Meanwhile we continue to build higher and higher on the North Shore mountains destroying the environment. The Governments have prostituted themselves to the highest bidder, selling citizenship for money and changing the nature of our neighbourhoods. This is not a healthy change. Marine Drive has become gridlocked. Disgusting monster homes with huge retaining walls being built. Everything has become too expensive here and beyond logic.”
– Alex in West Vancouver as relayed by Garth Turner at greaterfool.ca 9 Nov 2011

The interesting thing is that Alex has probably had these thoughts brewing for years. They have now crystalized with the sale of his house. The emotional attachment to the hopeful bullish position has departed, so the thoughts rise up, and become conscious and articulated.
There exists a super-saturated solution of these thoughts in the minds of Vancouver owners. They know that housing is very, very overvalued; they know that Vancouver is a nice city, but limited in all sorts of ways.
What will it take for everybody to suddenly realize the truths they already know? What will the seed be around which the realization rapidly forms?
What will do it is falling prices.
Unlike Alex, very few will be able to sell before they admit these thoughts.
The moment prices pull back substantially, RE will look different.
Owners will realize what they already know: that their $1.1M SFH or $400K condo are very modest structures, very overvalued, with lots of downside risk.
This realization will bring sellers to market as they attempt to realize their fantasized paper gains.
Prices will drop further; price drops will beget price drops.
The irrational strength on the way up will become irrational weakness on the way down.
This is how markets work, how speculative manias unwind.
– vreaa

“In the late 60s and early 70s my parents and their siblings all moved from Vancouver to South of the Fraser to have families. This has never been an affordable place to raise a family.”

“My parents were both born and raised in Vancouver as were their siblings. In the late 60s and early 70s they all moved from Vancouver to South of the Fraser to have families. This was not because they wanted to leave Vancouver but because they couldn’t afford to stay and buy a place. Vancouver has never been an affordable place to raise a family.”
– The Point at vancouvercondo.info 19 Oct 2011 4:49pm

“I was losing sleep over my real estate becoming a capital trap, so we moved; sold in North Vancouver to rent in Kelowna‏.”

“I was losing sleep over the my real estate becoming a capital trap,  and of loss of equity, so we moved; sold in North Vancouver and rented in Kelowna‏. Attached is my calculations about how much money I would lose if we owned in Kelowna vs renting.”

[Monthly payments assume 100% financing at 4.5%, 25 year amortization, used above.]

“Now, further calculations taking into account the effects of Kelowna price drops”:

[**Plus not realizing a decrease in valuations of 10% this year.]
[Rent is paid in these calculations.]

Summary
By renting a house worth $500k instead of buying, we save $68,000 over 1 year. “

– from ‘John’, to VREAA via e-mail, 1 Oct 2011 [Thanks John. -ed.]

“Sold our condo in noisy Yaletown, bought 5 acres in a small town in Eastern Township of Quebec, built a house. Debt load is a small fraction of what we had and lifestyle is way up.”

“Sold our condo in noisy Yaletown, bought 5 acres in a small town in Eastern Township of Quebec, built a house. Debt load is a small fraction of what we had and lifestyle is way up. Every day I think to myself, what are all those people clinging too? Running along the Seawall is the only think I can think of.”
– Ultramam at vancouvercondo.info October 4th, 2011 at 8:15 am

“I just can not wait to move to Alberta in the new year. This is a major loss to BC. My education was funded by BC taxpayers.”

“I am completing my bachelors degree in December. Vancouver does not have entry level graduate trainee programs. This is mainly due to the lack of head offices. All jobs in Vancouver demand experience and will pay peanuts.
Now, Ontario and Alberta have hundreds of graduate entry positions with salaries ranging from $40k-50k. Even if Vancouver were to offer such positions – $40k in Vancouver is below the poverty line. Being a mature student with a family, my income should be able to offer my family a middle class existence. For me apartment/condo living does not cut it. I want my kids playing in the backyard. In other Canadian metropolitan cities one can buy a detached family home for $250k. It might not be all that but as a starter home for a young family that would be great.
I just can not wait to move to Alberta in the new year. This is a major loss to BC since my education was funded by BC taxpayers. As a full time student I had to put my child into daycare and the province subsidized the cost. I even received rent subsidies. I would have loved to serve the Province that enabled me to attain an education but just can not afford to due to the exorbitant cost of living and lack of meaningful career opportunities.
When you are as busy as I am you hardly have time for the skiing and kayaking. During winter times Vancouverites also get to shovel snow off their driveways. Vancouver winters are relatively mild compared to other parts of Canada but Vancouver weather is no California weather.”
– IamOuttaHere at VREAA 26 September 2011 at 11:16 pm

“Depending on what you’re looking for, Vancouver is actually a great city to live in. If you can’t be happy here, forget it and go live somewhere else where you can find your happiness…”

“Depending on what you’re looking for, Vancouver is actually a great city to live in. I don’t come from a 3rd world country, but from western europe. I’m not an aging baby boomer either, I’m 34! I’ve lived in London and Paris for years, so I know what’s living in a world class city is like. I also did my MBA at UBC (that’s the reason why I came here in the first place) and decided to get a job and live here (as did a lot of my fellow classmates). Depending on your chosen field, you can have a decent career here. For sure the opportunities might be more limited, of course you may have to compromise a bit on salary, but would I trade my life today to go back to London or Paris? Hell no! In fact, most of my work involved projects located anywhere in Canada and the US. I could be located pretty much everywhere I want, and I chose to be here.
Is everything perfect in Vancouver? Of course not. I wish so much I could afford a house here, which I can’t despite my 6 figure salary (that’s the reason why I’m on this blog!). But I’m renting a nice condo in a great location in downtown, the same way I was renting in London and Paris. I don’t have any problem with it and I’m patiently waiting (and saving) for prices to come down and be reasonable again, as they certainly will… If they don’t? well, I’ll be sitting on a pile of cash…
Vancouver is not for everyone, and there is no reason to be angry about it. I have a happy life here, and I know lots of people do too. If you can’t be happy here, forget it and go live somewhere else where you can find your happiness…”
—
“I agree this is not a city for everyone and a lot of my friends in Paris or London would have a miserable life living here. But Vancouver works great for me and this is where I want to raise my kid…”
—
“This city/province has a lot to offer, but not everyone enjoys nature and all the activities that come with it. If you prefer museums, a developed music scene and other cultural activities, you will have a pretty miserable life here.”
—
“When I went camping to Garibaldi Lake last month, there were all kinds of people, very young “party” folks, older mature ladies (early 60′s) and parents with young children (I brought my 7 month old baby up there and I was not alone, to my biggest surprised! Talking about family responsibilities…).
I agree with you there are a lot more important things in life than outdoor activities. It’s all about putting your priorities in order. I love great food and I have yet to find a good yet affordable restaurant in Vancouver. I’m still amazed at the costs of fruits and vegetables here, and don’t get me started about the price of cheese here. I would also love to have more music festivals in Vancouver during the summer season.
The same way some people go and spend spring break in Florida or Mexico to get sunny and warm weather, it’s possible to travel from Vancouver to satisfy your cultural (and other) cravings you can’t satisfy in Vancouver… Portland, SF or even NY are not that far away.”

– Makaya at VREAA, 20 Sep 2011 at 12:44pm, 2:25pm, 2:37pm& 4:49pm.

“Vancouver isn’t vibrant or exciting, it’s as dead as a doornail. It isn’t a big city, a world class city or even really a city. It’s a large sleepy tourist village that wishes it matters on the world stage.”

“Downtown Vancouver isn’t vibrant or exciting, it’s as dead as a doornail. I lived in False Creek for 11 years so I know how bland and lame that town is. Dining was also bland and uninspired. Vancouverites to this day are the most arrogant closed off unworldly bunch I have ever met. Far worse than Americans, and I’m in the Southern USA now. What baffles me is that people actually pay to live there. I love living in the USA now, as a dual citizen and we’ll never go back to Canada. I couldn’t justify doing my MBA with zero real career prospects in the Vancouver ‘business district’ (laughable) and then driving up and down Broadway, Granville and Seymour thinking that bubble tea, camping, fishing and the Canucks is actually worth living there for and deluding myself in thinking it’s cosmopolitan. It isn’t a big city, a world class city or even really a city. It’s a large sleepy tourist village that wishes it matters on the world stage and the propaganda there just proves it. I hate Vancouver so much it makes my blood boil and get angry even thinking about it. I went to GNS private school in Victoria BC in Oak Bay. The lot of my old classmates either moved away to live in real cities and have real lives or went to private school and didn’t become successful at all. Canadian schools don’t seem to that much better. It’s what silly Canucks tell themselves to spite and convince themselves to the USA. No more Granville Island, no more skiing, no more small town people. A buddy of mine just become an oral surgeon, he moved to NYC to start his practice, why on earth would he choose NYC over the “best place on earth”? Maybe Vancouver isn’t on the map for educated people. Way to go Vancouver!!! the only people that live there (or want to) are aging baby boomers and the 3rd world… what a city !!!!! And one final comment, I never lived in a city like Vancouver where people pretended to be rich like they do there, what the hell kind of careers do people do there? I never figured that out. I know engineers that bag groceries at save on foods in east van, my realtor was an engineer but realized that he would never have a real career as an engineer there so in 1986 became a realtor. Vancouver is a poor city, with piss poor opportunities. I only stayed to do my MBA and watch my property values rise from when I got in during April of 2001. I cashed out to some foreign fool. I’m so happy I left.”
– Reality Check at VREAA, 18 Sep 2011 7:26am

Wow. We don’t share Reality Check’s vitriol; we at VREAA like many aspects of life in Vancouver, that is why we live here.
At the same time we acknowledge that in many ways, in many quarters (particularly amongst locals), Vancouver is simply over-rated. An unrealistic over-assessment of the city has undoubtably contributed to the speculative mania in housing prices.
– vreaa

“I landed a job in Seattle working for Microsoft and we will be moving there November 1.”

“I have reached my goal, I landed a great job in Seattle working for Microsoft and we will be moving there November 1. Seattle is a much much larger metro than Vancouver and it has more to offer. It is definitely underrated but the world is catching on to it quickly. They are building so many new public works projects that the city will be in constant change over the next 10-15 years. Also housing is considered affordable when compared to Vancouver. The neighbourhoods in Seattle trump any of those compared to Vancouver, they are amazingly clean and very unique with great architecture to boot. I know Vancouver has some nice spots as we live in Kits, but when you compare it to the Seattle equivalents none of our areas really measure up. We will be able to actually afford a nice house in a nice area at around $800,000-$1,000,000 depending on the area. (Maybe I should say this is in a nice middle class to upper middle class area. If we want to live in a nicer area than this then we would be spending $1,250,000-sky is the limit. My point is homes there are going for what feels like half the amount.) We are all just so excited to be a part of such a wonderful place while surrounding ourselves by highly educated people. We think it is a tremendous service to our children to have this experience. We’ll even have sufficient funds to provide our children private schooling if we choose to go that route and the schools there are quite nice. We are doing our part as parents and we are teaching them that putting all your money in a single asset is just plain stupid. Here is why we are not going to miss Vancouver. Yes we like Vancouver but the affordability is out of control and we own our place. The cost/benefit analysis does not add up and there are places on this planet that are just as nice if not nicer that we can live and be happy while being able to save sufficiently for our retirements. We could not be more pleased.”
– Brad in Van, greaterfool.ca, 13 Sep 2011, 10:21am and 10:24am

Ok, ok, Seattle’s nice, we get the picture. 😉
As the comedian said to his toddler son, eager to see his Dad at day’s end: “Okay, okay… you’ve got the job!”
An interesting story for its eagerness, and the quality of emotional relief (which we suspect is partly related to housing issues, but partly related to the new job). – vreaa

Complex Pressures On ‘A Simple Man’ – “My rant about the Asian mentality toward housing. My getting married and having children is, to my parents, the sum total of my goal for existence. I can’t move out of Vancouver even if I want to.”

“I immigrated from Vietnam 14 years ago. We had about the same culture and mentality as Chinese people. My parents are both teachers, and teachers in Vietnam get paid peanuts. That is an issue that angers me, but I will not dwell on that. I just want to tell my perspective as well.

We came to Canada with practically no savings. My mother forbid me to sell the house in Vietnam to get some seed money. She would have a relative of ours stay there instead, because in her mentality, once a family (and by this I mean an extended bloodline of 20-30 people) acquires one or more houses, relinquishing it is unthinkable.

My parents have been working a full time job and a part time job for most of their time here, clocking in 60-70 hours a week average. Meanwhile I have been going through university, maintaining A to A+ grades and getting scholarships, while working 25 hours a week part time. I also work full time + part time (60-70 hours week) whenever not in school. I am not saying this out of arrogance. I burn away my health and lifespan to maintain this sort of productivity, and trust me, I am not happy living like this. And we also skimp our spending and lifestyle to completely unimaginable levels. I will spare you the details. But the alienation from my parents, family, and community in general is a worse alternative.

Our family did this so that we could buy a house in Vancouver as soon as we could so that I can get married. It sounds absurd to you but my getting married and having children is, to my parents, the sum total of my goal for existence. To understand how much weigh my parents place on marriage, children, and house, I will tell you the anecdote that I once sat through a 6-hour long lecture about the need for me to buy a house and court more girls the night before the final round interview for a 6-figure job (needless to say I did not get the job). [My friend] Julian [Lee] is quite civil in his post about this [VREAA, 7 Sept 2011], but his parents are also significantly more easy-going than mine, and so he had not felt the pressure to buy a house as keenly as I do. And yet, my parents are still a long way from the true “Asian fanatical parents” out there.

Neither Julian nor myself belong to the “rich and probably questionable Asian” group, by the way. Both of our families are honest, upper-middle class at best, and just very hard working.

I managed to buy a house in the end of 2005 and rent out half of the house. I have been comfortably paying down the mortgage for the last few years, but the story didn’t end here…

Recently, I told my parents that if I sell this place and buy in Surrey or Port Coquitlam, I would be able to get a much better house and yet pay off all the debts, and actually still have a bit of money to spare. I got a week-long lecture about how the location is far from the city center, dangerous (because it is far from the city center), etc. etc. I will spare you the details because it all doesn’t make much sense to me either. I know that my parents were just frightened with the prospect of giving up a house because it is, in the community and to my aunt’s family who also live in Vancouver, a lost of status.

I also told my parents that I would like to get a job in the US and live there. My parents then gave me another earful on how I am irresponsible and leave my old parents alone to deal with the renters in half of my house.

There you go, my rant about the Asian mentality toward housing. Perhaps a generation later, this mentality may fade. But right now, I can’t move out of Vancouver even if I want to. Julian and I had talked for a long time about the subject of Vancouver RE, and I suspect that he is as stuck in Vancouver as I am.”

(Afterthought: My parents bought their first house in Vietnam the same way, through ridiculous amount of hard work and sacrifice of lifestyle. They did this because, tada, my dad needed to prove to his own family that he could buy a house before marrying my mom.
To me, that attitude is nihilistic and, eh (let’s not insult my parents here) wisdom-challenged, but it is the attitude of a people, a society, immovable regardless of my wish.)

– ‘a simple man’, at VREAA, 9 Sep 2011, 1:18pm

Your’re obviously not that ‘simple’ a man. Many thanks for a story well told.
We trust that your satisfaction with life will increase, and that you’ll be able to eventually enjoy the results of your labours.
We suspect many readers have had experiences with parental ethics that allow us to empathize with you.
We hope that the extreme infatuation with home ownership that you describe in some individuals cools and moderates in the years to come. We’d venture that it is not good for a society to have such beliefs driving housing ownership costs to irrational levels. (Yes, we’re aware that this is a judgment call.)
We suspect these apparently firmly held beliefs will be significantly challenged when prices drop. Nobody, regardless of cultural background, likes assets that lose value. So, just how ‘immovable’ are those beliefs?
What has happened elsewhere in the world to individuals with this housing ethos, when markets have gone through crashes?
Any Vietnamese Dubliners or Chinese Las Vegans out there to share their experiences?
– vreaa

Sidestepping Owning Entirely? – “This bubble kept them out at the precise time they were most eager to jump in, and, by the time it runs its course, they will be thinking about downsizing”

“I had an interesting chat over the campfire with some friends on the weekend. They are in their mid to late 30s, two kids, renters. A few years ago they were looking at buying a house in the suburbs where they live. They were priced out despite having a household income slightly above average. We got to talking about the coming crash and I told them that their dreams of home ownership may come to fruition in the next five or six years. Those houses that were unattainable at 500k+ may drop right back into the 250k zone they were at only 5 years ago. They informed me that they had made their peace with renting and the math on a 25 year mortgage no longer worked for them. They have plans to take their early pension option and travel. Even a 25 year mortgage won’t be paid off in time for them to have the freedom they want.
I’m not sure I totally agree with the logic that simply because you wouldn’t be mortgage free at retirement, means buying isn’t a sensible option at the right price, as they could still realize some gains if they were to buy near the bottom of the bubble cycle. But I thought their energy and attitude towards real estate was telling. They were looking to buy when their kids were 3 and 11. Now the youngest is almost 7 and the oldest can see University on the distant horizon. This bubble kept them out at the precise time they were most eager to jump in and by the time it runs its course, they will be thinking about downsizing, not buying into a money pit. I wonder how many other families will follow a similar path. Seems to me this bubble burst could be amplified by the thousands of prudent families who stayed on he sidelines during their most urgent nest years only to be in a completely different head space when the prices come back into reasonable range.”
– Lexlimo, by e-mail to VREAA, 3 Sep 2011

Even though this family will do fine financially, they have had to compromise through the bubble. In more typical times they would have been able to buy fairly easily at 3.5x income (or thereabout), and the whole subject of RE wouldn’t have taken up unnecessary space in their lives. It’s yet another example of the very significant inconvenience that this bubble has caused.
Perhaps more noteworthy, Lexlimo raises a very interesting idea about how the length of the speculative mania may result in a whole group of prospective buyers essentially ‘side-stepping’ the whole act of buying. It’s a persuasive argument, even though it likely only involves a smallish minority (most families have not been ‘prudent’). Thanks for the post, Lexlimo.
– vreaa

“Her husband is a realtor and she’s pregnant. They have decided to sell their condo and rent until the market comes down.”

“Just got a conversation with a friend of mine. Her husband is a realtor and she’s pregnant. They are looking to move to a bigger place. She said her husband has made the calculations and they have decided to sell their condo and… rent and wait until the market comes down before they’ll buy again!”
– Makaya, at VREAA, 16 Aug 2011 6:36pm

“I know a guy that did that in 2004/05 – I think they are divorced now.”
– Blammo, at VREAA, 16 Aug 2011 7:37pm

The first story is interesting as a possible case of someone close to the market getting wind of coming weakness. Most insiders in bubble markets, however, don’t foresee their collapse.
Blammo’s anecdote is an example of probable social fall-out of the speculative mania. (‘Probable’ because they may have divorced regardless).
Financial stress is often claimed to be the commonest cause of marital break-up. On the other hand, once the housing bubble imploded across the US, there was talk of many couples being forced to stay together because they couldn’t afford to sell the house and separate.
– vreaa

Software Engineer – “What is ultimately driving me out is the price of real estate. Establishing a family home is a higher priority than zip lining in Whistler. Adios BC.”

“Living in Vancouver definitely comes at a price. The salaries for my line of work (software engineering) are definitely 30% higher down in the US and quite possibly 5-10% higher in ON/QC. Given that, I’m not complaining about my salary: what is ultimately driving me out of BC in the next year or two is the price of real estate. When you are working crazy hard and the pay cheque is inadequate to purchase a 1-bedroom $600k nice apartment in Downtown Vancouver then I’m better off in ON buying a 3-bedroom $400k apartment in Downtown Toronto by the water. Sure the view isn’t as nice, and it will get terribly cold and terribly hot, but I never fancied myself the die hard nature lover or weather junkie. For a young family as in my case, establishing a family home is a higher priority than zip lining in Whistler. If majority of Canada’s population can bear the cold, so can I. Hey if I’m making more money and saving more, I can always come on vacation 😉 Ultimately it is a shame for BC as a lot of talented engineers and other professionals I know are leaving for better opportunities else in the country. What good is the weather and view if you can’t afford a decent lifestyle because everything is exorbitantly over priced. My 2cents. Adios BC.”
– Newman at VREAA 12 Aug 2011 10:10am

Sure, we all know Newman could rent, but perhaps that doesn’t equate to “establishing a family home” for him and his young family. – vreaa

Unconventional Offer for Adventurous Home Owner (Vancouver) – “This is the only way you will ever have your pet dinosaur, and the only way I will ever be able to acquire a house in Vancouver.”

Thanks to all readers who have forwarded us the following ad from craigslist:
—-
vancouver, BC craigslist > vancouver > housing > real estate wanted
Unconventional Offer for Adventurous Home Owner (Vancouver)
Date: 2011-06-26, 8:16PM PDT
Reply to: hous-wxb6b-2464265874@craigslist.org

This offer is not for everyone. Those of you who have saved every penny for most of your life to afford a down payment and currently work around the clock to make mortgage payments, I commend you on your efforts, but this post is not for you.

Do you own more than one property? Do you have so many rental homes with no mortgage payments, yet you still feel unfulfilled? Tired of your illegal tenants whining that there are rats in the walls? Have you always wanted your own dinosaur? Now is your chance my friend.

In exchange for one of your properties, I will be your personal dinosaur for one year. I will be at your beck and call, 24 hours a day, wearing a dinosaur costume. The type of dinosaur is negotiable. I can babysit your children (references upon request), scare the mailman, wash dishes, entertain and impress your guests, and much more. (No sex stuff though, sorry.) I will make realistic dinosaur sounds, eat what the particular dinosaur eats and maybe even sit on a fake dinosaur egg, if you are so inclined. I am well educated, fluent in English and French (as well as dinosaur), can play several musical instruments and have no criminal record or outstanding warrants.

All this and more. This is the only way you will ever have your pet dinosaur, and the only way I will ever be able to acquire a house in Vancouver.
Serious offers only please.
Thank you.

PostingID: 2464265874

“Without the Vancouver housing bubble I would have probably spent 3,500 hours working on building my business instead of getting addicted to learning everything I can about finance and economics.”

“I hate to invest in things I don’t understand, so from the age of 18 to 28 I invested in the thing I understood best: myself. My investment involved spending enormous amounts of time studying computer science, marketing, sales, accounting, the basic skills needed to operate a business, and IT management practices. In the first 3 years after finishing university I had spent $25,000 on computer books (crazy, but true). I am sure some RE bull observers would say that I would have been better off buying a house and watching it appreciate in value but they would be wrong because I loved every minute of reading hundreds of books on all things comp sci, IT management and geo politics. End result I have a consulting business where I am tax optimized, and only work 100 days of the year, generating 140K to 200K of revenue per year while being able to live anywhere in the world, so I effectively own my job.

My obsession with finance and economics was born around 2007 when I decided that I would stay in Vancouver. The plan was to live in Vancouver, enjoy the great outdoors, start a family, buy a house, and put what I learned into hitting a home run with a product based business (still swinging for the home run; have not hit it yet).
What really pissed me off is that, even though I had done something totally crazy [in a good way] compared to the average 28 year old (starting out as an immigrant kid with no connections and no money and lots of student debt), I still could not afford to buy a house in Vancouver. At this point I owned some commercial RE in Ontario and had cash accumulating in the bank at a healthy rate. My definition of affordable is minimum 25% ideally over 50% down payment and prices close to fundamentals.
My obsession with finance and economics became an addiction in 2008 as the world economy was blowing up. As of now I estimate that I have spent over 3,500 hours reading finance and economics books, and blogs. For fun, I wrote the CSI exam to see if I had learned enough, and I had no trouble passing it.
After 3,500 hours of research I have learned how to tell if something is a bad investment. The problem is that I have no idea what the [current] good investments are, other than my business, and myself.
I don’t have enough money to afford the seriously good money managers that know what they are doing and I know that the financial advisers at the banks and insurance companies really don’t know anything that I don’t know and will probably not advise me on anything and just sell me some product from their company.
It also seems to me that the markets are fundamentally corrupt and rigged against those who don’t have servers in the stock exchanges, or friends in government, or 100 million +.
Buying a house and putting all my money into it would have freed me from dilemma of figuring out what to do with my savings because I would have worked to pay off the house in 5 to 8 years and get mortgage free.

Now it seems to me that my options for my money are:
A) Put my money into a grossly overvalued housing and lose lots of it – I have worked too hard to let that happen.
B) Put my money into the fundamentally corrupt politically rigged and manipulated public markets.
C) Keep it in cash and let the bank gamble with it and loan it to fools who buy over valued real estate while my taxes “guarantee” the loans (current strategy)
D) Spend it
E) Try my hand at investing and see if I learn anything useful (I like learning and creating things not buying things in hope of selling them for more not really who I am the game just does not appeal to me but maybe I could grow to like it)
F) Invest it in my business and work to increase my revenue to $300K per year while only working 60 days per year. Use increased time and cash flow to search for business model with a personal 25 million + exit where I bootstrap the business from the ground up.
G) Raise money from investors for a business idea that I have developed business models for, then work 60 hour weeks 50 weeks of the year, be in perpetual raise capital mode, baby sit investors, lose my time to learn and grow, and then maybe exit if my interests are still aligned with the interests of the investors by the time an exit opportunity shows up.
H) Keep learning more and see if I learn anything new to change my mind about what my options are.
I) Leave Vancouver and hope that by doing so I don’t end up being obsessed about finance and economics any more.

Now that I have written this rather long post, it seems to be too personal and revealing to post online. But … I share my story for sake of contributing to this blog’s effort to capture the impact of the housing bubble.
So, without the Vancouver housing bubble I would have probably spent 3,500 hours working on building my business instead of getting addicted to learning everything I can about finance and economics.”

– ams at VREAA 5 Aug 2011 4:36pm

—
Thanks, ‘ams’, for sharing your illustrative story so openly. You are by no means alone, as the pressures applied to you through these profoundly abnormal times have been felt by many of us. And the perversion of behaviour you describe has also affected many; each in their own way. Witness the very existence of this blog as just one small example.
A few thoughts:
1. The speculative mania in housing has distracted many from usual productive activity. This is just one of the many ways in which asset bubbles misallocate resources.
2. Despite ‘austerity’ talk internationally and nationally (BOC Governor Mark Carney, etc), economic pressures continue to punish the prudent. ‘ams’ still feels pressure to use his accumulated wealth in an arguably unwise fashion: to speculate, to buy overvalued assets, or to squander it (spend unnecessarily).
3. The speculative mania in Vancouver RE was very clearly underway by 2007, and it was prudent of ‘ams’ to avoid the market then. Price action in the four years since then has punished him psychologically. This is a common phenomenon in bubbles.

Having said all this, if one lives through abnormal times, and if one is naturally drawn to examining one’s own behaviour and the behaviour of those around you, isn’t it normal to be fascinated by these massive social forces, to study them, to document them, to discuss them, to attempt to take advantage of them? Isn’t that a particularly human thing to do under the circumstances? – We are all to a certain extent products of our times. The results of ‘ams’s 3,500 hours spent studying ‘finance and economics’ are perhaps as much an important part of who he is as his business career, or the business that he has built, or any other valued aspect of his life.
– vreaa

Spot The Speculators #47 – $1.6M Tax-Free Profit In 36 Months – “The mere act of overpaying for a house three years ago might have been the smartest financial decision we had ever made.”

Frank O’Hara’s ‘China’s Real Estate Spree in Vancouver’ [1 Jul 2011 edition of BC Business] is a ‘must-read’. This personal anecdote excerpted –

“The note, one of those yellow stickies from 3M, was stuck on the door of our west side Vancouver home late one Tuesday night in March. My wife, Cynthia, found it early Wednesday morning while letting our dog out and called to me upstairs: “Baby, you’ve got to come down here.”
In clear, studied script it read, “I would like to buy your house. I am not a realtor. Please call me.” It listed a local phone number and was signed “David” in block lettering. We looked at each other, both resisting the urge to cackle with glee and dance around the room with our winning lottery ticket. Barely resisting.
Like just about every other homeowner, non-homeowner or potential homeowner in the Lower Mainland, I was aware that property values had soared in recent years. I also knew that this was largely due to overseas buyers – and that “overseas buyers” was a euphemism for several strata of mainland Chinese buyers, some of whom are visiting the region on property-buying trips, some of whom live here already (or have family who do) and some who, so sure are they of the wisdom of investing in Vancouver, buy sight unseen from China. …

Until David’s Post-it note showed up, the figures and stories were just … cocktail-party fare that seemed largely divorced from our day-to-day lives. In theory, people who had purchased their homes long ago were now presented with the opportunity to make exponential gains over their initial purchase price. We were in a less rarefied group since we had bought our house only three years ago: a large lot in what we euphemistically called South Kerrisdale, an area realtors call South West Marine that’s frequently called Marpole by our friends. We had paid what had seemed an ungodly sum: $1,875,000, which was, everybody told us, “definitely” the peak of the market. But now, three years later, the stories circulating around town telling of impossible windfalls made our “peak of the market” purchase look as if we’d merely hit the base camp of Mount Everest. And the sudden presence of a suitor opened our eyes to the reality that the mere act of overpaying for a house three years ago might have been the smartest financial decision we had ever made.
 …

It took almost a day for Cynthia to call David back, a period in which we simultaneously imagined spending our impossible gains and then chastised ourselves for such greedy thoughts. One terrible idea then came into our minds: “David doesn’t actually sound like a Chinese name,” Cynthia mused. The implications of such a thought were dire, especially given that, due to his neat handwriting, he clearly wasn’t a doctor either. Even the most reckless North American buyer would be loath to pony up the sort of money we were angling for. We needed someone with a briefcase full of cash if we were to become the next Greek Church House.
But as soon as David picked up the phone, such concerns were assuaged. He spoke in competent but halting English and explained that he was looking for a house for his parents. While driving around town, he discovered our block and thought he’d skip the realtor fees by coming to us directly. He asked if he could return sometime over the next week to see the house, with parents in tow. We cleared our calendar. …

Cynthia mentioned our idea of selling to Mabel, our tough-as-nails next-door neighbour, who was part of the mid-’90s Hong Kong exodus (she has the peach-coloured box to prove it). Mabel often brings potato salad to our house as a gift and once a year at Christmas takes my wife and daughters out for an extravagant Chinese lunch and tells us the state of things, such as, “The former owner of your house was stupid to plant bamboo in your backyard. I told him so. If it disrupts my pipes, I’ll have to sue you.”
Mabel’s response to our thought of selling was equally measured: “You’re crazy.” In 15 years she had yet to develop a touch for the Canadian art of diplomacy. “The Chinese who are coming now are paying with cash – no mortgages. There will never be a downturn because they will never sell at a loss because they don’t have to. They’d rather just give their house to their kids than sell for a loss.” Her message was clear: anyone expecting a major market correction didn’t understand the psychology of the average Chinese purchaser, for whom concepts such as a change in interest rates were of no concern.
Mabel had us second-guessing ourselves. Were we like a mid-’80s Seattle couple selling our Microsoft shares because they had made such nice gains already? …

David and his parents arrived separately, a week after the note had appeared, to tour the house. His parents showed up first in a black Mercedes S600, a $190,000 bank vault on wheels that throughout the world announces, “I’m rich and powerful, and now that that’s out of the way, let’s get down to business.” The father had dark glasses and a stripe of distinguished grey at the temples, and didn’t give his name upon shaking hands; the mother, Maggie, was more gregarious and, as she was taking English lessons, anxious to practice speaking like a local. David, who turned out to be all of 18, arrived a few minutes later in an electric orange $355,000 Lamborghini Murcielago.
The cars alone were a good sign. They marked David and his parents as belonging to the truly wealthy class of Chinese buyers. …

Cynthia led David and his family on the tour as I tagged along. The parents spoke little or no English, so David helped translate such phrases as “steam room with rain-shower fixture” and “programmable Nuheat floor.” (We decided we didn’t want to tax him too much, so we avoided making him translate knob-and-tube wiring.) The parents politely nodded at Cynthia’s detailed chronicling of every upgrade, no matter how small. Halfway through the tour of our cavernous basement, the father muttered something. “My father is very afraid of this space,” deadpanned David. “He would very much like to return upstairs.” In truth, I think we knew that the house tour was a flight of fancy. All the things we had spent $1.85 million on would soon be rubble, replaced most likely by a nondescript house of no discernible era or architectural style.
We moved upstairs to our living room to discuss business. Contrary to the stereotype of tough, straightforward Chinese negotiators, we actually ambled around the question of the house and a selling price for a good half-hour, a long time with most strangers and an eternity when major language barriers exist. Even a month later, I’m at a loss to recall what we talked about. I do recall the line that broke the ice: “The house down the street sells for $1.8 million,” the father instructed David to tell us. It had been an opening salvo but one I was unprepared for.
He was presumably referring to a house a few blocks away in deplorable condition on a small lot. Worse, that price was not only less than we paid but $750,000 below our woefully out-of-date assessed value from the city. The discrepancies were so great that had I been sitting with anyone else my stock response would have been, “What does that have to do with the price of tea in China?” It quickly became apparent we were at cross purposes, but I couldn’t muster any animus. We were the ones who had equated Chinese with irrational spending. They continued to express serious interest in the property, but although we continued to chat for a few minutes I knew our untethered dreams would not be granted by these particular visitors.
 …

Ideally, this would have been a self-contained parable, a caution to greed, prejudgment and a score of other vices. A three-by-three-inch sticky note had turned us into speculators – and now a four-by-four-foot sign rises out of our newly reseeded lawn. The asking price? $3.5 million – twice what we paid just 36 months prior.
The open house is next Saturday.”

Very smart to be selling.
We’d ourselves, however, attribute the resultant $1.6M windfall to exceptional good fortune rather than ‘the smartest financial decision (they) ever made’.
Frank and Cynthia bought in 2008, after the speculative mania was very clearly established (they admit they ‘overpaid’), and they could very well have lost much or all of their RE equity at any point during the 36 month holding period.
If somebody goes to Vegas, puts $1.6M on Black, gets lucky and doubles their money, is it correct to say that the action was “the smartest financial decision they ever made”? – vreaa

“We moved to the interior of BC years ago. We have friends and family in Vancouver, and we like to visit. But we can’t imagine living there anymore.”

E.G. at VREAA 25 June 2011 at 1:56 pm–
“My family and I moved to the interior of BC years ago, and we aren’t looking back. We have friends and family in Vancouver, and we like to visit. But we can’t imagine living there anymore.
Yes, we get more snow in the interior. And the temperatures are colder for about four months of the year. But during those cold months it’s raining continually in Vancouver. So pick your poison. And during the rest of the year we’re as warm, or warmer. And the sun is out so much of the time in comparison… even when it’s cold.
We can’t imagine trying to buy a house in Vancouver. And we know that if we did both my wife and I would have to work, rather than having the option of one of us home with the kids. And, not only work, but commute a couple of hours a day as well.
So we decided to live in a city where we could have time with our family and time with our community – where we wouldn’t be slaves to our mortgage in terms of our money and our time. And lots of other people here have chosen the same thing. And because of those choices by others and ourselves we can enjoy neighborhoods that are much like south Burnaby – and so many other parts of the Lower Mainland – used to be.
On top of that, people here have well-paying jobs and, with lower mortgages and lower fuel costs, they have the extra money to go to Maui for a couple of weeks in the winter. Or to get that cottage by the lake. Or… well, you get the picture.
Of course, the average Lower Mainlander will read this and say, “well, yes, but we’d have to live in the Interior.”
Yup, you would. Either the Interior or some other part of Canada.”

“The house prices, the sense of the city as a place where the main economic base is the city itself as a spectacle…”

Local civic-life commentator Frances Bula on her blog 22 Jun 2011 –
“I have a feeling that many people who once thought Vancouver was a good place to live are beginning to see it as a good place to visit only — stay a week, visit the sites, and then head back to home. The house prices, the sense of the city as a place where the main economic base is the city itself as a spectacle: those give the sense to some that it’s not really a city to live in any more.
I don’t feel that way myself. I’ve lived in the city proper for more than half my adult life. It feels workable to me, a place with neighborhoods and a sense of civic life. But are those of us who feel that way dying out?”

Quality Of Life Calculations – “They essentially are having 20 years more enjoyment than if they lived in Vancouver.”

gse36 at RE Talks 23 Jun 2011 1:28pm –
“I know 2 people in their 40’s who just retired in Toronto ($1.2M equity in Vancouver home, paid it off, bought $600k in Toronto, plus have investment savings (and will later cash out RRSP savings)). Actively invested.
They chose retirement in Toronto as opposed to working and living in Vancouver. Sure, they could buy a condo in Vancouver, but they wanted a house. Sure, it may not be as beautiful, but there’s something to be said about having 16 hours a day to yourself and spouse (assuming 8 hrs sleep) = 112 hrs a week.
[Compare this with] what they had before: 9 hour work + 1 hr commute each way (*2) + 8 hr sleep = 5 hr left to themselves 5 days w eek. = 25 hours a week + 32 on weekend = 57 hr a week. + all the anxiety and stress from their jobs + occasional overtime, etc.
They have 2x as much free time as before. They are in excellent physical shape, and go travelling a lot (yes, and back to Vancouver too), volunteer a lot. Basically doing all the things they enjoy. Contribute back to society, and help those around them. They felt this was more meaningful than paying the bank interest and paying for a modest house.
Given there’s 20 years to normal retirement age, and they get 2x more time to do what they want than others, then they essentially are having 20 years more enjoyment than if they lived in Vancouver. More importantly, it is while they are still relatively young.”

—
Two working, tax contributing citizens fall off the map because the price of their home hits ‘x’. This is one type of ‘misallocation of resources’ that occurs with speculative manias in RE.
This kind of move makes perfect sense for the couple, provided they do indeed have enough funds for 30+ years of retirement. It should be emphasized that their easy retirement is being funded by another couple taking on the opposite end of the deal: a very large lifetime liability.
This reminds us of a recently suggested strategy: Sell your house in Vancouver, buy 3 or 4 or 5 almost identical properties in the US (depending on city/state), live in one and live off the rental income from the others, retire.
How long can this kind of price differential last?
– vreaa

Heartwarming or Soul Destroying?

Heart of the World at greaterfool.ca 8 Jun 2011 9:31pm – “I was talking to a friend today, after a six months hiatus, and heard a great, amazing and very heartwarming story.
I was told that a woman I know who managed a film industry prop house in Vancouver had put her house on the market at 900 large. The house was really nothing much — near the Metrotown Mall in Burnaby, recently repainted but that was about it; a block away from a gas station in a mish-mash neighbourhood… the heartwarming part of this is that this woman is really lovely as a person, and as I remember her from various business dealings, I can tell you that her income was nothing much, and her work was hard, unrewarding, and she did it very, very well, with no complaints.
Anyway, there was a bidding war on her humble abode, and she and hubby came out of the affray with $1.5 mill. — a true lottery win! It is a good thing when those who work hard, and are kind and helpful to others receive this kind of windfall.
So while the economy at large will lose when prices revert to the mean, there have been, here and there, some good results for deserving people.”

Heartwarming? Perhaps.
Remember, however, that for every individual in this situation who is fortunate enough to ‘cash-out’ there is somebody taking the other side of the deal, and for that party the deal will be… what’s the opposite of ‘Heartwarming’?… ‘Soul Destroying’?
A speculator with a large down-payment or paying cash? Perhaps, and, if so, we’d have little sympathy. But, in our market, the buyers are just as likely to be a youngish family who have inappropriately completely overextended themselves into massive mortgage debt to ‘purchase’ this property, and they now carry very substantial risk that their lives will be ruined over the coming 5 – 10 years by being hopelessly overburdened by that debt.
Net gain/loss for the community?
There are very few real silver linings to speculative manias.
And, it goes without saying that people making more from the sales of their houses than a lifetime of savings, and having home sales described as ‘lottery wins’, are evidence of the fact of that mania.
– vreaa

“Before emigrating to Canada, I used to see pictures of nice locations all across Canada, nice and affordable houses and recreational facilities that made me dream of a better life.”

Crion at vancouvercondo.info May 20th, 2011 at 6:28 pm–
“Before emigrating in Canada, I used to see pictures of nice locations all across Canada, nice and affordable houses and recreational facilities that made me dream of a better life. I told to myself that it would be impossible to be poor and to live and work in a country with only 30 million people and huge resources like no other country on the globe.
Now, 10 years later, two kids, lots of drug/gang related activities around me and higher daily prices on everything, I have a bank owned crappy life just because I bought a crappy house in Vancouver just to have a roof above us. And I’m continuously thinking what to do in order to afford my new “dream life” … maybe work 16 h a day, maybe put together my own little grow up just to make money that I need to survive.
And I’m looking with envy at the cheap and the amazing houses in Florida while dreaming to have my crappy house in Vancouver still standing when I’ll be debt free …. see you everybody in 30 years. This is unfortunately what this country can offer us at this time. Maybe in another generation. And I’m still wondering who’s enjoying all the good things that Canada has to offer to its citizen.”

Five Couples Lost To Vancouver Because Of RE Prices – “In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming.”

Sheesh at vancouvercondo.info May 28th, 2011 at 10:23 am–
“In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming. They are all highly educated professionals and the ridiculous cost of living in Vancouver relative to the professional salaries and opportunities available have them suddenly running for the hills.
I don’t know if it is coincidence or if this is a sign of a larger trend, but I feel like we have all waited a really long time for things to get better here and now, in our 30s to early 40s, we are tired of sitting around waiting for a piece of the pie to come our way.
One couple both have MBAs but have had trouble finding work here that lives up to their potential. A corporate recruiter told them staying in Vancouver will kill their careers; one has already found work in Toronto so we expect both to be gone in a few months.
Another couple, both with Masters degrees, is moving to Edmonton. The husband found a job there and they have just put in an offer on a house. They can buy a beautiful house for grown-ups there for the same monthly costs as renting a dark, dank one-bedroom in the West End.
Another couple have met with an immigration lawyer about moving to the States. They can sell their place here and, with the equity, buy a sweet little house in a trendy neigbourhood in Portland for $300,000.
We also know a Canadian/English couple that were going to move here after living in Japan for many years but, after a real estate tour of each city, chose London, England, as the more affordable option!
The last couple that wants to leave is us! Unfortunately, our jobs are keeping us in Vancouver for now. But we have a young son and just don’t see Vancouver as a place where we can raise a family, save for retirement and have anything left over to buy a place.
All of us, by the way, would pick Vancouver as their first choice. It just seems like the city doesn’t want us. At this rate I really have to wonder what kind of place this will be in five or ten years. Can money launderers, speculators and offshore investors really make Vancouver “The Best Place on Earth?”
There are lots of nice places to live in this world; looks like a lot of us that didn’t get in on the ground floor are setting off to find another one.”

We share this poster’s concerns. Speculative manias in real estate cause misallocation of human capital, and our city is going to be poorer for it. – vreaa

“I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered.”

Brendon J. Wilson at VREAA 24 May 2011 10:33am –
“I returned to Vancouver from living and working in Silicon Valley for four years (I left after my MBA because Vancouver opportunities were lacking at the time). My wife and came back to start a family, and because we had grown tired of the Valley.
I interviewed at one company for a Chief Technology Officer position. When we got around to salary discussions, the employer indicated they would be willing to go as high as 90K. I pointed out that this was the salary I earned ten years ago.

“Oh you can’t compare a Vancouver salary to what you would get in Silicon Valley!”
“I’m not. That’s what I was paid ten years ago…in Vancouver.”
<awkward silence>

Ten years of additional experience, an additional advanced degree, plus international experience in the hotbed of technology in a significant role at a successful startup = no incremental value to a Vancouver firm.
Needless to say, I now work for a firm in Silicon Valley, remote from Vancouver, at close to twice the salary they offered. For those of you wondering – the cost of living in Vancouver is about the same as living in California.
What is wrong with this picture?”

[When you add in considerations such as taxation and cost of accommodation, does California end up being cheaper? – vreaa]

“I moved to Vancouver from Holland 3 years ago, planning to buy a business, house and settle. Last year we moved to the States.”

left already at VREAA 20 May 2011 8:53pm –
“I moved to Vancouver from Holland 3 years ago because my wife’s family lives there and many of my friends and family also.
Planning to buy a business, house and settle.
We had approx 10million CAD in cash. After looking at all possible businesses for sale for two years, we realised that there was really no opportunity to buy smth decent with cap rates higher than 3 to 4% same as what our money was earning on a savings account (most businesses were franchises, restaurants and other retail).
We rented for 2 years thinking that the RE prices will fall to reasonable levels.
It was not so much that we could not afford it but having come by our money the hard way, we realised that there was really not value in paying 1.5 million to live in very ordinary poorly build house. Weather was not so much an issue for us are we are used to rain and we really did not have bad whether the two years we lived there. The summers were beautiful, we liked it so much.
Last year we decided to invest in the States and moved here on an investor E2 visa. We bought an apartment building (42 apartments for 3 million USD) with a cap rate of 6.5%. The same building in Vancouver would cost 6 to 8 million.
And since we are here, I can tell you that once you get used to the San Diego sunshine, you can hardly dream of another place.
We just bought a house four ourself ( 860 000USD) with swimming pool and ocean view, lots of oranges in the garden, they are ripe and sweet now. Unbelievable how far the money goes here compared to Vancouver. Evth is cheaper. Vancouver is a TOTAL RIP OFF anyway you look at it. I will never regret the decision to leave.
Also, having worked for 27 years as an electro-mechanical engineer in Holland and having registered 7 patents during this period, and managed countless projects around the world, I thought I might get a part time consulting job in the industry , mainly to do smth useful and not get bored rather than to make money.
To my surprise no body recognised my credentials, I had to be registered to practice engineering there, and to do that is going back to school, pass all exams again, and once you do that you have to be coached for about 3 to 5 years by another professional engineer, almost mission impossible. I was stunned. It was the same thing for my wife, architect graduated from one of the most prestigious schools in Europe. Impossible to practice here.
Now, when you look at all the architectural junk that Vancouver is filled with, I really don’t know were they get those creative architects / designers…
I am so amused checking from time to time the blogs that helped me so much understand RE craze in vancouver and feel sorry for the people waiting on the sidelines.
I wish you good luck and hope things return to sanity sooner in the rainy city.
My advice:
Don’t let RE prices dictate your life plans, move on to where the sunshine is and life opportunities await. There are very little in Vancouver.”

[We are now satisfied that this anecdote is likely genuine, so we have headlined it. -ed.]

Professional couple; Lived in Vancouver for 4 years; Moved to Calgary to better jobs; “It was ridiculous in Vancouver; we didn’t want to pay the bubble price to buy a tiny shaky box there.”

DWANG at VREAA 17 May 2011 11:25am – “My family lived in Vancouver for around 4 years. We are not the millionaires from China but professional couple. I had a decent job at bank as IT engineer in Vancouver since we arrived 3-4 years ago, but my wife she couldn’t find any chance to work back in her field. She was a physician and has medical doctor’s degree. My family moved from Vancouver to Calgary just within 1 month. I got a higher payed job at Calgary before we moved in. And within 1 week, my wife got a offer at Alberta Children’s hospital as a medical researcher. Now she is happy and waiting for the new job started at the end of this month. Now we could relief a little bit and start enjoying the life. We are planning to shopping around within 1-2 years in Calgary to find a house for my family. Before it was ridiculous in Vancouver and we don’t want to pay the bubble price to buy a tiny shaky box there.”

“The idea of a highly paid surgeon leaving because he can’t afford to live in Vancouver is absurd.” [“No, it isn’t.”]

Pat at VREAA, 17 May 2011 8:11am, writes in response to the anecdote: Doctors Leaving Vancouver – “My friend, a surgeon at Children’s Hospital, said he couldn’t have the life he wanted in Vancouver because of the insane real estate prices here”, 16 Feb 2011 –
“Even though prices are obviously too high in Vancouver, the idea of a highly paid surgeon leaving because he can’t afford to live in Vancouver is absurd.
It says more about that person’s idea of ‘lifestyle’ than anything else. How is it that I can live here very comfortably on a self-employed salary ranging from $35,000/year to $50,000/year with my mature student spouse who earns maybe $15,000 part-time?
It’s ridiculous that someone says they can’t afford Vancouver on, what, $200,000/year. Utter nonsense.”

Pat –
Many thanks for your comment. Arguments similar to the one you make are made regularly and in various forms, so we’ll headline a discussion here.
We don’t find this surgeon’s decision absurd at all.
It is important to realize that, when “prices are obviously too high” in a RE market, they seem so to people at all levels of wealth and income. The surgeon takes a look at Vancouver RE, and realizes that he cannot afford the type of property that he’d expect to be able to live in, given his training and income. In actual fact he likely earns substantially more than you suggest, perhaps over $300K, or $400K, or even more. He could prudently afford a property selling for, say, $1.6M-$1.8M. But, take a look at what he gets for that on the westside at present. Then compare those properties with the houses that surgeons earning similar incomes, living in Washington State, or California, or Hawaii, or New York, or even Ottawa, get to call ‘home’. That’s the point. The surgeon in Vancouver cannot afford to live a lifestyle commensurate with his training and income. So he moves. This is a completely sane decision.
It is inevitable that a speculative mania in real estate should causes such forces to take effect; the misallocation of resources is characteristic of a bubble. In this case, valuable human capital is squandered and lost to our community. Many skilled professionals have made similar decisions, by either leaving or not migrating here to Vancouver in the first place. There have been anecdotes on these pages of business executives and university professors, amongst others, avoiding Vancouver for these reasons. [See the ‘Avoiding Vancouver’ post category for some examples.]
So, yes, it may seem that it is unfair for the surgeon to say that they “can’t afford” Vancouver; but their conclusion and their move is also perfectly sensible. It would be more accurate for him to state: “I can’t afford the kind of home in Vancouver that I can afford in every other North American city.”
This line of thinking is relevant to all Vancouverites. You may think you can ‘afford’ Vancouver, but have you considered what a similar income (or your home’s current market value) would get you elsewhere?
We’re not concerned that this specific force will leave our city deserted. Everybody can’t leave at once. It’ll only take a small percentage trying to cash out for the market to crash.
While the bubble remains in existence, however, it is sorely damaging our community by the many perverse pressures that it applies; having professionals leave town is one of them.
– vreaa

“I am in my late 30’s and, if I wanted to, I could retire today, all because my crack shack on the east side is now worth 5 times what I paid for it 11 years ago.”

“Yes, I could complain about house prices blowing off the roof in Vancouver, but then again I am late 30’s and if I wanted to I could retire today, all because my crack shack on the east side is now worth 5 times what I paid for it 11 years ago. So for that I thank the wave of investors. Cash out and move to costa rica? belize? panama? or how about naniamo? or just wait for the real estate bubble to burst then I can slave away till I am 70 to retire.”
– paul s 17 May 2011 2:24am, in the comment section of the Vancouver Sun article: ‘Chinese Spreading Wealth Make Vancouver Homes Pricier Than NYC’.

“Once my wife finds a suitable job (even one paying significantly less), or goes on maternity leave, we are moving to the Okanagan.”

JRoss at VREAA 13 May 2011 10:00am – “Thankfully my 100k job is portable. Once my wife either finds a suitable job (even if it pays significantly less) or goes on mat leave, whichever comes first, we are heading to the Okanagan. I have a friend who moved his family to Kelowna and commutes to his six-figure job at Powerex. He would rather pay for plane tickets and have his kids live in a decent house in a good neighbourhood and go to a good school. There are many others.”

“I left Vancouver in 2006 with my wife – the high cost / low quality of housing was a big reason. … The RBC lady had said “You guys are the most conservative couple I have met – we’ll lend you $600K, possibly more!” … We were pretty freaked out – not ready to take on that much debt.”

Post YVR at VREAA 13 may 2011 1:39pm – “I left Vancouver in 2006 with my wife – the high cost / low quality of housing was a big reason. We were both newly minted Architects – both working (ironically on high rise condo projects). We got married and rented a nice little one bedroom. We were expecting a son, still had school debt and had been kicked out of a couple rental places due to sales. Sat down with a nice lady from RBC to talk about what we could afford – 350 was our pre-assumed limit. RBC lady said “you guys are the most conservative couple I have met – we’ll send you 600, possibly more!”
We were pretty freaked out – not ready to take on that much debt, looking at crappy little damp garden hovels in our price range east of nowhere…we left the city / country as did most of the talent from our graduating class. Vancouver is an awesome city as a student / single / lifestyle town, not a great family town – at least not for most honest wage earners.
We now have two kids, good jobs, awesome place with yard, good schools, amenities, and oh yeah – sunny warm weather all year long. We left Vancouver – easier than I had thought it would be, and having lived through 4 years of a real estate melt where I live now I can honestly say it saddens me to see the social train wreck Vancouver is heading for.”

The bubble has rewarded the reckless and punished the prudent. Thus far, that is. – vreaa

Sold Vancouver House 800K in 2010; “Wife Is Out Of Patience”; “Social Pressure Is Enormous” To Rebuy; “Nothing makes sense anymore”.

This anecdote extracted from Garth Turner’s headline piece at greaterfool.ca, 1 May 2011 –
“Corey sold a house in Vancouver last year and was sitting on eight hundred grand. In a wretched savings account. Where, he opined, to invest? Corey’s spouse was hot to burn through all that cash, using it as a downpayment on new digs.
On 30 April, Corey wrote the following: “My wife is out of patience. She constantly refers to some friends who were waiting for the correction, then capitulated after tiring of living with the in-laws for a year. They built their new dream home (just moved in) and could likely sell for several hundred thousand more than they built for. Everyone believes it is different here because of the Chinese buyers, and the social pressure is enormous.
Nothing makes sense anymore:
* wages are stagnant,
* a lot of people are highly indebt[ed] and leveraged but do not seem to worry
* economically things don’t make sense to support an escalating housing market, but everyone here drinks the cool-aid they are fed by the MSM
* people are insane – some in our hood are buying and then trying to flip the house within say 6 months for 200,000 – 300,000 profit (with little or no renos).
* Anyone who dares suggest that interest rates are about to rise soon dismiss the idea saying that the impact will be minimal, or that the government will not raise rates with a high dollar etc.
* If I suggest to friends that the housing market is going to correct they look at me as if I have 2 heads
* Some are so confident that nothing will change that they are buying before they have sold, gambling that they will get their price (or more)

. . . I am beginning to doubt . . . and to wonder myself if the Chinese do make things “different here”?”

‘Bob’s Note’ – “I have lived here for 60 years and found it a wonderful area to grow up in. It is now time for me to move.”

Note seen next to a “sold” sign in West Point Grey…
“I have noticed many people stopping to look at the “sold” sign and I feel an explanation is due.
I have lived here for 60 years and found it a wonderful area to grow up in.
We knew every person in the hood and to this day I still have many friends that I grew up with in this area.
Unfortunately, time marches on, and these huge houses have replaced the bungalows that once dominated the block.
I don’t know one person that lives in them, and I’m not sure if I have ever actually seen anyone in them.
To me that is not a neighbourhood.
It is not their fault as I have said times have changed.
It is now time for me to move to a small town on the west side of Vancouver Island.
I hope to regain the warmth and friendship that I once had here.
Here’s hoping.
Bob”

[The above images and transcription posted at vancouvercondo.info by ‘No Money Down’ in early April 2011. Thanks to Nick for bringing the post to our attention.]

“Westside sellers are getting a comparable house on the Eastside, are putting huge sums of dollars in their bank accounts and still drive to work in 12 minutes.”

SethM at RE Talks 7 Mar 2011 10:04pm – “My high school buddy is a west side realtor. His listings are selling to Mainland Chinese. The vendors are longtime Vancouver residents. Guess where they move to when they want to be equidistant to their downtown office? They move to East Van. Mainland Chinese are pushing westside locals to West Van and to East Vancouver. Westside sellers are getting a comparable house on the Eastside, are putting huge sums of dollars in their bank accounts and still drive to work in 12 minutes.”

The majority of people who substantially decrease their RE holdings during a bubble will do fine. -vreaa

Three Strikes; We’re Outta Here – “If you like shoebox living or eighteen renters in your basement, by all means, make Vancouver your home.”

Angie at VREAA 26 February 2011 at 3:09 pm – “After living and working abroad for a few years my husband (Scottish Nationality) and I moved back to Vancouver, my home town to start our family. After 1 year of living here we packed our bags for Ottawa and a decent wage and cost of living average. We bought a house and had 3 kids and lived the good life. We decided to move back to the West Coast to be closer to family and see if maybe things have changed. Instead of getting better things are just getting worse. It is only when you see how life is lived elsewhere that you can appreciate how wrong things are here. Vancouver is my home but there is only so much hype one can take, if you like shoebox living or eighteen renters in your basement by all means make vancouver your home, but after three failed attempts at finding balance in Vancouver I am happy to say I am making the right decision by leaving for good!!!”