Perverse Markets Cause Misallocation Of Efforts – Young 31 yr old Couple; Two Kids; Finances Under Pressure; Considering Moving; Higher Risk Investments Become Priority Over Careers

zzz at vancouvercondo.info March 9th, 2011 at 5:09 am– [in response to a comment “wow, renters must be sitting on a giant pile of money waiting to swoop in and cash in”]
“Given up on that. Age 31, married with two kids under 3. Family finances coming under pressure. Expenses rising steadily, no wage improvement, job change imminent. We could be moving. Savings are a huge buffer but they’re losing value. We’re changing our plan and switching to active investment. Long term investment returns are priority #1, careers are #2, and Canadian real estate is off the radar.
Renting something acceptable is less than 30% of the cost of buying somebody’s fucked up reno here in the Fraser Valley. Buying my current rental with cash would yield under 4%, a poor return for an asset that depreciates. Like it or not, houses are an investment and at these prices they are a poor one. They are also illiquid and the risk is extreme given our obscene levels of mortgage debt and leverage.
No real problems here, but maximum uncertainty. It really shouldn’t be this way, but people here are just house crazy. I’ve got a relative with multiple properties holding out for a return to peak prices in the interior, others nearing retirement and 500k in debt, and a young family with 3 properties. They paid off their residence and then bought two in a year.
So yeah, the market is hot. Buy and hold People are playing monopoly with free debt. Thanks BoC!”

A couple of thoughts:

1. Note how distracting the current environment is to this young couple:
(a) they may move because of the housing market,
(b) they see ‘long term investment returns’ as higher priority than their careers. (It is likely that the ‘fast-and-loose’ milieu, with individuals around them making unnatural gains in the RE markets, is persuading them they have to take on more risk elsewhere.)
This bodes poorly for our community. We would be far better off if couples in this position were happy with affordable accommodation, and if they could concentrate on using their skills and talents to add to their own wealth by being useful in our society. Misallocation of resources, times two.

2. This is, in our humble opinion, a very poor time for a part-time investor to be shifting to ‘active investment’ (unless ‘zzz’ means considering short positions, which would not be a common idea at this juncture). A two year equity bull is about to turn: it is now sucking in the retail investor during a distribution phase. After retail investors took a record amount out of funds in 2010, a record amount of retail money is coming back in 2011 Q1, just in time for the smart money to sell to the man in the street. The little guy is about to get screwed, AGAIN. This could result in a double (and particularly devastating) blow for ‘zzz’ and their family; we would respectfully urge caution (which is the opposite of the urge they are experiencing, namely, to take on more risk for the promise of higher returns).-vreaa

“I’ve calculated it very carefully. It will be well worth the wait (even if it takes 5 years) when I buy that nearly new foreclosed detached home for cash.”

mattymatt at vancouvercondo.info February 24th, 2011 at 9:22 am – “My wife makes the average income of about $52,000 a year and I own a machine shop in Richmond, my take home is about $110,000. In 2008 we thought the market was going to tank, so we sold (“Big mistake”) our paid-off condo in Richmond, banked some of the money and invested the rest. For a 1-1/2 years we rented a top floor of a Vancouver “shit” house in the neighborhood of 20th and Fraser (bigger mistake). It also had a “basement” which was rented out.
LIVING IN VANCOUVER IS NOT GREAT! : Traffic and commuting back to Richmond. Expensive rent for really old and shitty place! Assholes in basement suite…No parking everywhere… and the list goes on and on.
So, as of January, we moved to Queensborough New West and are renting a nice 2 bdr top floor 1300 sqft condo for about the same price as the home in Vancouver. Even better, my Brother in-law is staying with us and pays us a-little rent. We can enjoy our money instead of throw it into high mortgage payments, taxes and (“strata” – cause even with our combined wage and money saved, to buy a “detached house” for 800k + is retarded!).
I’ve calculated it very carefully. It will be well worth the wait (even if it takes 5 years) when I buy that nearly new foreclosed detached home for cash.
The longer Vancouver RE market goes up, the bigger the crash. I can’t believe people (especially first time home buyers) with average incomes are still foolishly buying!”

Twitter Vancouver RE Chat [‘YVRREChat’] – Three Realtors, Four Mortgage Brokers, One Home-Stager, and Three Civilians Discuss The Market

“Gold, Jerry, gold.”
Recorded here for those of us who don’t ‘tweet’, this ‘twitter chat’ between realtors, mortgage brokers, home-stagers, and three regular civilians, 22 Feb 2011, 9am-10am [#YVRREChat]. There were a number of ‘threads’ to the chat stream, and we have done our best to parse the various threads. Our summary/analysis of the discussion follows at the end.

The cast:

Scott Dawson [mortgage broker, moderator]

Leah Bach [realtor]

Christopher W. Earl [realtor, ‘earl of condos’]

Jason Krist [ex-nurse, mortgage broker]

Rossana Wyatt [mortgage broker]

Heather Stewart [homestager]

Teri Conrad [realtor]

Conrad DeJong [mortgage broker; RE investor]

Gary Jones [financial security advisor]

Jonah Lewis [website builder, prospective FTB]

Lynne Robson [web designer, non-owner]

The discussion:

Scott Dawson: Welcome to YVRREChat. Hope everyone’s been having a productive start to the week. I have noticed a definite uptick in business. Today’s topic is an open discussion on the YVR Real Estate market. Does anyone has anything they want to start with?
Lynne Robson: All I know is the market is way out of control…this from a third party perspective.
Leah Bach: I’m really interested in why you feel that way.
Lynne Robson: I just don’t quite get it…I have a cousin in wpg who is an agent…heritage houses sell here for 1 mil, same homes in wpg 300g.
Leah Bach: So, your thought is that it is the price disparity between yvr and wpg (for example)?
Lynne Robson: I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
Scott Dawson: Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
Leah Bach: The drivers of this market are two fold. First time condo buyers (get into the market), and upgraders.
Jonah Lewis: Compare Vancouver to New York, a 300,000 apartment here is bigger and more affordable.
Lynne Robson: I am not going to pay 300g plus for an apartment.
Leah Bach: Of course not, because you don’t see the value. If however, you want land 300g gets you Mission.
Christopher W. Earl: location, location, location.
Scott Dawson: You may not pay $300k but many people do. Like Earl_of_Condos says, location, location.
Lynne Robson: But what is the location? the view? the weather? what makes this “the location”?
Leah Bach: My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
Lynne Robson: The market in Vancouver makes me crazy…I should just be quiet…
Leah Bach: No, I LOVE that you will talk to us about how you feel about the market. Your info is like gold to RE’s.
Lynne Robson: I know I keep saying wpg, but you can still get a very nice home in wpg for 147k.
Christopher W. Earl: Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
Leah Bach: Exactly which is why we see strong immigration in Richmond condos. Scarcity drives prices (less listings/more offers) and people who “get in” the market eventually “move up”.
Jonah Lewis: What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
Lynne Robson: I agree, there is no way to get into the market with that family home.
Leah Bach: AND the fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
Scott Dawson: You’d be surprised. Homes that price [1-1.5M] are going into multiple offers.
Lynne Robson: But what happened to the day when you got married, bought a home and lived in it while your family grew…?
Jason Krist: A lot of people are doing it with a rental suite now.
Leah Bach: ..you can do that in a three bedroom condo in Maple Ridge.
Leah Bach: The whole affordability argument is earning power does not rise in step with housing prices, but those in the market make equity.
Lynne Robson: Back in the day you actually saved for a down payment.
—

Scott Dawson: Your first home is never your dream home it’s a stepping stone.
Leah Bach: Exactly. I tripled my investment in 5 yrs and moved up.
Heather Stewart: Wasn’t that an extreme anomaly, though?
Leah Bach: Which part? the buyer or the return?
Heather Stewart: The return, so quickly. [No specific reply to this point. -ed.]
Lynne Robson: My parents did not buy their first home with the thought that it was a step stone, they bought it because they loved it.
Scott Dawson: Previous generations also settled down at one job for 35 years. Didn’t move as much.
Jason Krist: Homes are like jobs there days, people rarely keep the same one for long right.
Scott Dawson: Exactly! I rarely see a client that’s been employed longer than 3yrs at current job.
—

Christopher W. Earl: Average Vancouver home buyers can afford average Vancouver homes.
Lynne Robson: I don’t want an apartment…I want a house where my kids (if i had them) can play in a yard, or I can plant a real garden.
Jonah Lewis: It’s a question of wanting average or not. I’d rather live somewhere affordable if I could.
—

Leah Bach: I have clients that paid cash for a 750k place (dinks under 35)
Rossana Wyatt: Nice for them!
Gary Jones: Really? How did they amass that much wealth in such a short time?
Leah Bach: One good job (overseas) one well educated, some inheritance, one car, no kids, good investing etc.
—

Teri Conrad: Seems to me I’ve read somewhere that ratio of income to mortgage not far off from parent’s generation here in Van [Nobody responded to this statement. Too ‘facty’. -ed.]
—

Rossana Wyatt [mortgage broker]: hello evry1. We pd 190000 4 our condo at City gate and were lucky 2 get tht when we sold – now worth 400000 😦 [Example of flat market. Ignore. No responses to this either. -ed.]
—

Gary Jones: Is every home an investment or not?
Scott Dawson: I believe so. You have to live somewhere why not pay your mortgage instead of your landlords?
Jason Krist: As someone who has tenants it’s great, I tell clients all the time how much they waste on rent
Gary Jones: All the money savings books suggest renting is cheaper.
Scott Dawson: The first step when thinking of buying is to do a budget. For some it might make sense to rent.
Jason Krist: Renting may be cheaper but it doesn’t mean it’ll get them further ahead
Conrad De Jong: That’s why homeowners are rich and renters are poor; FACT.
Leah Bach: The fact remains, renters are covering somebody’s mortgage.
Conrad De Jong: I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage, you can rent it out
Lynne Robson: As someone not in the industry, I don’t want to have to look at buying a home as only an investment, I want a home
Jonah Lewis: It’s hard to go from a good size rental deal to 500sq of nothing and be house poor though. 1st time buyer.
Leah Bach: The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
Jason Krist: I agree, sacrifice for long term gain. Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?
Scott Dawson: Owners realize this once they’re in the market. Most wish they got in sooner.
Conrad De Jong: I think its worth the sacrifice in the longer term
Rossana Wyatt: Yes, pays off in long run!
Lynne Robson: Do people even save for a down payment now a days?
Jason Krist: They should be saving, problem is they walk into a bank, open a savings acct and feel relieved.
Scott Dawson: People are saving more than you think. Most of my current files are not high ratio.
Lynne Robson: Back in the day you had to save 25% for a down payment…how the hell do you save 25% of a mil…?
Leah Bach: You can always try the “bank of dad”
Christopher W. Earl: Get a REALLY high paying job 😉
Lynne Robson: So 25% of $1mil.. $250,000.. will buy me an ocean front property with a rental in barbados…hummm let’s reconsider..
Jason Krist: 25% was a lot less “back in the day”, now if you get 5-10% as a down payment, get into the market, smart purchase
Leah Bach: You don’t need 25%, mortgage people…where are you? and can you get a work visa in Barbados?
Lynne Robson: lol, actually I can…I have a virtual business, and a husband who is retired…
—

Heather Stewart: Best time to buy is always last year!
Jason Krist: Trying to “time the market” rarely works out for a FTHB
Scott Dawson: You can’t time market & mortgage rates. Buy when you’re ready.
Christopher W. Earl: You should buy where you see value…that fits your budget.
Rossana Wyatt: If u wait too long, never a rt time
—

Scott Dawson: Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors. [Mentioned out of the blue and for no apparent reason. Agreed with repeatedly by realtors. Not sure who the ‘some’ are who are arguing this in the first place. -ed.]
—

Christopher W. Earl: Housing prices always trend towards affordable.
Lynne Robson: Exactly what planet are you living on?
Christopher W. Earl: I didn’t say affordable for whom 🙂
Conrad DeJong: Vancouver hasn’t been affordable for 27 years
Leah Bach: It’s affordable [to renters? -ed.] because renters aren’t paying for the initial deposit, carrying costs, infrstrcture mtnc.
Heather Stewart: I guess when rent is almost unaffordable, coming up w/dnpmt and maintainence can be seen as unaffordable – investment or not
Heather Stewart: Market is what market will bear – it’s just too bad the market is out of reach for so many, now
—

Leah Bach: So, then let’s talk bubble….[..with minutes to go. -ed.]
Scott Dawson: Ohhhhh nooooo for the RE bubble chat we’d need hours.
Heather Stewart: Or days!
Leah Bach: It’s 10 anyway [time to end the chat hour]… bubble chat next week…
Rossana Wyatt: Thx evryone for gr8 chat – gotta run. Have a gr8 day! 🙂
Scott Dawson: Thanks for the chat everyone! Some great discussion today!
Lynne Robson: Sorry if I stepped on anyone’s toes
Christopher W. Earl: It’s important to have a wide range of opinions…otherwise, there is no discussion.
—/end of twitter chat/

——-
Summary/Analysis:
Okay, let’s breakdown the “wide range of opinions” offered in this discussion:

1. Why pay a landlord’s mortgage?:
– You have to live somewhere why not pay your mortgage instead of your landlords?
– I tell clients all the time how much they waste on rent
– Homeowners are rich and renters are poor; FACT.
– The fact remains, renters are covering somebody’s mortgage.
– Rent $1,000/mth = 60K over 5 year period would you rather build your equity or someone else’s?

2. Other people are buying; Therefore there must be some logic to buying:
– You may not pay $300k but many people do.
– Homes that price [1-1.5M] are going into multiple offers.
– I have clients that paid cash for a 750k place

3. Overextend yourself to buy; This is normal; It pays off; Always:
– My first house was $147k at the time, I thought we were going to eat KD for the rest of our life.
– The fact is we all feel a pinch when we get a mortgage, however, our earning power grows over time.
– …earning power does not rise in step with housing prices, but those in the market make equity.
– I tripled my investment in 5 yrs and moved up.
– I encourage people to start somewhere, even if its a 500 sq ft condo, you create leverage
– The secret to getting in is usually sacrifice. Save for the downpayment and buy the best you can afford.
– I agree, sacrifice for long term gain.
– Most wish they got in sooner.
– It’s worth the sacrifice in the longer term
– Pays off in long run!
– If you get 5-10% as a down payment, get into the market, smart purchase
– You don’t need 25% mortgage, people…

4. Accept less than you reasonably expect:
– If however, you want land, 300K gets you Mission.
– ..you can do that in a three bedroom condo in Maple Ridge.
– Your first home is never your dream home, it’s a stepping stone.
– Average Vancouver home buyers can afford average Vancouver homes.

5. Don’t try to time the market; Buy now:
– Trying to “time the market” rarely works out for a FTHB
– You can’t time market & mortgage rates.
– If u wait too long, never a right time
– Vancouver hasn’t been affordable for 27 years

6. Always keep in mind the compulsory RE wisdom:
– location, location, location.
– Vancouver has been rated as ‘most liveable city’ in the world. This has to have effect on pricing.
– Location is demand, first and foremost. Like anything, the more the demand, the higher the price.
– Scarcity drives prices (less listings/more offers)
– Market is what market will bear
– Contrary to belief by some it’s the market that sets housing prices in YVR not Realtors.

7. Ignore counterarguments; Avoid logical consequences of sensible statements/questions:
– Isn’t it an anomaly to triple your investment in 5 years?
– I have no idea how someone can be a 1st time buyer here. With cost of living, and home prices, there is no way an average person with an average income can even think about it…I know I can’t.
– But what is the location? the view? the weather? what makes this “the location”?
– What I find unreasonable is the average cost of a house 1-1.5 million. Who can afford that!?
– All the money savings books suggest renting is cheaper.
– Ohhhhh nooooo for the RE bubble chat we’d need hours. [And we’d have to consider actual facts and arguments! -ed.] – gotta run

8. Silence the dissidents; Or, rather, just keep talking to them until they silence themselves:
– The market in Vancouver makes me crazy…I should just be quiet…
– Sorry if I stepped on anyone’s toes
[Note to Lynne Robson -> Next chat, no need to apologize for your sensible observations. -ed.]

Westside SFHs At Less Than 2% Rental Yield – “I can easily and I mean easily rent a “today’s market price” $2 million dollar home for $3k per month.”

DaMann at vancouvercondo.info February 17th, 2011 at 4:37 pm – “I agree with you full well on living on the westside, I love it here and really wouldn’t want to live anywhere else. I sold my place so I could move back to the westside and rent.
A “land value” house on the westside doesn’t go for $5k a month, not a chance. I could rent many a nice house on the westside for $2500 a month that I would love to own, although they would be old and rough. $3k I could easily and I mean easily rent a “today’s market price” $2 million dollar home. I have lived on the westside for 20 years with the exception of my 3 years of owning, I know the rental market very well.”

“We are in a position to buy a house without a mortgage, but I have no interest in touching this particular RE market, because it is grossly overpriced.”

Canayjun at VREAA 15 Feb 2011 8:27am – “We owned a house from 1987 to 2009. We sold for a good price in 2009. When we bought in 1987 we put 25% down. But today they made it so anyone could buy a house, which on the surface sounds good, but in reality, some people should not buy a house. Specifically those people who can’t afford it, should not buy a house. By enabling people who can’t really afford to buy a house to do just that, they made it so people with actual wealth are shut out.
We sold because our adult children moved out. And we didn’t want or need to live across the street from a school anymore. We lived in that particular area because it was best for our kids. When they moved out it made sense to sell and move to an area that we liked. We are in a position to buy a house without a mortgage, but I have no interest in touching this particular RE market, because it is grossly overpriced. I really don’t care what anyone thinks of renters, good or bad. And the longer we rent the more I like it, outside of some of the weird stuff newbie landlords do, it’s mostly good.”

“How will I ever be able to afford that tear down crack shack on the West Side when I’m competing against overleveraged idiots?”

Manna from heaven at vancouvercondo.info February 9th, 2011 at 9:26 am– [After referencing BC’s 160% debt to disposable income ratio:] “How will I ever be able to afford that tear down crack shack on the West Side when I’m competing against overleveraged idiots? Now, before some cheerleader chimes in and says that I should lower my sights, I’d like to add that I’m an accredited investor (more than $1 million in liquid assets) and routinely make in excess of $200,000 a year. Please don’t think that I’ve shared that information for the purposes of bragging. My financial situation and my inability to purchase a dump clearly illustrates the absolute absurdity of this market and anyone who wishes to defend it.
Tempted to buy some waterfront on the coast and say the hell with it! I could fish, harvest clams, mussels and oysters, and forage for berries. Doesn’t sound too bad.”

Disillusion Row, Numbers 1-12

All of the following  anecdotes are from a single recent thread at vancouvercondo.info. They are archived here as a record of some of the sentiment being expressed at this juncture. Our housing bubble is at the very least profoundly distracting. Worse, it is scaring away human capital and putting our local economy at risk of implosion. -vreaa

1. JordanClark January 24th, 2011 at 3:56 am–
“This market is insane, the longer it goes on the worse off everyone here will be in the long run. The prices just flat out don’t make sense, there is no justification and people need to realize huge debt comes with real risks. People who got in at the right time might be better off but they do so to the detriment of the younger generations, who will be relied on to pick up the economic torch some day. What will happen when they aren’t there or still up to their eye balls in debt? We’ve been waiting for years and have pretty much given up on greater Vancouver. The market here will collapse some day, but that whole process will probably take many more years, people here are extremely stubborn about the eternal value of real estate and will take nothing before reducing prices. My kids start school this year, we need to be in a home with a yard, and stability. The condo life sucks. Luckily I’m a dual citizen so I’m in the process of sponsoring my wife and moving down to Washington State. I wish this was an easier option for more Canadians/Vancouverites because I think it would offer great relief to so many other families. We’ll buy a nice 3-4 year old house, 4-5 bedrooms, 2500+ sqft, nice 8000+ sqft yard, on a nice cul-de-sac within a few blocks of school for maybe $300k. From saving all these years we can put 50-75% down, pay it off in 10-15 years while still making significant retirement contributions. I’ll be able to retire in my 40s. Adios Vancouver.”

2. Vancouverite January 24th, 2011 at 7:03 am–
“Count me among those who have had enough. I was born and raised in Vancouver. I am at the very top of my very high earning profession here, like my husband. We own a SFH on the west side (it is respectable by Vancouver standards but pretty modest by the standards of any other city) and we are almost mortgage-free. While we would like to buy a bigger house since our kids are getting older, we won’t. This bubble is certain to burst sooner or later and we work way too hard to throw our money away competing with buyers who are up to their ears in temporarily cheap debt. We know how long it takes to save $100K. Although our extended families are here, we are actually giving serious thought to moving elsewhere in Canada or even to another country. We could sell our house today and buy a nicer house in a nicer neighborhood mortgage-free, with lots of cash left over for savings. There would be some initial sacrifice professionally, but we’d probably earn more in the long run. Even if we didn’t, we don’t really care if it means a better life for our kids. Which brings me to my biggest concern, Vancouver’s future. There is almost no significant business left here that is not connected to real estate in some way. Why would you bother trying to make a better widget when you could make more money more easily by developing, constructing, or marketing $1m townhouses? Even if you wanted to make a better widget, why would you do it in Vancouver, where it is difficult to attract professional talent because of the exorbitant cost of living? When this real estate bubble collapses, and it will, I think it is going to be disastrous for this city, which has put all its eggs and then some into one basket, and for its people, many of whom depend upon rising home equity for their spending and have forgotten what actual work and business looks like. I think I might like my family to be somewhere else.”

3. LY January 24th, 2011 at 7:12 am –
“I rented for 5 years in Richmond waiting for house prices to correct. Everytime its about to go down, the gov’t will intervene. As long as mortgage terms in Canada are lax and rich immigrant’s money continue to flow in, I don’t see any sizable correction in housing prices especially in bubbly vancouver. I gave up on Vancouver, move to Toronto and bought a house. Adios Vancouver too.”

4. pricedoutfornow January 24th, 2011 at 9:04 am –
“How has RE affected me? Well, for one, I have a whole pile of cash that could potentially be used for a healthy downpayment, if prices were what they were in 2001. If I were to drop that on a downpayment today, it wouldn’t get me very far. Plus the cost of carrying the mortgage would make my living costs go up by over $1000 a month (more when interest rates rise!). For another thing, every family gathering with my SO ends with questions from the inlaws as to why I haven’t bought yet, why am I throwing money away on rent. No matter how often I explain I’m actually SAVING money, they just harp on about how “Real estate always goes up.” Talk about zombies. I do wish I had a dog though, which would be a million times easier if I had a house with a yard. I can’t wait for this bubble to pop.”

5. Vansanity January 24th, 2011 at 9:09 am–
“My inlaws saw that piece on CBC and they called up in a panic, “oh my God prices are going up again, what are you waiting for?” I told them, hey, if you want to buy us a place for $1M I won’t stop you. In other words, put your money where your mouth is, cuz I have, that’s why it’s in the bank.
My wife and I ideally would like to have a place in East Van or Burnaby but we refuse to live “house poor” as some of our friends and family do. I haven’t convinced my wife to move away, but the longer this goes we might eventually take off and move to sunnier pastures. You know the saying the grass is always greener, well when it comes to real estate and money and Vancouver to the rest of the world, it might be true.”

6. VancouverFiveOh January 24th, 2011 at 11:32 am–
“I have been bearish since 2006. I’m a logic and math type and that has served me well in my profession but perhaps not so much when it comes to housing. I could have flipped a bunch of west side homes by now, right?
Count me among those who are seriously considering leaving Vancouver. I was born and raised here but am tired of this city and it’s “best place on earth” attitude. I’m also tired of the rain. Today sucks.”

7. Dan in Calgary January 24th, 2011 at 11:45 am–
“I was born in Vancouver, left and moved back in 1975. I spent more than 30 years of my adult life in Vancouver, leaving for Calgary in 2007. Vancouver’s rain was an irritation to be tolerated as long as the city had charm, class and a friendly, laid-back kind of atmosphere, with a small enough population that one could actually enjoy what Vancouver offers. But that all changed, particularly beginning when the Olympic hype started. Then the rain became intolerable. Today Vancouver is mere hype.”

8. /dev/null January 24th, 2011 at 11:56 am–
[In response to “Let’s poll how many would have said: I wish I bought a property a few years ago.“]
“I almost did but I’m glad I waited. Instead we both moved to part-time work – me to finish my degree and my wife to spend more time with our kids. With a mortgage we couldn’t/wouldn’t have done that. Now we can actually afford a house instead of that condo we were looking at, despite the run-up in prices. So we chose to invest in increasing my employment income (and raising our kids) versus real estate. So far I’m happy with the decision. Don’t assume that bears are just sitting around with their life on hold because they haven’t yet purchased a home.”

9. exWestEnder January 24th, 2011 at 1:46 pm–
“We moved to Paris (France) to see if it could possibly hold a candle to The Best Place on Earth. My partner got a transfer to the Paris office in Sept 2008. We moved in November, and man, we were we ever grateful that, as renters, we did NOT have to sell in that particular RE market. So now we’re enjoying all those French clichés: 7 weeks vacation, job security, cheap wine, amazing food, and a city where Lotsa Stuff Happens. … If our wanderlust fizzles and the Van property market ever returns to earth, we can come back knowing we already have a generous down payment….if we want to buy. On the other hand, when I remember the rain I might opt for putting it towards a farmhouse in the south of France instead….”

10. Patiently Waiting January 24th, 2011 at 1:59 pm–
“I have almost a million reasons to cheer for high real estate prices. They are the dollars my parents house is “worth”. I will inherit the house which my parents own outright. But I remain a bear because I hate what’s happening to this city culturally, feel sad for families who are struggling because of this, regret what this is doing to the economy (and my chances of getting decent work), want to see every real estate agent and mortgage broker humbled in a serious way, and logically know this can’t go on.”

11. painted turtle January 24th, 2011 at 3:05 pm–
“The real estate mania had a great positive influence on our lives. When we moved to Vancouver in 2005, as a 35 year old professional couple with 2 kids, we did not question our future: 1) Find good/secure jobs 2)Buy a house with a yard and be in debt for ever. This was supposed to be the way to happiness. Well… by the time we both had a full time job, house prices were too high. So we looked for a great rental solution (took some time). Now the kids are old enough they do not really need a yard anymore. We realized that since we are renting, we are making more money than needed. We could both put a break on our workloads and spend more time on hobbies we first thought would have to wait for retirement age. We can take care of our health, spend time with our teenage kids, take extended vacations, live a slow life. We also save money, and can look for ethical investments rather than being obsessed with ROI. We are now exploring exciting career moves/education we could have never thought of before. Somehow, it feels like being in my mid 20′s. By the time house prices will go down, our kids will be grown up, and the need for a house will have vanished. Anyway, mobility/freedom is our lifestyle, and I am happy we did not give up on that. So I would like to thank everybody who bought a house in the last six years for preventing us from entering a system we do not believe in, especially since we were about to be lured into making a wrong step. People who confuse wealth for happiness might no understand us, but fortunately, not everybody must have the same philosophy of life.”

12. YLTNboomerang January 24th, 2011 at 6:57 pm–
“I’m born and raised Vancouver and have had the opportunity to live for a few years in Germany/Belgium/Switzerland/US. I’ve been back for about 6 years now and have been a renter since selling in 2007. Does the irrationality make me want to give up and buy? NO WAY! I learned my lesson once already during the dot.com boom when I thought “maybe things are different now and the old style valuations no longer hold?”. Well, the result of that thinking lost me a fair amount on the market. I see the market today (more than ever) as a bubble and thus will never buy here until things come back in line with fundamentals. We’re happy renting and likely will do so when we move to Calgary in two years due to a planned advancement. I’ll keep an eye on Vancouver real estate and who knows, I could maybe even buy a place for retirement in the future if prices normalize.”

—
…and one bystander:

1. Best place on meth January 24th, 2011 at 11:06 am–
“I have no intention of ever buying real estate in Vancouver. I am however enjoying watching this one-industry city commit greed induced suicide. This Ponzi scheme is mere entertainment from my viewpoint.”

Close Reading Of Seller Strategies

YLTNboomerang at vancouvercondo.info January 25th, 2011 at 10:24 pm
“It’s going to be listings like these two neighbors that drives the slide:
1) v858893
2) v860521
The first guy listed at $769/sqft
The neighbor then listed at $760/sqft
(literally, these townhouses are right next to each other and are essentially identical so a great comparison)
In response, the first guy dropped his price by a whopping ~1% to almost match the $/sqft of the 2nd guy a week after the listing came on. It was $761/sqft for the first and $760/sqft for the second.
After a month of no luck (stayed listed over the holidays), the first guy has now dropped his price by another whopping ~1% to $751/sqft.
I’m hoping the second listing drops their price similarly and the back and forth continues. These meager price drops are not enough to motivate a buyer (IMO) and should result in a slow steady decline of this type of unit.
I expect we’ll see this sort of slow downward creep continue where it is slight enough for Bull’s to claim that each move is just noise however the annual impact will be significant and add to the snowball rolling down the hill!”

“He has been infected with this way of thinking from MSM and friends. Hard to blame him as he has seen his house triple in value in 15 years, he is a simple hard working man, somehow always lucky with real estate.”

4SlicesofCheese at VREAA 29 January 2011 at 12:59 am–
“My father tells me buy now price does not matter.
If you don’t like the place move in 2-3 years and it will be worth 60-70k more.
If you cannot pay the mortgage just sell it and buy a cheaper place with the money you made from selling it.
He is not only giving me advice he actually wants to give me 200k for downpayment, even with that and my own I would still not even consider it.
Everytime I visit my parents, first thing he asks me is have I looked at any new houses. I just have to say “Yeah I am going to an open house this weekend”. I tried once to tell him I think there’s a bubble, that did not go well haha I will just stick to my “Yeah I am going to an open house this weekend”

He has been infected with this way of thinking from MSM and friends. Meanwhile not listening to anything his family says, including a nephew that works at Goldman Sachs who called the bubble in the states years ago and says the same thing is going on here now.
Hard to blame him as he has seen his house triple in value in 15 years, he is a simple hard working man, somehow always lucky with real estate.
At the same time a few of my aunts have lost ALOT of money in the past investing but that does not seem to take that into account.”

“The day I embraced the fact that I would be in the Lower Mainland for at least the next several years – and I realized that I was completely fine with the idea that I might rent that whole time – was a GREAT one.”

Royce McCutcheon [at VREAA 20 Jan 2011 11:44am] has some wise advice for those caught on the wrong side of the bubble – “Make a choice NOW. Don’t hedge. Don’t wait till the end of this year. Ask yourself: how much sleep have I lost over this issue? How many fights have I had with my partner? How much stress have I carried with me because of this? How much WORSE will my obsession with this issue be as I consider the implications of having an expanded family?
The day I embraced the fact that I would be in the Lower Mainland for at least the next several years – and I realized that I was completely fine with the idea that I might rent that whole time – was a GREAT one. It removed some seriously pointless baggage. Life can’t be lived waiting for things to happen – and while I truly believe things here are going to correct soon, I can’t tell for certain if we’ll see it start this Spring or a few years out – or if I’m flat out wrong. Do you want to worry about how this issue is going to affect your life for that long? A terrible thought.
So do the pro/con calculations with your partner TODAY, ruminate, and make a CHOICE. Choose to stay for a longer time line (like several years) or choose to move soon and start building your new life ASAP. You don’t have to carve it in stone, but at least put it on the wall with some fairly permanent ink. The funny thing is that there’s a decent chance you’ll be happier either way.
Make a call together and then stick with it.
And as a post-script: nothing says you can’t stay engaged on this issue from an intellectual standpoint. I’ve actually found it to be much more interesting once I stopped considering it so much vis-à-vis my own life.”

Gulf Island Waterfront; 55% Off – “A sharp drop in demand for B.C.’s high-end rural waterfront properties has resulted in substantial price reductions.”

Denman Island; west-facing waterfront restored character house on 1 acre; listed 2007 for $1.5M; sold recently for $665K

From Vancouver Sun 20 Jan 2011 –
“A sharp drop in demand for B.C.’s high-end rural waterfront properties has resulted in price reductions that in some cases are substantial.”
“Rich Albertans and other wealthy buyers who traditionally bought up B.C.’s recreational properties are increasingly looking south to places like Arizona and Nevada, where prices are often much lower following the U.S. real estate meltdown.”
“People are definitely looking south.”

“I can tell she gets tense when I trot out the usual arguments about why it’s STILL a bad time to buy.”

tincup at VREAA 18 Jan 2011 7:43pm – “Much like all the people in the US who vowed they would move to Canada if Bush were elected for a second term, we have not followed through with our plan to move away from Vancouver if things didn’t start correcting by fall 2010. We simply renewed our plan…”if things haven’t turned around by fall 2011.” The difference now though is that due to a growing family we simply can’t stay in our current (cheap) place beyond that, and the S.O. is very anti-renting now due to the eccentricity of our current landlord. I can tell she gets tense when I trot out the usual arguments about why it’s STILL a bad time to buy. It’ll be an eventful 2011 for me, that’s for sure. If/when we buy, it won’t be at the bottom but hopefully it’ll be down enough that I won’t feel like all that patience was wasted. Vancouver really is different in the sense that it is taking forever for this correction to get going.”

Chin up; you are not alone. It’s bloody difficult to live through these times on the wrong side of the bubble. The market is a massive distraction, and it hinders regular folks who are simply trying to get on with their lives. It wastes time and misallocates resources. It causes people to leave or avoid living in our city. Affordable (not necessarily cheap, no one is expecting that) housing (to rent, and, yes, to own) is far, far better for a society. Economically, socially, psychologically. It’s going to take a while to resolve, but it will normalize. The more people that are scared off, the worse the comeuppance. Let’s hope sanity returns soon. -vreaa

UPDATE: tincup at VREAA 20 Jan 2010 1:37pm – “Just to mix things up even more though, yesterday I found out that my very solid, stable job is being relocated. Exactly where is uncertain at this point, but the options (not decided by me) range from pretty nice mountain town to god-aweful northern hole. If they decide on the latter, I’ll be looking for a new job. 2011 will be an interesting and stressful year.
Sure glad I don’t own right now…”

“I just kept thinking: Something is not right here, too much risk, don’t people worry? They seem to think NOTHING is possible, until it’s literally happening.”

This from “just call me anonymous please” via e-mail to VREAA 18 Jan 2011 –
“I was at Metrotown this evening, SALE signs everywhere (retail – a hint at the big picture ?). What is it? Boxing month?!
As a young (23 y/o) Vancouverite, I felt so alone before finding the [bearish RE websites]. I just kept thinking “Something is not right here, too much risk, don’t people worry?”. Everyone I know is sucking on the kool aid, it’s extremely comforting to know I’m not alone in my views. People truly are stupid, it seems they are just not too good at taking guesses at estimating possible outcome scenarios. People are shortsighted, they think NOTHING is possible, until it’s literally happening.”

Yes, we are aware that one can make the argument that the bearish Vancouver RE websites are like a cult, with posters and readers all reinforcing each other’s delusional views of coming RE collapse. But, we consider that argument carefully, weigh it, and discard it. There is far more evidence that the delusions are held by the far larger bullish-owner-speculator cult, who are apparently having to deny far more to maintain their false beliefs. Sample belief: “There is no relationship between income and the price of housing.”  -vreaa

“If somehow this market is special, and ignores fundamentals, and keeps going up, in two years my family and I are outta here!”

YLTNboomerang at vancouvercondo.info January 11th, 2011 at 9:44 am –
“If somehow this market is special, and ignores fundamentals, and keeps going up, in two years my family and I are outta here! I’ve been courted a few times to move to Calgary for significantly higher wages but held off due to extended family being here in Vancouver. Looking into it further, I can get flight passes from AC for $320 per round trip which means: $320 x 3 x 26 = $24,960 gets the three of us back to Vancouver every other weekend and let me say, the raise for moving to Cowtown is much more than $25K!”
and January 11th, 2011 at 1:43 pm–
“My moving to Calgary wouldn’t be acceptance that the market will continue up, it would be a “sick of waiting, move on with life” move. The Vancouver market will crash, hopefully soon as it has gone on too long however if there is some bizarre move that delays the eventual crash beyond the next 2 years I’ll go somewhere else to wait. Furthermore, if there is such a massive crash that the CHMC goes down with it and becomes a burden on the taxpayer…well…I’ll just give up on this country as a whole and move overseas or down south – somewhere that has already been through their re-pricing and is back to recovery.”

“I regret not buying into particular building a few years ago. Should definitely have taken the plunge then. Not out of the race just yet though.”

Fabien at RE Talks 11 Jan 2011 10:21 am – “I regret not buying into particular building a few years ago. The place looked great and the price looked right for an assignment.
Unfortunately I believed, or rather allowed myself to be influenced, by some insanely doom laden BS on [RE Talks website] that was claiming on good authority that 75% – (yes 75%!) weren’t going to complete. Probably wasn’t even 3%, I certainly didn’t see any bargains after the completion.
The place is now one of the hippest places and arguably the most distinctive building for years. The area is also attracting a really eclectic mix of people from all over Canada and the world (particularly Europe it seems, few Aussies too, Taip..?!), also of course including the old traditional trend spots like Yaletown, West End, Robson.
Not out of the race just yet though so I’ll keep a watching brief on that one. Should definitely have taken the plunge then though, instead of spending time on [RE Talks] arguing that people were talking agenda-driven BS!”

“My pleading with my spouse to buy met with nothing but negativity. I am no longer with the lass who put up the road blocks to buy this grand old home.”

eyesthebye at RE Talks, 6 Jan 2011, 6:37pm –
“Real estate regrets, got any? I have a few, but let’s get specific.
I wasn’t ready to buy at the time but I would have jumped all over these two.

Regret #1
1606 East 15th ave
Just off Commercial Drive on the hill at E. 15th ave sat a stunning old arts and crafts. Stained glass, fantastic stonework, incredible view of the north shore and a park right across the road. The house sits on a dead end street to minimize traffic.
Now here’s the good part…it sat on an oversize lot with the vacant portion being a corner lot. Asking price circa 2003 – I believe it was 679K but I could be mistaken.
Fast forward to today. On the previous vacant corner now sits a nicely done heritage style duplex. Assessed value of each duplex is 632K each (or about 800K market value each unit). The old arts and crafts has an assessed at 978K and the home should easily be one of the most valuable in East Vancouver. Conservative value 1.3M
Total of all = 2.9 Million

Regret #2
2316 Gravely
circa 2005 this “fixer upper” was available for 369K. It’s a finely build 1912 arts and crafts close to Commercial Drive.
Amazingly, it sat on the market for many months. My pleading with my spouse to buy the home met with nothing but negativity. When it was finally bought my heart sank.
Fast forward to today. The home was nearly gutted and redone to it’s original splendor. I drive by every now and again to appreciate what might have been. Assessed value is 1,060,000 and market value is likely in the 1.4M range. Yes gang, I am no longer with the lass who put up the road blocks to buy this grand old home.“

Renter Poll – “Where do you rent, how many bedrooms, and how much do you pay?”

Reader ‘ams’ proposed [VREAA 28 Dec 2010 8:12pm] that we headline this question, for the sake of data points and possible discussion. If you’re a renter and would like to participate, please add your info in the comments section.

“Where do you rent, how many bedrooms and how much do you pay?”:

ams‘ own response, to get things rolling –
“Mount Pleasant, 2 Bedroom Condo, hardwood floor, in suite brand new washer, dryer, fridge, stove, and dishwasher. $1570 per month not including utilities.”

[Rough estimate of ‘square footage’ may be as useful as ‘bedrooms’. -ed.]

TPFKAA on Renting – “It was as though ‘renters’ were another species, quite distinct from their human, homeowning neighbours.”

TPFKAA, from comments at VREAA, 22 to 24 Dec 2010:

“Our previous landlord increased rent because he had miscalculated property taxes. Massive assessment forced his payments into greater than rental income, and he tried to ask us to pay voluntarily a 15% increase so the rent would cover the taxes. He raised three years in a row by max allowable until we had had enough. Then he sold for a $400K profit, minus costs.

When we moved in to our current rental three years ago, I brought some raspberry plants (the kids love eating raspberries fresh off the plant) that we had planted, from our previous rental. The neighbour saw me and looked amazed. She said: “oh, I have never known renters[in italics] to put in any money”. the way she said it was as though “renters” were another species, quite distinct from their human, homeowning neighbours. Persistently, these neighbours place their garbage and garden cuttings over on our side of the property line, so as not to sully their beautiful, OWNED garden. (We maintain ours with 30+ hours of tending a month). They also treat the front of our house as their parking spot. Granted, they have been there 17 + years to our 3, but still…. I can’t help thinking that if we weren’t mere “renters” this would happen less.

[Current rental experience] in roughly chronological order:

Crackhead tenant in other suite steals our things the week we moved in, and soon gets evicted, Accuses us of ruining her life, and threatens our child with abduction. Strange men had been visiting her all hours of the day, and the sickly smell of crack smoke coming through the vents caused me to tape bags over all the heater vents. Lucky it was summer. This is an upscale Burnaby neighbourhood with 1m houses all around. She and associates came back to ransack carporch and break in to our car twice more before, like the mice, she disappeared. I sealed up carporch to make into complete garage, landlord donated materials that were already here and paid for the rest. no compensation for stolen property. I lectured landlord on not giving us any notice of his obvious concerns about this tenant, who had moved in two months prior to us.

I notice door is broken from attempted break in, soon after we move in. I fix with wood glue and clamps and screws.

My father in law spends 30+ hours per month (its more like 40+ hrs per week in summer, no exaggeration) landscaping and tending the garden. Landlord pays $50 per month + a couple hundred on materials, which is fair enough by him, no complaints about this behaviour as I guess he could just go back to getting a guy to hit it with a petrol strimmer once a month to whack the weeds down as he used to before us. I am sure it adds something to equity, though; the neighbours are so pleased that they don’t live next to weedy wasteland any more.

Our shower leaked through the floor for three months before the landlord finally came to repair, himself. Leaked again after two weeks, landlord (more accurately his brother, but they are interchangeable) came a month later. It still drips. There is a huge fungus/mold patch in the laundry room wall where the water went, and a hole in the ceiling where he fixed it. The beam holding the ceiling is rotted and green with fungus.

Every few months people knock on the door and tell us that the gutters are overflowing with leaves and totally blocked. Landlord doesn’t care.

Other shower leaks through the tap so barely any flow makes it up to the shower head… landlord promised to come back. asked him four times before giving up. Three years later, still leaks the same way. Father in law just showers in the meager flow.

Tap handles dropped off in other shower. I just bough replacements from home depot. Shower dripped for a year before drip turned into pour. (had long since given up on landlord coming). Had to shut off mains at midnight, open it up and put washer in backwards to stem flow overnight. Next day, mains off, trip to Rona with stem and washer, come back and replace. How lucky is the landlord that I own a 7/8ths socket?? a plumber outcall at midnight is what my wife would have done.

We have mice. I bought traps and battled them for a year, killed around 35. mice disappeared. came back this winter. I bought more traps. landlord no intention of getting pest control. Still spend hours each week trying to catch one. landlord paid for traps.

Deck stairs rotted and last two steps collapsed. We step down gingerly. One year already.

Oven part of gas stove failed. Repairman said 420 in parts to repair. Landlord told us he did not want to pay for a gas range, we tell him we prefer gas. He planned to buy cheapest electric replacement he could find ($340). waited several days, then, last week he tells me he was too busy, so maybe next week? I said wife wants to bake for christmas. He says ok, will you come and help me carry one from other rental property. I donate 4 hours of my time. We carry stove here, carry old one out. New stove doesn’t fit. We have to move all food out of kitchen, tape up cupboards, cover everything with sheets so he can cut the countertop.

After all this, and several other repairs I can’t remember, I blow my fuse finally and ask him to reduce the rent by $25 a month (off $1800, or $2600 including other suite). He initially thinks I have asked him for a one-off payment of $25 and agrees readily. Once the confusion is resolved he gets angry and thinks I am blackmailing him. we have an argument for about an hour before he agrees to try it; in return I will maintain the house to whatever extent I can.

On the flip side, he doesn’t bother us much with inspections or busybody nosiness… that’s a good feature. He is a nice guy, but I can’t stand his save-every-cent-I-can attitude. I believe he is either ignorant (unlikely) or just anticipates land value only, tear down and rebuild, so won’t invest anything in maintenance if he can avoid it. He tells me that I am the first tenant that complained about having to fix stuff ourselves. He says that his other tenants are very happy to just hand him receipts for “whatever needs to be fixed that they fix”. Of course, I am happy to save himself and myself some money too, if I can take care of the repair myself, but I told him it’s only fair he share the savings. I suppose we could pressure him to fix stuff, but he could just raise the rent by maximum allowed every year as our previous landlord did, but then we will be forced to leave. He has increased it once by the maximum in three years, so keeping pace with inflation.”

[cited in ‘Renters’ side-bar]

TPFKAA – “Like many people I have been trying to save with my wife for the past four years, with the end goal of buying a house”

Just three or four short days ago ‘anonymous’, the poster now known as ‘The Poster Formerly Known As Anonymous’ (‘TPFKAA’), started treating us to anecdotes in the VREAA comment sections. We’ve already headlined one of their composite anecdotes [Spot The Speculators #22; 23 Dec 2010], and will headline others in the near future. And there will be even more to follow, we hope.
Here’s TPFKAA’s own story, edited and compiled from various posts, 22 to 24 Dec 2010, at VREAA:

“I have been a blog reader for the past few weeks – it has been eye-opening. I have since been collecting my own anecdotes. I have “vectored” in to this site to share my experiences, as limited as they are. I felt it my duty to share with others as they have generously shared – I owe a debt of enlightenment to the many who bothered to post real stories from their lives, in keeping with the spirit of this forum. I (have gone) a little evangelical on the postings volume, I must admit, and for this I apologise. I had a lot of anecdotes built up over the past month that I felt would be of interest. [No need for apologies, the anecdotes are appreciated. -ed.]

Like many people I have been trying to save with my wife for the past four years, with the end goal of buying a house – (we actually wanted a small condo or townhome but have her father living with us, and with two kids, there are very few that have enough bedrooms. One thing I don’t understand is why virtually no one builds four bedroom apartments or townhomes – they are surely more economical than SFHs?) We were despairing of ever being able to afford anything large enough. I was looking as far out as Mission (we work in Vancouver, rent in Burnaby). One day I just got sick of every minute of every day thinking about how I could spend less and save up fast enough to get in to the market, and did a little search on Google for “average Vancouver house price” to see what information I could uncover to get a glimpse at future house prices. I came across Vancouver Condo info’s rollercoaster, saw the charts, and in rapid succession hit VREAA and Garth Turner’s blog. Read every Froogle Scott episode (loved the writing and the detail) – and months of archived blogs and anecdotes. The wife says I am obsessed.
I think it’s fair to say my world shifted on its axis. Since then, I have been asking subtle questions of anyone I encounter (it’s surprisingly easy in Vancouver, in 2010, to ask highly personal questions like how much did you spend on your house! amazing…) and my findings astonished me. The one question that had been puzzling me was the HAM or Hot Asian Money hypothesis, that had all my family members believing prices will NEVER come down in Van. So I got my realtor landlord into a discussion and worked my way to asking how these investors get the money. He volunteered all of the above. I should mention that together with his brother, he also manages 19 properties for investor clients, taking care of renting them out, maintenance etc. (his brother does the legwork, gets a small rent based commission, and together they share the commission from the eventual sale of these investor properties.) All these investor clients are living in Van, and own one or more investment properties in addition to primary residence. Most of them bought in around ten years ago, however, so they truly are long term investors.

I will keep asking around for more information. As far as I see it, there are two possible outcomes to this real estate conundrum:
1) Chinese and other foreign investors keep coming with enough cash and overseas income to buy up all Westside and work their way east with tear-down and rebuilds, with no need of local jobs. Local wage earners unlucky enough to be left behind in the property market rent or leave. That would include us. A skeleton crew of baristas, mechanics, retail staff, Ferrari and Lamborghini salespeople and check out clerks live in rent assisted social housing islands in a sea of uber wealthy, world’s-elite-with-a-penchant-for-temperate rainforest-climate-owned mansions. What happens to the local economy next I am not smart enough to figure out.
OR:
2) Many of the overseas investors are overleveraged in a speculatory bubble, both in their home markets (esp. China) and here. Rising interest rates and falling prices sap their will to buy higher. Depending on events in China, prices either decline calamitously or grind down slowly as per Garth Turner until they rest somewhere slightly above where fundamentals would put them, so about 4.2 price to income ratio (Vancouver seems to always have been above fundamentals. (grow op income perhaps?)
People continue to buy in preference to renting because of the homeowner premium. (as a six year renter since I arrived in this god-forsaken city I am prepared to pay slightly over to not have to deal with the landlords here – words cannot describe how cheap they are and how much it annoys me to have to spend money and time on making repairs because they never show up and I worry that they will raise rent every time I make them fulfill their legal obligations and actually spend the money on repairing dripping taps, leaks, broken stairs, etc.)

So that’s my take. I will keep collecting information to help the blogosphere decide where this will end.

As a new-ish Vancouverite who has lived in Italy, Spain, UK, Finland, Japan, even Albania albeit briefly, and traveled in 28 more countries, I want to tell something to all of you: read my lips very carefully:
THIS – IS – NOT – THE – BEST – PLACE – ON – EARTH.
It’s just like every other place, ok in some respects, sucky in others, great in a few. Get your heads out of your asses. It’s almost embarrassing telling people from other parts of Canada where I live, as I inevitably get tarred with the same brush of arrogance.

In my case, housing in Vancouver wasn’t affordable 4 years ago, and it isn’t affordable now. If it were affordable I’d be mortgaged to the hilt just like everyone else, nervously biting my bull hooves hoping that all these have-nots posting away into the night are wrong. I didn’t try to outsmart the market. I came within 10,000 more saved dollars of pathetic little downpayment to springing for a 1950s bungalow on an easement in Surrey backing onto railway land that if BC rail decided it needed, would cut the corner of the house off. Well, the 10,000 wasn’t as big an obstacle as the wife’s reluctance towards the place.”

“I just wanted to share a conversation I had with a good friend of mine as he announced he was going to buy a place.”

El Magnifico at VREAA 25 Dec 2010 12:24pm –
“I just wanted to share a conversation I had with a good friend of mine as he announced he was going to buy a place. It really highlights well what is called “the emotional factor” when it comes to buying real estate. Hopefully this conversation will be useful to some other people…

Me:
Hi (…),
I hope you’re doing well. I was also apt hunting recently, until I learned more about the real estate market in Vancouver… I’ve decided to hold off for for a couple of years and see what will happen.
I read a lot of articles, blog, etc… You may want to hear what these people have to say about the Real Estate market in Vancouver. Here are some of the most useful links I found:
– https://vreaa.wordpress.com/
– http://www.greaterfool.ca/
– http://canadabubble.com/
– http://financialinsights.wordpress.com/
Good luck!

My friend:
Hi (…),
Hope all is well with you too!
Thanks a lot for the information. I surely won’t dare to disagree that the risk of a potential real state crisis has increased due to the low interest rates, easy credit, and consequent increasing household debts, etc.
However, since I arrived in Canada some people have been expecting a real state crash in Vancouver for different reasons: 2008 financial crisis, the olympic games; etc.
On the other hand, some other people think that real state prices in vancouver will never drop significantly, due to the shortage of available land…
Meanwhile, I now realize that I have spent over $75,000 to pay for my rent in the last 3.5 years… and I will never see this money again, that’s for sure…
I mean, I totally see your point, and actually nobody can be sure if a mortage will or will not be a good deal at this time…
I really don’t know who is right or wrong… and so I guess I will keep looking around and I think I will probably buy a place if I see a good opportunity on a place that I like. Besides, it’s probably better to buy now, when interest rates are low, than the opposite…
Anyway, we should keep discussing about that… I think it can helpful to the both of us in trying to make lucid decisions.
Thanks again and let’s try to get togetehr for a beer or coffee sometime soon.
I take this opportunity to wish you, (…) and your baby a very Merry Christmas and Happy New Year!!
Talk soon,

Me:
Hey (…),
Good to hear everything is well for you! (…).
Somehow, I’m glad I didn’t buy any real estate as I would have been such in trouble to sell it off (the market is dead right now, -35%ish for saleq compared to last year…).
I’m glad you are aware of the potential risk for a real estate crash. The intent of my first email was simply to make you aware in case you were not. As we say in french “un homme averti en vaut deux” which means something like “one knowledgeable man is worth two men”.
If I can only give you a few advices to you in making the biggest investment of your life (unless your business becomes so successful that you can afford all these millionaires’ toys), there would be as follow:
– be always careful of what real estate agent and their board say. Trusting them regarding real estate analysis is like trusting your drug dealer when he says heroin is good for you! They have a vested interest in keeping the market going up…
– when you compare renting vs. owning, make sure that you take into account all the costs of ownership. As a renter, you don’t have to pay for property taxes ($1,500 a year), strata fees ($400 to $500 a month in the nicer buildings in downtown) and the maintenance costs (so many people bought condos in leaky buildings and had to pay 50 to 70K in rainproofing… that really hurts!). All in all, ownership costs are really expensive too.
– Don’t forget that when buying a place, you’ll have to pay 7% of commission fee to your real estate agent. On a $450,000 property, this is $31,500 (not far from half what you paid in rent in 3.5 years in Canada!), money that you will never see again too.
– remember that if you don’t have 20% of down payment, you’ll be required to pay for the CHMC insurance, which will be a significant additional burden to your mortgage payments.
Coming back to the argument of buying when interests are low, it is actually a bad idea, and it’s counter intuitive. Let me explain you. When people buy a house, they look at what they can afford and usually bought the biggest house/condo they can afford (property cost + interest cost). This is ok in countries like US or France, where mortgage interest rate is setup for the entire duration of the mortgage. In Canada, however, mortgage rates are reset every 5 years. I let you imagine what happened when a family that has bought to the maximum of their ability, at emergency low interest rates, see their mortgage payment doubling because their mortgage rate has been reset much higher 5 years later… This is what, in my opinion, will create a real estate crash throughout Canada. When the Bank of Canada will increase the prime rate, people will see their mortgage payment increase and won’t be able to face it, and therefore be forced to sell…
On the other hand, if you buy a place at a time where interest rate are high, the cost of your mortgage payment are likely to be lower when your mortgage rate is reset after 5 years. Today, it is the opposite. Interest rate can only go up, and therefore mortgage payment will go up significantly for most of the people.
Regarding the argument of available land in Vancouver, I don’t really buy this argument. There were so many special places in the US (Florida, California, Nevada, etc.) that, despite great features/qualities, have lost more than half of their values that I don’t think this argument is very solid. What I see is that prices in downtown Vancouver are now similar to prices in Manhattan and double the prices in Seattle. There is no rationale reason for that…
The last thing that I wanted to share with you is what I discovered when looking at mortgage payments. Initially, the first few years, your mortgage payments are split as follow: 80%ish to interest and only 20%ish to your principal. That something I didn’t know and found totally unfair and outrageous. Somehow, the first few years of your mortgage, you more renting the place to the bank than owning it…
Anyway, it’s a very long email. I wanted to share with you my thoughts and discoveries regarding RE. I was in the same seat as you and I didn’t buy, and now I’m leaving, I’m so glad I didn’t.
(…)
I hope this email will be useful to you. I’ll organize a small farewell gathering before I leave (…).
Cheers buddy !

Him:
Hi (…),
Excellent reasoning, thank you so much for taking the time to share, I really appreciate it!
(…)
I did become aware of the issues you mentioned above when I first thought of buying a property here in Vancouver, in early 2009. I agree with you in most of them (and that’s why I gave up the idea of owning a real estate property in Vancouver, back in 2009).
In some other aspects I think slightly differently from you, more specifically regarding the interest rates and ownership costs (but I won’t get into details here, because I don’t want to make this a boring discussion to you, as I’m sure you have more important things to think about(…).
(…) I’m now also considering some aspects of ownership that are less of financial relevance (but not less important) and more of personal nature, and therefore difficult to be quantified, because their effect and value can significantly vary from person to person.
All in all, I’m still inclined to jump into the owners side, if the right opportunity comes.
Well, thanks a lot again (…). I really appreciate your analysis – definitely very useful.
Hopefully I will see you soon then!
Cheers,
….”

“Here Is My Bear Household Profile…”

‘WFT?’ at vancouvercondo.info December 15th, 2010 at 10:43 am–
Here is my Bear household Profile:
Cash invested in low risk assets: $1,200,000
Annual income from investments: $60,000
My annual income as a lawyer: $165,000
Wife’s annual income as a doctor: $150,000
Rent: $1800/mo (2 bedroom south false creek)
Do I have money to buy a house? Yes.
Am I stupid enough to do it? No.
With my investment income alone, I can live in a mansion in Shaugnessy.
http://vancouver.en.craigslist.ca/van/apa/2114309230.html

$5000 / 4br – Ideal Shaughnessy House For Rent –
Ideal Shaughnessy location, quiet neighborhood. 80’x150′ lot with a beautiful 4,044 sf character home. 4 large upstairs bedrooms with walk-in closet in each. New kitchen and large deck off the kitchen. New carpet in basement. Local access street. Only one block away from prestigious private schools.

Why would I buy that house for 3.5-4 million and have it eat up my invested savings, and spend all my take home salary on mortgage payments every month?
In other words, if I can live in that house using my $1,200,000 in savings, why would I spend those savings AND borrow a few million more to live in the same house?
Please, bulls, give me one good reason why I should buy that house?

Learning From Isaac Newton – “I know quite a few people who sold at peak just before the 2008 correction. Their plan was to buy back in at lower prices. They are all now waiting and losing pace to the market every month.”

eyesthebye at RE Talks 18 Dec 2010 12:24pm – “I know quite a few people who sold at peak just before the 2008 correction. Their plan was to buy back in at lower prices. Guess what? One is still living with her folks, another can now only afford a townhouse, and a couple more are renting, waiting and losing pace to the market every month. If I ever decided to sell it’ll be because I have an accepted offer on another house. Check how many “smart” waiters/renters there are on this site [RE Talks]. Waiting to buy real estate is the dumbest strategy… better to buy real estate and wait.”

Learning from Isaac Newton’s experience:
Okay, these players could listen to their friend ‘eyesthebye’, and plunge back into the bubble market ASAP (buying even less for even more; exposing themselves to the market, again). Alternatively, they could stick with the conviction that led them to sell in 2008 (that Vancouver RE was ridiculously overpriced and due for a big correction) and stay out of the market.  If they take the latter course they will,  in our opinion, ultimately prevail, and then some. In the coming crash prices will likely drop far, far below those of the 2008 peak.
During the South Sea Bubble, Isaac Newton, perhaps the brightest guy on the planet at the time, made a lot of money selling into the first half of the run-up. Then, enticed by the promise of further gains (and, who knows, perhaps because of the taunts of the early-1700s likes of ‘eyesthebye’) he stepped back in, just in time for the final peak ‘n plunge. He lost 20 thousand pounds, at a time when ‘a middle class family could live very comfortably on 200 pounds a year’. If he’d simply stayed out of the market and waited, he’d have been one of the  very few people who made money out of the bubble. -vreaa

“The maxim that credit was not wealth unless it rested on a wealth-producing asset had been ignored”. – John Carswell, historian, ‘The South Sea Bubble’, (1993)
“Snap; ditto.” – Vancouver RE 2010

Buy Or Rent In Fort Nelson? – Reader Request For Opinion

t at VREAA 11 December 2010 at 3:48 am
“I am very bearish on Vancouver real estate…I am moving to Fort Nelson in the new year. I have been looking at Vancouver RE for so long that the prices in Fort Nelson appear reasonable to me. I have looked at the cost to rent vs. cost to own…$1100/month to rent, $800/month to own…and I am considering buying a place up there. Your thoughts?”
& t again on 13 December 2010 at 10:01 pm
“I am going to buy in Fort Nelson in the next month. I am a bear, and I am relocating for work. The cost to buy up there is roughly 300k for a nice family home. It would cost more to rent than it does to pay a mortgage. I do think that the prices are still high up there, but the local economy does support those prices because there are lots of high paying jobs. If any of you know anything about the RE up there please let me know. We meet with a local RE agent next week.”

vreaa thoughts:
t – Thanks for the note, and for caring enough to solicit our opinion.
We suspect there will be numerous readers who can give you food for thought regarding this decision; we’ll start with a few thoughts of our own:

You’d likely be taking the following into account:
Various nuts-and-bolts questions about the math (Is the cost of owning REALLY $800 per month? What about transfer costs, taxes, maintenance, etc? etc.).
Your age. Your income. Your degree of job security.
Whether you intend to live in Fort Nelson long term.
If you purchase, would you be buying the kind of residence that you’d like to live in long term?
What is your ‘ownership premium’? (How important is it for you to feel you ‘own’ your house?)
Would the prospect of future higher interest rates alter your decision? (BOC Governor Carney warned us yesterday that rates WILL rise)
Would the prospect of a future distressed economy in Fort Nelson alter your decision? (How secure are all those ‘high paying jobs’?)

We note that you went from “considering buying a place” to “I am going to buy” in just two days. Obviously you are planning your move, and we respect that you have a need to decide one way or the other. But, does the decision to buy merit the urgency that you currently appear to feel?
Perhaps you are confusing two separate decisions:
..(a) where are we going to live when we get to Fort Nelson?, and
..(b) should we rent or buy our accommodation?
These are indeed two separate decisions, but currently they may feel like one. Perhaps you should try to separate them.
Is the prospect of going up and renting for a while too burdensome?
What do you have to lose if you went up, rented for 6 months, and then made your decision?
The benefit, even if you did end up buying, would be that you may get a better idea of the property type and site that would work for you.

All of the above are important considerations, and readers will likely be able to add more.
For us at VREAA, however, the most crucial considerations are the following:
We are bearish on RE. (You, ‘t’, are bearish, too.)
We anticipate a pullback in RE prices in Vancouver in future, a pullback that will also effect all of BC (and, to a lesser extent, all of Canada). We think prices could drop 50%, perhaps more.
We could be wrong (we have been for some years now).
We weigh the probability of ongoing steady price increases as low to very low (5-10% chance of ongoing price strength). We think the chances of an outright crash are far higher than that.
So, if we were trying to make the decision you’re weighing, we’d be asking ourselves the following:
“If I were to purchase, how much would a substantial decrease in housing prices in Fort Nelson effect my overall future financial trajectory?”
The answer to this question would be closely related to income level and net-worth.
If you purchased, what percentage of your entire net-worth would be made up by the purchase price of the property? 20%? 50%? 100%? 500%? 1,000%? – [the 1,000% example is the case where you put 10% down and have no other savings.]
For some individuals, to purchase a property that then drops from 300K to 150K market value, and stays there (in real terms) for 10 years, would not be of much consequence. For them, it may not be worth the hassle of renting to avoid that risk.
For others, the 150K paper loss may be completely devastating; it may result in a financial blow that takes decades from which to recover (and essentially changes their entire life’s financial trajectory for the worse).
Some people can afford to lose 150K, others can’t.
(In Vancouver, the same rent vs buy decision are heightened by the fact that in many cases that statement becomes “Some people can afford to lose $1.5M, others can’t.”)

Needless to say you have to do your ‘own due diligence’ on this.
(Oh, and by the way, I don’t think any of us doubt what the Fort Nelson realtor will advise. You’d best be clear in your own mind about your intentions BEFORE you meet with the local RE agent next week.)

“They walked. You win.” – “I don’t think I’d be telling everyone about this little sales problem!”

‘Judy in Langley’ sent this to VREAA by e-mail 10 Dec 2010 –
“A recent ad that I’ve seen twice now in the Langley Advance:
“They walked. You win. … Get ready for this unprecedented opportunity to save. Calera at Clayton Village has 16 homes where non-refundable deposits were paid but the sales didn’t complete, and the buyers walked away. …”
This ad presents this as a great deal, a one-day only sale.
“… and thanks to a previous buyer’s deposit, it could be yours for a lot less.”
They’re giving you a discount equal to the previously paid deposit? Plus, they’re including the property tax and maintenance fees for a year – must be desperate. I’m shocked that so many buyers walked away from their deposits in this new condo complex. This is a bad sign, not a good thing as the spin would like you to believe. I don’t think I’d be telling everyone about this little sales problem!”

“Sigh. Another weekend, another family gathering. Another evening of hearing the same robophrases “Why haven’t you bought yet? You should buy!”; “You’re throwing your money away by renting.” It really reminds me of when I hung out with a group of evangelicals.”

pricedoutfornow at vancouvercondo.info December 3rd, 2010 at 10:29 pm – “Sigh. Another weekend, another family gathering. Another evening of hearing “Why haven’t you bought yet? You should buy!” When I try to argue that it would cost me $1000 more to buy this same place rather than rent, I just get blank looks and the same robophrases “But you’re throwing your money away by renting.” and “But real estate always goes up.” It sure is tiresome. It really reminds me of my high school days in the Okanagan when I hung out with a group of evangelicals. They were convinced I was going to hell since I was a non-believer (or rather, I just questioned things intensely). Now I guess I will be sentenced to the hell of renting for the rest of my life. I am doomed. (But hey at least I save $1000 a month and can take vacations every year, unlike some homeowners I know!) huh. Some hell. I’ll take it!”
and, after the event, on December 4th, 2010 at 7:25 pm – “I told my (future) sister-in-law last night that it would cost me more than $1000 a month more to buy this place than what I’m currently paying in rent. I asked her where I’m supposed to come up with an extra $1000 a month (which is not really the point, since I’m actually putting $1000 a month into a savings account). But being the brilliant person that she is, told me that I don’t have to, then spouted some nonsense about low mortgage rates. And then what happens when rates go up to 7% when I go to renew? She said I should probably just go find a better job (ya right, like it’s so easy!). Then she said disdainfully, “But you’re renting” like, EWWWW!!!! Funny how she walked around the place unimpressed because it’s a “rental” but if I’d lied and told her I’d bought I’m sure she’d be gushing over the gas fireplace and stainless steel appliances.
People are dumb.”

[Probably Fabricated Market Timer Emotional Capitulation Anecdote] – “I sold my westside home for around $950K in 2004. Now I can’t afford to buy back. You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

.
Yes, the markets can be a bitch. Yes, it is demoralizing to get the general picture right yet get the timing wrong. And, yes, to be down a lot on paper can be excruciating, moreso when you’re playing with your own accommodation and are vilified by your family and community for doing so.
Markets can go from ditzy to completely-bigtime-insane before they sober up.
This poster [** see postscript] was correct, the Vancouver market was already overvalued in 2004. It hit the insanity jets in 2006 and then the free-money magic-blow-off after-burners in 2009. It was going to roll over and die in 2008 but star-dust bailed it out. This poster was mentally short in a mother of a virtual-short squeeze. We say ‘mentally’ and ‘virtual’ because he wasn’t really short, but he felt like he was short.
This poster’s current mind-frame represents a form of mental capitulation, but it doesn’t show real capitulation. Real capitulation would involve action, it would involve this poster buying back into the market for $1M+; a far lesser house for far more money. Thus a bear would become the last of the bulls. Students of the markets all know what happens when the last bear who is going to capitulate does so.
We still estimate that it is highly probable that individuals in this poster’s situation will have the opportunity, in future, to buy back the 2004-$940K westside property, now selling at far more than $1.5M, for 2004 prices or less. We also suspect that many prior market participants will be so gun-shy that they will not step up to the plate, and that, once falling, prices will fall well below 2004 levels. Yes, this may seem crazy to many at this point. Insanity is a common ingredient in Vancouver RE market moves. -vreaa

‘Chinese renter’ at vancouvercondo.info December 1st, 2010 at 5:41 pm – “I am Chinese Canadian, not recent immigrant, previous home owner, presently renting. Sold my westside home for around $950K in 2004 after it’s price had recovered from a drop in value in the late 90′s. I haven’t brought since. That same house is now worth minimum 1.5 million. Sure renting is not costing me as much than to buy right now but I loss an asset that is now worth 1.5 million by not re-buying back in 2004,2005 or even 2006.
I was influenced by bloggers like VHB and Garth [Turner] not to buy, thinking it was a bubble. I have lost all confidence Vancouver real estate is a bubble. Not on the westside where the Asians like to buy and the builders and flippers buy so they can resell to the Asians. My invested equity from sold house can no way keep up with price appreciation of Vancouver real estate, not with fixed income interest rates this low. Now just to buy back what I had I can’t afford. I can buy above 1 mil but not 1.5 and above.
The place I am renting now was just brought earlier this year as an investment by a Chinese family for 1.6 million. Sure my rent they receive doesn’t justify the cost per month to own on a monthly bases but it has appreciated $100K already. The landlord can easily sell and there will be a bidding war. Check out the dump V858532, 5069 Ash St, ask was 1.49 million. Sold in 7 day over asking 1.528 million. Why does the sold price have numbers 28 in it. One guess, you are right, Chinese buyers. it was open house Saturday Nov 18, multiple offers Monday, sold Wednesday Nov 22. The house is practically a tear down and that part of Ash St is awful, narrow and full of parked cars.
You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. Seriously they don’t mention to friends and relatives I am renting. Asians, Chinese have to buy, it is low class to rent.
To rent a nicer home on the westside may cost less than buying but eviction is real. Happened three times already to us, not because we are bad renters, we are great renters. But twice after one year lease, landlords claim place back for own use. Not fun having to look for new place and moving after only one year, just settled in. Not fun especially with young children and changing of schools. So I do eventually want to buy for stability, we want to live in a house, not a build for rent condo. At the rate of Vancouver price appreciation I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

**postscript – We are fully aware that this poster may be a fabrication by a bull poster, an emotional sketch making a case against being bearish. The handle, the pat phrases, blaming the bear bloggers, etc.
Regardless, there are likely some individuals in this situation (although very few trade out of primary residences during a bubble expecting to buy back in cheaper later). And the numbers are in the right ballpark. So, we dealt with the anecdote as though it came from an actual individual. ‘Chinese renter’, if you’re reading this and you are an actual individual, apologies for the voiced whiff of doubt. Drop us an e-mail. And keep us informed of your future circumstances. -vreaa

“I’m finishing some courses, and my wife and I are moving out East. No matter what happens, this is going to be a miserable city for everyone in the next few years.”

Patiently Waiting at vancouvercondo.info November 24th, 2010 at 12:10 pm– “No matter what happens, this is going to be a miserable city for everyone in the next few years. I’m finishing some courses, and my wife and I are moving out East somewhere. I’ll leave my hometown to the scumbags who ruined it, and watch their painful agony from a safe distance.”

The Agnostic Realtor – “You can’t argue that Vancouver RE is overpriced [because the market is unknowable.]”

Mike Stewart, Vancouver realtor, posted this video 17 Nov 2010
His argument can be summarized:
You can’t argue that Vancouver RE is overpriced because:
a. you can’t compare Vancouver with any other place; all places are unique. “Compared to where?”
b. you can’t compare today with any other time; all times are unique.
“Compared to when?”

“The RE market is dynamic; it’s always changing; it’s always moving.”
“If you feel the market is overpriced, you should act accordingly; If you feel the market is underpriced, you should act accordingly. My job is to help you buy or sell property based on what YOU think the market is doing.”

—
We believe that Mr Stewart is very wise to take an agnostic position regarding the market. Realtors are wise to present themselves as not knowing whether the market is going up or down.
HOWEVER, realtors should be market agnostics because they are SALESMEN,
NOT because of  presumptions that the market direction is UNKNOWABLE.

There are many valid ways of estimating whether a market deviates from fair value. At present, by numerous measures, Vancouver RE is outrageously overpriced. You can use history, you can use comparable cities, and you can use fundamental measures to come to this conclusion.

Mr Stewart thinks he’s being neutral, but he’s actually taking a stand by saying that the markets are unknowable.

If Mr Stewart REALLY wants to be a good salesman, he’d decline from making ANY comments about the markets, including even saying that markets are unknowable.
After all, what does he know about predicting market direction OR claiming it can’t be done? He’s self admittedly a salesman, not a market analyst.

He should consider remaking the video in a shorter version, simply saying: “My job is to help you buy or sell property based on what YOU think the market is doing.”
That’d be refreshing. We’d be more favourably disposed to hiring him if he made a statement like that.

-vreaa

“I am thick-skinned enough to deal with the social pariah status of being a mere renter. A lot of people here believe that responsible adulthood includes home ownership, so if you don’t own, you somehow don’t make the cut.”

A discussion regarding buying versus renting at vancouvercondo.info this week included interesting anecdotes and opinion, and we have archived many comments below. The stigma attached to renting persists. It’ll only change after prices plummet and enough people have been burnt to make renting look respectable and even wise again. See the ‘Renters’ sidebar for past discussion and links. -vreaa

Anonymous November 11th, 2010 at 11:25 am–
“I started looking in 2007 and in the area I want to buy, prices haven’t moved much at all (not Vancouver or Richmond). Since 2007 I’ve saved over $150k. As long as price growth doesn’t outpace my rate of savings I’m doing well. If I had bought in 2007 it would have been with 5% down, as I was fresh out of school, so imo I’m better off having waited. I’m going to buy something soon, were just waiting for the exact house we want to hit the market; probably by spring. It’s tempting however to keep renting because if keep my current pace of savings, I’d have about $800K cash in 10 years, and there is no way I’d have $800k in equity after 10 years if I buy. My wife however, sees more value in family memories than a fat bank account and I agree.” and later adds “My situation probably isn’t very common. Yes we live cheap. I drive a $2,500 car; we don’t travel or eat out. We save about $4k per month on average, less currently but more when my wife is at work, so at 3% that works out to about $800K in 10yrs. We rent a home that our family owns so this helps a lot because our rent is very low, enough to cover taxes/services and maintenance. My mother in law lives 2 blocks away so she looks after the kids while we are at work, which is a huge savings.” [Arguably favourable situation, but ‘renting a home that my family owns’ makes this a non-representative example. -ed.]

Ted November 11th, 2010 at 11:33 am–
“Here is my story: Bought in Calgary in early 2005, sold for an almost 100% gain 18 months later. Moved to Vancouver and held on to our now large down payment and rented. Passed up 1000 square foot units for around 500K which now go for about 650K.
Gave up and bought in early 2009 and now contracted to sell 100K higher (-35K of renos – low net but free accommodation at least!)
I don’t think I should buy right now but don’t have the conviction all of the bears seem to have. Who knew the interest rates would drop to nothing? Who knew amortizations would be extended? Who knew qualifying would become so easy? Who knew Canadians would lever themselves up to the levels they have? Could something else come out of left field to keep this game going? TD’s new mortgages? Maybe… There is no way investment real estate makes any sense right now but if you’re looking at a primary residence I’m not so sure.”

patriotz November 11th, 2010 at 1:29 pm–
“I do not aspire to own in Vancouver again as I have no plans to live in the city long term. Elsewhere in BC perhaps, and as we know the bust is already well under way outside the Lower Mainland. If I did want to buy I would wait for price/rent of about 150x, that would be the figure for a house with suite income, a house without a suite would be higher as the potential suite income would have to be factored into the price. Any higher than that and you are throwing away money. I’ve found that having my name on a deed does not make life more enjoyable. I also think that Canada’s support for retirees will be stressed in the future and I think throwing away money at a stage in your life where you don’t have a great deal of time to earn it back is not very smart. I’d rather keep my money in the stocks and bonds where I can get a reliable 6% yield. As far as condos go, they have so many downsides that I can’t understand why anyone would pay more than 100x rent. If you rent one you do have the risk of having to move but so what – they’re all the same anyway.”

Lilypad November 11th, 2010 at 1:31 pm –
“Prices would have to fall at least 50-70% for me to buy a house or condo in Vancouver. It is just too easy to rent a luxury condo for half the price of a mortgage, strata fees, taxes and other maintenance costs, even at these low mortgage rates. Plus I don’t need to deal with the costs and anticipation of building leaks, irritating strata councils and disrespectful neighbours. If I have any problems I just pick up and move. To me this lifestyle represents FREEDOM. I can always move with my nest egg to a nice place that is 1/7th the price of Vancouver if I ever feel the need to own a house and take on the headaches and added expenses associated with it.”

Absinthe November 11th, 2010 at 1:47 pm –
“I’ve had, since 2005, a bigger place at a lower price in a better location than I could have had buying, with money left over for RRSP and RESP. I am more diversified than I would be if I owned my primary residence. I have more room, which with two small kids, is no small thing. I have a yard, which with two small kids, is no small thing. And, I don’t have to lose a second of sleep worrying I don’t have enough set aside for the roof, or the furnace, or whatever else might go. Seriously: I became a bear because owning would require an unholy amount of “lifestyle” and location sacrifice for the excitement of property taxes and strata meetings (because I wouldn’t have been able to afford a SFH) and there was simply no way it was worth it. I live in a bigger house a lot closer to work than those of my group that own.
If housing rises forever, then they’ll be house rich and I’ll have investments and be more liquid and live closer to work and deal with less stress. I will buy, if and when the lifestyle sacrifice required isn’t so heinous as to make my every day a sweet hell of 3 hour commutes (and the car/gas payments that go with), or conversely, 4 people in 750 square feet with no room for projects, etc.”

metalhead November 11th, 2010 at 1:48 pm –
“I have a paid for house in Abbotsford and I’m 50 years old with a decent bit of cash put away. I’m looking at rec. property in the Okanagan area. Some specific deals are getting close for me. In general though I think the area has a ways to drop and it’s really just starting. We’ll see how it looks in Feb. or March? I should be able to buy something outright or maybe tap a small amount of HELOC to take care of the balance. I won’t need a mortgage.”

Renting November 11th, 2010 at 1:57 pm –
“At what price point would I actually buy? When it is cheaper than renting when all costs are factored in. I think we need about a 50% reduction to make buying cheaper than renting if interest rates stay low. Is 60% to 70% realistic? Yes, you are caught in a bubble which clouds your vision. Look at the examples posted in this thread for Prime NYC at 80% off and Kelowna water front at 50% off. This is just the start of the decline in both places. A million dollar home in Vancouver is a piece of shit. At 60% to 70% off it will still be a POS and will still be priced higher than buying a POS anywhere else in the world. It would have to drop 85% to be priced at levels we see in Phoenix for example. So yes 60% to 70% is not just realistic but probable. 300k to 400K for a POS house in the less desirable part of Vancouver would still be expensive IMO but that is 60% to 70% off!”

cgh November 11th, 2010 at 1:01 pm –
“My rent is $820 per month and I’ll gross around $120,000 this year (hard to say exactly yet, as I’m a contractor). If my girlfriend and I end up moving in together, I’ll save even more.
I have other friends in the same position. Unlike them though, I am not even thinking of buying anytime soon – why bother? The value just isn’t there, and I am thick-skinned enough to deal with the social pariah status of being a mere renter.”

paul November 11th, 2010 at 3:20 pm –
“I’ve never experienced any negativity about renting yet I read about it all the time on forums like this. I think this is an Internet thing as in real life it would be very surprising to have someone criticise you to your face for choosing not to buy a house. I mean, your living arrangements are hardly likely to come up in conversation with someone you hardly know and why would the people you do know care whether or not you own your own home?”

cgh November 11th, 2010 at 3:53 pm –
“Actually, I find living arrangements come up [in conversation] all the time. At dinners with friends, some of whom are acquaintances (particularly their spouses), talk often turns to real estate, what’s going on with whose house, etc., and when I eventually reveal I’m renting, it’s assumed by some (not all) that there’s “something wrong” in my life. Those were the words used by a very good friend’s spouse not long ago, in fact. She has basically classified me as someone who “needs to get their life together”.
I bought a vehicle over the summer, and the financial person at the dealership took my cheque (I paid cash) and said, “Bet that’s the biggest cheque you’ve written in a while – well, except for the down-payment on your house!” I said I’d never made a down-payment before, and it went from there.
Maybe it’s just our social circles, I don’t know. I think that once you’re 35+, a lot of people here believe that responsible adulthood includes home ownership, so if you don’t own, you somehow don’t make the cut.”

rp1 November 11th, 2010 at 5:57 pm –
[Regarding whether one experiences “negativity about renting”.] “Try being 30 with a young family. If you haven’t got a million in cash or a million in debt (either way, as that’s what gets you a SFH) then you’re the worst parent ever.”

Anonymous November 11th, 2010 at 6:35 pm –
“My wife mentioned to another mom at our kid’s preschool that we rent a house nearby and the other mother responded like my wife had cancer, with a tone of pity.”

McLovin November 11th, 2010 at 6:47 pm –
“It feels different out there. I am meeting a lot of people who think the market is overpriced. Recently I met a person who sold his house made a huge amount and said “I won the lottery.. I am taking my money and renting maybe for the rest of my life.” This was refreshing to hear. I know the sales and prices don’t really back this up but it appears to me that the winds are changing.”

jesse November 11th, 2010 at 8:28 pm –
“Overpaying will, in net, leave someone with less capital in the future. For whatever reason some people’s personal situations warrant them being willing to pay a premium for certain products at certain times. From a strict value investment point of view investing in property any time in the past decade — even at a small discount vis a vis the market trough in 2008-09 — was not a wise move. But in many specific situations it’s not always about maximizing future capital.”

Renting November 11th, 2010 at 9:34 pm –
“Although I have seen people offer good intentioned advice to renters I have never seen someone get any type of pity or disrespect. If someone was to show my wife that disrespect I would simply give her some advice on how to reply. For example: Oh do you own? When did you buy? Oh geese right at the peak of the bubble. You must be worried? No. Well then your husband must have a really good high paying job. Oh that is all he does, so sorry to hear that. We will keep our fingers crossed for you that things work out. I mean I am sure what happened in the US will not happen here with the price collapse. And if interest rates do go up as everyone predicts you can get always get a second job on weekends. I can watch the kids for you. I don’t have to work.”

NO – LYMPICS November 12th, 2010 at 10:53 am–
“A friend of mine lives near the 41st and Oak. For about 16 years he rented a nice 50 year old rancher from a Chinese landlord. The Landlord has now given him notice…wants to sell for approx. $1 million but no takers. Was paying about $1400 month.”

Abbotsford – “From old sales price to new asking price there is a 25% drop. Right here in the best place on earth.”

“A-Sharp” Accountant at vancouvercondo.info November 11th, 2010 at 8:46 am–
“I just got a flyer in the mail for ‘Yale Crossing’ in Abbotsford. There are over 30 units left in a fairly small building. The flyer says that all units must be sold by the end of the year.
These units were initially priced at about $290k + GST in spring 2008. THey sat until later that year and some sold for $265+GST.
Now they are asking $210 including Net HST
From old sales price to new asking price there is a 25% drop. Right here in the best place on earth.
I’m certainly curious to see what “must sell this year” means… If it is true, then I will certainly put in an offer on Dec 29th for 100k or something.
Another anecdotal point of reference: These [Okanagan, Westside Road] places originally sold for $850 in 2006, went up to about 1 mill in 2008, and now are foreclosing and asking in the 400′s.”
.

4215 Westside Road # 9
Kelowna, BC, V1Z 3W8, MLS 100115093
Ask price $459,000
1042 sqft, on ‘under one acre’
Realtor blurb: “Foreclosure. Reduced with $20,000! [? -ed.] Blow out price for this rustic style 2 bed & den waterfront cottage. Cottages sold for $849,000 in 2006! It features 3 levels, granite counters, incredible lakeviews, little private beach, patio.”

“I’m just some hardworking schmuck in my 40s who wants to have my own place one day, yet doesn’t want to pay for an overinflated property, either.”

canali at greaterfool.ca 5 Nov 2010 10.02pm – “I live in gorgeous Vancouver…but you get economists and other RE analysts saying that our higher prices are also driven by things that can’t be cyclical whims of the marketplace: our land is limited to the west by ocean, to the north by mtns to the south by the US border) and then you go east to the Fraser Valley.
So it’s only natural (they say) that with great climate, lovely geography and limited developmental land that such rates can be sustained….sure they may go for a dip here and there, but overall the trend is upwards.
Another factor to consider is with the number of immigrants (many with cash) who wish to come here in the lower BC mainland (among highest growth area of anywhere in Canada I’ve been reading).
I’m not a realtor,  just some hardworking schmuck in my 40s who wants to have my own place one day (instead of renting forever and not building up equity) yet doesn’t want to pay for an overinflated property either and be mortgaged to the teeth like so many others.”

Ben Rabidoux, Financial Insights – “I rent my current home” – Check Out; Bookmark

Ben Rabidoux, on his blog ‘Financial Insights’, has been spoiling us all recently with lots of excellent commentary on the economy and the real estate markets.
I may be preaching to the choir (or the already converted?) when I suggest you bookmark Ben and check out his site regularly.

Here is part of Ben’s own story [financialinsights.ca 31 Oct 2010], reposted here as an archived anecdote, with his permission:
“I rent my current home. I live in a fully updated and renovated 4 bedroom, 3 bathroom home with all the trimmings (granite countertops, slate and hardwood floors, etc.). We live on 5 beautifully manicured acres backing onto a wooded area with trails through it. I pay about half of what the home could rent for on the market. We are in a very secure 2 year lease with a written agreement by the owner not to sell the home for the duration of rental period. Needless to say, I don’t buy the argument that renting a home is somehow a compromise on stability or living standards. Not at all.
I’ve often said that I do feel that home ownership is an integral part of long term financial security. I’m not against owning a home at all. However, the argument that renters are ‘throwing their money away on rent’ is bunk. It holds only the slightest element of truth when price to rental ratios are at or near their long-term averages. Today they are an astonishing 2.5 standard deviations above their long-term norms, an extremely rare statistical occurence.”

It’s wise to be cautious when you come across somebody on the internet who sees things pretty much the way you do yourself… there’s a danger that you simply confirm your own delusions. The web has been criticized for possibly having that effect on outsider groups and conspiracy theorists.
Having said that, when you’ve looked at the data yourself, drawn your own conclusions, and consequently feel isolated in what seems like a mainstream of madness, to then find other individuals who have drawn similar conclusions is to be shown that there may be some sanity in your thinking.
vreaa has been party to more than one prior situation like this one, where the passage of time proves a small minority opinion to have been overwhelmingly correct in the face of mainstream ignorance.
We have little doubt that the bearish position on Vancouver RE will prove to have been correct.
As Ben says, he is NOT wrong stating that Vancouver RE will return to values supported by economic fundamentals, well below current price levels.
Timing? It’ll happen when it happens. -vreaa

High End Market Tales; A Request For Advice

This 18,633 sqft house on 1.12 acres [3489 Osler] in Shaughnessy sold for $17.5M on 22 Oct 2010. It had been listed since 21 Oct 2009 with an ask of $22M.

Regarding higher end properties in this part of town, a successful young Vancouverite sent the following anecdote and request for opinion to VREAA by e-mail. Perhaps readers can volunteer their thoughts. :
“I have some questions, but first, let me give you some background. I was born and raised in Vancouver. I am 33 and married. My wife and I live with my parents in Vancouver and I’ve been watching the prices in Vancouver soar. I could have bought an apartment several years ago but I decided that it would have been foolish. I had some money to play with so I decided to start a company with a few friends.  I am in the process of selling my share of the company for approximately $7 million. My dream is to purchase a home in First Shaughnessy and the home I fancy is on the market for approximately $5 million but its assessment is $2.9 million.  The house is from 1910s, approximately 7,000 sqft in need of some renovations. Lot size is around 14,000sqft.  I am a bear to some degree, but I do not know if we are headed for an absolute crash of 30%+.  I am willing to pay more than the assessment, but in short not a dime more than $3.5m.
Do you truly believe Vancouver west side is bound for a crash when it is irrefutable that the Mainland Chinese are buying everything they can get their hands on? Furthermore, First Shaughnessy is tiny and thus I can see demand for that part of town outweighing supply for years to come.  I am curious to hear your opinion on what you would do if you were in my position. Do you believe that Westside homes will sell near their assessment prices?”

“Update on an Olympic Village rental condo, where the asking rent is decreasing.”

El Magnifico at VREAA 31 Oct 2010 1.12pm – “Update on a rental property I posted some time ago. Rents are decreasing as well…
I have been following this 1BR 630 sq.ft. condo in the Olympic village. It has been for rent since at least early August 2 for $1750! (I even sent them an email early September to tell them that there was no way they were going to find a fool that would pay $1750 per month for that). After sitting empty for 3 months, they finally followed my advice and decreased their price to $1,650 which is still very expensive considering the size, location and bad publicity around the OV…
I’m wondering how long it will take them to find a tenant and how much it will have cost them to wait with their overpriced condo sitting empty…”
Here is the link: http://vancouver.en.craigslist.ca/van/apa/2035326065.html

“When we settled into our rented apartment she still seemed upset, and confused about why we were renting.”

C at greaterfool.ca 23 Oct 2010 at 7:30 am – “My wife and I sold our condo back in April 2010. We’ve been renting since. At first it took a ton of effort to convince the wife why we should rent and why buying again at this time would be foolish. She reluctantly agreed. When we settled into our rented apartment she still seemed upset, and confused about why we were renting. I just kept printing off 3rd party info, statistics, graphs, charts, and explained to her what they meant. A lot of times they were/are similar to the US situation 4-5 years ago. Now, when we discuss the renting/buying situation she says no need to explain it, I’m on board with you. It feels good to hear that. So for those guys with girlfriends/fiancees/wives with house lust, just be patient and back it up with BASIC 3rd party info. Anyone can say things will go up or down, but if you back it up with concrete statistics from another party, it should help shape the probabilities of things to come. I know there are husbands out there with house lust too so do the same thing with them, and throw in a 6 pack of beers and that should do the trick.”

“My wife and I are starting to think about buying a house, although nothing too serious until we see the correction is underway.”

[note that this anecdote is posted here one month after it was up at VCI -ed.]

mflat at vancouvercondo.info 27 Sep 2010 4:48pm – “My wife and I are starting to think about buying a house, although nothing too serious until we see the correction is underway. With that in mind, we’ve started looking more at the real estate market to see what’s out there and watch the pricing trends. We did two things this weekend that I wanted to share:
1. Went to the Vancouver Heritage Foundation’s self-guided Vancouver Specials tour. For $25 they give you a map of 4 renovated Vancouver Specials (all on the east side this year) to see what’s possible with these eye sores. As shown, the boxy Special is great for a modern renovation with it’s straight, boxy lines, and simple load-bearing design. Something to think about for when the market tanks and one wants to do a lot of reno to make a house their own.
What surprised us about the tour was the demographic of people we saw/encountered. They were largely over 40-years-old, and many much older. Perhaps those who are looking for their last flip into a house they can reno and be proud of? Something that might get into Wallpaper magazine as they enter their final creative years as a self-published author/poet? Anyway, just odd to see so many older people interested in this sort of thing, and not the young condo flippers that you’d see at every Realtor conference.
2. Took a long walk from downtown to Main & 25th to check out some houses. First up was V840359, listed at $720K. This is a Vancouver Special built on one of the worst bogs in the city. Take a walk down 18th sometime, and have a laugh at all the tilted foundations where neighboring roofs are almost touching due to the house angle. The house listed was like a horror slum on the inside. The worst part of it was the room angles, with sloping floors, and walls/ceilings that felt trapezoidal due to the sunken foundation. No thanks.
Next up was V851300, listed at $790K. A tiny house on a small lot marketed as a better option than a townhouse or condo. Well, maybe at these prices.
Observation is that prices are softening, but not yet to the extent where anything makes sense.”

Vancouverite View Of New York City Apartments

‘Bob’ sent the following note and images to VREAA by e-mail, 14 Oct 2010 – “I’m a Vancouverite who recently had a chance to spend time in New York City. The five boroughs have a total population of 8.4 million and a population density of 10,630/km². The New York metropolitan area has a population of 19 million and an approximately gross metropolitan product of $1.13 trillion (2005). By comparison, our entire nation, the whole of Canada, has a GDP of about $1.3 trillion (2009).

While walking about the city, my wife and I found ourselves looking at photos posted in an upscale realtor window (housing ‘porn’, as some people call it), advertising Upper East-side apartments and condos. Desensitized to high prices by the Vancouver real estate market, we were pretty surprised to see the kind of thing you can get in Manhattan for your buck.

For instance, to give some examples that come up after an internet search (in these cases all by Sotheby’s) – this 1 BR in a very prime area, ‘close to Fifth Avenue, located on New York’s Museum Mile next to Central Park’,  ask $950K:

Or this 900 squ.ft 1BR, 10.5ft ceilings, at 45 East 66th Street, (on Madison Ave, one block from Central park), ask $895K:

Or this smaller 1BR at 345 East 77th Street, ask $399K:

Later, looking to get an early dinner, we asked a respectable looking fellow for restaurant advice.  Me: “Excuse me, do you know this neighbourhood?”, He: “I should do, I’m a realtor.” After he gave us advice regarding where to eat (good advice, it turned out), we asked him about the market. He told us about apartments nearby in the Upper Eastside that were selling in the $600K range. (Looking around the web, for instance at these recent Corcoran sales, it seems properties below $1Million are selling in the $500-$900/squ.ft range, with lots in the $625-$700/squ.ft price range). Perhaps your readers with more experience of the Vancouver condo market can offer opinions on how these prices compare with ours. They seemed like good value by Vancouver standards to me. [Recent sales from prior link saved for the archives here. – ed.] On top of this, it looks like the US property market is about to take yet another step down.

I’m not going to try to list all the appeals of NYC. Anybody who hasn’t seen the place should visit. It is indisputably one of the greatest cities in the world. On this note, I stumbled across two things that led me to consider Vancouver, and BC, and our much discussed ‘Greatest Place On Earth’ theme –

The first was from an ad for a iPhone app that allows you to identify activities of interest around you in NYC. I was struck by the modesty of the claim –

The second was a painting by artist David Shrigley, seen at the Anton Kern Gallery in Chelsea, NYC. For the record, I love Vancouver, and love living here, but seeing this painting in NYC did make me chuckle. A teasing contrast to ‘Greatest Place On Earth’ and ‘Everything Is Going To Be Alright’ –

Realtors Will Add Crash Value – ‘Sharp Pricing’ Will Assist The Bubble Deflation

In December 2009, when we penned our ‘Prediction For The Coming Decade’, we neglected to add a ‘Coming Action’ factor that we have since realized is of considerable importance:
Realtors in need of income will speed the coming Vancouver RE price deflation.

By now almost all of us are aware of the cute study described in ‘Freakonomics’ where realtors selling their own homes were found to hold out longer for higher sales prices, compared with when they are selling the homes of clients. In the latter case, the closed deal (and resultant commission) is far more important to the realtor than getting their client a higher price. In that study, realtors were found to to sell their own houses for an average of 3%-4% more than a client’s comparable house, and they also kept their own house on the market for 10% longer, waiting for that better price. The message from the study is that when realtors are selling a client’s property, they want the sale a lot more than they want a good price.

Sales are down year-over-year in the lower mainland, in some areas of BC they are down as much as 50%.  There are twice as many realtors in BC now than there were 10 years ago, and they are now competing for a shrinking pie. In many markets we are seeing realtors talk about the importance of ‘sharp pricing’. They are applying pressure on sellers to drop prices to points at which they meet buyers. They are a force against the ‘sticky pricing’ that is characteristic of this stage of a bubble burst.

Through the late summer and early fall, many owners have tested the market waters. They put properties on the market, only to remove them when buyer interest proved to be reduced. We presume these owners plan to put those same properties back on the market at some point; many will likely do so in spring of 2011. Changes in volume are predictive of changes in price, and we anticipate ongoing minor drops by year end and larger drops in the first half of 2011.

When prices do inevitably start dropping we have always anticipated that waves of sellers will come into the market, many motivated by fear of further losses of paper profits. Speculators, boomers, foreign holders, overextended locals, developers. They will all be selling at the same time.
The advice given to those anxious sellers by their realtors, hungry for income and eager to close deals at almost any price, will speed the price decline.

—

“Realtors are saying that if you are selling your home you need to consider dropping your asking price… or be prepared to wait a long time” – A News Vancouver Island 1 Oct 2010

“Anybody looking to sell right now should get ready to cut down their expectations. … It’s going to be a long winter for some sellers. … Sellers need to adapt … People are going to have to be more open to price drops and more realistic prices on their properties.” – Marko Juras, Vancouver Island realtor, on A News Vancouver Island 1 Oct 2010

“If buyers have a lot of choice like they do right now, if your price is not reflective of today’s market, if it’s not priced at or near it’s final sale price, people are just going to let it go … [then you end up with a] four month old tired listing, people ask…’What’s wrong with it?’ “ – Shamus Baier, Vancouver Island realtor, 29 Aug 2010

“Owners of 1 bed condos need to forget peak prices in order to sell. Lots of buyers out there but the ‘sense of urgency’ is gone and product needs to show really well and be priced competitively.” – thinktom (Vancouver realtor), at RE Talks, 12 oct 2010 10:37 am

OV Developers On Best Behaviour

“The tax payer has to be paid back fully before we make any profits or before we even get our money back…” [Interviewer: Is that a guarantee?] “That is something that we are striving (cough) striving towards, and it’s something that doesn’t have to be done now, we have two and a half years to reach that goal.” – Malek Brothers, Global TV, 7 Oct 2010
[These guys sure look like they’ve been pulled up in front of the school principal, don’t they?]

Collapsing Periphery – “I listed land at 20% below tax assessment 6 months ago. There have been no viewings. My real estate guy tells me that August in our town normally has 33 house sales. This year there were three. It’s freaking ugly out there.”

slavador 15 Sept 2010 00:10:25, in the comments section of Mish’s globaleconomicanalysis.blogspot.com post ‘59% of Canadians Live Paycheque-to-Paycheque’ 14 Sept 2010 – “After 8 months of no work, contracts have finally restarted! Since I do not qualify for any sort of employment insurance it was a mad scramble for cash. Here’s a few observations:
I ran crews in the forest for a friend for a couple of months. The rates were 1/2 that of other years and there was 1/2 the work. The phone rang day and night with folks desperate for work. In a normal year a 20 year old kid fearless enough to run with a chainsaw full throttle all day could make $300/day. This year it was more like $150/day and there were way more tough young lads than trees to cut.
I sold logs from my lands for a couple of months. Loads of cedar went for $3000 that went for $6000 two years ago. Idle self loading logging trucks were available at all times. Finding buyers was a bitch.
Neighbour with mill had 3 truck loads of cedar products stolen by a shady buyer at the US border. The trouble is that shady buyers are presently the only buyers! He is now running a saw in the bush like the rest of us…
In between I cut firewood. 1 cord split/dry fir is going for $125. In the past it was $200. Lots of guys are in the woods this year – many yards are full of wood.
I listed land at 20% below tax assessment 6 months ago – there has been no viewings. My real estate guy tells me that August in our town normally has 33 house sales. This year there were three and they were all bank foreclosures!!
I’m doing a mid-price (16k) wedding for my daughter in the regional nice hotel in a couple of weeks. We are their only booking for October -normally they have 6-7.
I do not know where the “recession is ended” crap is coming from – certainly not the North Okanagan in British Columbia Canada! Paycheck to paycheck Ha Ha Ha. How about cash job to cash job. With these contracts, I am pleased to be returning to my middle class life, but have great concern for the financial of my neighbours as its freaking ugly out there.”

HST Fit – “I am so pissed, I cannot put my thoughts into words.”

“I am so pissed, I cannot put my thoughts into words.” – Bob Rennie, Vancouver condo marketer, on the marketing uncertainty generated by Premier Gordon Campbell’s announcement this week that the HST would go to a referendum on Sept. 24, 2011 [Globe and Mail, 16 Sep 2010].

Remember when Bob Rennie was un-pissed enough to put his thoughts into these words: “EVERYTHING IS GOING TO BE ALRIGHT” ? That was back in Sept 2009 when markets were storming back and Vancouver RE looked bullet-proof:

Rennie is trying to sell lots of condos, including >400 in the Olympic Village, in the face of a stalling RE market.

When bubbles burst, people re-write history; they retrospectively come up with ’causes’ for an implosion. They do this because it’s far easier for them to tell themselves that something extraneous, something unpredictable, caused a crash, rather than to admit that they were foolish enough to not recognize a classic and irrational market bubble that had been staring them in the face for years. They’d rather see themselves as surprised than gullible. (And, even better, indignantly blame somebody else at the same time.) Witness locals who now preach that our housing price drop in 2008-2009 was caused by the Sept-Nov 2008 global economic meltdown. [It wasn’t – The Vancouver housing market topped in the summer of 2008, months BEFORE the financial meltdown. Perversely, the global free-money emergency financial bailout RESCUED our RE market… Temporarily, anyway.]

Bubbles don’t need ANYTHING to pop them, they eventually, always, inevitably, collapse under their own weight, as ours is now proceeding to do. Like forest fires, they roar deliriously, then run out of fuel.

The HST is serving as a very convenient scapegoat for current poor sales, and it’s a fair bet that it’ll be pointed to in future as something that brought down the market. But in the grand scheme of things it’s essentially irrelevant. The real problem for this debt-fueled speculative-bubble market is in its very fabric, and that flaw is way, way bigger than the HST.

Kitsilano House Nominal Return Over 33 Years – 0%

rmac at VREAA 16 Sep 2010 7:57pm – “I grew up in Kitsilano, in a house built in 1913 on West 7th. The block was comprised of sets of identical houses, 2 of each style. My parents bought the house in 1946, just after the war when prices were heating up – they paid $3,000 for it (25′ lot). We researched the history of the house and it turned out that these houses sold for $3,000 new, back in 1913, so I think that story about real estate doubling every ten years has just been proven false.”

“And for the last year and a half she’s basically been yelling at me, saying that she’s missed out on some good locations because I’ve been telling her to wait.”

itsonlymoney at RE Talks 15 Sept 2010 1:16pm – “So for the last, I’d say, year, year and a half, I’ve been telling my sister just wait..wait..wait before you buy, because there’s going to be price corrections. And for the last year and a half she’s basically been yelling at me, saying that she’s missed out on some good locations because I’ve been telling her to wait. My thought is there’s going to be a big price correction, but I’ll be damned, this stubborn market keeps chugging away year after year, so who knows? With that being said, my sister is now interested in purchasing at the new Uptown development by Concord Pacific (Kingsway & 12th). Its advertising as nearly all units below $350,000.”

Sellers Awaiting Divine Intervention

3641 West 14th Ave (at Alma); 2,496 sqft; 33×122 ft lot; Built 1974
Ask Price: $1,799,800
Listed 1 June 2010, Days on market >100, MLS V834521

.

1419 West 56th Ave; 2,923 sqft; 50×122 ft lot; Built 1947
Ask Price: $1,698,000
Listed 25 Feb 2010, Days on market >196, MLS 812329

.

4857 Trafalgar St; 2,450 sqft; 50×119 ft lot; Built 1952
Ask Price: $1,738,000
Listed 21 Apr 2010, Days on market >141, MLS 825551

Pharmacist Zombie Realtor Survey (n=50) – “Each and every time I said to a stranger “Buy now!” they laughed at me.”

This picture and story from Sophie, on Garth Turner’s greaterfool.ca 30 Aug 2010 – “As a pharmacist who moved from East coast to West coast, [greaterfool.ca] is a therapy to all the in-laws, co-workers, etc who are constantly asking why I am not in the market yet! We were in Vancouver previously, but we see no future with our 150k total salary income to buy something normal, considering we are now [in our] 30′s and we don’t picture ourselves in a million dollar slum in East Van. As a part of my therapy, I participated to the zombie walk in Vancouver in mid-August. My partner and I were zombie realestate agents (that’s me in the picture). I could swear to you that each time I said to a stranger ”Buy now!” they all laughed at me (about 50 persons surveyed) 🙂 . And they were not zombies.”

Empty Townhouse On Howe – Realtor/Owner Attempts $250K-Profit Flip; “Now looking at a significant loss.”

YLTNBoomerang at vancouvercondo.info 31 Aug 2010 10:15 am –
“One of the areas I’ve been tracking for a few years now is townhouses in Coal Harbour and False Creek North (essentially waterfront townhouses). The thing that sets my data apart from MLS data is that I don’t reset my ‘days listed’ counter each time a property is re-listed with a new agent or MLS #. As a result, the [accurate] average number of days listed of all townhouses in this area is… 358!!! Talk about stagnant listings!!!!
Of the current 28 units in this segment only 9 are under a hundred days with the worst offender at 927 days (v829368; 1194sqft; 1439 Howe St; ‘Pomaria’; condo fees $611 per month). Check out the history of this unit that has never been lived in since being completed at the end of 2007:
Initially listed: February 11 2008: $989,000
Price reduced March 4 2009: $969,000
Price reduced April 17 2008: $899,000
Re-listed July 31 2008: $799,000
Re-listed July 21 2009: $699,000
Re-listed June 10 2010: $759,000 (I guess the owner figured the market recovered enough to warrant an increase)
Price reduced June 24 2010: $749,000
This guy has already paid $20K in maintenance fees alone with no rent! I think this place is worth no more than $400K.”

And this important information added by Anonymous at vancouvercondo.info 31 Aug 2010 1:32pm – “Purchased Feb 4 2008 for $749,900 with big dreams of an easy quarter million dollar profit. Now looking at a significant loss. At least the owner will save on commissions…the listing agent is the owner.”

[Thanks for sharing the data, YLTNBoomerang & Anonymous. -vreaa]

Loss of Appetite for RE – “Now I find that I’m not sure I want to own any house again, anywhere.”

‘Lost the taste for RE’ at greaterfool.ca 28 Aug 2010 1:22am – “My husband and I were living abroad and visited Vancouver for Christmas 2001. Lots of houses on the market, sales very slow. I heard that real estate boards were lobbying to have the rates reduced to help sell some damn properties.
So I was watching the Vancouver property listings from abroad. When the rates dropped, every house we had some interest in upped their price from between $300,000 and $700,000 — all within 3 weeks. And this was just the beginning.
I used to think we would just continue to rent our current very nice, large house in a beautiful neighbourhood from an excellent landlord — just wait it out [and buy later]. Now I find that I’m not sure I want to own any house again, anywhere.”

Stories Of People Avoiding Vancouver – “Vancouver is just too expensive for what it is.”

Architecture firm researcher Andy Yan’s Vancouver Sun quotes regarding young Vancouverites being repulsed by high RE prices [archived VREAA 23 Aug 2010] drew a series of anecdotes to bear out his opinion. All of the following are extracted from comments on that thread; they are headlined here because that’s what we do with relevant stories. -vreaa

MMM – “I recently lost a great young employee from my office here for the sole reason that he was offered a job in the US where he has since purchased a house for around one-fifth of the cost here (which includes not a rental suite but and entire separate rental HOUSE on the grounds). I didn’t believe that people would leave town for this reason myself either until I saw it first hand.”

keL – “I’m a late-twenties engineer (as is my spouse) and most of our friends in our personal and professional networks have a timeline for leaving Vancouver. We’ve already lost several close friends to Ontario, Alberta, the US and even China. A friend of ours who is a surgeon accepted a position in Regina instead of Vancouver citing the cost of living as the reason (specifically housing.. he said “I’m not buying a dump for 750K”).

ams – (33 years old, married, young son) “I have been a consultant for past several years in the software industry and do about 120K to 220K in business per year. I find it depressing that in Vancouver I can’t afford to buy a house. I put in the time doing some serious research and have seen that owning would be financial foolishness.”

ams (anecdote within anecdote) – “When I was renting in Kits, the old man across the street complained me that all his kids were in Eastern Canada because they could not afford to buy real estate in Vancouver.”

DM – “We are Vancouverites who left for 8 years and lived in Hong Kong and returned 2 years ago. Housing was expensive there too, but we were still able to buy a 1300 sq. foot flat with sea views and 25 minutes from the central business district. Even with the downpayment that we have, which is pretty significant, I can’t do the same here.”

Captain Jack – “I’m a professional making 150k a year. Live like a caged rat in a condo. RE has killed my love for the west coast. I’m outta here for good in the next 3 months.”

Makaya – (Moved here from Europe 4 yrs ago; 95K income; rents downtown) “After many discussions with my wife, we have finally decided to leave Vancouver. We have already started to look for jobs and once the right opportunity appears, we’ll be gone for good. Real Estate prices, along with general prices of goods and services here (why does everything has to be more expensive here?), are the things that turn us off, and that’s the reason why we are leaving . Vancouver is just too expensive for what it is.”

DB – “My wife and I, both early-career finance professionals, got sick of watching prices climb based on emotion, hype, and speculation and being pressured by peers to “buy before you miss the market — you don’t want to RENT forever, do you?” We packed up and left Vancouver 8 months ago.”

“Vancouver is in our blood. That doesn’t mean we’re incapable of seeing the insanity of pricing our real estate way ABOVE places like Hawaii, NY, etc. The hype is reprehensible. We see the HUGE amount of misallocated effort and money wrapped up in this market, and the hurt that’s coming down the road.”

The “if you complain so much about this place, why don’t you leave?” cries have reached another wave of high intensity on local RE blogs. The couple in this eloquent anecdote demonstrate how it is not inconsistent to both love Vancouver and, at the same time, harbour misgivings about the obscenely overvalued RE market & its deleterious effects on our society. -vreaa

Royce McCutcheon at vancouvercondo.info 20 Aug 2010 12:13 pm –
“My wife and I – both in health research – have decided to have a crack at setting up here because we felt it was somewhat worth taking a professional hit in order to 1) have closeness to people we care about and 2) to stay in Canada and, especially, in an area where we grew up. We’re here because we are Lower Mainlanders. I don’t mean that in the sense that we’re straight out of a leaky-shoebox-lovin’ condo ad, stacking fresh-cut flowers in the front basket of our mint Vespa scooter. I mean it in the sense that we are actually OF this place. For better or worse, this place will always be HOME. I learned how to ride a bike when I lived in family housing at UBC, I grew up listening to Robson & Larscheid call Canucks games, I’ve enjoyed everything from Expo 86 to the celebration of the recent hockey gold, and my heroes are people like Terry Fox and Doug Coupland. My wife has similar bona fides. We’ve spent time in dozens of countries between us and we return here because it is in our blood.
But even with us personally loving it here, we reserve the right to mock the “best place on earth” tag. Just because WE are acclimated to the craggy beaches, hefty rainfall, and lack of cultural and industrial infrastructure, doesn’t mean we’re incapable of seeing the insanity of pricing our real estate way ABOVE places like Hawaii, NY, etc. We know that outsiders who don’t have Vancouver in their blood are unlikely to feel like we do, so we think the hype is reprehensible. And even though we personally are not in the real estate market, we can’t simply ignore real estate in the Lower Mainland. Why? Because it’s clear that this incredibly delusional and out-of-whack market has the ability to impact the majority of people in this region (not just those who invested directly in real estate)! THAT is why we express anger and frustration and why we deride this place. The vitriol you’re witnessing towards Vancouver – and Lower Mainland real estate in particular – is a symptom of the Cassandra complex that’s developed in people in this city who can think rationally. We see the HUGE amount of misallocated effort and money wrapped up in this market and we see the hurt that’s coming down the road, yet we’re pretty much powerless to affect the situation. Some of us may personally benefit from a massive correction and are gleeful, sure. (There’s a very decent chance that my wife and I will benefit hugely in the time ahead – and even if a correction takes a long time, we love where we rent.) But if things get bad enough, many might also have to leave (for us, research funding has already started to be cut BEFORE a massive correction has occurred). And we take no pleasure in seeing people we care about – or the city we love – struggling to move forward.
So, regarding why we stay here even after ‘grass is greener’ comments, it comes down to simple personal math: [(Being ‘of’ the Lower Mainland) – (Poorer work circumstances)] > [Better working circumstances somewhere else]. Some days the equation flips. Once that happens enough times, we’re gone. Till then, most negative comments are just blowing off steam in an obviously frustrating situation.”

“At the open house the realtor told us “I know it is listed at $725,000, but the new price is actually $625,000, we just dropped $100,000.”

This story is of interest for at least two reasons. Firstly, sellers are having to drop prices. Secondly, the effect of a falling ask price, instead of attracting this buyer, rather gets them to further delay any planned buying. This demonstrates one mechanism leading to the falling-prices-beget-falling-prices action we anticipate. -vreaa

sweet at vancouvercondo.info 15 Aug 2010 4:12pm – “We just came from an open house in Port Moody (1082 Gatensbury Rd). The house is listed at 725000, empty, probably somebody bought it to flip it. Before leaving the realtor told us “I know it is listed at $725000, but the new price is actually $625000, we just dropped $100,000″ !?!? We may buy a house in the future, but for now we are patiently waiting…no rush.”