“Their combined family income is just over $200K per year. They could buy a SFH but don’t want to, because, in her words, it would be a dump and they’d be elbow-deep in mouseshit and stucco for 3 years. Should have seen her eyes when I told her she is in the top 1%.”

“Met a nice fellow today at an event who said he and wife make just over six figures (combined) and were just pre-approved for $1.2 mil. He said he knows they can’t afford more than $400K at present rates. But nice lady at the bank said not to worry – rates aren’t going up soon. Wonder where she heard that from, and what “soon” is in the context of a 30 year shackle. A friend sells mortgages at same bank. Nice gal. Earns $46,000 a year, dropped out of general arts in her 3rd year of undergrad, took a mandatory 5 day combined mortgage/financial advising course at the bank, rehashes one page flatsheet talking points to existing bank customers.”

“I work with a very nice gal whose combined family income is just over $200K per year. They own a 2 bdrm condo in East Van and can’t afford a SFH but desperately want one because of growing family. Actually that’s not true – they could buy a SFH but don’t want to, because, in her words, it would be a dump and they’d be elbow-deep in mousesh!t and stucco for 3 years, and they actually want to buy vegetables and contribute to an RESP for their kid but couldn’t afford to with an $800K mortgage. Should have seen her eyes when I told her she is the 1% – she figured you needed at least $500K per year. Nope… $230K. What’s 35% of that? After tax: $3,500 per month. With rates up 200 bps in 3-4 years… that’s probably getting you a $500K mortgage or a bit better by my math. Yeah, that’s a healthy market… the 1% can only buy half of the “average” house without a hefty DP.”

“This is what sickens me and drives me to post my useless rants on [RE Talks] – not (just) that I want to buy a reasonably priced SFH in the LM. I’m not some bitter lefty renter – I’m a fiscal conservative to the core, and own property outside the LM. I just can’t stand to see the lies and deceit that will harm so many people while the insiders make out like bandits once again.”

– Arthur Fonzarelli at RE Talks, 15 Jun 2012 10:08pm

Four stories in one here:
1. Couple earning $100K+ pre-approved for $1.2M.
2. In-house bank salesperson selling mortgages with minimal training.
3. Family earning $200K+ reluctant to move up because of perceived low value in SFHs.
4. Fiscal conservative RE owner seeking a “reasonably priced SFH” in the lower mainland.
Common themes?
Readily available cheap credit resulting in elevated home prices reflecting very poor value.
– vreaa

“Today’s consumers are better informed, connected and tech-savvy. And they expect the same from their realtors.”

“When Ashley Smith, a 27-year-old realtor in Vancouver, gets a new listing she tweets out the details to her followers and posts the property’s profile on her Facebook page.
And shortly, once her new website is up and running, Smith, who previously worked in the Langley/Surrey property market, will also run a blog to promote her listings and broadcast her thoughts on trends and housing opportunities in the Greater Vancouver area.
A few years ago, a For Sale sign on the property and some New Listing flyers dropped on the doorways of neighbours might have sufficed. But today’s consumers are better informed, connected and tech-savvy. And they expect the same from their realtors.”
– from ‘B.C. Realtors increasingly embracing social media and the web to stay ahead of the pack’, Cassidy Oliver, The Province, 15 Jun 2012 [hat-tip paul S]

It is natural that realtors should be using social media to promote business.
In fact, it would be welcome for BC realtors to use technology to inform consumers even more, in particular, to share data that they have on the market, such as the sales history of each specific property, a la Zillow in the US.
This article is also a reminder that young people continue to be attracted to realty as a career; this is understandable given the strength of the market over the last decade, but it is also an example of the misallocation of resources caused by the speculative mania in housing. There are more than 11,000 realtors in the Greater Vancouver area, up from 6,500 in 2002, and the highest number on record.
– vreaa

A chart from 2010. Membership is now >11,000 [as per REBGV]:

‘The Starbucks Factor’ – Vancouver RE Prices Explained

“When you are buying your first house, you may want to pay special attention to where the closest Starbucks is located. ‘The Starbucks Factor’ is a remarkably accurate qualitative measure that is great at predicting where the next hot neighbourhood will be. Where Starbucks goes, that’s where real estate values are on their way up… They put massive amounts of money into researching that area to make sure they have a solid location. … The way to get the most out of this factor is to buy in a neighbourhood where there isn’t a Starbucks yet, but where there is likely to be one soon. It’s not exactly easy to figure out, but, if you understand neighbourhood trends and you have a realtor on your side who knows the areas that are appreciating at a faster rate than others, you can find the next up and coming area.”
– Andrew la Fluer, Toronto Realtor, self-posted video at youtube, 18 April 2012

This explains EVERYTHING about the Vancouver RE price run-up…
Joking aside, using this strategy may still result in you buying a house that then proceeds to plunge in price, but, at least you’ll have the consolation of knowing you have a large variety of refreshing coffee-based beverages close at hand.
– vreaa

“I know a young couple who bought a 400K condo assignment in Vancouver. In discussion they generally deflected, avoided or otherwise tried to bury their heads in the sand. If it wasn’t so sad, it would have been amusing. However, I came to observe a few things…”

“I know a young couple who bought a condo assignment (for a 400k condo in Vancouver). The condo will be finished sometime next year. They are both moving to rural Alberta for a year or two to earn a lot more money to pay off the wife’s student loans for dentist school and the mortgage. They leased another car (SUV) recently so they can drive there. They are not going to rent out the condo when it’s finished because they wanted a new place. They have also extracted all their RRSPs (with maybe help from parents) for a down payment.

In the discussion with the husband and family that followed, (as expected) they generally deflected, avoided or otherwise tried to bury their heads in the sand. If it wasn’t so sad, it would have been amusing. However, I came to observe a few things.

1) They have no idea how the market works.

When I told them that house prices may be down, and listings were up, the responses were:

“I don’t care about house prices, of course those are going down, but condos are still going up or holding their value.” Huh??

“The reason there are so many listings are that people are just seeing what they can get for their houses, they’re not trying to sell.” Uhh? Apparently it’s free to list. (Both in time and money.)

2) They have no clear idea how debt works.

The counter to “when prices correct to 50%..”, was that at that point, it would just be cheaper to “upgrade”. I was shocked. In a debt-equity relationship, when “equity” goes down, you first lose value in your equity, not in your debt. In fact, you never “lose” your debt. I used 5% down as an example, and he didn’t realize that at the end of 5 years, unless everything they both earn are paying for the mortgage, that a 50% drop would mean that they’re probably 30% underwater. They will have NO equity to “upgrade” if they can even renew their mortgage. At this point, he disregarded that and went back to his example of how if his condo was worth 200k, he could still…

3) They use select anecdotal evidence only, with no statistics or any other information to back their opinions.

Sometimes these pieces contradict themselves — I don’t see how they could not see it.

“My friend works at the RBC and approves of mortgages. There’s a lot of cash only buyers from China.” … I thought cash-only meant they didn’t need a mortgage…

And of course the standard “housing prices always go up”. Anything that shocks them, just gets deflected and any statistics are ignored and rationalized by some made-up opinion.

4) They don’t understand the relationship between “home” and “equity”.

“We don’t see this as an investment. We plan to stay there long term, at least 5 years. If you want to start a family, you will have to buy a place, you won’t be able to time it.”

Yup, the standard arguments. It’s almost like they all have the same script. Anyhow, I wasn’t cruel enough to break it to them, but they ARE using it and treating it as an investment. If not, they would not talk about using the “equity” in the condo to upgrade. At the end of the day, they do plan for their place to have “value” in it. Otherwise, what’s wrong with renting? (See next observation…)

5) Any alternative is seen as impossible.

No no no… no talking about renting. “Well, if I were to rent, I’ll have to deal w/ having to find a new place when the landlord kicks me out. That’s a hassle and represents time. And time is money.”

I really wish no one coined the “time is money” bit, it’s always misused. Time represents sweat equity (maybe) which maybe translates into money.

I was also not cruel enough to point out that the inconvenience of renting is probably a lot lower than the inconvenience of being homeless, but I kept it zipped.

I’ve shown them graphs and blog entries and videos already. I’ve done my good turn already. I don’t expect them to change their minds on the spot, I am just hoping it’ll give them something to reflect on — that doesn’t fit in their current world view. Perhaps that difference might mean being poor compared being homeless.

As has been said here before, speculative mania can turn regular people into crazies…”

– RE Lurker at VREAA 11 Jun 2012 3:35pm

Musing About Living Elsewhere – “Vancouver is nice, but it sure ain’t worth the cost.”

“I’m originally from here but moved away to study. Came back with a wife and a professional degree this past December. Between the two of us (both healthcare professionals) we make far more than the average family in Vancouver. However, we think of leaving every day due to the cost of housing. It’s a constant debate. I’m not sure how much longer we will hang around. We “could” buy a house if we felt the need but the fundamentals are just ridiculous – this can’t go on forever. Since I arrived our department has lost two colleagues to the high cost of living in Vancouver.
My wife is from Edmonton where we could get higher paying jobs, lower cost of living and cheaper real estate. Then again we’d be in Edmonton.”
– EST at VREAA 1 Jun 2012 11:17pm

“If our families weren’t here I suspect that both of us would be more inclined to pick up and leave. The second component is the fact that the rest of Canada is not extremely desirable – to us. You have Calgary,Ottawa, Montreal and Toronto. Hardly a plethora of choices, and all come with punishing winters.
Often these days I find myself in envy of our Southern neighbours. While things are certainly not all rosy down there, the US remains the land of opportunity for those willing to seek it. Add to that the amazing variety of locales to live in, and constantly decreasing costs of living and it makes it exceedingly difficult to want to stay in Vancouver. Too bad that for the majority of us living in the US is nothing but a pipe dream, myself included.”
– Burt at VREAA 2 Jun 2012 9:05pm

“I moved away a little more than a year ago. My preconceived notions of how much I would miss Vancouver turned out to be nothing like reality. Sure I miss my good friends and family that live there, but everytime I go to visit I’m so glad to leave and return home. Vancouver is nice, but it sure ain’t worth the cost.”
– Escapee at VCI 6 Jun 2012 9:20pm

“I work in the software industry. I’m preparing to move away. Other high tech employees with the skills and talent to get better work opportunities elsewhere are leaving the company due to the stupid cost of living here.”

“I’m one of those so called bitter renters. I have chosen to rent because I believe that living close to work is important for family health reasons. Our household is also loosely budgeted with the idea that the wife can stay home if she chooses. As we have a young child now, she is choosing to do that for the near future.
An opportunity came up at work for a company transfer to the US of A. Company transfers are pretty sweet. Most expenses are covered. Moving to a state with 0% state income tax, and homes cost oh, 75% less than they do here.
It’s a tough decision, lol. But you know, sacrifices have to be made.
I work in the software industry, and as I’m preparing to move away, I’ve been in informal discussions with some of the higher ups in my company, and in the discussions I’ve heard that other high tech employees are leaving the company (and the lower mainland) due to the stupid cost of living here. These are the shining star employees that are fleeing, as they are the ones with the skills and talent to get better work opportunities elsewhere.
Just in regular meetings, it’s come up with the upper level management, that the housing in vancouver is just CRAZY, and they worry for their children’s futures. Not only do they consider the housing to be CRAZY, but the also point out that salaries are out-of-proportion low. (Those two are likely related.) Also other general feelings that commutes are taking longer. Commutes from white rock to richmond used to be 30 minutes outside of rush hour, but in the past few years, it’s consistently been 45 minutes instead. (outside of rush hour)
VREAA I know you’re reading this, and I’d likely be interested in contributing to a series about my experiences in this new place outside of the ‘Best Place on Earth’, if you deem my writing style and content worthy of publishing.
In any case, after waiting so long and quite a large amount of marital stress over housing, we’re moving away.
I gotta say, at first it was a hard sell with the spouse. She didn’t want to leave her friends, but then she saw the shopping, the beaches (wow!) and um, the housing down there. And she came around.
There’s a lot more to write about. Differences in taxes, health care, car insurance, property taxes, and those HOA fees. Bottom line though, I’ll be paying a LOT less interest when I purchase down there. Credit ratings may be a bit of a challenge. Seems even with large DP’s you need a good credit rating for the best mortgages.
Good luck to all intelligent posters. I’ll still be hanging around these forums. I’ll just have to observe from a distance as the meltdown progresses.” …
“I think we will choose to rent for at least the first year.
It just makes sense to take a little bit of time to get familiar with the area before committing to buying a place we have to live in for a long time. It does seem that monthly costs are really high in the area we are moving too.
Maybe we won’t like it down there. Who knows, leaving may open our eyes to the truth that Vancouver really is the BPOE. I’m thinking likely not. I’m looking forward to the adventure of being someplace new and different. Life should be fun and exciting. 30+ years of debt is just not for me. It’s really amazing how much Vancouver demonstrates the ‘emperor has no clothes’ children’s story.”
– ‘curious lurker’ at VCI 6 Jun 2012 5:27pmand 8:12pm
—

Thanks for the story, curious lurker. All the very best for the move and with future endeavours. We’d certainly welcome hearing more of your experience living away from Vancouver. Send updates via your own blog (see White Rock renter’s suggestion below) or by e-mail to us (see ‘contact’ above) and we’ll post them here.
Needless to say, we are saddened by the ongoing process of skilled individuals being pushed away from Vancouver due to housing costs, and we look forward to a time when housing here becomes more reasonably priced and less of a hinderance to the health and growth of the city.
– vreaa

—

“CuriousLurker – If you blog about your experiences moving stateside, I know I’d be interested. My family is in the exact same position as you, except husband hasn’t formally started applying for jobs there yet (software engineer). The only thing that keeps us here is family, really. I would love to know how education and health care measure up from someone actually making the switch. I think too often we dismiss the US as a non-option because of the assumption that schooling is terrible and health care is too expensive. I’m betting with better salaries, cheaper cost of living, and affordable housing that maybe healthcare costs and even private school costs would balance out and maybe we’d still come out ahead. I don’t know. I’m just sick of it here, the rain, and the attitude that somehow its different here. Let us know if you start a blog.” – White Rock renter at VCI 8 Jun 2012 3:05pm

“I recently left Vancouver with my family, we sold our house and moved to the island. If we had stayed we would have had a mortgage for 20 more years, pouring all our extra money and time into our house.”

“I recently left Vancouver with my family, we sold our house (Feb 2012) and moved to the island. We were in Vancouver for 11 years and both our kids were born there. We traded our large mortgage on our old house (we did a ton of work on it but it still needed about a 200k reno on it) for a brand new house with a mortgage that will be paid off in one year (it also has a rental suite). You would not believe the amount of stress that has been removed from our life. There is no more stress as what would happen if one of us lost our job or don’t make bonus one year. My wife and I will be 42 and mortgage free, time to travel with our kids, save for retirement and RESP’s. If we had stayed in Vancouver we would have had a mortgage for 20 more years, pouring all our extra money and time into our house just so that we can live in Vancouver? Its just not worth having that debt hanging over our head for the next 20 years just to live in Vancouver, Vancouver isn’t that great. I don’t get why someone who has 1 million to 2 million in equity (paper equity???) would not sell and leave Vancouver. I understand for some people its not possible, but take a look around the rest of the world, real estate does not always go up, and no its not different in Vancouver. People work their whole lives and don’t make that kind of money especially after tax. You could put that amount of money in a diversified portfolio of dividend stocks and make $50,000 a year in income or more. Take the money and run… run away and live a life with less stress, more travel, discretionary income and a more secure future. Just my two cents worth, but its coming from someone who has done it and has never been happier. If one day I begin to miss what Vancouver has to offer I will go over for a weekend and stay at the Pan Pacific…guess what I can afford it now!!!”
– ‘debt free = stress free’ at VREAA 5 Jun 2012 9:59am

All You Need Is Love – “This party tonight shows me how co-habitation, even with the asymmetric business arrangement inherent in tenant-landlord contracts, can produce wonderful relationships in an otherwise individualistic cityscape.”

“Was at a family friend’s birthday party tonight, she is heavily invested in 2 properties in Vancouver. She invited her tenants (4 of them) to the party. One brought a cake from the upscale bakery she works in, another who lives in her basement — she walks the dog and tends to the garden — made a few dishes as well.

One thing that always got me about Vancouver is how cold it is; not just the summer weather but the neighbourhoods, at least compared to other Canadian cities in which I’ve lived. This party tonight shows me how co-habitation, even with the asymmetric business arrangement inherent in tenant-landlord contracts, can produce wonderful relationships in an otherwise individualistic cityscape. Maybe this basement suite thingy isn’t such a curse after all.

Epilogue
I was reading on twitter about some guy complaining how one of his neighbour’s lawns remained uncut and whether he should call the City for “someone” to do something about it. I was thinking to myself, why not just f*cking mow it and invite them for tea next time they’re in town.”

– jesse at VREAA 10 Jun 2012 12:02am
—

Imagine all the people, living for today. You may think I’m a dreamer, but I’m not the only one. I hope someday you’ll join us, and the world can live as one.
Seriously. Why not?
Perspective, people.
(At the same time, we have to deal with this.)
– vreaa

A Vancouver RE Bear Unashamedly Anticipates Schadenfreude – “I do want this correction to happen. I don’t give a rat’s ass about the families who will lose their houses, or the investors that will lose their rental properties, or the carpenter who will lose his window framing job.”

“I’ve been renting for a while, I have no debt, bunch of money saved and invested in a pretty diversified portfolio, and I’m extremely happy with my current job. Could’ve bought, like many others did… I mean rented from the bank, but I didn’t. For some reason, as opposed to the grand majority, I’m still scared shitless of debt, I hate owing money, and just couldn’t wrap my head around the idea of being tied to a loan for 20+ years. It’s kinda hard to explain to the average Joe why Lucy the hair dresser lives in a 750K McMansion, while Mike Hunt the engineer “hasn’t been able” to do it. I do want this correction to happen. I don’t give a rat’s ass about the families who will lose their houses, or the investors that will lose their rental properties, or the carpenter who will lose his window framing job. Many relatives and close friends have done the 5/35 or 5/30 deal. They’re responsible adults who signed the dotted line and now have to live up with the consequences. Yes I’ll be affected too… but you know what… I don’t care. Higher taxes, zombie economy, unemployment, doom & gloom, financial crisis, ..whatever. At least I won’t have an underwater mortgage. Man that’s one scary thought. I’m ready. I got my shorts for when the tide recedes. Schadenfreude.”
– Mike Hunt at VREAA 6 Jun 2012 1:08am

30s Grind #4 – “We bought about 10 years ago and took about 9 years to renovate. It is now worth over a mil at least. We make about 85k combined. We struggle most months to pay the bills.”

“We live in Vancouver I work full time, he works part time so that he can manage more of the house stuff, kids etc. We bought about 10 years ago and took about 9 years to renovate (we did most of the renos.. Blood, sweat and tears) It is now worth over a mil at least… We make about 85k (total combined salaries). We struggle most months to pay the bills. There are no extras, vacations, dinners out, babysitters etc. We are so careful with our $$ and it boggles our minds how most families (parents have regular jobs… Nurse, firefighter, teacher, med tech etc) in our circle take exotic vacations, shop at Whole Paycheck, drive expensive cars and have huge mortgages (the bigger the mortgage, the more exotic vacation it seems). We assume that they have parents with deep pockets… We can’t imagine they live off credit..heck these are educated people… Wtf??”
– Sandy at thethirtiesgrind.com 31 May 2012 8:17pm

Question: How long would it take this couple to save “over $1M”, after tax? A lifetime? Two?
That was a mental exercise to show how disproportionate the run-up in home prices has been compared with real actual money that people are capable of earning and saving.
If this couple do not realize their paper profits by selling, there is an extremely high chance they will be talking about this missed opportunity for the rest of their lives.
– vreaa

30s Grind #1 – Sorry to freak everyone out, but I am not sure who can live and own in Vancouver unless you make at least 500 G’s+ a year.”

A post from Melissa Carr’s local blog, ‘The Thirties Grind‘, was recently headlined here: (“Are we all lying to each other? How the f*%#k are people affording to live in Vancouver?”, VREAA 4 Jun 2012). Various archive-worthy anecdotes appeared in the comment section at ‘the grind’, and we’ll headline and save them as a series here.
– vreaa

“My guy & I are both almost 48 and living in Vancouver. We make great $$ and still find it hard to get by. Everything we make goes into our lifestyle which means a 1300 sq. foot home we RENT in Kits, 2 great vehicles (Lexus SUV and BMW 328i) that are not excessively “fancy” schmancy, 2 vintage cars that are sentimental, a vacation home in Palm Springs, which is fully paid for, and 2 sweet senior Bichon Frise dogs who have their own set of expenditures…I do not think for a minute our lifestyle is over the top and we have RRSP’s but not nearly enough to retire on…I have not really ever saved and for the life of me I worry all the time about money!!!! Sorry to freak everyone out, but I am not sure who can live and own in Vancouver unless you make at least 500 G’s+ a year.”
– TP at thethirtiesgrind.com 29 May 2012 3:15pm

“From my field of cronies I can state that most don’t have defined pensions anymore and are expecting to live off “their equity”, as most of them put it.”

“As an aging individual I feel I can make a purely anecdotal comment on “boomers moving to Vancouver”. From my (limited) field of cronies I can state that most don’t have defined pensions anymore and are expecting to live off “their equity” as most of them put it. The ones that have loaned or gifted their adult children down payment money tend to regret it since that is money that will never be available for lifestyle needs of mom and dad. No one is moving to Vancouver to downsize – they may be moving down here for access to better medical care but that’s about it. As well, many boomers have had to look after their own adult parents and have discovered that elder care is extremely expensive, even getting a part-time caregiver in to help with chores runs about $20.00 per hour. The other fly-in-the-ointment is that many of the boomers parents did downsize and stay in Vancouver so one generation back the family home was sold, mom and dad moved into either an apartment or facility so there is very little equity left to leave to boomer parents, who in turn, will have little left to leave to their children.”
– Observer at VREAA 5 Jun 2012 7:57am

“I can add that both my inlaws and a friend’s Boomer parents cared for their elderly family using sales of “the family home” on the West Side of Vancouver. Both are retiring away from Vancouver, because Vancouver is too bloomin’ expensive. My mother will also retire away from Vancouver.”
– Absinthe at VREAA 5 Jun 2012 1:13pm

Bear Exhausted By Tenacious Bullishness – “Over the long term real estate never goes down besides there is so much money coming over here.”

“Talking to a colleague. Her and her brother were looking at places in my neighborhood last night. He sold his place in the sticks and is now looking to move closer to the city. I asked her why doesn’t he just rent, “he feels that interest rates are going to rise and he wants to lock in a low rate.” Wouldn’t it better to sock away the money and wait for rates to rise, values to decrease and then buy, I asked. “Over the long term real estate never goes down besides there is so much money coming over here.”
The rent for my one bedroom is $1,550 and similar apartments are listed for $490k. meaning it would cost me almost $3,000 a month to own a comparable apt. — based on 5% down with a 5-year fixed at 4% with a 25 year amort.
I am so very, very tired of being wrong about Vancouver’s RE market. It appears that there is just no shortage of people who truly believe that we are running out land, that real estate always goes up and that everyone wants live here.”
– Manna from heaven, at VCI, 1 Jun 2012 11:19am

“What do you mean you were wrong? Average price is down 12% YOY. It sounds like you were right.
Bears have been wrong so long they can’t recognize when they are right!”
– WFT? at VCI 1 Jun 2012 12:15pm

Wealth Transfer? No, Wealth Destruction – “Since it’s our retirement money that we are using, it is a stretch. But I just don’t see how they could afford to buy a place otherwise.”

Anecdote 1:
Thirtysomething condo owner Shara Bruce says that despite her relatively high-paying job, she still couldn’t afford to buy the condo she owns in the Woodward’s building.
That’s why Ms. Bruce’s mother made the down payment.
“There’s no way I could save that kind of money for a down payment living in Vancouver,” she explains. “And I don’t make a small amount of money. I make a fairly good salary as a construction contractor.
“I can totally pay her back, or it can be part of my inheritance.”
Her mother, Ruby Bruce, says she also paid her other daughter’s down payment on a Vancouver condo.
“It’s tough for them to get the money together,” said the elder Ms. Bruce. “The other daughter paid me back when her place sold.”
Ms. Bruce’s mother is part of a demographic that has done better than most in terms of real estate. … Ruby Bruce bought her Vancouver home more than 36 years ago for $54,900, and today it is worth $750,000 [Return of 7.5% p.a. nominal; 3.5% p.a. real]. Because parents have clear title to their homes, they can borrow against that equity or use their retirement savings to help their kids.
—
Anecdote 2:
Victoria-based homeowner Gail Argatoff says she and her husband recently bought a condo in Kitsilano for their daughter and son-in-law.
“We got them a condo and they are going to work on paying us back when she finishes law school,” Ms. Argatoff said. “Instead of them paying rent, they are gradually paying us. … We have another daughter and we’d like to do the same for her one day because she’s single.
“Since it’s our retirement money that we are using, it is a stretch. But I just don’t see how they could afford to buy a place. I don’t see how affordable the city will be for the future generation.”
—
Anecdote 3:
Robert MacKay, senior marketing and communications manager for PricewaterhouseCoopers, says he plans to buy a two-bedroom condo in North Vancouver for his three children.
“It’s using the equity out of the family home to buy the condo and they can pay rent to cover the mortgage, and then they have something. It’s just a matter of letting them stay in town so they can go to university and whatnot.”
Mr. MacKay says he and his wife will also be the recipients of an equity transfer in the form of inheritance.
“We don’t like to think about it that way, but [our parents] are not going to be on their own for very much longer.” …
Mr. MacKay believes that most young people won’t have land-rich parents.
“There are still a lot of people my age who don’t own a huge chunk of real estate.
“I think [unaffordability] is a very significant issue,” Mr. MacKay said. “So be nice to your parents,” he added, laughing.
…
“Vancouver is extremely expensive, so most young people buying are doing so with assistance from their parents,” Ross McCredie, president of Sotheby’s International Realty Canada, said. “A lot of companies, like ours, are advising baby boomers to set up a succession plan, and part of that includes saying to your kids, ‘We don’t want to waste our inheritance, so you buy real estate with it.’
“We see it in a significant way with Mainland Chinese families who may have immigrated here and bought assets here. They are buying real estate for their children.”
—
“I believe that the baby boomer is now so risk averse that they are taking their money off the table and consolidating, and the first-time buyer is a benefactor of this aging demographic,” Bob Rennie told a sold-out audience at the Urban Development Institute’s annual general meeting last week.
Mr. Rennie forecasts that the wealthy demographic will continue to transfer its equity to the younger generation, and “buy down” while maintaining their lifestyle.
“I believe that this room’s [RE professionals] success will be to understand what this risk averse, buy-down baby boomer will buy next,” he told the audience of developers, marketers and industry players.
—
– excerpts from ‘Land-rich boomers buying nests for their young’, Kerry Gold, Globe and Mail, 1 Jun 2012 [Hat-tip evilfred]
—

From the comments section of the same article [Hat-tip Joe_BABHHC]:

“As a boomer who owns a home with free title I personally would rather have it priced realistically so my kids could live in the neighbourhood instead of the basement. While it is of course nice for parents to help their children this does nothing but contribute to the problem of excessive market values. If the new generation of buyers lived by the same rules as their parents , saving and waiting, the market would adjust downward and we would all be better off.” – dbh 2 Jun 2012 10:59am [If we issued awards for ‘getting it’, dbh would get one. -ed.]

“The boomer parents need to consider the risk they are setting their children and themselves up for.
As a home owner, you need to be able to absorb unexpected expenses (special assessments, leaky roofs, etc). If the children cannot save up a 5% downpayment, how will they deal with the unexpected?
And what happens when prices fall? The children now owe more than the property is worth. And the parents may no longer have enough equity in their house for a comfortable retirement.” – MM_van 2 Jun 2012 11:34am [Another award here, please. -ed.]

“Twenty something years ago when interests rates were north of 17% and we bought our first house, we were over the moon when our folks bought us and washer and dryer. Boy, have things changed.” – BikeQueen 2 Jun 2012 12:32pm

“That’s why my wife and I just bought two condos as rentals so when our 6 year old twins grow up the can have their own places or sell then for down payments.” – AHappyGuy
“Can’t tell if this is sarcasm . . . I call a top.” – wezvv
“What is a top? This isn’t sarcasm. It’s what we’ve done.” – AHappy Guy
– exchange 3 Jun 2012 12:40pm onwards
[‘A top’ is a child’s toy. -ed.]

Households who have overextended and overleveraged themselves in RE are very vulnerable at this point in the RE cycle.
This includes, if you like, the ‘multigenerational household’… elderly parents, young (almost boomer) children, adolescent grandchildren (and variations on this theme). Over the last 10 years, some of these ‘extended’ Vancouver families have overextended themselves into RE and, on paper, appear to have done very well. It is very hard for people to see that this state of affairs won’t continue. Even at this late stage of the cycle others are still emulating them.
As commenters quoted above imply, there is a high risk of wealth that would have been transferred rather ending up destroyed. Worse, some children may see inherited assets turn into liabilities. For instance, instead of one fully paid for home, a family may end up with two or three or four underwater properties.
– vreaa
—

Last word from Ralph Cramdown [also from the G&M comment section, 2 Jun 2012 3:18pm; here with editorial poetic license]:

“Dear Auntie G&M,
I’m nearing retirement, and have most of my net worth concentrated in a single asset which is very pricey right now. Although completely undiversified, I’m bored. Maybe it’s the lack of leverage? Any advice?
Regards,
Basil Lacklever”

“Dear Mr. Lilyliver
Lever up! Don’t diversify into another market or a different asset class, buy another property in the same market.
Yours,
Auntie Alluneedisahree”
—

“I’m a stay home mom and my hubby is a lawyer making over $100K but we cannot live a decent life style here in Vancouver. We have decided to move out of province for a better paying job and affordable housing.”

“I’m a stay home mom and my hubby is a lawyer making over $100K but we cannot live a decent life style here in Vancouver. We are renting a 960sqft 2 bedroom suite in North Van but a nice three bedroom house cost about $3000 for rent. Vancouver is great but it really rains too much and to be honest the housing is the killer. It’s only for uber riches or those who have been here for a long time. We could move out of Metro Vancouver to other parts of BC but then salary would be much lower. We have decided to move out of province for a better paying job and affordable housing and good education for kids. Which city would fit the bill? I would be happy to pay $2000 for a newly updated 3 bedroom town house and the priority would be where good public education is.”
– sora at mothering.com 27 Apr 2012 6:43pm [hat-tip Jeff Murdock (and ‘Anonymous’ at VCI)]

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

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

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

“Are we all lying to each other? How the f*%#k are people affording to live in Vancouver?”

“Today I read an article in the Vancouver Sun, which stated that …the combined cost of mortgage payments, utilities and property taxes costs the average Vancouverite 88.9% of their household income. … Something is really, really wrong here. How the f*%#k are people affording to live on less than 12% of their incomes?

My husband and I scratch our heads about this all the time. We feel like we are beyond cash poor. We’re certainly not financial wizards, but we take pride in the fact that we manage our debts and try as much as we can to live within our means. Meanwhile, we see people renovating homes, buying new cars, new clothes, paying for daycare, nannies, dinners out, vacations etc. etc. Are all of these people getting by on 12% of their incomes or is there a massive amount of credit spending happening behind closed doors? Are young families around this city floating their lifestyles with plastic? I fear, for many, this may be the case.

For most of us in the “young parent” stage of life, we’re literally “just getting by”…however, I think our definition of scraping through a month has drastically changed. There are conveniences and luxuries we have become used to that are nearly impossible to imagine forgoing. I’m guilty myself of not using up everything in my pantry and going out to buy more groceries (although I don’t shop at the infamous “Whole Paycheque”…something that completely boggles my mind – how in the heck to people afford to do their shopping there??).

Aside from our own needs, which can largely be attributed to growing up in a culture that values consumerism (an entire conversation in itself), and our government’s role in the state of our economy, there is definitely something askew when home ownership becomes so coveted and, at the same time, overpriced that people literally finance their lives away. Now, I’m no economist, but what then happens when the s*%t hits the fan, interest rates rise and these families are not only sat with mortgages they cannot afford, but massive amounts of credit debt incurred to actually “live”?”

– Melissa Carr at TheThirtiesGrind 29 May 2012 [hat-tip to OH YAH]
—

Nobody in Vancouver is living on just 12% of their income. The math reflects that the average bungalow in Vancouver would cost an average Vancouver household 88.9% of their (get this) pre-tax income. So, in short no average households are buying average bungalows any longer… they simply can’t afford them.
Which is not to say that Melissa’s indignation and exasperation isn’t justified. It is. Vancouver is very, very overpriced, and the 88.9% figure indicates how spectacularly overpriced it is… prices are two to three times those determined by fundamental value.
Housing bulls argue that this simply means that, as in Manhattan, Monaco, and Tokyo, bungalows have become a coveted property, only for the mega-wealthy, and that ‘average’ Vancouver families should accept the ‘new average’ — that they should be happy with properties like a condo or town home in New West or White Rock, or a modest condo closer to Vancouver, or perhaps a basement suite.
We disagree. Just fly into or out of YVR… does that look like Tokyo?.. No! Bungalows as far as the eye can see! (Bungalows, and land, by the way.) Bungalows in Vancouver will never be cheap, but they will certainly become a lot cheaper than they are now.
– vreaa

MarketWatch – “No real estate bubble pop expected in Canada” – Source: Two Realtors

“What makes the big picture unclear is that a lot of new homeowners in Vancouver aren’t leveraged at all. Realtors tell me that a lot of their recent sales are to buyers fresh from China and flush with cash.”
—
“Housing in Vancouver still seems cheap to many of my Chinese clients,” a Realtor here told me. “That’s because in some cities in China, housing is two or three times more expensive than here.”
—
“I lived in the San Francisco Bay area for over 20 years, and I’ve seen skyrocketing real-estate prices firsthand. I’ve also watched the price of the wine-country home we sold there in 2006, near the top of the market, drop by 60 %. The current Vancouver run-up looks eerily familiar — like those new ‘For Sale’ signs here that reflect the “Buy low, sell high” truism.”
—
“The current real-estate market here is reminiscent of the one I experienced a few years ago in California, when a few were poised and ready to sell at the top of the market. We nearly succeeded, but we were able to become what Washington state Realtors call California “equity refugees.”
One old-pro Vancouver Realtor told me, “Look, interest rates are going to go up in Canada. Maybe later than sooner. We all know that. But you’re not going to see a real-estate bubble pop, like it did in the United States. What we’re starting to see here now is some of the air slowly coming out of the bubble. We don’t do things here the way you do in the States.” Thank heavens for that.
A soft landing for Canada’s real-estate market, in other words, is expected by many.
—
– ‘No real estate bubble pop expected in Canada’, Bill Mann, Marketwatch 24 May 2012

“In the USA, you have humans; here in Canada we have… wait a moment!”
No mention of fundamentals; pretty much a non-article.
Noted as yet another external mention of Canada’s RE bubble.
– vreaa

The Night Before The Morning After – “Within my half hour walk through the downtown core at 11pm last night I overheard three groups of staggeringly drunk people conversing, arguing and yelling at each other about real estate, renting and mortgages. It was a tad surreal.”

“I had the fantastic endeavour of walking through the downtown core at 11pm last night [Saturday 2 Jun 2012]. Within my half hour walk I overheard three groups of staggeringly drunk people conversing, arguing and yelling at each other about real estate, renting and mortgages. It was a tad surreal.
I was entirely sober, walking home from a late work meeting. I usually treat myself to a walk and a listen to an album from start to finish, but on a weekend late night around Granville, it’s not the time for headphones for safety reasons.
I’ve never heard conversations like this before. Women yelling at each other that “it doesn’t matter if I can’t afford the payments one day, I can always go back to renting” another young man saying to his friend “no way man, I just want a place that’s worth $500,000. It’s gotta be worth $500,000″
To hear one conversation, no big deal, coincidence, to cover twenty blocks and encounter three passing conversations seems worthy of mention.”
– Aldus Huxtable at VREAA 3 Jun 2012 8:59am and onwards

Coming next: Morning-after guilt; regret; shoulda-coulda-woulda; nausea; incomplete recollections; rewritings; “what-happened-to-my-wallet?”; blame; denial; repulsion; resolutions of abstention.
– vreaa

“When my family and I were pondering a move out of Vancouver, the line I heard more than once was “Don’t sell your house, you’ll never get back in.” It almost made sense, until I looked at the mountain of cash we would be leaving town with. For now I remain a Vancouver homeowner. The abstract concept of my net worth remains a fictional number.”

“Real estate is a hot topic these days amongst my neighbours. We’ve all heard the stories of little bungalows along the Cambie corridor selling for north of 2 million dollars. These were homes you could buy for a third of that before the construction of the Canada Line system was announced.”
“Where does it end? That unfortunately is a scenario we humans are not all that good at seeing. If it is indeed a bubble, it will remain invisible to all those but a chosen few. Those few will be madly blogging about it and preaching their gospel of “sell now” at cocktail parties, desperate to be proven right. And even if history does prove their predictions about a real estate crash to be correct, we’ll still find them annoying and usually find a way to avoid them at the party.”
“The cruel truth is that a bubble does not become visible until that bubble has popped, leaving drops of soapy fluid on the ground that we will be slipping and sliding on for years (as we make our way to the bank to renew our mortgages at a higher interest rate, realizing just how much money we owe on a property that suddenly doesn’t seem as sexy as it once had).”
“Last year, when my family and I were pondering a move out of Vancouver, the line I heard more than once was “don’t sell your house, you’ll never get back in.” It almost made sense, until I looked at the mountain of cash we would be leaving town with. Thankfully I haven’t had to make that decision yet… and the abstract concept of my net worth remains a fictional number.”
“So for now I remain a Vancouver homeowner. At least I know where to buy a carpet for cheap. [See body of article for context.] I should ask why they’re shutting down the business though. Maybe they know something I don’t.”
– from ‘The Persian Rugs Going Out of Business Sale!’, Martin Strong, at City Caucus, 30 May 2012 [hat-tip Nemesis]
—

Many Vancouver homeowners ‘know’ that this is a bubble; they see that the price run up is just too ‘good’ to be true; yet only a very small percentage will capitalize on this windfall before the bust. Most will be unable to overcome the inertia and the inconvenience of selling. And, that aside, it’d only take a relatively small percentage to try to sell at the same time for the market to collapse.
It is very, very difficult to run against the herd. On the way down, of course, the herd is selling…
Martin is correct about the bears being seen as irritatingly annoying by the general citizenry. Witness Larry MacDonald’s article in Canadian Business that we headlined yesterday, where Larry asks the bears to simply go away. As today’s anecdote shows, it’s irritating to have people tell you something that pertains to your circumstances, that you know in your heart is likely valid, but that you can’t bear to act on. Like a large version of being asked whether you shouldn’t get that overdue term paper finished when the big game is on television.
And for how long is the “can’t-tell-its-a-bubble-until-it’s-popped” canard going to be in such wide circulation?
It is very clear that you can identify a bubble from the inside: a market is in a speculative mania when prices clearly divorce themselves from fundamental values, and continue upwards solely because new buyers expect ongoing price strength. That’s a bubble. Capisci? (The bears do!)
Anyway, Martin shows that he has a remarkable amount of understanding about what’s going on, even to the point of talking about what it’ll be like after the bust (“realizing just how much money we owe on a property that suddenly doesn’t seem as sexy as it once had”). He also shows excellent insight in referring to his current perceived wealth as an “abstract concept” and his net-worth a “fictional number”. After the pop, he will doubtless say that he “knew” it was a bubble, and he actually ‘did’. But his own wishful thinking and the seduction/threats of the herd (“you’ll never get back in”) will have prevented him from acting on that which he knew. This is how bubbles work. Powerful, eh?
– vreaa

Local DJ Leaves For The Prairies – “My wife and I had this crazy idea that we could afford a house. Your prices here are insane.”

“Heard something on the radio just now. This DJ on Sonic Radio just announced this was his last broadcast, as he and his wife want to live in a city where they can actually afford a house, so he is moving to Edmonton.”
– S, via e-mail to vreaa, 1 Jun 2012 [thanks, S -ed.]

“I didn’t catch the whole thing, but was listening to the radio this morning, 104.9 FM, around 9:50 a.m. and the DJ was leaving, today was his last day. He said something along the lines of (paraphrasing), “My wife and I had this crazy idea that we could afford a house. Yeah, your prices here are insane. I thought I’d be here longer, but no. I didn’t even stay long enough to change the plates on my car, I still have Saskatchewan plates. That will look really good to the police, ‘Where are you coming from?” B.C. ‘Where are you going?’ Alberta. ‘What’s with the Saskatchewan plates?'” I gathered he was here about seven months. So another one bites the dust. I Googled for a while but couldn’t find anything online about a DJ’s comings and goings at Sonic FM. I don’t really listen, so I don’t know who it is. Would be nice to have a bit more detail for your blog, but c’est la vie!”
– Angela, via e-mail to vreaa, 1 Jun 2012 [thanks, Angela -ed.]

Preparing To Blame The Inevitable Canadian RE Crash On The Bears! – “I wish the perma-bears would just go back to their lairs for a really long nap.”

“For years we’ve listened to housing perma-bears Garth Turner and Ben Rabidoux warn of a collapse in housing prices. But those stubborn price indexes just aren’t co-operating. When is Armageddon ever going to descend?
Actually, I do have a fear of Armageddon. Namely based on the risk that the thicket of gloomy blog posts/tweets eventually whip up homeowner anxieties enough to precipitate waves of selling in a self-fulfilling prophecy. Moreover, the risk of such an outcome could be climbing with the mainstream media picking up on the theme (in a rather uncritical way considering the subtleties of economic cycles and statistics missed by the perma-bears).
As a homeowner, I admit not only to a vested interest, but also to wishing the perma-bears would just go back, frankly, to their lairs for a really long nap. Their proclamations substantially risk devaluating a major asset of mine. Furthermore, if Canadian housing were to crash similar to what occurred in the U.S., there will be a rather traumatic impact on the Canadian economy and all our living standards.”
– image and text from ‘When will housing Armageddon arrive?’, Larry MacDonald, Canadian Business, 30 May 2012
—

Once a speculative mania gets underway, the fact that it will crash is as inevitable as gravity and sunrise.
The villains of a mania, if there are any, are the many parties that contributed to its expansion, not those who point out the nature of that which has developed.
After years of denial, after ignoring mountains of evidence & years of measured arguments from bears, RE bulls are now suggesting that we all follow the path of even more denial. This is a psychologically primitive response and one that should invoke both laughter and sadness in those who hear it.
The woeful thing is that, despite the fact that this is so obviously a ridiculous argument, some will actually end up believing it, and will blame the coming crash on ‘naysayers’. As though if we all simply linked hands and pretended all was good, it would be so.
This is a truly remarkable, preposterous (and, given it’s publication by ‘Canadian Business’, arguably landmark) article. Mr MacDonald appears to be a homeowner who is likely over invested in his home, and whose future financial well-being is consequently under threat, and who is now allowing wishful thinking to blur his ability to weigh the evidence.
The bubble will implode because it’s a bubble, not because people point to it and say “Look, a bubble!”
– vreaa

“Friend of mine just bought a foreclosure, fully furnished, of a family who hightailed to Asia, leaving a pile of unpaid debt.”

“Friend of mine just bought a foreclosure, fully furnished, of a family who hightailed to Asia, leaving a pile of unpaid debt.
Not sure of the details, didn’t ask too much, but the story is that the family owed money — not sure how much — and simply pulled up their stakes and left. Think it was family of 4. I don’t think it’s that common but who knows. The guy got the place with all the high-end furniture still there.
Banks now require a certain level of capital in Canadian jurisdiction to approve stated loans. Before February 2012 or so they didn’t.”
– jesse at VREAA 30 May 2012 3:39pm and onwards

Christian Science Monitor – ‘Canadians Still Think Real Estate Has Nowhere To Go But Up’ – “I would say prices are hyperinflated. But for the price of housing to go down in Toronto, that I can’t see.”

Actor and broadcaster Jeff Douglas says he knows there are “more responsible” things to do than take on a mortgage he will likely have to pay until he turns 70.
But that didn’t stop him and his wife, interior painting contractor Ana Maria Diez, from charging headlong into the battleground that has become the Canadian real estate market.
Mr. Douglas and Ms. Diez fell in love with and purchased a 1,300-square-foot duplex in a middle-class west Toronto neighborhood last month for $632,000. Like an increasing number of Canadian buyers, they sealed the deal after duking it out with several other couples who also wanted the house. They placed no conditions on their contract and finally paid 112 percent of the original list price of $555,000.
“It was one of the last houses I think we’d have a shot at because the price of houses in Toronto goes up every week so it was definitely a now or never situation,” says Douglas. “At $625,000 ($632,000 inUS dollars) we feel like we got a bargain.”
…
Douglas and Diez may feel lucky. But house purchases like theirs are increasingly fueling concerns that, like their American neighbors a few years ago, Canadians are spending themselves into financial disaster.
“What we are seeing is the irrational exuberance that was present in the US,” says David Madani, a former Bank of Canada analyst now with the consultancy Capital Economics. “It has all the symptoms of a disaster waiting to happen.” …
Although buyers seems convinced that real estate prices can only go up, Mr. Madani, along with the International Monetary Fund, the Economist magazine, and various independent and bank economists, warns they are already overvalued by as much as 25 percent.
…
“If credit tightens tomorrow, the game is over,” adds Ben Rabidoux, an analyst with the US real estate market research firm M Hanson Advisors and the author of the website The Economist Analyst. “I think we will see a decade of stagnant returns and a stagnant economy.”
…
Still, Toronto real estate agent Melanie Piche says she expects real estate prices to continue rising.
“People see their friends, how much money they have made in real estate,” she said. “And there aren’t a lot of safe places to put your money right now. Where else can you make 10 percent?”
Jeff Douglas agrees, and said he thinks of his purchase as an investment, similar to buying into the stock market.
“I would say prices are hyperinflated. But for the price of housing to go down in Toronto, that I can’t see,” he said. “Simple supply and demand dictate that as long as the city continues to grow, there will be a demand for housing and that will keep prices up.”
…
– from ‘Canadians Still Think Real Estate Has Nowhere To Go But Up’, The Christian Science Monitor, 29 May 2012
—
“One of the commenters for a G & M article today accused housing bears of being “unpatriotic”. Because a housing correction is bad for the economy, therefore to hope for a correction is anti-Canadian.”
– crankycorvid at VREAA 30 May 2012 7:59pm
—

Hey!.. who do these guys think they are at the Christian Science Monitor (and the IMF, and The Economist, etc, etc) dissing us Canadians for patriotically supporting our RE bubble in the face of all common sense?
Almost makes one want to drop interest rates further, or go on a rant about health care & immigration & BPOE, or go out and buy a six-pack of condos, just to give the market a boost and show them they’re wrong.
– vreaa

[PS: “Hope” doesn’t come into whether we have a “correction” or not.
Once a speculative mania runs rampant, the collapse is already built in, regardless of what various participants desire.]

Froogle Scott – “By systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

“Over the past few weeks I’ve had some interaction with two couples, both of whom are currently renting, and are contemplating house purchases. I’ve outlined the bear/bubble case for one couple, and hinted to the other couple, in more muted terms, that they could be buying at or near the peak. Everyone has been polite, but you can feel how uptight it makes people to hear these opinions. Including other people present at these conversations. It’s as if you’re the dinner party guest pushing your personal religious, political, or social beliefs onto others. It obviously makes people uncomfortable.
That’s the problem with the unbalanced and unethical MSM coverage of real estate in Vancouver. It conditions the vast majority of people to believe exactly what the vested interests want them to believe. And it makes people uncomfortable with legitimate and healthy debate. It’s all opinion, it’s all emotion, but by systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”
– Froogle Scott, at VREAA, 27 May 2012 12:31pm

Those of you who don’t already know Froogle’s epic Vancouver RE story are encouraged to check out ‘The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise’.

NDP leader Tom Mulcair has remortgaged his home 11 times since early 1980s

“New Democratic Party leader Tom Mulcair and his wife have repeatedly refinanced their home west of Montreal, gradually increasing the debt on the property over a series of 11 mortgages, land records show.
Mulcair’s office will not explain why the couple have loaded more and more financing onto the West Island home they’ve lived in since the early 1980s, saying only that it’s a “private matter.”
It is unclear why Mulcair would need to refinance the modest two-garage home in Beaconsfield so many times, bumping the value of the mortgage from $58,000 to $300,000.”
…
“They paid $64,000 for the home in 1983, with a $56,000 mortgage from the Caisse Populaire du Lac St. Louis at 10.7 per cent interest — the going rate of the day.
Every few years, new financing with the Royal Bank of Canada was registered on the property with mostly increasing values as the amount owing rolled over.
The couple obtained loans in 1984, 1987, 1988, 1990, 1996, 1997, 2001, 2003, 2006 and 2009.
Nearly a year after the last transaction, Mulcair filed a report with the federal ethics commissioner, saying that he taken a line of credit with his wife from the Royal Bank.
Under the MP’s Code of Conduct, material changes in a member’s assets or liabilities must be reported to the ethics commissioner within 60 days.
The value of the line of credit is not specified.
Today, Mulcair earns $157,731 annually as an MP plus a $75,516 stipend as Leader of the Official Opposition. When in Ottawa, he lives for free at the official residence, Stornoway.”
…
– from ‘NDP leader has remortgaged his home 11 times since early 1980s’, Ottawa Citizen via Vancouver Sun, 28 May 2012
—

NDP, Liberal, Conservative… the political ‘stripe’ here may or may not be important, that can be debated. We are of the opinion that many Canadian politicians, across all parties, are, like the general citizenry, overdependent on RE for their financial health.
That said, this piece of information certain won’t help NDP promises of being capable of fiscal prudence.
This anecdote illustrates:
1. a nice concrete example of ‘RE-ATM’; it is now commonplace, with escalating home prices, for individuals from all walks to allow mortgages to balloon over time, rather than to pay them down; many longterm owners still have considerable mortgage debt;
2. our politicians, like our general citizenry, have strong personal interest in the RE market remaining robust.
– vreaa

House For Sale In Port Moody For $2,500!

Dog house – $2500 (port moody)
Date: 2012-05-23, 8:55AM PDT
Reply to: 5p5rw-3033196540@sale.craigslist.org [Errors when replying to ads?]
“Dog house build to order. Delivery time ca. 6 weeks.
E-mail for more info.”
– craigslist ad, 23 May 2012 [screen capture]
[hat-tip ‘anonymous’ via e-mail]
—

“It’s not the structure, it’s the land value.”
“Clearly a ridiculously low ask price designed to fuel bidding wars.”
“My grandparents bought their house in Point Grey for less than that!”
“Is there a basement suite?”
“Reeks of recent renos and shoddy workmanship.”
“Does the square footage include the porch?”
“No pets.”
– vreaa

House > Life? – “What a waste of a good house. He should have had the courtesy of blowing himself up in an empty lot.”

“Investigators have found the body of a Surrey electrician in the rubble of a Kamloops home that exploded after he took his co-worker hostage for seven hours Thursday night.
Following the tense standoff, the 48-year-old man, who burst into the woman’s home with explosives strapped to his chest, released the 44-year-old woman around midnight. Shortly after, three explosions rocked the house and it was reduced to ashes.” …
“During negotiations, police learned the man was distraught about breaking up with the woman two years ago.”
– from ‘Body of Kamloops bombing suspect found, removed from the rubble’, Vancouver Sun, 20 May 2012

“What a waste of a good house and depriving people of their living quarters. Glad to hear the important ones got out alive.
This wacko should have had the courtesy of blowing himself up in an empty lot.”
– commenter‘CasualT’ at vancouversun.com, 20 May 2012 4;44pm

On The Value Of Buildings

“A 122-year-old, 6,200 tonne building in Zurich is being moved 60 metres westward (over two days) to make way for the expansion of a nearby railway.”
– BBC, 22 May 2012
—

“Need to demolish a house in the US? Rent a tank.
A tank has been hired to demolish a house which was scheduled to come down in Kasota, Minnesota.
The job was accomplished in less than 30 minutes.”
– BBC, 3 May 2012

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

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

‘Urgent To Return China’ – “In the vancouver west very expensive premium real estate is very difficult to find such a cheap price; there are a lot of room for negotiation; a total of nearly 200 000 discounts; distribution of aristocratic furniture; piano.”

Craigslist Ad reads:

“8br – 4000ft² – VANCOUVER WEST LUXURY HOUSE JUST BUILT SALE WITH FREE PIANO&FURNITURE
craigslist.ca
Date: 2012-05-19, 10:05PM PDT
Reply to: gt63v-3026416518@hous.craigslist.org [Errors when replying to ads?]
Address 3243 W 33rd Ave, Vancouver, BC V6N 2G8, Canada
View map
Bedrooms (#) 6 or more bedrooms
Bathrooms (#) 6 or more bathrooms
Size (sqft) 4000
For Sale By Owner

hour of the open house: every weekend Fri, Sat, Sun all afternoon 2pm – 4pm

Note: the owner because of a urgent to return China, so the asking price there are a lot of room for negotiation, coupled with the distribution of the total value of 80000 full set of aristocratic furniture, piano, plus on the government’s home purchase cash back, buyers will get a total of nearly 200 000 discounts, which in the vancouver west very expensive premium real estate is very difficult to find such a cheap price, welcome to the OPEN HOUSE to look at the new luxury house just completed! NEAR TO U.B.C!”
—

On MLS as follows:

3243 W 33rd Ave (V944504)
2,982 sqft* SFH; 33×130 lot; Built 2012
Listed 16 April 2012. [No price changes since. -ed.]
Asking Price: $2,480,000
BRAND NEW high-end custom-built house selling now at the well sough after Mackenzie Height area. This is a dream house that comes with high-end Kitchen Aid stainless steel appliances, HRV, air-conditioning, two gas fireplaces, central vacuum cleaner, crystal chandeliers, electronic door lock, security system with intercom speakers and monitor, jacuzzi tub in master bedroom, granite counter-tops throughout house and granite tiles at the entry foyer. This house comes with just almost everything you need. Possession is AVAILABLE NOW. Open house Saturdays. Will you be this brand new house’s FIRST homeowner?
—

[* Note: Square footage in the two ads is different, we have no explanation for this. There is a small possibility that the craigslist posting is a hoax, or that they got the address wrong. Readers can decide for themselves. We also welcome any further information, confirmatory or otherwise. -ed.]
—

Is this a one-off anecdote, or something we’ll hear more of as prices begin to fall?
We have long surmised that foreign demand can rapidly become supply.
And, of course, the story that foreigners are buying can evaporate in a second, causing locals to draw in their horns.
– vreaa

City Of Vancouver – re:THINK HOUSING Competition – Call for Proposals

“As part of the work being done by the Mayor’s Task Force on Housing Affordability, re:THINK HOUSING, an open ideas competition, is being launched to generate a broader discussion of possibilities for Vancouver’s affordable housing crisis. Aimed at everyone who has an interest in affordable housing, from the general public, to designers, planners and architects, to philanthropists, non profits and financial institutions, the Ideas Competition seeks to create the space for provocative, bold new ideas that address Vancouver’s affordability challenge head-on. It’s a chance to get new perspective on how we build an affordable city in Vancouver, and to garner ideas and possibilities for neighbourhood belonging and better connections across the City.”
…
“Vancouver is a growing and diverse city with significant housing challenges. Whether it’s homelessness, a lack of new rental homes, or high prices for single-family homes, Vancouver residents face housing pressures across the financial spectrum.”
…
– from re:THINK HOUSING Competition, City Of Vancouver
[Thanks to terminalcitygirl for bringing this to our attention, and who adds “Have you checked out this COV initiative? It seems unnecessarily complicated to me but at least they are asking for input from beyond the usual suspects…”]
—
We’d encourage all readers to take a look at the re:THINK HOUSING website, and to enter proposals if they see fit. We’re considering possibly submitting one ourselves.
Submissions close 29 Jun 2012.
– vreaa

Globe & Mail; Sommerville; Rennie – “No Bubble” – “Those in the know out here don’t seem to be too alarmed by what they’re seeing” … “Talk of housing bubbles makes for provocative sound bites but isn’t based in reality.”

“While there are certainly those outside the city – including economists at some of our more reputable financial institutions – who think Vancouver is heading for an abrupt decline in house prices, those in the know out here don’t seem to be too alarmed by what they’re seeing.”
…
“Tsur Somerville, the oft-quoted real-estate economist from the University of B.C., doesn’t see signs of a major real-estate story brewing. He actually holds a refreshing perspective on the local scene. He won’t even go so far as to say that buyers hold the advantage at the moment, even though supply far exceeds demand.
“When the average house price is still north of $800,000, then buyers’ market is a term I like to avoid using,” he says.”
…
“Some think that while the housing market might not be ready to go bust just yet, the condo arena is. But marketer Bob Rennie, someone who follows this area more closely than anyone in the city, says that’s nonsense. … Mr. Rennie said talk of housing bubbles makes for provocative sound bites but isn’t based in reality. He produced a dazzling array of charts and graphs to back his claim that the future of condo sales has never looked brighter.
Now, you might expect someone who sells condos for a living to say something like that. But Mr. Rennie makes a pretty compelling argument that something is afoot that backs his claim. A massive demographic in Greater Vancouver – those between 55 and 74 – is sitting on $88-billion in equity. They are beginning to downsize.”
…
“And he may well be right. But for now, the market is colder than it’s been in a while. That may not be a bad thing.”
…
– from ‘Cooler housing market no catastrophe’, Gary Mason, Globe and Mail, 19 May 2012
—

So, Global TV (16 May), The Vancouver Sun (17 May), and now The Globe and Mail, have all reported bullish outlooks on the Vancouver RE market this last three days, all citing as sources various combinations of: Bob Rennie, Tsur Sommerville, Helmut Pastrick, and the CMHC.
We would have liked to have seen something less homogenous and more analytical from our media, but perhaps our expectations aren’t low enough.
– vreaa

Elitism And Sense Of Entitlement Linked To High Property Prices? – “The push for more exclusivity comes where the average house price is more than $1 million.”

“A battle is brewing in the village of Lions Bay, B.C., where some residents want to block beach access to people from outside the seaside community.
Lions Bay Beach Park is a picturesque destination with waves from Howe Sound breaking on the sand, two barbeques, manicured grass and a playground. A group of residents complained to village council last week that too many outsiders are using the space and argued for it to be “locals only.”
The push for more exclusivity comes where the average house price is more than $1 million, with a gated waterfront home going for more than $3 million.
“Of course it should be resident-only, we pay the taxes,” said Lions Bay resident Kambiz Azordegan. “The visitors come here and they never behave.”
– from ‘Lions Bay beach ban divides residents’, CBC, 19 Sep 2011

[Hat-tip to Zerodown for bringing this article to our attention, and who added “Guess where I’m going this afternoon?”]

The debate regarding restrictions on Lion’s Bay beaches appears to rage on, here’s a May 2012 pdf:
‘Moving Forward with Lions Bay Beach Parks’

Basement living, Positive perspective

“Mr Ai says he is committed to staying in China, but he is also keen to create a European base in the cellar of the Berlin studio of his friend Olafur Eliasson, a Danish-Icelandic artist. His aspiration is that the space, which Mr Ai describes as a bunker with no light that has survived two world wars, will be renovated into something that functions as both a studio and an artwork. The location appeals to him for “strange, personal reasons”, he says. He had lived in an earthen pit as a child after his father was banished to Xinjiang. Enduring hardship, whether in dirt holes or dark interrogation rooms, is in the artist’s blood. So is making art.
“The art always wins,” Mr Ai says. “Anything can happen to me, but the art will stay.” Mr Ai’s legacy as a human-rights activist remains uncertain, but his sculptures and photographs are lasting memorials to his wit and courage.
– from ‘Artistic licence – China’s most famous artist talks about his work and how it confounded his jailers’ an article in ‘The Economist‘ [5 May 2012] about the artist Ai Weiwei.

“Vancouver faces a loss of its brightest painters, dancers, designers, makers and performers to greener pastures. There just isn’t much affordable space. It’s an unsustainable bubble at this point, I don’t think anybody can disagree with that.”

Underneath the vibrant, diverse surface of a thriving arts and culture scene, Vancouver faces a loss of its brightest painters, dancers, designers, makers and performers to greener pastures.
…
As property values skyrocket higher than any other city in the country (second place worldwide), Vancouver’s artists are facing stark choices about their future. Many find day jobs, paint and create in their bedrooms, or gradually drift to the suburbs. But an increasing number are leaving the city in what Red Gate’s founder, Jim Carrico, describes as a “steady migration of artists.” They’re going to Montreal, New York, Los Angeles, Toronto, even Berlin, Germany.
“The shortage isn’t of expensive space!” Carrico says, laughing sardonically as he describes Red Gate’s Kafkaesque quest navigating city permits, applications and bureaucracies, both before their eviction and now in the search for a new home. “There’s lot of expensive space around. There just isn’t much affordable space. . . It’s an unsustainable bubble at this point, I don’t think anybody can disagree with that. When median prices in Vancouver are more than twice as any other city in Canada, and yet median salaries are lower.”
…
“The majority of corporations said to us, ‘Arts and culture isn’t where we put our money.’ Vancouver is notorious for a wait-and-see attitude. It’s very hard to convince anybody in this city to get involved in something before it happens.”
…
The fear of a Vancouver becoming a hollow Disneyland of a city is one shared by many artists.
“It’s a great point, I totally agree,” Kate Armstrong reflects. “There’s a way a city can become so expensive that it (becomes) empty.
“This is such a beautiful city, and it’s a huge risk the way real estate is going here. It’s becoming a postcard of itself – so smooth that no one can afford to live in it. It risks becoming increasingly one-dimensional. If we really lost our artists – and we do take them for granted – we would feel it in ways that we can’t begin to describe.”
…
The loss of Vancouver’s talent to LA, Montreal, New York and Toronto is something that should concern us all, says artist, lawyer and recent independent City Council candidate Sandy Garossino.
“We’re draining the lifeblood out of our city with the disappearance of the artists,” she says. “By the time you’re at a certain point in your life, you can’t afford to live here.
Garossino rattles off the pros and cons of the various art Meccas on the continent which are pulling some of the city’s creatives away: New York City (expensive, but renowned arts scene); Montreal (mind-bogglingly cheap, and a real arts “incubator”); LA (relatively affordable, great community).
…
– from ‘Vancouver’s arts and culture bleeding out in “steady migration”, warn city creatives’, David Ball, Vancouver Observer, 9 May 2012
[hat-tips to ‘Aldus Huxtable’ and  ‘granite countertop’]

Media Cosy With RE Industry, Yet Again: Vancouver Sun & Telus Garden – “Sometimes you find out that what they release to the media is complete crap. Telus Garden has not sold out, no matter what people tell you. I have e-mails from their marketing company saying they still have units for sale.”

“I’m not a fan of pre-sales because sometimes you find out that what they release to the media is complete crap. You see, what happens is, a month ago The Vancouver Sun reports that Telus Garden in downtown Vancouver is sold out. However what they didn’t tell is that all these people who lined up and purchased had one week to rescind their purchases without any penalty… so what happens is, of course, not everyone goes ahead with their purchase and Telus Garden is still flogging all their properties, whatever they have remaining. There are still properties remaining at Telus Garden one month later. It has not sold out, no matter what people tell you. I have e-mails from their marketing company saying they still have these units and these units and these units for sale. So if you think the market in the pre-sale market is ultra hot, and you think you going to buy it to flip it, think again.”
– Ian Watt, realtor, self-posted youtube video, 7 May 2012

See also:
‘Telus Garden condos sell out’, Vancouver Sun, 2 Apr 2012
– From that article: “Telus Garden’s 428 condos sold out in about one week. “We’ve been marketing them for a few weeks and we had a tremendous response from the public as well as from Telus team members,” said Andrea Goertz, Telus Corp.’s senior vice-president of strategic initiatives, on Friday. “Demand was stronger than anticipated.”

RBC Poll – “45% of British Columbians are relying on selling their home to pay for their retirement.”

“People in B.C. are the least optimistic of Canadians across the country about their retirement, a new poll by RBC found. …
Nearly half — 45 per cent — said they are relying on selling their home to pay for their retirement.”
– ‘People in B.C. worried about their retirement, poll finds’, The Vancouver Sun, 9 May 2012

As we have been saying…
People in BC are over-dependent on their RE holdings for their future financial well-being.
So, imagine.. you’re 5 or 10 or 15 years from retirement, you’re dependent on the value of your home for your retirement funds, and housing prices start dropping… 10%, 15%, 25%… what do you do?
– vreaa

[Post-script: When you consider that only 70% of BCers own their homes, that 45% figure is massive… assuming the poll was a balanced sample, it means that over 60% of BC home-owners plan to sell their homes for retirement funds!]

Two Properties; Falling Income – “Eve sees her rental property as her pension. Her goal is not to have to work for a living any more.”

Too many balls in the air?

“It would be easy to envy Eve her lifestyle. She has a mortgage-free home in a sought-after part of downtown Toronto, work she loves and a rental property that throws off substantial cash flow.
Eve’s world has changed over the years. At 46, she is divorced with shared custody of her two children, ages 10 and 12. The erratic income she has earned as a freelance photographer is dwindling and could disappear altogether before long. She’s worried about finding employment at her age and uncertain about what she wants to do.”

Summary of situation:
Monthly net income: Net real estate income before income tax $2,500; average freelance income, $2,170 and falling. Net income after tax (average, variable), $3,750
Assets: Cash and short-term $6,050; TFSA $2,015; RRSP $44,000; home $700,000; rental property $685,000. Total: $1.4-million
Monthly disbursements total: $3,545
Debt: Mortgages on rental property $375,000; line of credit $20,400. Total: $395,400

“Eve sees her rental property as her pension. She has two mortgages on the property, one that will be paid off in more than 20 years, the other in about 16. Short term, she wants to pay down her $20,000 line of credit and wonders whether she should cash in her registered savings to do so. Longer term, her goal is not to have to work for a living any more.
“I don’t drive a car, don’t eat out at fancy restaurants, don’t take drugs, but play lots of squash, which costs,” she writes in an e-mail. She is apprehensive about the future. “Given that I am not keen to get a real job and don’t think anyone will want me now, how doomed am I?”
Eve wonders if she can afford to retrain for a new career and whether it would be worthwhile. “I’m working for peanuts. I love it but it’s going to run out,” she writes. “Or should I perhaps think about buying another rental property?”
Then, as if having second thoughts: “Am I in a position to have choices?” she asks. “When can I feel safe and retire?”

– from ‘House rich but career challenged’, G&M, 4 May 2012
—

Many households recently featured in this G&M ‘Financial Facelift’ series involve individuals who are over-dependent on RE for their financial futures. This is not surprising, given how the housing bubble has drawn so many into buying more than one property. Also, the idea of not working and living off your RE gains has become a prevalent theme.
We have little doubt that ‘Eve’ will be better off in future if she decreases her exposure to RE as soon as possible. However, this likely won’t occur to her as a viable option until the market value of her home and rental property drop about 25% (at which point she will have lost 35% of her current paper net-worth, given her leverage). There are people in Vancouver in similar situations, only the numbers involved are usually larger.
Read the entire article: The financial planner, to his credit, advises against buying another rental property (!), but doesn’t bring up the idea of Eve decreasing her exposure to RE.
– vreaa

Caution About Canada? – “I was watching Al Jazeera English via satellite dish. A report came up about the buoyant Canadian housing market and how the level of household debt is now a cause for concern.”

“I was watching Al Jazeera English via satellite dish. Suddenly one report came up. It was about the buoyant Canadian housing market and the level of household debts that are now a cause for concern. Nothing is new actually but this means the world is now cautious about Canada.”
– ‘Thai-born Chinese Canuck’ at VREAA, 5 May 2012 2:57am

Calgary After-Dinner RE Chat – “Renting is scoffed at. These bulls apparently do not believe that any significant economic or political events could impact Canadian RE values. Denial is powerful.”

“Was at a swank inner party last night (here in Calgary where I live) with 6 couples including my wife and I. At around 9:00pm when the table had been cleared and the many pre-dinner drinks and about 8 or 9 bottles of utterly intoxicating wine had been consumed, the after dinner whisky, scotch, and cocktials started to flow and the conversation around the table turned to real estate, economics, and politics.
The host couple (close personal friends of ours) and my wife and I were the only RE bears at a table full of RE bulls. Time for a little background, the host was a wealthy doctor who acquired his home on a golf course 11 years ago for about 1/3 of what it might be sold for today. He owes about $200K and will have the mortgage paid in full in 24 more months. If the property dropped back to what he paid for it they would not be materially financially impacted in any way, since they didn’t know that, or plan for, any appreciation due to a boom in RE values. They built the house to live in and pay off in a decade. It is one of a portfolio of many international properties that they own, amongst other things. The correct definition of homeowner could be applied here. We are renters here, even though we own a single piece of property in another continent that is paid for. Over the last 11 years we have saved a mid 6 figure sum in cash by renting, staying out of debt and living within our means.
These bulls apparently do not believe that any significant international economic or political events could impact Canadian RE values. Witness the election of a socialist to the presidency of France for example and the ramifications thereof. The Euro zone will create problems for all of us. As will the US and China.
It is also their entrenched belief that interest rates will never rise in Canada for a very, very, long time. Even though as other nations react and perhaps have to raise rates to attract capital in order to keep their financial ships afloat, poor little ole’ Canada will have no choice but to follow along or be left behind. Of course, we may just raise rates due to the bubble (that does not exist mind you) because we need to stop the madness and eventually one government will do so of their own accord when they come out of the ether.
Renting is scoffed at, merely because it does not support the last generations ingrained mental foundation of wealth creation, that all of your eggs must be in a piece of property or you are in a class lower than everyone else. When I was explaining that a renter can do just as well as, or IMHO better, than someone who had all of their net worth in a single piece of property, the guffaws could be heard round the table except at our end. Yet they could not, nor would they even try, to rebut our position with logic facts and reason, since perhaps they knew we held all the cards. Their arguments were entirely emotional in scope, and easily debunked. Just like any RE agents sales pitch.
At the end of the night I was looking at them and, to me anyways, it seemed that they were all dressed in black pants and shirts while wearing brand new white Nikes…… waiting for the RE comet to take them away (a la ‘Heaven’s Gate’). Denial is a powerful belief system.”
– Carioca Canuck at VREAA 6 May 2012 2:43pm

Riddle: “Look in one direction you’re in New York City. Look in another direction, you’re in Paris. Where are you?” Answer: “You’re in New Westminster, British Columbia!”

“Five years ago, I couldn’t imagine looking anywhere outside of my beloved Mount Pleasant ‘hood, let alone anywhere east of the Drive. But when my girlfriend — now my wife — moved in with me in 2006, space quickly became a premium in our creaky 620-square-foot leasehold apartment on East 14th Avenue. There weren’t any two-bedroom places available in the area for less than $300,000 — and those that were anywhere near that price were unlivable and needed extensive renovations.
Stubborn as I was, she convinced me to look outside Vancouver for places to live.
Not live in Vancouver? I hated the idea — I mean, I really hated it. I was adamant that I be able to walk to a cafe or a pub without having to follow a maze of residential streets or cross highways to get there. I wanted to be part of a community, not a matrix of parking lots and six-lane freeways.
Realistically, though, we had to get a bigger place. In desperation, we checked out options in Coquitlam and Burnaby — both of which, as I expected, made owning a car a necessity. Richmond and Surrey were, for me, out of the question. I wanted more character than the bland, cookie-cutter architecture I saw out there.
One night, I was looking on MLS.com. When I narrowed the search down to two-bedroom apartments under $300,000, to my surprise a huge cluster of affordable apartments showed up in New Westminster and not much west of there.
“What about New Westminster?” I asked my then-girlfriend. We’d been there once or twice on day excursions, and for a change, I didn’t feel a knot in my stomach when I considered the possibility of living there.
We quickly learned we could easily get a two-bedroom, two-bathroom apartment within our budget and it wasn’t long before we secured a great place at the top of Carnarvon Street with a beautiful south-facing view of the Fraser River and plenty of sun. Two years later, we don’t feel the need to be closer to anything, because, well, everything’s already nearby.”
…
“It’s not only more affordable than Vancouver, it’s brimming with character, artist studios, indie cafes, old parks, and fixer-upper opportunity. Young people are moving out here in droves, and Mayor Wayne Wright is openly courting them. The city’s downtown core also is one of the most densely populated areas in the Lower Mainland.
This is more than a story about the revival of New West. It also may be about the salvation of Vancouver. As B.C.’s biggest city verges on becoming a reserve for the wealthy, it chases away the younger, creative talent that gives a big city its lifeblood and secures its future as a productive centre. Do those priced out move 20 minutes away on SkyTrain? Or, as so many do, do they leave for Toronto, Montreal or cheap and cheerful Saskatoon? When New York got too expensive for the creative young people that make New York hum, other places separated by bridges and tunnels became home to that population — most famously Brooklyn.”
…
Urban issues journalist Frances Bula hears the future in conversations around her Vancouver dinner table.
“I know that my 29-year-old son and his friends, who are artsy and not very rich, often talk about New Westminster as a place they’d consider,” Bula tells me. “It has beautiful old buildings, a sense of place and… it’s easy to get to by transit.”
In fact, she adds, “New West is attractive because it’s one of the few areas outside downtown Vancouver with a sense of history. There are a few more areas scattered around the region — lower Lonsdale, Annieville, Steveston, Fort Langley, Cloverdale.
“But,” Bula continues, “New West is closer and not so suburban feeling as North Van. I see it possibly being more like Georgetown in Seattle or Williamsburg in New York.”
…
One person’s gritty, of course, is another’s alarm bell. In December, Maclean’s magazine ranked New Westminster Canada’s 15th most dangerous city.
…
New Westminster’s varied edges makes it a natural locale for the movie industry, actor and stuntman Patrick Sabongui says.
“You can look in one direction and be in New York City. Look in another direction, and you’re in Paris.”
…
– from ‘Vancouver Needs a Brooklyn, and New West Could Be It’, Keith Mackenzie, The Tyee, 5 May 2012 [hat-tip Jeff Murdock, and, via e-mail, Aldus Huxtable]

A good article, in many ways; worth the full read.
New Westminster sounds like it has all sorts of things going for it, without needing to be likened to anywhere else.
Similarly, Vancouver is a fine city that doesn’t gain by desperate wannabe labels like “Vanhattan“.
– vreaa

“I have a friend with 2 kids in 2 different daycares costing untold organizational nightmares and $2400 per month so she and her husband can work full time at jobs they don’t really like so they can try to keep their heads financially above water. What kind of life is this?!”

“I have a friend with 2 kids (one just a year) in 2 different daycares costing untold organizational nightmares and $2400 per month so she and her husband can work full time at jobs they don’t really like so they can try to keep their heads financially above water. The dream of a home is still there but the townhome they bought 8 years ago is all they can really afford. They spend 3-4 hours a day with their kids, a few hours in the morning getting them fed and dressed to go to daycare and a few hours in the evening getting them fed and bathed and ready for bed. What kind of life is this?!
And then there are the Bumfuzzles – live on a 44 foot boat in Mexico, spend all their time with their kids and each other, live with less, work for themselves, love their life.
I know which life I’d choose. The idea that you need 3+ bedrooms and 2+ bathrooms and a big yard and stuff and debt is wrong for so many people but they don’t even know it.”
– terminalcitygirl at VREAA 5 may 2012 1:11pm

‘The Fortunate Few’ – Taking Profits; Cashing Out

“What if you bought a home many years ago and had the opportunity to lock in a great profit while the market is still buoyant? A Vancouver woman and her husband answered this question recently by selling the family home and signing a one-year lease on a rental.
“We bailed,” said Ms. Bold. She and her husband have been having annual talks about whether to sell since 2008, when the housing market briefly plunged. This year, they agreed it’s time.
“When you look at all the statistics, it just doesn’t make sense,” Ms. Bold said of the Vancouver market. “Who’s kidding who? The cost of living here is so outrageously expensive and incomes are not keeping pace.”
Ms. Bold and her spouse have been thinking. They’re in their mid-40s, she a professional coach and her husband an entrepreneur. They have two kids, aged 12 and 7. They bought a $275,000 home in 2003 and sold three years later for $375,000. Purchased for $445,000, their most recent North Vancouver home sold in March for over $1-million after attracting three bids from interested buyers. Time on the market: Less than a week.
“Let me put this in perspective – this is a 100-year-old home, 2,400 square feet on a 50-foot lot,” Ms. Bold said of her just-sold home. “We do not even have a bathroom upstairs with our bedroom.”
More than a million for a non-monster home? “That’s nothing,” she said. “This same home on the west side of Vancouver would sell at $1.5-million.”
The Vancouver housing market looked a little shaky in March. While average prices moved higher, sales fell sharply. Ms. Bold’s sense is that some parts of the city are holding up, but her confidence level in the market is near zero right now.
At first, she and her husband thought about selling in the traditionally strong spring market, and then buying another home during the traditional summer slowdown. Now, they see no rush to buy back in. Instead, they will rent a four-bedroom house for a one-year period in which they’ll look at their options.
One option is to continue renting in Canada, at least for a few years, and buy a house in the United States. …
For now, Ms. Bold and her husband are content to enjoy their debt-free status and the extra cash flow that comes from renting. In fact, their monthly rental costs are only a little less than their mortgage payments, which were set at a high level to speed up the repayment process. But they estimate they’ll save thousands by not paying property taxes and home maintenance costs.
It’s not an easy emotional transition to go from owning a home to renting, but there are compensations.
“The part I’m struggling with is the idea of living in a house that doesn’t look and feel the way I want it to,” Ms. Bold said. “My husband just keeps saying, wait until you see our bank account balance. We’re going to be debt-free with a big wad of cash.”
– from ‘Ready to be bold? Sell the house and rent’, Rob Carrick, Globe and Mail, 30 Apr 2012 who also comments:
“After a long rally in housing prices, concern about a correction of some sort is growing. For a majority of people, the idea of selling now to preserve their gain in the housing market will seem crazy. They like their homes, they like the homeowner’s lifestyle and they abhor renting. Let the housing market rise and fall – they plan to own for the duration. Still, there’s a case to be made for getting your money out of a house now if you’ve done very well over the years.”

From the comment section of the same article:

“Just listed my Vancouver home this week to do the exact same thing. Made huge gains over the past 10 years but never felt like the money really belonged to me, when it sells and the money is in the bank it will, because it is. I will be renting for a quarter of the price of owning with a huge smile on my face waiting for the correction.” – mootumbo

“My husband and I did exactly the same thing, and are really glad we did. I do think the Vancouver market is really overpriced. When and if we buy back in, we will downsize considerably, and will end up owning a condo/townhouse outright with enough savings to help to continue building for our retirement, which is still 15+ years away. In the meantime, even with very low returns, we are making enough to make it worthwhile to wait and see for at least another year or two.” – Just my opinion in BC

—

These individuals will, in years to come, be viewed as ‘the Fortunate Few’, those who cashed out in the vague vicinity of the top of the ‘Great Vancouver RE Mania of the early 2000s’.
In a speculative mania, only a surprisingly small percentage of participants end up profiting.
Another thing: we fully believe that even those who sell, and who now think that they are planning to buy on a pull-back, will largely sit on their hands when the time comes.. “Why buy an asset whose price is falling?” (they will reason).
– vreaa

Get Girls With Your Car; Keep Them In Your Condo

– from The Georgia Straight, 27 Apr 2012
Many thanks for the link to the image to Ray, who also adds:
“Here is a fun ad from the Georgia Straight today that insults our ability to keep a woman unless we buy one of their houses. Is it the top when they have to play into our primal urges in order to sell their homes?”
—

And the target buyer is…?
With a name like ‘Meccanica’, and this line of advertising, you’ll be able to smell the testosterone in the common areas.
(Where is condohype when we really, really need him? For those of you who are relatively new to the Vancouver RE blogosphere, ‘condohype’ was a site that offered incisive, insightful and often hysterically funny critiques of condo project promotions. Foreclosed 2009. Archives still online.)
Yeah, guys, if you can’t supply a cave or a nest, you aren’t going to get girls, and all sorts of other things aren’t going to happen to you either.
‘Real Men Buy Real Estate’ ™
– vreaa

Reminiscent of:

[For the record, this our version of the cover of the book “I Married An Artist”, by Billy Button. Great stuff. -ed.]

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

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

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

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

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

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

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

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

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

Raising Kids In The DTES – “We own an affordable home in downtown Vancouver, and I don’t think we could have pulled that off if we hadn’t been willing to take a chance on a dodgy neighbourhood. The next wave of real estate refugees will be moving even closer to ground zero.”

A woman smokes crack in Vancouver’s Downtown East Side
[The image illustrating this story in the National Post]

“For the past six years, our family has lived just around the corner from the worst stretch of Vancouver’s notorious East Hastings Street, near dismal Pigeon Park. Curiously, we chose to move here while my wife was expecting, about nine years ago. We had found a condo that we could actually afford, so we purchased a unit pre-construction, gambling that the neighbourhood would improve significantly by the time our building was completed. It didn’t. We moved in anyway, hopeful that change was just around the corner. It wasn’t, although the area would improve, eventually. But first, we would spend a few years raising our children in what could generously be described as a disturbing new community.

Housing prices being what they are in Vancouver, I expect that more families will consider taking a chance on “improving” neighbourhoods, as we did. And they will find, as we did, that addicts don’t make the best neighbours. While every user’s personal story is surely tragic, it remains a fact that addiction does terrible things to people. Junkies steal, they prostitute themselves, they leave needles and feces in the streets. The Downtown Eastside may be home to my city’s least fortunate, but it is also, in many cases, home to my city’s least sanitary, least responsible, and least polite. Anybody who thinks drugs are glamorous should spend some time around here.

[Series of stories of DTES encounters at this point. Read the whole article]

So why did we stay here? I suppose it helped, as middle class parents moving into a decidedly un-middle class neighbourhood, that our hopes were not high in the first place. … we were able to ride out the rough patches because we always knew that our time here was optional: either the area would improve or we would leave. Many will never have that choice.

Recently, parts of the neighbourhood have improved, and significantly. A couple of years back, the completion of several residential towers quite rapidly turned our formerly desolate block into an up-and-coming district, complete with overpriced French bulldogs. There are now coffee shops and grocery stores and dry cleaners and pizza places where, not long ago, there was nothing. For years, we were the only fools braving the local playground, dodging the winos and crack heads, checking beneath the monkey bars for needles and broken glass. Today, there are always kids around, there’s a beautiful new daycare just across the street, and funding has just been announced for an elementary school. Heck, these days, even the walk to Gastown isn’t quite as scary.

It took a while, but we bet on gentrification, and – knock on wood – it’s happening. Of course, when a toddler is taken hostage at a daycare, as happened about a year ago just a few blocks away, you do have reservations. And, to be sure, if anything serious had ever happened to a family member – or if my kids paid more attention to their surroundings – I might be telling a completely different story. But, with hindsight, this was a good move for us: we own an affordable home in downtown Vancouver, and I don’t think we could have pulled that off if we hadn’t been willing to take a chance on a dodgy neighbourhood. So, if any parents out there are considering a similar choice, it can be done, but you will need to stay alert, avoid the clearly problematic individuals and situations, and hope that your kids won’t be exposed to anything too extreme. And good luck, because the next wave of real estate refugees will be moving even closer to ground zero.”

– excerpts from ‘Mike Comrie: Raising kids amid the hookers, junkies and drunks of Vancouver’s worst neighbourhood’, National Post, 20 Apr 2012
[hat-tip Aldus Huxtable]

Lawyer In Surrey Washroom – “The market has been slow for many months. I think it will get a lot slower. There are lots of lawyers making a living on real estate convayencing who are scrambling.”

“I was in a washroom in South Surrey yesterday and overheard the following conversation between a 50 something lawyer and another fellow:

Lawyer : “Well, the Real Estate market has not been exactly robust”
Other guy: “Really? I thought it was crazy”
Lawyer: “No. Actually is has been slow for many months and I think it will get a lot slower. There are lots of lawyers who are making a living on real estate convayencing who are scrambling…”
Lawyer before guy could answer: “…I am actually working on importing a new green tea energy drink from China”

A smile crossed my face as I walked out.”

– McLovin at vancouvercondoinfo.ca 21 Apr 2012 9:27am

You Go, Girl! – “She was ready to start climbing the property ladder and he wasn’t. She hopes women have the courage to leap confidently into homeownership. Work within the budget (she laughs).”

“I have a single friend sitting on the fence between buying and renting. She’s financially ready to make the leap into homeownership, but hesitant about doing it solo in case she meets someone soon.
Waiting for Mr. Right can derail a number of women’s homeownership plans, according to Sandra Rinomato, a realtor and owner of a full-service brokerage in Toronto.
“I can’t tell you how many times a client asks what she’ll do if Mr. Right comes along, and I always say if he does, then okay, you can keep the investment in your portfolio and rent it, he can move in, or you sell it and take the equity,” she says. She speaks from personal experience, having at one point purchased property on her own while in a serious relationship. She was ready to start climbing the property ladder and he wasn’t.
…
More and more single women are entering the market, making up roughly one in four new buyers, according to Ms. Rinomato, who is currently hosting the new HGTV series, Buy Herself, focused on helping singles navigate the world of real estate.
…
“If I could pull a rabbit out of a hat I would, but we work within the budget,” laughs Ms. Rinomato. Searching outside your financial scope can derail the process, or financially stretch you further than you should be if you fall in love with something a few rungs out of your reach on the property ladder.
Aside from down payment, monthly mortgage costs, and emergency funds for the unexpected, it’s your responsibility to have a grasp on the countless other costs associated with buying your first place, like inspection, legal, and appraisal fees.
…
Ms. Rinomato says it’s not unusual for solo buyers to have unrealistic requirements. … A strong team in your corner is also essential for a first-time buyer, and an understanding of the steps of buying, and how to will help you make the right investment decision. … She hopes her new TV series inspires women to at least ask if this is the right time to buy and not to hold back because they’re scared, or don’t think it’s an option, or think Mr. Right is around the corner. More importantly, she hopes women have the courage to leap confidently into homeownership if the time and the investment is right.
…
– ‘Finding the right home, with or without Mr. Right’, Angela Self, G&M, 20 Apr 2012 Angela Self is “one of the founders of the Smart Cookies money group and writes a weekly column on managing debt and saving money at the Globe and Mail”.
[hat-tip theragingranter]
—

Careful feminist analysis of the article would be appreciated; any takers?
“A strong team in your corner is essential for a first-time buyer”: let’s guess… a realtor and a mortgage broker, right?
– vreaa
—

From the comment section of the G&M article:

“Is anyone else amused by the fact that a show enticing single women to buy into the very peak of the condo bubble, and thus committing financial suicide, is being marketed as “female empowerment”? I’m thinking it’s time to short Lululemon stock. … In a few years HGTV can do a follow-up program called “Sell Herself”. That’s what many of these women will be doing in order to hang onto their negative equity condos.” – Alistair McLaughlin

Federal Immigration Minister – “People in Vancouver ask why we facilitate this. It is leading to inflated real estate prices. Great if you are well-established, but if you are a young family starting out, good luck being able to afford a house in Vancouver. A lot of people who aren’t rooted in Vancouver are inflating the costs.”

Kenney – “We had begun to devalue citizenship.”

Nine out of 10 wealthy immigrants accepted into Quebec’s investor immigrant program never come to Quebec, federal Immigration Minister Jason Kenney said Friday.
“I do think it is peculiar that the province that was given power to select immigrants primarily to reinforce the French fact in Quebec is in fact flipping Asian people into Vancouver,” Kenney said during a meeting with The Montreal Gazette editorial board.
“In principle, the Quebec immigration program should be about immigration to Quebec.”
…
Kenney defended the [national] investor program.
“There are millions of millionaires. There is absolutely no shortage of demand for this kind of program. We have a huge surplus of applications.”
But the immigration minister said he would like to see both the national and Quebec programs revamped to better reflect the demand from rich people while making the programs more valuable to Canada.
Under existing criteria, the national and Quebec versions of the program accept applications from investors with a net worth of at least $1.6 million, provided they make an $800,000 loan to the state, which is repayable without interest in five years.
…
Kenney said the “vast majority” of the roughly 4,500 people Quebec accepts under the investor scheme settle elsewhere.
“As far as we can tell, about 90 per cent of those people end up settling in Vancouver and Toronto. They don’t even come here,” Kenney said.
“Quebec gets the money. Ostensibly, they are supposed to be coming to Quebec, but they go to Vancouver and that is where they stop.”
He said in most cases, the family sets up a household in Vancouver while the breadwinner “goes back to Asia or wherever to run the business, where they are not paying Canadian taxes.”
“Here’s what often happens. Quebec will get the $800,000 for five years. B.C. will get the social services costs for health care and everything else for the dependents who have been brought to Vancouver.
…
“People in Vancouver are always asking me why are we facilitating this because it is leading to inflation of real estate prices. Which is great if you are well-established and you have paid down your mortgage. But if you are a young family starting out, good luck being able to afford a house in Vancouver. A lot of people who aren’t rooted in Vancouver are inflating the costs.”
…
“We have decided that we have to raise the price point. There is a huge surplus of people applying for these programs beyond our ability to admit them and we just aren’t getting enough bang for the buck.”
Kenney rejected suggestions that the program feeds into the perception that Canada is ready to sell citizenship to the highest bidder.
“It’s not citizenship, it’s permanent residency,” Kenney said.
“There is a compelling rationale to attract high net worth investors to help bring capital and ongoing investments into the Canadian economy . . . But the current one is not meeting those objectives. What we want is investment that puts real skin in the game, not just a loan so people can move in and out.”
…
Meanwhile, Kenney said the federal government is in the process of revoking the citizenship of 2,300 people, with at least 6,000 more cases under investigation.
He said a two-year investigation by the RCMP identified at least 8,800 cases of alleged residency fraud.
“Thousands of people were using crooked immigration consultants to create fake proof of residency in Canada. When we find several thousand people who have broken the law, it is pretty widespread.”
…
“We had begun . . . to devalue citizenship in the sense that we were not consistently applying the statutory requirements to obtain citizenship,” he said.
…
– from ‘Que. immigrant program funnels rich newcomers to B.C.: Kenney’, Montreal Gazette, 20 Apr 2012
[hat-tip Jeff Murdock]