“We’ve got a kid on the way and are looking at the rent vs. buy situation right now.”

‘nobody you know’ at VREAA 22 July 2011 10:34pm –
“We’ve got a kid on the way and are [looking at the] rent vs. buy situation right now.

If we continue to rent:
– Cost of housing is less than $1000 per month
– Commute to work is 5 minutes or less
– Wife can quit job, stay home with baby in early years
– RRSP and RESP savings continue uninterrupted
– Mortgage savings grow, emergency fund intact
– Disposable income allows for travel to visit family, enjoy life

If we choose to buy:
– Cost of housing rises to $2000
– Commute to work increases to 20-45 minutes + $100 or more in gas
– Wife forced to work, child placed in daycare system
OR
– RRSP and RESP stalled indefinitely
– Savings gone, emergency fund won’t be replenished if used
– Disposable income wiped out, new baby separated from grandparents

Five years from now we’ll have a nice little pile of cash, our kid will have spent their early childhood being raised by their mother, and we’ll be able to travel and have a bit of fun. My wife will go back to work, the kid will be in school and we’ll be able to buy what we need.

But if we are pressured into buying right away we’ll drastically increase our cost of living at the same time that our income is going down. Our finances would be brutally tight. If my wife worked she’d give so much of her net income to a daycare that she’d be working for minimum wage and all so we could have a place in an inconvenient suburb that required me to spend 5-8 additional hours per week in a car. We’d be stressed and unhappy, as we’d be reducing our quality of life just to fit in and join the excitable real estate chatter at family gatherings and work parties.

And the best part about renting now is that we’ll actually be able to buy a much nicer place in a few years even if prices don’t go down. So instead of being stuck in a condo we’ll have a real house. Yes, this requires patience and discipline, but we’ve got plenty of both. We’ll just have to put up with mortgaged bank tenants looking down on us for a while.”

Vancouver Island – “Prices are dropping, so why should I buy? I’m not even remotely interested.”

Van Isle Renter at greaterfool.ca 10 Jul 2011 10:17pm –
“I live on the Island. Moved here two years ago. No interest in buying a house. Renting and loving it! Prices are dropping, so why should I buy? Until I see a major re-trenchment in prices (30%+) I’m not even remotely interested. I was a homeowner for 20+ years. Glad to be rid of it.
Spend my time golfing and sipping cappuccino’s while the landlord worries about the property taxes, the hot water tank and the roof. And I’m OK with that.”

When prices are falling, prospective buyers feel no urgency to buy, and sit comfortably on their hands. – vreaa

Joanna Pachter, Canadian Business – “This is not yet another story about the real estate bubble. It’s a story about why more of us don’t rent.”

“This is not yet another story about the real estate bubble. It’s a story about why more of us don’t rent. The belief that we’re not responsible adults until we own our home, whether or not we can afford it, has distorted and stigmatized the cheaper and safer alternative: renting. And we’re literally paying the price.” – Joanna Pachter, in the her article in ‘Canadian Business’, an excellent discussion of renting in Canada, circa 2011 [‘Rental Complex’, Joanna Pachter, Canadian Business, 14 July 2011].
We encourage all to read the entire article.

Excerpts:

[Personal anecdote] Over the past decade, Barry Bradey, a health and finance entrepreneur, owned three houses in the affluent Toronto suburb of Oakville, and watched each soar in value. But after a divorce and a business failure, he needed cash on hand. So last fall Bradey (who asked that we use a pseudonym) did some back-of-a-napkin math. The 3,500-square-foot house he wanted would cost about $850,000. Even with $400,000 down, the mortgage would cost him roughly $3,000 a month. Add property tax and maintenance and “that’s $5,000 a month before you turn on the lights.” Utilities, insurance and various amenities would be another grand. He also figured the downpayment came at an opportunity cost of about 6%, equivalent to another $2,000 or so a month. He bounced these numbers off a local realtor friend; she thought the carrying cost should be closer to $12,000. Nevertheless, she insisted the house was worth the money because it was “an investment.”
Bradey didn’t buy that. To rent that same house would cost him—all in, and worry-free—about $3,500 a month. A 53-year-old father of two with a startup venture underway, Bradey did the financially prudent thing. He now rents a large townhouse in the same neighbourhood for $2,200 a month. “With a house, its market value might go up or down, but it would cost me $8,000 to live there,” he says. “My logic is, renting gives me flexibility. I won’t have to pay 5% [commission] if I want to leave.”
—

Over the past decade, as the value of the average Canadian home doubled, and tripled in some areas, rents remained stable or even declined. As a result, it now costs more than twice as much to own that average home as it does to rent it.
—

—

With widespread warnings that we’re approaching the peak of the housing boom, with Canadians more indebted than ever, largely due to their outsize home investments, and with cities like Toronto boasting some of the lowest rents among major world centres, why aren’t more of us re-examining the math? The reasons are cultural and emotional, backed by ill-conceived public policy. This Canadian Dream is an expensive delusion. There’s never been a better time to rent.
—

[Personal anecdote] Your lifestyle suffers, your worries mount—and yet, no matter how much data you throw at people, there’s an ingrained belief that being a homeowner signifies maturity and that renting connotes instability and transience. Moshe Milevsky, a finance professor at Schulich and one of Canada’s best-known home-ownership skeptics, has long argued that for young people with limited means and unrealized career potential, stowing most of their wealth in a single illiquid asset is foolhardy. Today, he thinks just about anyone would be better off renting. “I really wish I could sell my house and rent. Immediately!” he says. “The market is so overvalued. I’d sell to the biggest sucker. But my wife and kids would kill me.” That’s because, for most of us, financial considerations are only part of the equation. “The decision to purchase a house goes well beyond the practical,” says Milevsky. “It’s part of people’s identity.”
—

While the average price of a Vancouver home is now more than 11 times the average family’s income, the rental market has stayed earthbound. But VREAA notes that the bubble has raised the “social cost” of renting. “[It’s] become broadly socially synonymous with being relatively impoverished and disenfranchised,” he wrote in a post that drew passionate debate. [‘The Stigma Of Renting In Vancouver’ 25 May 2010 -ed.] One respondent noted that people are renting luxury units in new buildings they can barely afford to give the illusion they own. Another said that even though renting saves him and his wife $4,000 per month, in social terms, “we’ve never felt poorer.”
Vancouver may be extreme, but the stigma is just as real elsewhere. Bradey, the new convert to renting in Oakville, knows that his friends, who are largely well-to-do and own their homes, see his move as a regression. “Even in my own mind, I probably downgraded [my social status] from an A+ to a B+,” he says. Still, he believes that, were most people who may pity him now forced to go without income for three months, they’d be in trouble.
—

In the glow of our pride of ownership, we tend to forget that owning your residence is hardly the global norm. Quebec, where home ownership rates have been rising, remains a renting-friendly society, at least in the urban centres, and Montrealers who move to Toronto are often shocked by the pressure they feel to buy. In Switzerland, Sweden and other parts of Europe, particularly where rental markets are highly regulated, the majority rents. In fact, Germany, Europe’s economic engine, has the European Union’s highest proportion of renters, according London-based property research firm RICS. In Berlin, 90% of residents rent; in Hamburg, the share is 80%. And renters aren’t the lower-income contingent: professionals who spend half their earnings on rent are not uncommon. While Germans do want to own, they don’t feel pressed to buy when they can’t afford to, the way Americans, Canadians and Britons do. The difference can be traced to real estate market trajectories: Over the past decade, while housing bubbles percolated through much of Europe and in North America, home values rose less than 3% in Germany. Renting has no stigma because Germans don’t think of home ownership as an investment opportunity of a lifetime.
—

No one argues that owning a home is, in principle, a bad idea. But today, in this market, renting is a better one. After 12 years of rising real estate, a renter goes against a powerful cultural tide. But even if the housing bubble continues to inflate for months or years to come, it’s high time to recalculate the ownership premium we are willing to pay.
—/ end of excerpts

It is also noteworthy that Pachter’s article is given cover prominence with a strongly worded: ‘Home ownership is a losing bet: Why renting is suddenly making a comeback‘.
And the association of ‘Home ownership is a losing bet‘ with the ‘Suckered‘ headline story can’t be a coincidence, surely …

City Councillor – “The main source of profitability in the real estate market is capital appreciation rather than income.”

“The main source of profitability in the real estate market is the line not shown in your pro forma, which is capital appreciation rather than income. This kind of performance is not untypical of real estate companies who embarked on a buy-and-hold strategy.” – North Vancouver City Councillor Guy Heywood, commenting on a rental apartment developers request to waive city fees to save the project [‘Rental developer asks city for $500K in fee help’, North Shore News, 15 July 2011] (hat tip VCI)

Local governments are endorsing a new norm where developers are expected to build rental properties that are not cash-flow profitable, but rather on the premise that strong price appreciation will continue unabated?
Yet another example of ‘new paradigm’ thinking common during speculative manias. – vreaa

“At Christmas my four full-time employees were shocked to see I still live in a very small town-house with two children. My wife keeps bugging me to move, but if we had a big mortgage it would put me under too much stress.”

Ali at vancouvercondo.info 8 July 2011 9:10am –
“I came to Canada 16 years ago. We emigrated from the Middle East. The process was very long and difficult. We had to have every document translated, and go thorough a couple of interviews. The officer asked us about exactly where our money (which was small) came from, what languages we spoke- he was impressed my wife was fluent in French, asked why we wanted to come to Canada
When we got the visa, we felt like winning a lottery, we were so happy. It took me a long time to get going here, I took any jobs and worked for up-dating my technical skills and English. Finally I got a good job and after a few years I started my own small tech company. It is over ten years now. I have four full-time employees- 2 Canadian (many generations), 1 Serbian man, and 1 Chinese lady and a few contract people too. I am proud that I am helping give four families good incomes, and that we do 80% of our work here, but 60% of business is from outside Canada. Also I am very grateful to Canada for this opportunity.
What has this [to do] with real estate? A lot. I still live in a very small town-house with two children. My employees were shocked at Christmas to see how small and my wife keeps bugging me to move. But I tell her, some months I have to borrow from line of credit to make the pay-roll, if we had a big mortgage too it would put me under too much stress.
This has been a big trouble at home and every time it looks like the market comes down a bit, something pushes it up. The government does some tricks or they let in a lot of people with money (without asking any questions) and we lose the chance to move up.
My employees too have the same problem.”

The speculative mania in housing has punished hardworking, prudent citizens. – vreaa

“What I don’t get is that my friend pays less for rent in Vancouver than I do in Calgary. I don’t know if Vancouver landlords are just more understanding and generous or if the market isn’t that tight for renters.”

“What I don’t get is that my friend pays less for rent in Vancouver than I do in Calgary (And I also paid less when I lived there) for something relatively similar. Most of these houses look like those that have basement suites. Even if you bought before the boom (2002-ish), the house is still around 500-600k. But now that it’s worth 800k, the property taxes should be enormous, add in the costlier utilities and sewage/garbage/recycling fees and I don’t know if Vancouver landlords are just more understanding and generous or if the market isn’t that tight for renters.” – relationship_tom at reddit.com 15 July 2011

“It’s most certainly a renters market. I live in Van and renting is so much more affordable it’s insane. My dad just bought an apartment in Arizona for 80k and is renting it for $900 a month. A similar place here would be 500k but only rent for $1800.” – jsbell_69 15 July 2011

[Comments above from a discussion thread regarding Vancouver Sun article, ’20 ‘average’ homes in Vancouver priced around $810,000′]

Toronto – “Everyone my age and younger is getting into these 500k+ mortgages, thinking they’ve arrived in life. I rent and feel no shame.”

“I live in the Mississauga/GTA, and virtually every billboard, bus shelter and cheap cable ad scroller is taken up by the smiling face of a real estate agent. The condos are still going up, the developments are still breaking ground….it’s a suburban nightmare.
My grandparents had a nice house on the other side of the city; the result of a lifetime of hard work and frugal living. They still travelled mind you, but they saved.
Everyone my age and younger is getting into these 500k+ mortgages, thinking they’ve arrived in life. What happens when interest rates go back to something realistic?
I rent and feel no shame. The ‘buy real estate’ strategy of my boomer parents doesn’t cut it anymore. It just isn’t affordable. There’s more to life than hardwood floors and granite countertops.”
– Dr Porkchop at zerohedge.com 24 Jun 2011 19:22

Michael Geller on Living in Vancouver – “I think there are many better places to live… where you are not worrying quite so much about whether you will ever be able to buy a home, or how to pay such large mortgage payments… and even whether you can afford to have kids…”

Michael Geller (‘a Vancouver based architect, planner, real estate consultant and property developer with four decades’ experience in the public, private and institutional sectors‘) in a comment at Frances Bula’s blog, 24 Jun 2011 12:00am. Excerpts –
“I´m currently ´living´in Javea, on the Costa Blanca about 75 minutes from Valencia on another house exchange. …
Last night, my wife and I were discussing just how our house exchange partners are enjoying life in Vancouver, compared to how we are enjoying life here. [In Spain gas pricier; wine cheaper] From our modern villa we can walk to town, buy an incredible variety of fresh fish at a fraction of the price in Vancouver, or when eating out, enjoy a string of seafront restaurants where you can get a nice 3 course meal, with wine for 9 to 12 euros…no worry about drinking and driving… [In Vancouver drive to restaurant for meal at twice the price] Then again, unemployment is 22% in the Valencia region and although there seems to be so much more industrial activity than in Vancouver, the region is spending more than it takes in and is reportedly on the verge of bankruptcy. …
I would conclude by saying that one´s enjoyment of Vancouver as a place to live is obviously a function of where and how you live…whether you worry about money…and how satisfying your work/life balance is….

There is no doubt that Vancouver is beautiful to look at, but every time we do a house exchange we realize there are many plusses to life in other cities and countries…New Zealand and Australia both come to mind….But we don´t move because we are ‘established’ in Vancouver… our friends are there… etc.
However, if one could feel free to choose, I think there are many better places to live… where you are not worrying quite so much about whether you will ever be able to buy a home, or how to pay such large mortgage payments… and even whether you can afford to have kids… this one really troubles me whenever I hear it from young Vancouver couples…

I agree with [the opinion] that if you can resign yourself to renting, Vancouver may be a better place to live than for those struggling to buy…although those who bought homes for $100,000 that are now worth $2 million and can sell and move elsewhere and retire on their nest egg… would probably not think this way!

So my advice, start doing house exchanges as a way to enjoy relatively inexpensive holidays, and a way to experience life in other places…go to homelink.org to see what´s available.
I must admit that while I am tempted to move to another place, if only for half the year…I do always come back to Vancouver… but I´m not sure it´s because it´s better… just because it´s where I live and it might be too much effort to change!”

[Earlier comments by Michael Geller were headlined at VREAA 23 Mar 2011.]

“I declined a promotion involving a move to Calgary because it would mean giving up our 1 car lifestyle and fantastic rental condo on the seawall.”

alter at VREAA 22 Jun 2011 5:57pm – “I live in Vancouver and work for a multi-national with an office in Calgary as well. I declined a promotion involving a move to Calgary because it would mean giving up our 1 car lifestyle and fantastic rental condo on the seawall, trading in a temperate climate (albeit rainy) for cold snowy winters, and longer commutes to the outdoor activities we enjoy outside of the city. I’m a regular reader of this blog and do believe housing prices are ridiculous here and wouldn’t buy even if I had the means. But despite having lots of options to move, for some reason we haven’t yet. Also had an opportunity come up in Toronto which I didn’t take either. And I have previously lived in both those cities so have a pretty good idea of what they would have to offer.”

“I know a gal and her husband out Vancouver Island way. They have bragged many times about how much their house appreciated over the last few years.”

Utopia at greaterfool.ca 21 Jun 2011 at 11:31 pm–
“I know a gal and her husband out Vancouver Island way. They have bragged many times about how much their house appreciated over the last few years. All swagger and puff and bullshit.
They laugh when I tell them about the cheap little small town prairie houses. They are much too good for that of course. The laughter is not for enjoyment either. They feel sorry (and silently superior) that they earned a housing lottery for having done nothing while the poor prairie folk are stuck picking weeds in the garden. They meanwhile, holiday in Mexico using other people’s money.
So they bought a place down there. Bragged about that too. But I know in fact they can barely make ends meet with the mortgage payments, the kids, the taxes, the new truck and all. He can hardly get a full weeks work lately, she is but a part-timer.
She actually admitted once they didn’t have money for food. The bills had eaten everything up. There was no money left over at all. What to do? She and hubby got a fat line of credit, bought tools and a trailer and then bragged about that too.
I will have to admit that I might just enjoy seeing the smug look on their faces wiped away in the correction that is coming. I wasted too much breathe warning them of the trouble that was coming already. Nothing I ever said changed their minds and they minimized my point of view like it was some weird alien thesis.”

“On my walks around Kits and Downtown, over the past 3-4 months I have seen more property available for rent signs than I have seen in the past 5 years.”

Aldus Huxtable at VREAA 8 Jun 2011 1:59pm and 3:34pm–“On my walks around Kits and Downtown, over the past 3-4 months I have seen more property available for rent signs than I have seen in the past 5 years. Quite a number of friends I have made who were traveling from the UK and Australia have all absconded from Vancouver to elsewhere in Canada for in their words “a better cost of living”. I’ve spoken to a few building managers who have had to lower prices for the first time in years due to a lack of rental applications.People are beginning to go elsewhere, because at a certain point, something becomes bad value for money.”… “I have lived here for 20+ years now and have year by year over the past 8 years seen a majority of long term local friends depart to Montreal, Toronto, Winnipeg, Edmonton, Calgary and Kelowna due to the price of property. People who have grown up here, cannot afford to live close to their families and are forced to move elsewhere. Strangely enough, everyone who has moved away laughs at the cost of living here and insists they’ve given up nothing asides from their friends by leaving.”

“I’m in my mid-30s but I feel like someone who is in their 80s saying “in my day…”. The disconnect between income and housing prices is insane.”

HM at VREAA 2 Jun 2011 11:05pm – “I’ve been working in various companies in the software industry and I’m seeing that there is a difference in what I’d get paid here versus elsewhere. The disconnect between income and housing prices is insane, and this is speaking as someone born in the Interior who has seen the prices go to crazy levels there. I feel like someone who is in their eighties saying “in my day….” and I’m only in my mid thirties. I remember when the coal harbour condos were just going up and seeing the sell prices at $150 – 200K and the prices they go for now is insane. I’m resolved to pretty well never buy a home, probably stay as a renter or take whatever inheritance I get from my parents (god I don’t want to be that ghoul) or move elsewhere and not buy there as well, prices across this country just seem delusional and out of touch with common sense.”

“I live in 600sf on the 8th floor in Kerrisdale. I have a nice little concrete balcony with all my herbs and tomatoes, some flowers, and a new Jasmine vine. My view is spectacular. We rent for $1100/mth. We’ll buy one day.”

Flip Flop at vancouvercondo.info 2 Jun 2011 7:43am – “I live in 600sf on the 8th floor in Kerrisdale. I have a nice little concrete balcony with all my herbs and tomatoes, some flowers, and a new Jasmine vine. My view is spectacular. I have a new outdoor pool (new to me; I’ve only been here for a couple months). The neighbors are mostly friendly (a couple are a little crusty, but flash them a smile and it all goes away).
I love this city more today than ever and I’ve lived here for 12 years. My fiancée and I are paying down debt (my debt), putting as much as we can into a diversified liquid portfolio, and getting married at a beautiful little place on the water past Spanish Banks in October.
We rent for $1100/mth. We’ll buy one day. It’ll be for less than 4x our combined income, and have a rent multiplier around 150. With any luck it’ll be one of the detached at the new Tsawwassen Springs development, so I’ll have a golf course and driving range outside my back door.
This province has lots to offer if you can find a good job and a good partner. My guess is that miserable people will be miserable no matter where they go. Grab a beer, spark a blunt and fuck the Joneses. They’re not as happy as they look.”

US Housing Drops Further – “I could afford a median-priced house, no problem, but I would be paying more to live in a place I like less.”

‘Tim Hebb, a Los Angeles systems engineer, sold his bungalow in August 2006 and has since rented a succession of apartments.’

Excerpts including two personal stories from ‘Housing Index Is Expected to Show a New Low in Prices’, NYT, 30 May 2011 –

The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.
Even as the economy began to fitfully recover in the last year, the percentage of homeowners dropped sharply, to 66.4 percent, from a peak of 69.2 percent in 2004. The ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.
—
Housing is locked in a downward spiral, industry analysts say, not only because so many people are blocked from the market — being unemployed, in foreclosure or trapped in homes that are worth less than the mortgage — but because even those who are solvent are opting out.
“The emotional scars left by the collapse are changing the American psyche,” said Pete Flint, chief executive of the housing Web site Trulia. “There was a time when owning a home was a symbol you had made it. Now it’s O.K. not to own.”
—
Tim Hebb, a Los Angeles systems engineer, expertly called the real estate bubble. He sold his bungalow in August 2006, then leased it back for a year. Since then, the 61-year-old single father has rented a succession of apartments.
“I have flirted with buying again many times over the past few years,” said Mr. Hebb. “Let’s face it, people are not rational creatures.”
But he always resists, figuring housing is still overpriced and even when it stops declining it will stumble along the bottom for years and years. He says there is plenty of time to get back in if he should ever want to.
—
Susan Lindsey, a San Diego software programmer, was once eagerly waiting for the housing market to crash. She said she would have no guilt about swooping in on some foreclosed owner who had bought a place he could not afford.
With prices now down by a third, however, she is content to stay in her $2,500-a-month rented house. She prefers to invest in gold, which she has been buying since 2003.
“I could afford a median-priced house, no problem,” said Ms. Lindsey, 48, as she headed off for a holiday weekend in Las Vegas. “But I would be paying more to live in a place I like less.”
—

“Even with good salaries we’re not finding anything within 10-15km of our jobs. Our limit is $500k, or $650k with a suite. We could look further out, but then we might as well live in a different city.”

MM at VREAA 26 May 2011 5:46pm – “Even with good salaries we’re not finding anything within 10-15km distance from our jobs. To be specific, our limit is $500k, or $650k with a suite. Even further out (pomo, coquitlam) we’re struggling to find a place in that range (but in that area we’d expect some kind of private yard, and not have to deal with $50-100k renovations to bring it to reasonable standard). We could look further out, but then we might as well live in a different city.”

Have 25% Down For SFH, Refuse To Buy – “I feel we have probably avoided the biggest mistake of our lives. I call us ‘strategic renters’ – in more normal circumstances we would embrace home ownership.”

JCH at VREAA 26 May 2011 10:52pm – “We narrowly avoided buying into this completely abnormal market, as we thought it was just annoyingly expensive until we started doing more research. Now I feel we have probably avoided the biggest mistake of our lives. I call us ‘strategic renters’ – in more normal circumstances we would embrace home ownership. (We DO have 25% (!) down for a lower mainland SFH, and could easily afford to buy but refuse to do so.)”

“I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation.”

Smartinuk at talkvancouver.com discussion thread on affordable housing in Vancouver, 17 May 2011 10:18am – “I am a graduate student at UBC and am very saddened that I have no hope to ever afford property in Vancouver, even if I get a good job on graduation. The housing situation in Vancouver seems to be a simple result of supply and demand.”

No, it isn’t, it’s the result of a speculative mania, driven by cheap money and local buyers prepared to overextend themselves to nose-bleed levels based on their fear of being ‘priced out forever’ and their greed regarding the promise of preternatural profits. Once gravity reasserts, things will return to normal range. Even graduate students may be able to afford to buy something, if they care to, at some point in future. – vreaa



facebook page – ‘Canada home buyers, boycott now’

‘Canada home buyers, boycott now’, a facebook page, was launched 20 April 2011. Noted here, for the record.

“My choice is to live on the westside and raise my family there but because of all this foreign money, I no longer can afford it. Something must be done.”

“I am a Canadian-born Chinese male who is in his near 40s. My choice is to live on the westside and raise my family there but because of all this foreign money, I no longer can afford it. Something must be done. It is in the neighbourhood’s interest to stop foreign investment. These families send their kids to school in your neighbourhoods unsupervised…driving their Ferrari’s and BMW’s. How can unsupervised but very well off kids be good for any school or neighbourhood? Governments must step in to protect the integrity of these neighbourhoods and allow hard working 2 income families with strong family values to have a chance to live there.”
– anon206444676 17 May 2011 12:04am, in the comment section of the Vancouver Sun article: ‘Chinese Spreading Wealth Make Vancouver Homes Pricier Than NYC’.

Archived here because this kind of ‘call for action’ on the part of ‘governments’ has become common in the Vancouver RE discussion. We fear the unintended consequences of government intervention in the market, and believe that the speculative mania will run its due course regardless of such intervention. – vreaa

“We cannot afford a home in our own city despite 12 years of university between my husband and I – both with masters degrees.”

“We cannot afford a home in our own city despite 12 years of university between my husband and I – both with masters degrees but no chance to compete against money of unknown, and too often criminal proceeds.” – Bella Donna 17 May 2011 1:34am, in the comment section of the Vancouver Sun article: ‘Chinese Spreading Wealth Make Vancouver Homes Pricier Than NYC’.

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

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

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

Softening Rental Market? – “He says tenant quality has been challenging recently but doesn’t know why” … “Everyone who could buy, did. There just aren’t any fools left to buy.”

jesse at VREAA 1 may 2011 7:43am – “Anecdote: talking to friend of mine who lives in Taiwan. Was renting furnished apartment downtown to some guy in the film industry. Anyways the guy had to abruptly leave back to the US. My friend was having trouble finding another tenant so flew back to Vancouver (yes) to administer the tenant search. He says tenant quality has been challenging recently but doesn’t know why. Also, a few friends of mine have noticed a larger number of cooperative postings recently, from many cooperatives that are typically lined up with applicants. Maybe it is just randomness. Haven’t heard many anecdotes from the rental world recently.”

pricedoutfornow at VREAA 1 May 2011 9:14am – “I too, have noticed a lot more postings for co-ops, and also Metro Vancouver’s affordable housing. My friends who bought the Olympic condo to flip (didn’t happen) turned accidental landlords also had a hard time renting it out. They said they had NO calls, and finally rented it for $1200/month to some guy who only stayed 3 months. This is about $1000 less than the mortgage payment.
My guess is we’re at a point where everyone who could buy, did, in the past few years, leading to the bottom of the barrel left in the world of tenants (apart from those of us who think the bubble is going to burst). This is the point where it all collapses because there just aren’t any fools left to buy.”

“I would be content with a house like this. My dream has been shattered.”

unicas at RE Talks 26 Apr 2011 9:24pm – “I will be content with a house like this, doesn’t have to be in Vancouver. This is the kind of upper middle class housing we expect to see in most parts of North of America. My dream has been shattered.”

4,351 sqft SFH; 0.46 acre lot; built 2006
Ask Price: $479,999
Price/sqft: $110/sqft
On market 180+ days
MLS/ID: 11490706
Shady Shores, Texas, 76208
[Median household income: $94,746 – ed.]

Prospective-But-Waiting Buyer Sentiment – “My brain is fighting my heart. Holding this type of conflict is really hard on a person.”

Kelli at greaterfool.ca 21 Apr 2011 12:53am – “We could buy a 2 million dollar home with no debt. I struggle with this every day. Garth [Turner] helps me rationalize renting. My brain is fighting my heart and holding this type of conflict is really hard on a person.”

Westside Couple Do An ‘Isaac Newton’ – “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special in the same neighbourhood as where we sold. I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars. I’m scared and confused about our decision.”

Anna’s story as told by Garth Turner at greaterfool.ca 20 Apr 2011 –
“Two years ago Anna and her husband decided to sell their house on the west side of Vancouver. “At the time it seemed like a good idea,” she says, “because interest rates were forecast to rise and we were seeing a housing recovery here after the global recession. Our goal was sell high and buy low, anticipating a decline in the market.” The five-year-old house went for $1.2 million. They were ecstatic. That was $1.1 million more than they had the day before. But joy has turned into gut-wrenching, debilitating stress.
The same house today sells for $1.4 million. Meanwhile Anna, her husband and 15-month-old daughter have been living in a 500 square foot suite for $1,100 a month – with $1.2 million sitting in cash in the bank. Idling. Coiled. Waiting to pounce. In their minds only one asset class exists – a house.
“We are getting very claustrophobic. My husband is getting anxious and wants to re-enter the housing market.  I want to wait.  However I am also very scared because it seems the market keeps rising.  There seems to be no end in sight for increased prices.”
The ‘buy now, or buy never’ fear has etched their minds and strained their lives. The clear logic they felt before – sell high, buy low – has been replaced with an icy, pervasive terror that real estate will rise forever, and a confused couple with only $1.2 million in cash will be locked eternally in a basement suite. Deprived. Wanting.
Yesterday Anna wrote: “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special listed for $1,328,000, in the same neighbourhood as where we sold. We already have the inspection lined up before the offers are presented.  I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars.  I’m scared and confused about our decision.  Not able to sleep, so here I am writing my thoughts to you.  I’m really confused what to do. And how long will we have to wait before the market comes down.  Any ideas?   We are already at a loss of $200,000,000 and can’t afford any bigger loss. Anna.”

Isaac Newton held shares early in the South Sea Company Bubble. In April 1720, seeing and understanding the nature of the bubble, he sold his £7,000 holding of shares. The bubble continued to inflate. Newton couldn’t resist, he bought back in, heavily. The bubble collapsed. When all was said and done, he had lost £20,000.
Anna and her husband made a wise decision two years ago. They are about to reverse that. They are buying out of fear of being ‘priced out forever’. They are, also, speculating on ongoing rising prices, even though most would not label their buying ‘speculative’.  -vreaa

Recent Arrival – “To say there is a bubble in Van city is an understatement. And condo construction material and workmanship is disgusting.”

Dclipse at greaterfool.ca 16 Apr 2011 12:15am – “My wife and I just moved here from Mississauga ON. Sold our condo there and renting now in North Van. 2 year old building. Nothing is falling apart yet… but the material and workmanship is disgusting. And btw, it’s a 760 sq. ft. unit worth $450,000 according to similar ones on mls. We sold our 1015 sq.ft 2bed 2bath for $278.000. To say there is a bubble in Van city is an understatement. At least our old place [in Ontario] was excellent quality. And for 6 years we lived there it was as new. If you’re paying big money for a place you should at least have good quality (you would think). Met a guy 2 weeks ago that works for a company fixing leaky condos. Says they’re making a killing. And right now they’re working on a 3 year old building in Yaletown. Can you believe that?”

Social Effects Of A Real Estate Cult – “We’ve created a generation of young people whose sole ambition is to have a piece of property under their name”

Extracts from ‘For Many Chinese Men, No Deed Means No Dates‘, NYTimes, 14 Apr 2011 [hat-tip both Nemesis and Nick] –
“In the realm of eligible bachelors, Wang Lin has a lot to recommend him. A 28-year-old college-educated insurance salesman, Mr. Wang has a flawless set of white teeth, a tolerable karaoke voice and a three-year-old Nissan with furry blue seat covers. “My friends tell me I’m quite handsome,” he said in confident English one recent evening, fingering his car keys as if they were a talisman. But by the exacting standards of single Chinese women, it seems, Mr. Wang lacks that bankable attribute known as real property. Given that even a cramped, two-bedroom apartment on the dusty fringe of the capital sells for about $150,000, Mr. Wang’s $900-a-month salary means he may forever be condemned to the ranks of the renting. Last year, he said, this deficiency prompted a high-end dating agency to reject his application. In recent months, half a dozen women have turned down a second meeting after learning that he had no means to buy a home. “Sometimes I wonder if I will ever find a wife,” said Mr. Wang, who lives with his parents, retired factory workers who remind him of his single status with nagging regularity. “I feel like a loser.”
…
Working-class buyers have been frozen out of the market while an estimated 65 million apartments across the country bought as speculative investments sit empty.
…
Han Han, one of China’s most widely read bloggers, frequently assails the government policies that he and many economists say have contributed to rapidly rising prices. In an interview, he said one consequence of the single-minded focus on real estate, or on earning the money to make mortgage payments and repay family loans, is that young people have little time for anything else. “We’ve created a generation of young people whose sole ambition is to have a piece of property under their name,” he said.
—–

While the social ramifications of the owner/renter divide in Vancouver is less extreme, it’s not a million miles from that described in this article. – vreaa

“We love it in Vancouver but are making plans to move within the next couple of years as we’ll never be able to afford to buy a reasonable home here. People move here, stay for a few years, then inevitably leave as it’s just too unaffordable.”

“My wife and I are in our early 30’s and are both professionals, all of our friends generally fit the same description. We love it in Vancouver but are making plans to move within the next couple of years as we’ll never be able to afford to buy a reasonable piece of property home here. Believe me, we don’t want a ridiculous McMansion and just want something basic, but that simply doesn’t exist in Vancouver anymore.
Almost all of our friends are making similar plans; a couple we know moved to Nanaimo last year as they could both find equivalent work and could buy a detached home for the less than the price of a one-bedroom condo in Vancouver.
There’s a reason this city feels so transient compared to places like Toronto and Ottawa; because it is. People move here, stay for a few years, then inevitably leave as it’s just too unaffordable.”
– mizike, reddit.com, 13 Apr 2011
[hat-tip matt, for alerting us to this reddit discussion]

Related comment from same thread:
“[I will be] moving from BC to ontario or quebec in the next few years. This actually makes me happy to know I’m going to be in a kick ass home once I switch markets.” – monolithdigital, reddit.com, 13 Apr 2011

Rent Is Still Relatively Low – “Just moved to Vancouver. The place I’m renting in the West End is nearly identical to my Toronto rental, only it’s 100 dollars cheaper and it’s right downtown, instead of 8km away in High Park.”

“I found Toronto’s rental prices to generally be higher than in Vancouver. Just moved [to Vancouver] a month ago. The place I’m in is in the West End and it’s nearly identical to my previous, only it’s 100 dollars cheaper and it’s right downtown, instead of 8km away in High Park. It’s also has a wicked view of English Bay.” – megapickles, reddit.com, 13 Apr 2011 [hat-tip matt]

Real demand remains modest. The rent/price ratios prove we are in a massive speculative price bubble. -vreaa

Mindless Consumption – “Spending money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.”

“Having your entire financial worth wrapped up in a house and living on its nominal value is a risky situation. But in a way, [this] is only following cultural norms. Homes today fulfill much more than a need for shelter. They are physical representations of our tastes and the lives we lead — or wish we led. Last year, Los Angeles Times columnist Meghan Daum chronicled a lifetime of housing lust in a memoir whose title sums up a common attitude: ‘Life Would Be Perfect if I Lived in That House’. “Few things in this world are capable of eliciting such urgent, even painful yearning,” she writes. – from ‘Housing: Real insanity’, Canadian Business magazine, April 25, 2011

“We are being persuaded to spend money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.” —Tim Jackson, economist, from talk at TED.com

Canadian Business Mag: ‘Housing: Real insanity’ – On Renters And Owners

The article by Joe Castalado at canadianbusiness.com 25 Apr 2011 is an absolute must read for anybody with even a vague interest in Vancouver RE. It is a multifaceted article, and we have/will highlight various bits and pieces of it elsewhere. It is headlined here to archive its presence in the chronology and to encourage all to take a look.

We also take the opportunity here to highlight excerpts that summarize well the renter/owner discussion:

“Canada has a long history of embracing property ownership (it was once a requirement to vote), and government policy continues to support it. “It’s a virtuous circle,” says Phil Soper, CEO of Royal LePage. “Governments have been elected over the years for putting forward policies that encourage home ownership, and people have in turn viewed it as good policy.”

Politically, it makes sense for governments to cater to homeowners, a powerful voting lobby. But part of the logic behind supporting ownership is that it’s [good] for society. The prevailing wisdom is that homeowners vote and volunteer more than renters. They’re more engaged with their communities. They’re even healthier. In short, property ownership makes better citizens.

The evidence for this is dubious. William Rohe, director of the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill, summarized the existing research a few years ago for a Harvard University housing journal. He found that homeowners have higher self-esteem than renters, but pointed out that the original studies may not have adequately controlled for other contributing factors. Numerous studies also show that homeowners participate more in volunteer organizations and political activities. It’s still unclear, wrote Rohe, whether ownership actually leads to this behaviour. Yet another purported benefit of ownership is that it fosters better education for children. Again, the evidence is weak. A paper in the journal Real Estate Economics published in 2008 examined much of the literature using more sophisticated analytical techniques. It found that children of American homeowners scored no better on math and reading tests than renters’ kids, nor did they have lower high-school dropout rates.

Grace Bucchianeri, a professor of real estate at the Wharton School of Business, found the societal benefits of home ownership to be similarly overblown when she examined data collected from 600 women in Ohio. She found little evidence to support the idea that owners participate in civic and community activities any more than renters, and after controlling for factors such as income, housing quality and health, she concluded that owners were no happier. In fact, they spent less time on leisure activities and socializing with friends than their renting counterparts. When you look beneath our assumptions, Bucchianeri writes in her 2009 study, “the intuitive link between home ownership and well-being breaks down.

As for the renter’s fear of losing out financially, that too is exaggerated. Today, the average home-price-to-rent ratio is at its highest level on record, which means renting may actually be more affordable than paying a mortgage. Furthermore, a 2007 study from the UBC Centre for Urban Economics and Real Estate found that over the past three decades, renters could have beat homeowners’ financial results. The study examined the theoretical returns of buying versus renting in nine Canadian cities. In four of them, renters who invested wisely could accumulate 24% more wealth than homeowners, and match it in three others.
…
Considering the inconclusive research, it might be time to rethink the degree to which governments support homeownership. David Hulchanski, an associate director of research at Cities Centre at the University of Toronto, for one, argues that our current system punishes renters. … Housing policy should stop blindly favouring ownership, Hulchanski argues. Eliminating the capital-gains tax exemption on home sales would be one way to free up some cash. “That’s billions that could be used on rental or social housing, and we rebalance the system,” he says. He knows the prospects of that are next to zero, however. “Even the NDP is silent on it.”

“Hi, my name is Kate and I’m a recovering real estate addict…”

Kate at greaterfool.ca 9 Apr 2011 12:35am –
“Hi, my name is Kate and i’m a recovering real estate addict. I used to spend afternoons searching for the perfect home on my pre-approved budget. Then i started watching home and garden. I hit rock bottom when i started scheduling viewings for houses we couldn’t afford.
Luckily my husband stepped [in and] held a real estate intervention before things got bad.
We live in a beautiful million dollar rental, and pay 2200 a month. I sometimes feel like i want to own, thanks to pregnancy hormones. But i’m happy, debt free, and i don’t have to pay an 800 a month strata fee.
Reading this blog [greaterfool.ca] gets me through the hard nights when i want to pull up mls and buy a house in Vancouver. Thank-you garth [Garth Turner, at greaterfool.ca] for saving us lots of money.
Now if you could only write an anti-designer hand bag blog my husband would really owe you.
Thanks again.”

“My wife and I could buy a place outright and have no mortgage which is much less than what we pay in rent. That still doesn’t mean we should buy.”

CanuckDownUnder at vancouvercondo.info April 7th, 2011 at 2:46 am offers a position that applies as well to the Australian bubble as it does to ours – “My wife and I could buy a place outright and have no mortgage, which is much less than what we pay in rent. That still doesn’t mean we should buy.”

A simple truth that is still lost on many. – vreaa

Australian Home Buyer Strike Campaign – “First home buyers have been duped into entering the bottom rung of a nationwide property ponzi scheme.”

For the chronological record, we note this action here, and also note that this is being discussed on Vancouver and other Canadian RE blogs. For an account, see ‘The homebuyer strikes back’, abc.net.au, 31 Mar 2011. [Hat-tip Don.]
Excerpt:
“The housing market has spiralled off into ridiculous pricing that nobody can possibly afford, and it gets to the point where if nobody can afford it the prices must change,” he added. Mr Collyer says first home buyers have been duped into entering the bottom rung of a nationwide property ponzi scheme. “The first home buyers are the greater fools of the real estate market – that is, the entire edifice of land prices in particular depends upon this constant influx of new first home buyers naively entering into outer suburbs, into lower-priced housing to boost the price of everybody else’s housing up the chain,” he explained. “Now, when you remove that first stage of real estate pricing, the whole edifice collapses – it’s the end of the game.”

While we agree with the sentiment, we don’t believe that campaigns like these have a high chance of working directly. They do, however, spread the word, educating more people about the nature of the bubble, and that is a good thing. “Hey, I don’t HAVE to buy!”; “Hey, if I try to sell, there may not be a buyer!”
Simply seeing ‘Housing’ and ‘Ponzi Scheme’ in the same sentence in the national media is noteworthy enough. We haven’t seen that yet in Canada, to the best of our knowledge. – vreaa

“I had a client who was convinced that the Vancouver real estate market had finished it’s run and the bubble was about to pop. Now, prices are even higher and he cannot afford to purchase.”

From Lisa Gibson, Vancouver Realtor, self posted video at youtube, 18 Nov 2010 – “Hi, I’m Lisa Gibson, with MacDonald Realty, I help people buy and sell homes in Vancouver.
“Should I buy now or should I wait until the market slows down?” – This I get asked a lot. Generally, as most of you know, any of you who have waited more than a couple of years, have been outpriced by the market. So, I guess, overall the answer is, if it’s your home, you’re better off to buy when you can afford to buy, than [to] wait.”

From blurb accompanying the video:
“If you are waiting for the Vancouver real estate market to go down – don’t hold your breath.
Three years ago I had a client who was convinced that the Vancouver real estate market had finished it’s run and the bubble was about to pop. Three years later, prices are even higher and he now cannot afford to purchase.
The Vancouver real estate market has seen a steady increase for the last 10 years. This is in large part due to two factors: one, the fact that we have very limited land space in which the city can grow; two, we have a steady stream of immigrants from China who keep pressure on the market which in turn keeps our Vancouver and Richmond real estate prices from collapsing.
Generally, if you are buying a home it is always a good time to buy in Vancouver. Even if the market drops slightly, you are paying down a mortgage and building up your equity.”

This is always the story in a bubble, those on the sidelines look stupid until the whole things comes crashing down, then they look wise. Still, painful for the prudent in the meantime.
Also noteworthy for the “building up your equity”  and “(real estate always goes up (don’t hold your breath variant))” chestnuts.
-vreaa

Addendum: This honest impression from another Lisa Gibson video 18 Nov 2011[excerpted from video and blurb] – “How Do People Afford Homes In Vancouver? I don’t know! If I did, and there was some secret I would definitely share it here. I see some young people either getting money from parents, or the money is coming from overseas, or.. I just have no clue.. because they certainly are not making the money that can afford the prices that these homes sell for in Vancouver. [emphasis ours. -ed] Frequently I see young couples purchase an $800K plus home, in Vancouver or Richmond, and they are only in their early 30’s. I have no idea how they can afford it. I often wonder if they are just completely maxed out on credit.”

“My wife and I earn nearly 4 times the median household income in Vancouver. We can’t afford to buy a decent home for our family. This thing either starts crashing or we are out of here.”

Cognizant at greaterfool.ca 9 Mar 2011 12:33am [hat-tip to Nick] – “My wife and I earn nearly 4 times the median household income in Vancouver. We can’t afford to buy a decent home for our family. This thing either starts crashing or we are out of here. I can’t live with the rage I feel towards all of the greedy realtors and house porn addicts who don’t see that the crazy RE prices here are DESTRUCTIVE and dangerous. I am so crazy mad at all of this. …
Everyone is so blinded and irrational about this that it is pretty lonely being a RE bear these days.”

Destructive and dangerous. Agreed. – vreaa

“There is a suite for sale in my building” – Rent vs Buy Comparison

taylor192 at vancouvercondo.info March 8th, 2011 at 9:19 am–
“There is a suite for sale in my building for $310K. 10% down for 30 years @ 4% is $1300/mn plus $150 condo fee and $150 property tax == $1600/mn for 480 sqft without a bedroom. Similar units rent for < $1200/mn.
A 900sqft 2bdrm just rented for $1750/mn. There was a young couple looking at buying it, I couldn’t fathom it. I would probably kill my partner if I had to live in such a small space, with less money available to do things outside of the space.”

‘The Rent Is Too Damn High PARTY’ – “Every day more and more good folks are being forced to leave as affordable homes get torn down to make way for million dollar condos and the transformation of this city into a resort city for only the rich.”

From Gord via e-mail, found on facebook [Thanks Gord].
Conrad Schmidt is the head of the Work Less Party, “known for co-organizing parties in East Van with political overtones”:

The Rent is Too Damn High PARTY

Time	Friday at 21:00 – 12 March at 02:00
Location	Commercial Drive Legion
Created by:	Revelry Society, Chris Masson, Conrad Schmidt, Adrian Sinclair
More info	Featuring funky fresh tunes from…. – Freeflow – Timothy Wisdom – Dakk vs Slice … Saucy, Scintillating Burlesque Performances from: – Roxette Starr – Vermillion Viper -and your MC for the evening, Mr Chris Masson As with any Revelry party, good times abound! But best of all at the end of the party, the profits from the event go to helping out some needy friends. Folks who can’t pay rent that month or who are a struggling, toss your name into Andrea’s Hat of Good Fortune. If your name is drawn, the PROFITS FROM THE EVENT GO TO HELPING YOU OUT WITH YOUR RENT! Read below for how our happy hat will work. Where: The Legion Hall, 2205 Commercial Drive When: Friday March 11th Cost: $10 Why: Vancouver has become they most unaffordable city in the English speaking world despite a 1.5% increase in unemployment this year. Every day more and more good folks are being forced to leave as affordable homes get torn down to make way for million dollar condos and the transformation of this city into a resort city for only the rich. –Rules of Andrea’s Happy Hat– The Max that can go to any single person is $400. If profits are greater than that, the remaining cash goes to successive drawees. This is an honor based system, please only throw your name into Andrea’s Happy Hat if you are truly havin a bad rent month. Please help support this event by sharing this facebook link with as many folks as possible. ++Brought to you by the Revelry Society++ http://www.facebook.com/group.php?gid=336554775401

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.”

“This is what it’s like dealing with newbie landlords.”

Canayjun at greaterfool.ca 12 Feb 2011 4:47pm – “The numerous first time landlords, that arose from the enormous level of spec buying in past two years, are an interesting bunch. They have no clue what they are doing. The four I have negotiated a lease with recently, all believed they were going to buy in and flip the property for a quick profit of $20,000 to $50,000.

None of them knows how to be a landlord. One gave back the damage deposit, not mine, the previous tenant’s, (minus $200), then tallied up the costs to repair the damage (which totalled $600). He was informed by his realtor (who did a market evaluation for him), that he rented us the condo far below market value. I thought it was a good deal. And apparently it was a good deal. Good for us.

Another newbie landlord didn’t know how to fill out the rental agreement forms. I had to do it for them. Another landlord thought they could store whatever they wanted in our back yard, after we moved in. We actually got into arguments over it. They didn’t understand that the house and yard was now ours, not theirs.

Another landlord increased the rent by the allowable amount in BC, then threatened to kick us out if we didn’t sign another one year lease–totally illegal. When he realized he couldn’t kick us out for not signing another lease, he offered to reduce the rent to its original amount if we signed another lease.

Another landlord thought he would store dump trucks on the unused/unoccupied portion of the property on our current acreage rental. I already shut down the dump truck storage (30 trucks) that was beside us on the neighbours property by complaining to city hall. So our landlord thought he could move in 50 dump trucks and store them on the other side of us to make some money. Never going to happen.

Another landlord deposited our rent cheque into the wrong bank account, apparently he has several bank accounts, and then demanded another rent cheque to cover the “missing” rent from August. It took five hours to make him understand he wasn’t missing any rent.

This is what it’s like dealing with newbie landlords.

It’s so much better to rent through a management company. On high end properties they are very, very willing to fix things quickly. And we are currently renting three high end properties.

But these are all minor worries really. My two big worries are if they are going to sell at lease renewal time and whether they might end up in foreclosure.
In reality, my worst case scenario is having to move before I want to, and even that is not the end of the world.”

“Our rented condo is supposedly worth $460k (based on a current listing in the building). And yet we can’t believe that this piece of crap is worth any more than $150k.”

pricedoutfornow vancouvercondo.info February 12th, 2011 at 6:56 pm– “My rented condo is supposedly worth $460k (based on a current listing in the building.) And yet…SO and I can’t believe that this piece of crap is worth any more than $150k. It’s 6 years old, and every morning and night we have the privilege of listening to what we’ve dubbed “Niagara Falls”-water gushing down the pipes in the wall whenever the people upstairs flush the toilet/have a shower/wash their hands. We moved our bed so the water gushing isn’t above our heads (heaven forbid a pipe bursts) and SO has taken to yelling “Quit peeing!” whenever the water starts to gush. As a bonus, we’re beside a corridor which leads outside, we can hear people clomping down the stairs ALL THE WAY from the 4th floor! Starts at about 6am every morning as people rush out to get to work.
Dear God, I’m so glad I didn’t buy this place, because I would be planting pipe bombs in the developer’s mailbox right about now. This market has got to correct, if only because owners are pissed enough to realize they’ve bought into a garbage wood-frame building.”

“It’s very frustrating. We’re willing to pay but we can’t find anything.”

From ‘Tight market sparks bidding wars in hot neighbourhoods‘,  Vancouver Sun 12 Feb 2011 – “Miri Malkin and Gabi Kabazo, the parents of three children under 4, are living in a Yaletown condo while they look for a house in Vancouver in the $800,000 to $1-million range. The couple are pre-approved and plan a 40- or 50-per-cent down payment. They’ve been looking since May, but have yet to put in a bid because all the houses they’ve looked at are either fixer-uppers or don’t have enough space for their family. They would prefer to live in Vancouver rather than move to the suburbs.
“It’s very frustrating,” Malkin said. “We’re willing to pay but we can’t find anything.”
The couple, who moved to Vancouver from Israel in 2004, were looking in 2008 but didn’t buy because they thought prices might come down. One Arbutus townhouse they looked at was priced in the $700,000 range and is now listed for more than $1 million.”

“News of bidding wars in an overheating Vancouver market comes on the heels of a TD Economics report that identifies B.C. residents as most vulnerable to interest rate hikes, a housing correction or an economic downturn. The province’s average household debt-to-income ratio of 160 per cent is the highest in the country and matches levels reached in the U.S. just before the financial crisis and housing bust.”

[It probably goes without saying that, if we were in this couple’s position, we’d sit tight in the current rental or, perhaps better still, rent a SFH in one of our target areas. That way, when prices collapse, we’ll know even more about where we want to eventually buy. … The Sun perhaps deserves some kudos for at the very least printing a few words of reservation (citing the TD warnings). It continued the article, however, with old stalwart Tsur Sommerville again assuring us that a crash is impossible in Vancouver, and, whatever the outcome, “It’s just sort of what variant of expensive we’re looking at.” -vreaa]

“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.”

“Now they are about 1.3 million into a house that might be worth 1 million tops AND they still need bank financing.”

John Davies at VREAA 3 February 2011 at 11:19 am–
“Back in 2007, I bought a house for 725K$ in North Vancouver, put 70K$ in materials renovating it and sold it for 925K$ 8 months later which netted me 100K$. I had to change the closing date 3 times because the purchaser had problems closing (financing) and I was very reluctant to keep his deposit. This purchaser loved the renovations and the sale price was an area record.
So one would think end of story, No it gets worse for very nice couple.
These buyers that the bank reluctantly approved got hold of a builder that quoted them 200K$ and 3 months to renovate again. So they are renting as we speak.
They ripped out all the renovation that I did (new kitchen, new bathrooms, new flooring, everything) and are up to 350K$ in this new renovation.
They joking tell the neighbours that they are wondering if the bank will finance this.
Meanwhile, I am happily renting and although we are all adults and each person has a head on their shoulders, I wonder what some people are thinking.
Now they have about 1.3 million into a house that might be worth 1 million tops AND they still need bank financing.
I hope this ends better for them than I think it will!”

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.”

“I’m just plain sick of hearing from everyone how much they have made from flipping houses while I sit there renting.”

Singh at greaterfool.ca 31 Jan 2011 12:45am – “I’m just plain sick of hearing from everyone how much they have made from flipping houses while I sit there renting. Can’t wait for this all to play out!”