Tag Archives: Economy

“We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard.”

“My wife and I have good jobs in high standing professions. Between us, we have five university degrees in hard science fields (with a sixth at the doctoral level underway) all from top three Canadian universities. We have high responsibility jobs for good employers, and do well financially, but not well enough to afford what we think is reasonable for two people like us, a single family home with a yard. We are good with our money and have solid nest egg already built. We cannot justify spending 80% of our income to be able to afford a single family home anywhere within an hour of the downtown core.
We also visit Seattle regularly. In Seattle, we would both make double or more than we would here in Vancouver, with housing at half the price, and the same climate. Similar circumstances exist elsewhere in Canada. While our families are here, we want to start our family in a place where we can provide our children with opportunities, not where every last dollar goes to real estate.
To put a point on it, people like my wife and I are being groomed by our employers to take on senior leadership roles in their organizations down the road. The problem for our employers is that we won’t be here – we can’t have the family we want, along with quality of life we desire and can easily obtain elsewhere.
I look forward to leaving this real-estate obsessed burg. Unless things change, things are going to get a lot worse here before they get better.”

– Vancouver In The Rearview at VREAA 6 Nov 2011 8:06pm

“In my late 20’s; university grad; secure job; happy about how I’m doing professionally. The only depressing part is that owning a place of mine own in Vancouver is fast becoming a dream rather than an option.”

“Being in my late 20’s and happy about how I’m doing professionally relative to my goals (university grad and a well paying secure job), the only depressing part is that owning a place of mine own in Vancouver is fast becoming a dream rather than an option. The alternative is buying east of Burnaby/Coquitlam and then driving daily out to Vancouver … by the time I save up enough for a down payment and mortgage (giving it 5 years realistically). It has nothing to do with a desire to live in upper class neighborhoods, rather somewhere in the city I’ve grown up in rather than be pushed outwards just because of bad luck and timing.”
– sam_i_is at reddit, discussion of ‘Going Going Gone’, 13 Oct 2011

Lawyer Couple in 30’s – “Neither of us feel entitled to owning a freestanding home in Kits. You’re missing the point if you think that’s the problem. Fact is, we don’t want to be renting a small apartment in our 40’s.”

“I’m in my 30’s as is my wife. We’re both working lawyers and have a baby on the way. We rent a two bedroom apartment in East Van. We’re essentially the couple in the article except we live in a more affordable neighbourhood.
Recently we gave notice at our place and are packing our bags to leave Vancouver as we feel like we’ve been priced out of the housing market. Neither of us feel entitled to owning a freestanding home in Kits, and you’re missing the point if you think that’s the problem, but we also don’t want to be renting a small to mid-sized apartment in our 40’s which is the reality of housing in metro Vancouver. The fact is all of our friends who are in their 30’s, have kids, and can find work elsewhere have already left for more affordable pastures, either to the Island or to Langley. Those who are tied here due to their work end up commuting two hours a day and dream of finding jobs elsewhere.
I don’t know what the solution is, but there’s definitely a problem here even if you don’t want to admit it.”

– mizike at reddit.com discussion of Going Going Gone article, 13 Oct 2011

City Of Vancouver – Enough New Homes; Business-Unfriendly; ‘Green’?

City of Vancouver, 1998 to 2010:
Net increase of new residents: 83,267
Net increase of homes: 50,973
Net increase of new businesses: 46 (0.09%)
Business:Residential tax rate ratio: 4.5:1 (cf 3:1, or less, rest of Canada)
Net increase in cars: 64,329

– from article ‘Business growth in Vancouver stalls while suburbs flourish’, by Don Cayo, Vancouver Sun, 24 Oct 2011

Are these figures correct?
If so:
1. 1.7 new people to each new home (cf 2.1 average household).
2. Unattractive to business endeavours.
3. ‘Green’?
[eyeroll]
– vreaa

Four Out Of Four RE Industry Insiders Agree: “There is no bubble in Vancouver” – “[Moderator] Podmore wore a ‘no bubble’ button to the debate”

“Ward McAllister, president of Ledingham McAllister Properties, and fellow panelists Eugene Klein, president-elect of the Real Estate Board of Greater Vancouver, and real estate consultant Richard Wozny, of Site Economics Ltd. were at the board of trade to debate whether or not Vancouver real estate is in the midst of a bubble. They all agreed it is not. …
“Buyers, especially the under-25 mark, are sitting on the sidelines,” said Klein. …
The HST effect was the only real damper on Metro Vancouver real estate, which the three panelists and moderator David Podmore, CEO of Concert Properties Ltd., all said (was) not a bubble. Podmore wore a button to the conference with the slash symbol for “no” imprinted over the word bubble.
“I am very optimistic about where we are heading,” he said, noting that his company largely pulled out of Metro Vancouver Real Estate in 2007, but went back in 2009.
He cited two reasons for the region’s strong real estate market: immigration and the fact that real estate is being viewed as a hedge against the uncertainty that has hit global finance.
Klein said international interest in Vancouver is attracting foreign buyers. He said buyers are coming here to live, with only three per cent characterized as foreign investors. He said supply is now out-stripping demand, but it has no affected prices. Prices have increases dramatically in some area over the last 12 months; in Richmond by $200,000, in West Vancouver by $275,000 and Vancouver’s West Side by $400,000.
“Demand for high-end properties have helped drive our demand for most of the year,” he said.
Wozny said Metro Vancouver’s real estate prices are “very high by any measure.”
“It must be something political or social because it certainly has nothing to do with economics.” he said.
He forecast low interest rates for the foreseeable future, which will translate into continuing sales.
“There is no bubble in Vancouver,” he said.
McAllister had advice for prospective homeowners in their 20s who are questioning whether they should wait for prices to come down. Don’t wait, he said; borrow from mom and dad.
And he warned against selling hoping to get back into the market later.
“Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.”
– from ‘New housing sales stall over transition out of HST’, Gordon Hamilton, Vancouver Sun, 21 Oct 2011
[hat-tip Patiently Waiting at vancouvercondo.info]

Well now, ain’t that.. cosy?
Quite the ‘debate’.
Metaphors almost fail us… kinda like getting Palmer, Nicholas, Woods and Player to debate the subject “Golf, the Best Game?”; or four vultures to debate the merits of carrion.
Thoughts:
1. Interesting terminology, “the under-25 ‘mark’ “. (Ever seen ‘The Sting’?)
2. They are seeking buyers at the margins: persuading those in their 20’s to borrow downpayments.
3. Their analysis is arguably even more nebulous than the usual “limitless demand” position: Even though prices are very high and not supported by “economics”, low interest rates and “something political or social” will “translate into continuing sales”. “Immigration and the fact that real estate is being viewed as a hedge against the uncertainty that has hit global finance” will continue to buoy the market. This really is little more than wishful thinking. Consider what may happen to this market if just a 15% drop in prices (and a 10% drop in the loonie) lead investors to question its “safe haven” status.
4. “Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.” – Classic bubble quote. Whenever people start expressing opinions that markets will never change, take note.
5. With reference to our discussion earlier regarding the media and the RE industry, witness the Sun running this as ‘news’.
– vreaa

Brad Lamb Is Not Worried – “We are the number one condo market for new development on the planet. This talk of bubble is ridiculous.”

Announcer: “Remember that so called real estate bubble that’s been predicted to burst for what seems like forever? (laughs)… well it certainly didn’t happen last month… Canadian home sales rose almost 3% in Sept and 11% from the same month last year.”

Brad Lamb: “We are the number one condo market for new development on the planet.”
Announcer: “Brad Lamb is a RE broker and developer who has “been selling Toronto property for two decades, he says 2011 could be a record breaker.”
Brad Lamb: “I’m building over 2000 condos across Canada at present, and I’d say that 50% of those are under 520sqft.”

Announcer: “Yet there are worries that developers may be building too many condos in Toronto.”
Will Dunning, economist: “… we don’t know how they’ll be absorbed in the market place.”
Announcer: “Brad Lamb, who builds them, is not worried.”
Lamb: “This talk of bubble is ridiculous. But, we’re going to have recessions, we have them every 15 or 10 or 8 years, and when it happens, people are going to put their hands in their pockets and not buy real estate.”
-CBC Radio, “World at 6”, 17 Oct 2011

“I’d like to share my story as someone who was born and raised in Vancouver, lived abroad for ten years, returned, and is now planning to leave permanently.”

“I’d like to share my story as someone who was born and raised in Vancouver, lived abroad for ten years, returned, and is now planning to leave permanently.
I grew up in what is today ground zero for Vancouver’s speculative mania, Point Grey. My dad was a professor at UBC, and my mom a part-time teacher. In real terms, my income is comparable to that of my parents when they bought our house in the 70s. And my expenses are lower: we have one child (so far) instead of four, one car instead of two, etc. And yet the modest house I grew up in would be utterly out of reach for me today.
The question is, what has changed between a mere two generations? Yes, the economy has grown, and there is more wealth in the world today. But presumably one’s income reflects this growth, so that real estate should be no less affordable than it ever was.
Locals shrug off this uncomfortable question with the standard wisdom: We have water! And mountains! To which I reply: Vancouver has always had water and mountains. The city’s attractive geography is widely known and has long been priced in to the market. It’s a valid reason for local prices to start out higher than in certain other places, but not for them to go up any faster over time. Some improvements have been made to the city itself, but the fact is Vancouver is pretty much the same place it was 30 years ago.
What does seem to have changed is our collective mindset. We are living in a dream where Vancouver is the new global hotspot, debt and real estate are the path to riches, and where history doesn’t matter, because “it’s different here”.
I believe Vancouver is in for a grim wake-up call. By any number of fundamental metrics, local real estate appears overvalued by 60-70%. If there were a way to short the market, I would wager a significant portion of my net worth on this bet.
The ridiculous cost of housing aside, after living in six cities in four countries, and traveling to countless other locales, I can say with some confidence that Vancouver is not as uniquely wonderful a place as its residents claim it to be.
None of my three siblings—all hard-working professionals—has chosen to settle in their hometown. My wife and I only moved back because my dad fell ill. We currently rent an eastside bungalow, and intend to relocate internationally next year. I plan to move my business with us. The place we’re going to has its own challenges, but in our experience the overall quality of life is superior.”

El Ninja at VREAA 15 Oct 2011 3:28pm

“An IT recruiter told me there are almost no quality people. He sees the same applicants again and again. He said that he has never seen such a shortage.”

“A software developer that worked on one of my projects has moved to Ontario. Another one announced that his wife is pregnant and once the baby arrives, they are moving back to Europe.
In the past few years, I have been looking for several software developers for my business. The positions were mostly for senior or at least intermediate developers and were advertised on craigslist, BCTechnology and Monster. The funny thing was that for every single position from all sources, the pool of applicants was virtually the same – same people and most of them were not very skilled. Out of those few that were skilled, some left or are leaving soon.
Recently, I talked to an IT recruiter. He told me basically the same thing – there are almost no quality people and he sees the same applicants again and again. He said that he has never seen such a shortage.
So there is the silver lining – if you are a quality software developer, it should be easy for you to find a job, because many quality people have left.
However, salaries for these positions are still lower than in Toronto or Montreal. That may eventually change in bigger companies. I doubt that small companies can afford to pay more, because the owners need to make money too.”

bubbly, at VREAA 12 Oct 2011 5:47pm

‘Going Going Gone’ – Vancouver’s ‘Generation F’

Jesse alerted us to an excellent article: ‘Going Going Gone’, by Tyee Bridge, Vancouver Magazine, 1 Nov 2011. We will headline some extracted personal anecdotes in coming days, but, until then, we suggest the whole article as a must read, and headline it here for discussion.
Excerpt:
The dilemma many employers face, says Michael Heeney, a principal of Bing Thom Architects, is that once their employees want to have a family in their 30s and early 40s, they leave the city. “When they have one child in a two-bedroom apartment they can get away with it, but as the child gets older, or they have a second child, it really doesn’t work very well here.” When they leave, he notes, they don’t go to Surrey and commute, but light out for distant centres like Chicago. “These are people who are at their absolute most valuable, because they’ve been working in the business for 10 or 15 years. They’re the backbone, the boiler room of your business. And we’re losing that investment. In many ways, our most significant export is talented people.”

“I recently gave up on Vancouver and moved to Silicon Valley. The average salary where I work is around $100k. Yet, the parking garage at work is filled with 10 year old Hondas, Volvos, etc.”

“I recently gave up on Vancouver and moved to Silicon Valley. A few things struck me as notable here. First, the average salary where I work is around $100k. This is substantially higher than the average Vancouver family income. Yet, the parking garage at work is filled with 10 year old Hondas, Volvos, and the like. Sure, the guy two cubes over has a Porsche, Ferrari, and two airplanes, but the vast majority of people aren’t flashing their money around. The concentration of new Mercedes and BMWs in Vancouver is much much higher than here. Lastly, houses here are more reasonable sizes. They average probably 1200-1400 sq feet, as opposed to the monsters in Vancouver.”
– Ex Vancouver at vancouvercondo.info October 7th, 2011 at 4:43 pm

Professors Cross Threshold – “After this fiasco we are completely done. I phoned U.Alberta today and told them that we will take the jobs if they offer them to us. In our view this city is being rapidly ruined.”


‘mjw’ writes, in two e-mails to VREAA, 5 & 6 Oct 2011 –
..“What happened to us this past weekend offers a glimpse at the ridiculous game being played out on the westside.
..My wife and I are both profs at UBC, mid 40’s and have been trying to “upgrade” from a duplex on the westside to a SFH in Kits in order to get more space for our family, while retaining a good school district and a short commute. I wrote a post on VREAA a few months ago [12 May 2011] indicating that we are applying for academic jobs elsewhere in Canada. However, finding comparable work for two senior academics is a challenging enterprise, and takes much time to sort out. To make a senior hire in academics is often a long process, and the department needs to know that the candidate is serious on accepting if an offer can be generated. Fortunately, my wife and I are both at the top of our professions and we have been “head-hunted” a few times since 2000, but on those occasions had decided to stay in Vancouver. Fortunately, we both have interviews at U.Alberta in November, and we are pretty confident that this is where we will end up.
….In the interim, we continue to look off and on in Kits with the idea that if we are able to find something decent around the 1.5M price range we might just suck it up and try to buy it…
….In this light, this past weekend we went to the open house at 2655 Waterloo street [MLS number V912486] advertised at the magic number 1.488M…
….If you look tonight [5 Oct 2011] you will still see this as the advertised price. It was an okay house, not great by any means, no dining room, a 10 times 11 master, nanny suite rather than a basement suite, low ceilings etc…. The presenting realtor was so obnoxious that I was worried that my wife might launch at him during the open. The house was significantly less desirable than 1.6M homes that have sold in our neighborhood since last spring that we have seen in (and were unsuccessful in getting during a bidding war).
….Anyways, we made an offer in the low 1.5M’s, and were one of 3 offers presented this past Monday at 1pm. I have a sense from what our realtor told us that we were the highest bidder.
….Got a call from our realtor on Monday evening saying that they were rejecting all offers, as they really wanted a price of 1.698M (which is simply 210,000 more than the price of 1.488M advertised on the weekend of October 2nd). You can see the new listing and the new price on the realtor Julia Lau’s website (scroll down to 2655 Waterloo street listing).
….On Monday evening the listing realtor contacts our realtor and asks “are we interested in purchasing at 1.698M?”…. My first thought was that someone clearly has transposed some digits?… surely this is a joke?… Anyways, it is no joke, this is precisely the game being played here…. and perhaps is being played out in many other “transactions” on the west side…. A complete waste of everyone’s time (writing offers, visiting open houses etc…)…
….After this fiasco this past week we are completely done. I phoned U.Alberta today and told them that we will take the jobs if they offer them to us.
I don’t know if this is normal procedure; advertising one week at 1.488M, and then the next week at 1.698M… but this to me is a clear sign that there is rampant speculation and that buying bricks and mortar has turned into an auction…. In our view this city is being rapidly ruined…..


….“Renting a SFH on the westside is very unstable; places are being flipped like burgers; there would be little stability with regards to schools for the kid. I have watched my graduate student have to move 4 times in the past two years owing to the fact that his basement rental (shared with another student) is in a house that is being flipped. The overwhelming feeling is that at this stage of our lives it should not be so difficult. We will have an easy go in any other place in Canada…..
….I think that some sort of activism is needed to highlight and make people aware of the game that is being played out. If this type of behavior receives more “press”, hopefully individuals will choose to boycott the system until some sanity returns. I do hope that some maverick decides to run for city councilor who can really communicate the difficulty faced by so many families. I think it would resonate with so many people…..”

A remarkable story.
The loss to Vancouver of two bright professionals, and their family.
One example of the misallocation of human capital caused by the speculative mania in housing. It is crippling our city.
Only the most blasé RE bull will be able to read stories like the one above without feeling concern for the health of our community.
– vreaa

“Did it ever hit close to home. Add me to the list of young families looking at options East of the Rockies.”

“Did it ever hit close to home. I too am under 35 with two little kids and can relate 100% to the families interviewed. Add me to the list of young families looking at options East of the Rockies. They said it best when they said it doesn’t feel like you are making any financial progress. How can you with the outrageous cost of living here? For our generation the current path, with house prices the way they are, is financial failure…the type that you recently featured when profiling some 40 somethings. There literally is no money left at the end of the month after mortgage and bills. With both wifey and I working and earning over $120k combined, we are running on a financial treadmill. I don’t know how young families can manage here. A negative savings rate might offer an explanation. There is more to life than putting all one’s $ into a house in a region that is cold and wet basically 10 out of 12 months a year. Born and raised here but wanting out now. The nice cultural fabric we once had here has been shredded also in recent years, to add insult to injury.”
– ‘Metro Van Observer’ [greaterfool.ca 5 Oct 2011 12:54am] responding to stories on Global TV about young couples leaving Vancouver

“Our youth is getting screwed over at the expense of realtors, developers, and a government that’s all too eager to bend over backwards and let a rampant real estate market guide itself.”

“Our youth is getting screwed over at the expense of realtors, developers, and a government that’s all too eager to bend over backwards and let a rampant real estate market guide itself.”
JCVdude, youtube, 24 Jan 2011 (quote at 3:15 on video)

Somehow we missed this video when it was posted earlier this year. It covers many of the commonly discussed issues relating to the speculative mania in Vancouver housing. Good production values for an informal video; nice general Vancouver footage; worth the watch/listen. We are impressed with JCVdude’s very reasonable and controlled expression of his frustration. – vreaa

Broad and Deep Negative Effects – “When housing prices do fall the effect on the economy is often much greater than many people expect. Homes are not riskless investments.”

“As I talk with economists from countries whose housing values have risen markedly but not experienced sharp declines, I have been struck by two things. First, they are often confident that national (versus regional) house-price reductions are unlikely. And secondly, most assume that a decline in house prices would have a measured impact on the economy should that in fact occur. But the experience of Japan in recent decades and the U.S. more recently should provide some caution – given that the economic retrenchment that followed these significant declines in home values exceeded most people’s expectations.”  /
“… sharp declines in housing prices can have additional negative effects, with broad implications for macroeconomic outcomes and monetary policy – broader, perhaps, than may be assumed and incorporated into most statistical models of the economy. …
(When) housing prices do fall the effect on the economy is often much greater than many people expect.
A key lesson from the past several years is that homes are not riskless investments.”

– excerpts from a speech given in Stockholm 28 Sep 2011, by Eric Rosengren, President of the Federal Reserve Bank of Boston.
[Taken from a recommended article by Ben Rabidoux, The Economic Analyst, 28 Sep 2011]

Housing is in a speculative mania in Vancouver and the unwinding of that bubble will have broad and deep negative effects on our economy and our society. – vreaa

“You move to Vancouver, you make a lot of sacrifices to look at mountains and avoid a couple of months of snow. It’s far from a slam dunk.”

“I hire positions at a prestigious government employer [here in Vancouver] with an amazing benefit and pension package. I’ve noticed a serious drop off in resumes. 4 years ago I would see 40+ resumes for a professional IT position. The last post garnered 7. I didn’t necessarily connect it with the real estate market, but it does beg the question of where all these people clamouring to live in the “best place on earth” are.
I also perform stand up comedy on the side. There are 4 (soon to be 5) decent places to perform in Vancouver. I recently took a look at the scene in Toronto and there are dozens, you could do a different room every night for a month and never duplicate. You move to Vancouver, you make a lot of sacrifices to look at mountains and avoid a couple of months of snow. I still prefer it to any other city in Canada (I’ve lived in Toronto, Montreal and Calgary), but it’s far from a slam dunk.”

LexLimo at VREAA 18 Sept 2011 11:50am

PostCardsFromTheBlastRadius #13 – “You’reInvited! GhostMalls ‘O TheOkanagan… by RSVP”

Ya know, the only problem with ‘NaganTouring in a 48 Pontiac Woodie (apart from occasionally having to deal with the irate/disconsolate ‘Darlings’ one neglected to invite) is that they’re Darn!ThirstyBeasts. Which means, sooner or later (usually, sooner) it’s FillErUP!Time… (as opposed to MillersTime – which one ought never to do when in charge of mechanical contrivances in motion; which, come to think it, as ‘catch-all phrases’ go – could include some rather unusual appliances; but I digress  [just this once. -ed.]).

Accordingly, following a recent sojourn exploring the ‘delights’ of Highway97’s assorted RoadSideAttractions/Signage. Imagine, just imagine ‘TheHorror!’ upon discovering that your BigBlockV8 is now reciprocating on mere vapour – and you’re about to experience the GloomyMisfortune of gliding into…

A GhostStation.

As in No SingingTexacoGuyz. No Pumps & Definitely NoGas.

Now, as it happens, there is a good reason why the current PesosPerLitre signage has been ‘blacked out’ at this PitStop…

And it just might have something to do… with whatever it is that’s on the other side of that hoarding. Let’s have a look, shall we?

OhGoodie! RSVP! Have we just been invited to Partay!… @UrbanLiving?

But, “Hey! Just a minute now – this is WestBank. So where the Heck’s The’Urban’?”

Leaving that issue aside, for the moment, upon closer inspection (the kind that reveals the spreading cracks in this faded DevelopersDreamSignage) we discover that this is, regrettably, yet another incitement to ClimbAboard the PreSalesCondoTrain.

Albeit… in this particular instance, a superfluous/obsolete ‘invitation’. For, not surprisingly given the region, the CondoDreams of UrbanLiving’s Montréal QC Developer DevMcGill®, are… Defunct.

Of course, as with all such disappointments… There are consequences.

For example, there are a lot more WestBankers hand-washing their cars themselves these days…

And, more’s the pity, no chance to reprise BackToTheFuture’s superlative retro ‘50’s ‘FullService’ sequence either.

So. What’s an aspiring WestBank, BreakingBad, ‘WalterWhite’ type – looking for a cash business to masquerade his horticultural earnings – to do? Especially, when you allow that the only ‘vacant’ CarWash/GasStation in town is frozen in legal limbo.

‘Better Call Sol’, I guess. Unless…

Yeah! There is a restaurant. Heck, there’s a WholeDarnedStripMall!

Loads ‘a possibilities here! Could work.

Hmmm. Better check out those interiors, though – cause ya never know, do ya. Caveat emptor, and all that stuff.

Ah. Just as well we decided to Peek‘nPoke… Judging by the abandoned air mattress, broken glass and somewhat haphazard arrangement of dusty colonial furnishings – what was once a popular restaurant has been reduced to a temporary refuge for the circumspect (but, presumably, handy with tools) homeless.

Just look at all those stacked/discarded menus. One can almost see them now… The Wives n’ Daughters of The’Nagan. Those effusively fulsome and ebulliently perky purveyors of GrilledSurf&Turf! Rushing to and fro, juggling enormous platters and steaming stainless pot’s ‘o java. Each and every gal lovingly adorned in a fetching, freshly scrubbed ‘PeachQueen@TheProm’ themed ‘CattleCountry’ uniform.

Well, it’s a nostalgic thought, ain’t it?

Yep, “CattleCountry” it once was… but, sadly, there ain’t no RibEyes, Tbones or Lobster a sizzlin’ here. Anymore.

Still – it does afford us a splendid excuse/opportunity to explore the broader implications…

‘Cause, “CattleCountry”, as any aspiring actor could tell ya, or for that matter, anyone who’s ever experimented with OnLineDating in the ‘hinterlands’… is, subliminally at least, an apt moniker for a ‘Nagan eatery.

Even an abandoned one.

And here’s why – because it is also suggestive of that apt turn of phrase from ‘TheShowBiz’, “The Cattle Call”.

So, getting right down to the NittyGritty – it doesn’t take an enormous leap of imagination to equate a Developers’ clarion invitation to StrokeTheSteel & GraspTheGranite to a casting director’s MassAudition (usually to find the perfect DancingTomato, for ‘scale’). Or, for that matter, to the OnLine Catalogues ‘o The Forlorn maintained by the FieldsMedal winning entrepreneurs of SocialMedia. [we’re still with ya, but only just. – ed.]

Regardless, it all amounts to pretty much the same thing… The aggregated exploitation of the ‘vulnerable’ and/or blissfully ignorant.

And, more specifically, the relentless commoditization of people and their dreams.

Well, at the risk of driving a “Steak” through the Heart ‘o those dreams… (or barricading them with welded steel security grilles)… The ‘answer’ just might be…

That some things are best left ‘unsold’. Not hyped. Not marketized. Not ‘traded’.

..& lest we collectively succumb to the temptation of ‘BlameCasting’, however… how about a little reflexive introspection first?

In the LookingGlass. All of us.

For, to quote the MostEstimable Chinese President Hu JinTao’s enthusiastic address to an impressive assembly of the PartyFaithful earlier this year:

“We must go deep down. We must immerse ourselves in the reality!”

“Good night, and good luck” [google that, All – you’ll like it.]

—-

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

—-

[Once in a while, it’s good to give your brain a workout. Keeps you ‘agile’. -ed.]

Mayor Robertson – “People come here with money and they want to be part of this. That creates challenges for my kids and the next generation to live here. It’s not affordable to live here now.”


“There are many hopeful environmental stories in the city of Vancouver. In the past 15 years, residents’ use of cars and carbon emissions have both gone down dramatically, by roughly one per cent every year – even while the population has expanded to 570,000 people and the economy continues to grow. This is a very unusual trend in the world’s cities now. A city that is committed, and that sets aside the perceived inevitability of calamity, can be a stronger community. We can change our ways of getting around and looking after each other. I think there’s a lot of hope in that for generations to come.
The converse is that Vancouver becomes a very desirable city. People come here from all over the world for the beauty and for the sense of community… That creates challenges for my kids and the next generation to live here. It’s not affordable to live here now. People come here with money and they want to be part of this. And that makes it difficult. So it’s creating other challenges for us.”

mayor Gregor Robertson, Vancouver Sun, 23 Aug 2011, from a conversation with David Suzuki, Thich Nhat Hanh, and Jim Hoggan

The mayor is deducing that Vancouver RE prices are high because his “green” policies are perceived as successful. We believe that he is sincere in his logic, but also that he is simply wrong. Housing prices have ballooned to “unaffordable” levels in Vancouver because we are in a very large debt-driven speculative mania, not because we have any particular desirability as an environmentally friendly city.
Many of the apparent problems of unaffordable housing will be ‘solved’ by a simple market crash. Of course there will be all sorts of bad effects for the community from such a crash, but that is now unavoidable. You may say that such an outlook is an example of a “perceived inevitability of calamity”, but this outlook is not pessimistic, it is simply realistic. Ask any student of speculative manias. It’s already woven into the fabric of the market; it’s a completely natural consequence of the speculative mania. – vreaa

Modest Ottawa Example – “I bought my house 18 years ago and paid $178,00 – now I am being told it it worth $375,000. This is crazy. My old job is only paying $3,000 a year more.”

“I bought my house 18 years ago and paid $178,000 – now I am being told it it worth $375,000. This is crazy. My wage has only gone up because I switched jobs. My old job is only paying $3,000 a year more. The only way I will realize a profit is if I sell and purchase a home outside the Ottawa market – hmm I still need to work. The house price is more driven by the cost of land so when we looked around for a smaller home – the price difference would only cover the cost of moving – no more. The only one who gained was the bank – we have paid them a lot of interest over the years.”
DeborahS, comment at cbc.ca 12 Aug 2011 9:26am

This Ottawa example is extremely modest by Vancouver standards. That’s an annual compound growth rate of just 4.5%, but still more than twice the Canadian inflation rate over the same period (1993-2011 CPI averaged about 2%). -ed.

“Dull”, “Steady”, and “Flat” Canadian RE Markets? [Highly Unlikely]

“The realization that the Bank of Canada will not be raising interest rates in the coming months is working to remove any sense of urgency to front-load activity. At this point we do not see any catalyst that will change the current trend in any dramatic way.” – Benjamin Tal, Deputy Chief Economist, CIBC World markets, Reuters, 16 Aug 2011.
Tal also said the Canadian real estate market will be comparatively “dull” going forward [in interview on CBC Radio, 16 Aug 2011, 3:35pm.]

“We will probably have a couple of years of steady prices” – Victoria Real Estate Board president Dennis Fimrite, ‘Victoria housing tilts toward buyers’, Times Colonist, 3 Aug 2011

“CREA expects sales to fall less than one per cent in 2012 while prices will flatten next year.”
– ‘Home sales to rise this year, says CREA’, Kim Covert, Financial Post, 16 August 2011

A speculative mania never ends with a flat, boring market; not even in Canada.
We suspect “Dull”, “Steady”, and “Flat” are hopeful terms being used by vested interest insiders who are seeing the first signs of coming weakness. – vreaa

“The main Wiggles guy asked the kids and the crowd to name something special and unique about Vancouver.”

“I was at the live Wiggles show the other day. The main Wiggles guy asked the kids and the crowd to name one thing/something special and unique about Vancouver.
Awkward confused look on people’s faces.
Someone said “maple syrup”..or “sushi”(??)…until everyone seemed to agree on “Olympics”
Come to think of it, I cannot think of anything either..”

Get Real at greaterfool.ca 11 Aug 2011 11:12pm

Damn! This would have been the cutest story if one of the kids had called out something about the housing market. – vreaa

On that note, this extract from ‘Summer Fun For Boys’, by Tim Long, New Yorker, 1 Aug 2011:
“At the beach, build the biggest sandcastle anyone’s ever seen. Pretend that it’s 2005, and take out a huge, adjustable-rate mortgage on the sandcastle which you can’t really afford. Throw lavish sandcastle parties for seashells, rocks, plastic shovels, and candy wrappers. When the bank comes to foreclose on your castle, run and find your dad. Try not to look surprised when you discover him sitting with a lady in a green swimsuit. Her name is Terri. While shaking Terri’s hand, ask her for a seven-hundred-thousand-dollar loan to cover your sandcastle debts.”

“Money is so cheap to borrow and everyone else does it”

“I have nine friends, family, co-workers in the same boat. They used their principle residence as a bank machine to do renos, buy investment properties, travel, buy new cars. Everyone almost said the same thing: “Money is so cheap to borrow and everyone else does it”
Patrick at VREAA 11 Aug 2011 4:14pm

“RCMP report suggests the dramatic plunge in U.S. house prices has caused some gangsters to re-evaluate whether B.C. is really the best place to do business.”

From ‘Cheap housing luring Canadian marijuana growers into U.S.: RCMP report‘, The Province, 7 Aug 2011
The U.S. housing crash has lured some marijuana growers to move their operations south of the border, according to an internal RCMP report obtained by the Vancouver Sun.
“Some VOC (Vietnamese Organized Crime) groups have moved their marijuana grow operations to the United States where the lower cost of real estate (in some regions) allows them to operate a more profitable enterprise and where they can also avoid police/customs detection at the border,” states the RCMP report.

For more than a decade Canada has been home to a multi-billion-dollar marijuana-growing industry, the bulk of whose product has been shipped to the U.S.
B.C., where the largest number of those operations are located, has generally been seen as an attractive place for drug gangs to set up shop because the legal penalties for growing marijuana here are more lenient than in the U.S.
However, the RCMP report suggests the dramatic plunge in U.S. house prices has caused some gangsters to re-evaluate whether B.C. is really the best place to do business.
Since 2007, house prices in the U.S. have dropped by roughly a third nationwide and in some markets, like Las Vegas, by more than half.
During that same period, prices in most Canadian cities have been flat or rising, with particularly large price gains in Vancouver.
Growing operations tend to be located in residential properties, so real estate is one of the biggest expenses for growers.

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

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

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

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

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

ams at VREAA 5 Aug 2011 4:36pm


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

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

“Here’s a couple of attempted flips in Metrotown to watch…”

Crash at vancouvercondo.info July 15th, 2011 at 4:04 pm
“Here’s a couple of attempted flips in Metrotown to watch:

MLS#: V893467
7005 Gray Avenue
Assessed: $780,000
Sold: Mar 2010 $805,000
Listed: Jul 2011 $1,340,000 (after some renos. maybe $40-50K worth)
Note: This was listed in May 2011 for around $1.1 Mil and didn’t sell, so now re-listed even higher!

MLS#: V899271
7162 Gray Avennue
Assessed: $739,900
Sold: Apr 2010 $790,000
Listed: Jul 2011 $1,398,000 (after some renos. maybe $40-50K worth)

Both of these houses are 1960′s era bungalows and were bought just over one year ago, prettied up with renos and re-listed just after the one year mark to avoid the capital gains.
These people must be watching old reruns of Flip-This-House.

Also:
7188 Gray Avenue
Assessed: $697,500
Sold: Oct 2010 $757,500
House has now been demolished and a new spec. house is being built. This next door to 7162 Gray Avenue.

Lots of builder and speculator activity in the Metrotown area south of Imperial Street. I have noticed a sales slowdown in the area recently, with a noticeable increase of listings.”

“We’re facing an exodus” – “Young families will say ‘Let’s sell what we have here, get a better mortgage and make more money somewhere else.’”


Nizam Ibrahim lives in Vancouver but commutes to Calgary, where he rents a two-bedroom apartment in a nice part of town. Despite added monthly expenses of more than $3,000, he still averages $15 an hour more than any job he could get in Vancouver.
“It’s a bit tiring, but to enjoy any kind of lifestyle in Vancouver it’s a compromise I need to make,” said the IBM IT consultant. “I’ve saved more in the last two years working in Alberta and traveling back and forth than I ever did working in Vancouver.”
Recruitment experts predict with its high living costs, skyrocketing real estate and grossly inadequate salaries, more Vancouverites will flee to where salaries are higher and commensurate with their skills and inflation.
“We’re facing an exodus,” said Feras Elkhalil of the WPCG recruitment firm. “We don’t want a brain drain out of Vancouver. We don’t want to lose talented people. If you want good talent, you need to pay for it.”
He added Toronto salaries are at least 15 per cent higher, and 20 per cent greater in Calgary and Edmonton where taxes and real estate prices are lower.
“Employers are not keeping up,” he warned. “I fear they’re turning a blind eye, saying it doesn’t apply to them and we’ll have people frustrated at the cost of living and (foreign investment) driving up costs of real estate. Young families will say ‘let’s sell what we have here, get a better mortgage and make more money somewhere else.’”

– From ‘BC facing a brain drain‘, Erica Bulman, 24 Hours, 17 Jul 2011 [hat-tip to Brent]

The math for Ibrahim is remarkable. It appears that, given the pay differential and his cited extra expenses, he only profits from the commute if he works more than 200 hours per month. Perhaps there are also career advantages.
That aside, the main point of the piece is sound: That income:RE_price ratio in Vancouver is forcing some people away. – vreaa

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

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

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

“Lately I find myself overwhelmed by stories of young(ish) professionals who are leaving the city – often in their thirties, driven by the desire to purchase a home that is affordable for them and their families.”

“I have been asking myself what would make Vancouver a better place to live, work and play?  Lately I find myself overwhelmed by stories of young(ish) professionals who are leaving the city – often in their thirties, driven by the desire to purchase a home that is affordable for them and their families. They are grantmakers, green building specialists, filmmakers, and socially progressive bankers. All smart, caring folks, emerging in their respective fields.  All are assets to Vancouver.  
Mostly they love the city but can’t afford to live here, even working at good jobs and earning good incomes. Sadly, the lowest rung on the home ownership ladder is too big a step. Or with children, the lowest rung (typically the one bedroom apartment) is not workable.  I wonder, is this cohort the ‘lost generation’ – talented, skilled, thoughtful people that are bidding adieu to the city, and taking with them their energy, skills and unique potential contributions.”
Heather Tremain, ‘What would make Vancouver a better place to live?’, The Vancouver Observer, 8 July 2011

In the rest of the post, Heather Tremain, discusses affordable or ‘attainable’ housing. The most important factor in understanding Vancouver’s RE predicament is not recognized: The speculative mania in RE prices. This is a giant bubble, folks. To ignore that makes the task of trying to ‘solve’ the problems of affordable housing completely meaningless.
A collapse in RE prices will change the landscape profoundly. The process won’t be painless, but in the end, it’ll be better for the city. – vreaa

“Only one UBC employee can afford to own a westside home.”

Unagi Don kindly posted this observation/analysis at VREAA 12 July 2011

“Only one UBC employee can afford to own a westside home.”

#1) The income levels required to own a westside home: $496k.
http://www.yattermatters.com/2011/07/vancouver-home-buyers-adopt-slogan/

#2) The largest employer in Vancouver (which happens to be on the west side): UBC
http://www.lib.uwo.ca/programs/companyinformationcanada/canadaslargestemployersbycity2007.html

#3) The number of UBC employees earning more than $496k: 1
Prof. Donald Wehrung in Sauder School of business earns $510k.
Stephen Toope, the university president, earns only $483k.
http://www.vancouversun.com/business/public-sector-salaries/advanced.html

For the sake of comparison, the public universities in the US located in the most expensive housing areas are probably UCLA and UCSD. (I’m excluding Manhattan as single family detached homes simply do not exist there.)

At UCLA, there are roughly 100 employees with salaries over $400k:
http://www.sacbee.com/statepay/?name=&agency=UC+LOS+ANGELES&salarylevel=400000
And the average home price in Westwood (the upscale area where UCLA is) is around $650k:
http://www.zillow.com/local-info/CA-Los-Angeles/Westwood/r_118920/

It goes without saying that UCLA is not the largest employer in LA.

At UCSD, there are roughly 70 employees with salaries over $400k:
http://www.sacbee.com/statepay/?name=&agency=UC+SAN+DIEGO&salarylevel=400000
And the average home price in La Jolla (the upscale area where UCSD is) is around $1m:
http://www.zillow.com/local-info/CA-San-Diego/La-Jolla-home-value/r_46087/

UCSD is the fourth largest employer in the San Diego area.
http://www.alliant.edu/wps/wcm/connect/resources/file/eb9ce84c34a1a77/San_Diego_Major_Employers.pdf?MOD=AJPERES

“The average retail lease rate on Robson is $194 US per square foot, less than one-tenth the price on Fifth Avenue in New York and significantly less than lease rates on comparable streets in London, Paris and Hong Kong.”

From ‘Robson retail space a bargain on world stage’, Vancouver Sun, 8 Jun 2011 [hat-tip SethM/Greenhorn] –
“Retail space on Robson is a bargain compared to high-end fashion hubs in the U.S. and around the world, according to a Colliers International report.
The average lease rate on Robson is $194 US per square foot, less than one-tenth the price on Fifth Avenue in New York and significantly less than lease rates on comparable streets in London, Paris and Hong Kong.
Robson is the third most expensive street in Canada behind Bloor Street in Toronto ($292) and Ste-Catherine Street in Montreal ($204). Victoria and Calgary clock in at $53 a square foot.
But Drew Keddy, Colliers vice-president, Canada, and national retail leader for the real estate company, expects Canadian lease rates to climb as vacancy rates trend down and U.S. retailers like Target move north. …
As for Toronto outranking Vancouver on retail lease rates, Keddy said the Ontario city remains the top “internationally exposed city” in Canada despite the spotlight that shone on Vancouver during the 2010 Olympics -and despite our superior hockey team. “Toronto is probably a more established international city,” Keddy said. “Vancouver’s really been coming on the scene in the last decade or two.”


So, Vancouver RE prices are in the same ballpark as those in Manhattan, but retail space lease rates are 90% less. Hmmmmm.. let’s think about how this aberration could reconcile itself… (Hint: does not involve Vancouver retail lease rates rising by a factor of ten…) – vreaa

“In Vancouver, you need a family income of at least $250K per year to be able to afford a house, save for retirement, and save for your kids’ education. Unfortunately on $140K we can only do two of the above.”

ams at VREAA 1 July 2011 10:34pm
“Vancouver was the place I wanted to move to from Toronto. I moved here in 2007, by accident, to do a project for a few months. I met the right woman and got married. What was a temporary assignment became home. Now that I have been here almost 5 years I am planning the family exit out of Vancouver. Vancouver will always be a very nice place to visit. As a place to raise a family and grow a high tech IT business it is not a good spot.
Based on detailed spreadsheets of our current family expenses we live a very modest lifestyle (we don’t own anything fancy). You need a family income of at least $250,000 per year to be able to afford a house, save for retirement, save for kids education. Unfortunately on a family income of $140,000 we can only do two of the above, so bye bye Vancouver hello Toronto. The issue with Vancouver is far deeper than just the housing bubble the economy is not diverse enough there are hardly any world class companies here and I don’t see why any major company would setup shop here than say Toronto, or Calgary.
April of 2012 we will leave, sell all our stuff move out of the rented place and head to Germany with the kids for the summer we will come back to Canada in September 2012 to Toronto, or who knows maybe we will stay in Germany till 2013.”

Note that ‘ams’ is not claiming that a family can’t ‘get by’ on $140K p.a. in this town. They are comparing the lifestyle and future security that their skills can earn them in Vancouver with what they can earn them elsewhere. It is not good for our community that those comparisons are leading to people leaving. The speculative mania in housing is resulting in loss of human capital. – vreaa

The US Dollar – Who You Gonna Listen To? ‘Some Anonymous Blogger’, Or Lindsay Lohan?

“Have you guys seen food and gas prices lately? U.S. $ will soon be worthless if the Fed keeps printing money!”
– Lindsay Lohan tweet 27 Jun 2011

Need any more evidence that the USD will rally? -ed.

PostCardsFromTheBlastRadius #11 – HollyWoodNorth’s GulagArchipelago – The LakeCityBurnaby Commercial RE Glut

Wow! There’s an ‘Elephant in the room’… And in Burnaby, no less!

And a TigerShark… dining!
(NoteToSelf: ‘Doing Lunch’ with sharks inevitably ends poorly.)

And how about this forlorn, rusting sentinel…?

RazorWire? In the Lower Mainland?

Everything you’ve just seen (and will see) was photographed, “OnLocation!” in Beautiful Burnaby’s LakeCity & environs.

Our explorations begin with a very special and particularly privileged corporate EconomicMigrant peculiar to BC’s LML… The ‘RunAway’ HollyWood Production.

Ooooh, Goody!!! HollyWoodNorth at work!… Or as the BurnabyHillBillies are wont to say, “MovieStars&SwimmingPools!” Let’s go have a look, shall we?

Darn&DoubleDarn… No celebrities and PublicParking’s a little scarce. Fortunately, we’re on foot today.

Hmm… No Stars here, either! – but somewhere, somebody’s definitely making a killing on OrangeTrafficCones and associated signage.

Definitely no ‘parking chaos’ on this BackLot (and as it turns out, no “Chaos” anymore either – but we’ll get back to that in a moment).

Yep. Ain’t no doubt ‘bout it. Them HollyWoodNorth Moguls – rather like their CounterParts in the CityOfAngels – just love designated private parking spots. But, Hey!? What’s that BigOrangeSign in the background all about?

That’s what. The RazorWireEconomy of vacant, disused industrial & commercial space (and by implication, vanishing enterprise, transient jobs & ‘DisposableWorkers’).

Indeed, although this particular venue was briefly resurrected as a temporary sound stage and production facility for the short-lived CBS television series, “Chaos”… Only 13 episodes and about as many weeks later and it’s just one more, “HereToday & GoneTomorrow”, “NowLeasing!” story.

And that, DearReaders is how it usually works in HollyWoodNorth – where indigenous production is virtually non-existent and the principal attractions to foreign producers of ’run-away’ productions were the Loonie@.65USD, weak local craft guilds and generous public subsidies.

So. There it is. Your visual harbinger of the HollowedOut, ‘MovieSet’/Facade economy so emblematic of our province’s graft-ridden, peculiar political economy of Construction&RealEstate, HumanTrafficking and ‘Horticulture’.

A terrible pity. And as for that forest of superfluous DesignatedParkingSignage? Well, never mind – because it makes great kindling for the CampFires ‘O The HomeLess who actually inhabit the parklands nearby.

Nothing screams out, “OpenForBusiness!” like barbed wire, chainlink and DisposableWorkers on picket duty. All that’s missing are the Pinkertons.

OK – so here’s the skinny on LakeCity’s vacant industrial/commercial premises – and it’s hardly a, ‘solitary building here&there’ kind ‘o thing… Warning: you might want to flip through these “quickly” – ‘cause there sure are a lot of them!

It’s simply amazing how quickly it adds up… 1200SqFt up there…

Becomes 2200 SqFt over here…

5,500 SqFt down the street…

10,463 SqFt around the corner…

12,500 SqFt KittyKorner from SkyTrain ‘University’…

To 15,500 SqFt…

To 60,000 SqFt…

To 63,000 SqFt (in this instance, former home to “Chaos”). See where this is going?…

Indeed, some developments have so much vacant space on offer – they have circumspectly chosen not to advertise the available square footage…

OK – this is just one district in Burnaby. If we throw in the rest of the LML – how many Millions ‘O Square Feet of commercial space are currently sitting vacant?

Sadly, and with few exceptions, the only thing growing around these industrial premises and accompanying LeasingEnticements is the grass.

As most of you have already surmised – each one of these vacant properties was once home to a business. And although Nemesis knows the ‘ordinary’ businesses that once occupied these premises don’t enjoy the Cachet/Buzz ‘o ShowBiz, they did for the most part, provide people with worthwhile, stable employment of a type not found in the GlamIndustries.

Perhaps there’s a lurking labour economist or econometrician in the audience who could provide us with a rough guide to the solution of: (x)[SqFtVacant] = (y)[JobsGone] ???

The SmallPrint on this Cushman&Wakefield signage reads, “Global Real Estate Solutions” – and that’s your next clue… Hmm. Perhaps it should say, “Arbitrage” instead of “Solutions”? Works with people and, apparently, RE too.

Ok – this is way too depressing. Time to board SkyTrain and GetGoin’.

Oops. SkyTrain’s ProductionWayUniversity Station is rubbing our noses in it, too. Three years after completion and they’re still flogging space in this development. Well, at least some of that OfficeSpace is furnished (locally sourced & ‘lightly used’ LakeCity disposals, ‘Nem’ wonders?).

Even TheResidentials’ are vying for our eyeballs & a piece of the action. To wit, a transit bench featuring the balding, collective rictus of ColdWellBanker’s “LoveTeam”.

Wandering towards the escalator and trying to ignore the commercial hoardings – for my own private amusement I briefly envisage LakeCity’s FarFuture…

A park like landscape where FlyingCars compete for AirSpace with children’s Frisbees … Where SFU’s Industrial & Urban Archaeologists of tomorrow are momentarily perplexed upon discovering the corroded remnants of sentinels, elephants, and a tiger shark… beneath a discarded transit shelter apparently dedicated to the Arcane&Taboo Rituals of RE’s “LoveTeam”.

Yikes! Startled BackToReality by yet more RezCouture/RE AgitProp.
I guess that when it comes to Vancouver, there’s really no escaping it.

———————-
Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Aftermath – Vancouver Riots 2011

 

The legacy of the ‘Stanley Cup Finals and Vancouver Riots of 2011’ may well end up being the ensuing social debate. We’ll here collect links to representative opinions, and other articles of interest. [This post will be updated with further readings; Please post suggested links, quotes or subjects in the comments. -ed. ]
———–

Theories of Causation (not mutually exclusive):

1. “Criminals, anarchists and thugs”
– Police Chief; Mayor (Globe and Mail, Van.Sun)
– No, not anarchists (Brian Hutchinson, NatPost)

2. Widespread Deep-Seated Societal Problems
Adrian Mack and Miranda Nelson, Georgia Straight

3. ‘Disenfranchisement/Disinvestment/Powerlessness’
Froogle Scott

4. Sport Fan Riot/’Fun’/’Exciting’
“Forget Freud, Forget Marx. Rioting, above all, is fun.” – Andrew Potter, Macleans
Douglas Todd, Vancouver Sun

5. Bad Parenting

6. Mob Mentality/Madness of Crowds
Chronicle Herald

7. Poor Planning by Authorities
Calgary Herald

8. The Inherent Violence of Hockey Itself

9. Other?

———–
Other subjects of interest:

Concerns About The City’s Reputation
“.. a huge black eye for the city of Vancouver” – James O’Brien, online hockey writer, NBC Sports

Comparison with the Olympics:
– Different
– Not So Different: Christie Blatchford

Comparison with G20 T.O.
– Different: Toronto Standard

City preparation
VPD response, Globe and Mail.
Police Chief acknowledged mistakes, 17 Jun 2011, Nat.Post
“Mayor Gregor Robertson was a little naive. He wanted these live events. He wanted a great big fun city.” – Leo Knight, former Vancouver city cop and RCMP, chief operating officer Palladin Security.
Debating the blame, 21 Jun 2011, G&M

The Effect of Social Media
#canucksriot
Globe and Mail, ParsonsBlog
– “…the massive online reaction to the Vancouver riots is unprecedented and as groundbreaking as WikiLeaks.” – Christopher Schneider, a UBC sociologist

Public Outings of Rioters
– various websites: ‘Vancouver 2011 Riot Criminal List’; publicshamingeternus


“For reasons I can’t really explain, I went from being a spectator to becoming part of the mob mentality that swept through many members of the crowd.”Nathan Kotylak (pictured above)

“A UBC student photographed leaving Black & Lee Tuxedos with a piece of clothing in her hands has been called out online by one UBC donor, who is threatening to pull his annual donation if she isn’t expelled.” – Vancouver Sun, 19 Jun 2011

“Alex Prochazka, 20, a professional mountain biker, was photographed during the riots with a T-shirt emblazoned with the name of a sponsor. He has since lost multiple sponsorship deals and told The Sun, “I didn’t go there for the riot, I went for the hockey game and got caught up in the hysteria of it afterwards.”Vancouver Sun, 20 Jun 2011

Self Confessions
– Semi-Voluntary: G&M
– Unintentional: news957

Proclaimed Heroes
example1; example2; others

Backlash Against Social Media and Public Outings
“The online forums have gotten pretty ugly. It enables a whole dark side of our psyche to go public … it’s too bad and I hope it turns around quickly.” – Mayor Gregor Robertson
“I don’t think we want to live in a society that turns social media into a form of crowdsourced surveillance.” – Alexandra Samuel, Harvard Business Review

The Iconic Kissing-Couple
yahoo, cbc

The Clean-Up
Georgia Straight

The “Citizens’ Wall”

Healing? Penance? Purification? Blaming?
“Mayor Gregor Robertson says the city has been in touch with merchants and asked them not to throw the plywood away, while archival staff consider ways to save what he calls “these pieces of history.” – G&M 19 Jun 2011 [This just 4 days after the riots themselves. An attempt to instantly manufacture a palatable history. -ed.]

Notice How Nobody Is Talking About The Hockey Result
“I would like to congratulate the Boston Bruins on a game well played for the Stanley Cup.” – local Canuck fan
———–
Parodies
‘Ballad of Brock Anton’

‘You Gotta Be Here’

“I have been here five years now; I still can’t figure out what all the people here do.”

Michael at VREAA 13 Jun 2011 11:15am
“I have been here now five years, I still can’t figure out what all the people here do. The Tech people I know all seem to hope for the big break or work for a US company that once upon a time decided it was cheaper here than in the US, but that seems to be changing quickly too.
Anything, at least in the computer field, that has proven successful has moved to other places, mainly the US, either on it’s own power or being sold to a US company.

Having hung around the “startup” world here in Van for a bit I think what is happening is that this is the place where quite a few smart people come to play, mainly outdoors. On the side they develop an idea and because wages here are low (comparatively) they start their business here.
They soon realize that the cost of doing business here is high, that the good employees want to have money they don’t have so they either move or sell the business (Flickr comes to mind) and the cycle repeats.

There really isn’t that much high-tech success here, it’s mostly a lot of self celebrating of the “high technology” field. Vancouver was a small border town with a large rail yard and some industries that lived off of the interior (e.g. sawmills, tanneries in False Creek). Once those industries were “cleaned up” there wasn’t really a lot left.
Interesting times ahead for Vancouver, and BC as a whole, that’s for sure.”

The Disinvested – A Few Disparate Thoughts On The Vancouver Riots

by Froogle Scott, VREAA, 16 June 2011

Rioters = people less invested in a society, or at least capable of being less invested for an evening, when fueled with booze and testosterone.

Interesting that the typical riot shot or ‘riot pose’ adopted by the young male participants, is one with arms thrust upward and outward in a V, as if proclaiming some kind of victory, or drawing power from the carnage behind. Ergo, these are people who spend most of their time walking around feeling powerless?

The boutique and upscale display window, the BMW or Hummer, is the magnet for trashing, upscale consumer goods the key item for looting.

The riot appears to be a fun event for the participants, but also something that helps define them, assert their individuality — ironically, while part of a mob. The Canucks fail to make them feel good about themselves, so they take matters into their own hands. Surreal to see “Kesler” and “Luongo” and “Sedin” running around inside the Bay and outside smashing and looting. If the real Luongo can’t get it done, I’ll just do it myself.

A few disparate thoughts, perhaps held together by the notion of ‘investment’ — the various meanings of that term, the lack of it, and perhaps the distortion of its meaning by the broader Vancouver society. We feel invested if we own a house or a condo, or earn enough to buy $500 hockey tickets, or designer handbags and shoes, or fancy automobiles. As the society has become increasingly focused on consumerism and sensory experience, on houses and home renovation, and the price of admission to that society climbs increasingly higher, the notion of what constitutes a healthy society in which everyone can feel invested becomes increasingly murky.

I don’t think the rioters are ‘dispossessed’ in any real sense of that word, but I do think that a riot of disaffected, bored bottom-feeders in a consumerist hierarchy tells you something about the nature of the broader society.

Game Day – Carney On The Road In Vancouver – “The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear.”

15 Jun 2011, 8am: Big Day! No, not this evening’s Stanley Cup Game 7 on home ice, but BOC Governor Mark Carney, on the road, speaking here in Vancouver. We don’t know what he’s going to say, yet, but we expect it to be pertinent to our speculative mania in housing and the nosebleed debt levels BC-ites are carrying. He’ll be subtle, but he’ll warn us nonetheless. Nail-biting stuff.

UPDATE; excerpts from the speech:

“Some markets are already severely unaffordable even at current rates.”

“Given such developments, one cannot totally discount the possibility that some pockets of the Canadian housing market are taking on characteristics of financial asset markets, where expectations can dominate underlying forces of supply and demand. The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear – greed among speculators and investors – and fear among households that getting a foot on the property ladder is a now-or-never proposition.”

Entire speech here: (pdf)

“The number of resumes I see at work from people currently in Vancouver looking to leave, or that have already left is pretty surprising.”

westcoastfella [living in Toronto] at RE Talks 11 Jun 2011 8:08am
“The number of resumes I see at work from people currently in Vancouver looking to leave, or that have already left is pretty surprising. The simple fact is they make more in Toronto and pay less for everything around them, and when you’re raising a family and have no tangible ties to Vancouver, it can sometimes be an easy decision to make. My observations are anecdotal for sure, I’m one guy in one industry. But the people I hire are technical engineers earning 70-120K a year (so 60-90 in Vancouver) – not the sort that Vancouver wants to be losing in droves.”

“My brother works in the film industry in Vancouver, and after a few years of nonstop employment, no longer has steady work. He said that there is nearly nothing filming now (which is understandable given its the summer), but more alarming, there is little on the horizon for the fall. 4 regular TV shows film there in the winter, and a handful of movies – but not enough to employ the industry in any significant way, he estimated 40-50% of the usual workers are looking for work. He is leaving this summer to go to Toronto or Montreal, or possibly Europe. The high dollar is stopping some projects from coming here at all, and a lot of others are moving east.”

“I’m not too surprised that the local Vancouver media has not picked up on it, given the negativity of the implication – I’m sure they’ll finally start reporting on it when its too late.”

The Disillusioned – “I tell all the young co-op students that come and work at my office to leave this city if they want to make something of their life.”

Anonymous at vancouvercondo.info June 2nd, 2011 at 9:00 am“Vancouver sucks, i tell all the young co- op students that come and work at my office to leave this city if they want to make something of their life. Unless you’re a civil servant, a union slob, or in sales… Vancouver has nothing to offer. After listening to me they all agree… Most have moved.”

Office of the Superintendent of Financial Institutions Examining Bank Exposure To Household Debt

The Office of the Superintendent of Financial Institutions is examining the bank exposure to household debt [FP 3 Jun 2011] –
“If demand for residential real estate were to dry up in Canada, it would not be good for Canadian banks,” said Peter Nerby, senior vice-president at Moody’s who is responsible for the credit ratings of Canadian financial institutions.

We note this here for the chronology and direct you to a discussion of the subject by jesse at Housing Analysis [‘OSFI in da House’ 5 Jun 2011].

PostCardsFromTheBlastRadius #10 – The Okanagan Bust – “The GreatConflagration ‘O HospitalHill & Other OkiTales ‘O ‘SpontaneousCombustion'”



It could be your SmokeDetector going off in the WeeWee’s ‘O TheNight… A building AlarmActivation – or maybe even a FranticNeighbour BANGING! on your door. This is when CrossStreets are important – Life&Death important.
Know yours. Because, when you ReallyNeed the EmergencyServices and you’re doing the ‘911Dance’ you may be too stressed to blurt out a street number. Knowing your cross street will enable a faster response time. And sometimes, seconds count.

Here’s the thing, DearReaders – Housing Booms&Busts come laden with externalities. UnintendedConsequences. BlowBack. And, not infrequently…   BackDraft!
Witness the OhSoMany SadTales ‘O Detonation, Conflagration & Deflagration that have occupied our Metro & Regional HeadLines these past couple’o years. From CoalHarbourYachts to NewBuildCondo’s in Surrey&Richmond to every second restaurant on a certain stretch of Broadway near Main.
Even in the best ‘o times, careless people do stupid things and stressed people do careless things. But… in the worst ‘o times??? Well, financially stressed and/or inherently DishonestPeople do criminal things – and they do them more often.

[Disclaimer: OK, there’s nothing intrinsically funny about “Fire!”. So, please forgive ‘Nem’ for penning a serious piece. And we have no special knowledge of whether crimes should be suspected in these cases. Fortunately, no one perished at the SkyLine or in any of Nem’s subsequent examples ‘o Okanagan ‘SpontaneousCombustion’. Let’s hope it stays that way.]

Our story begins here… Welcome to Vernon’s SkyLine Apartments!
The astute among you will notice the PoliceTape and the charred, skeletal remnants of furnishings strewn about the lawn…

Ah yes. That would be why.
Let’s step back a few months and experience the event’s ‘frisson’, shall we?…

[VernonStar – February 25, 2011 12:06 PM] – “Firefighters remain on scene of a major apartment building fire on Vernon’s Hospital Hill. Flames and smoke engulfed the structure on 31A Street at about 5 a.m. Friday, forcing about 52 people to flee into temperatures that dipped to -17. “As soon as the guys left the department, they could see it,” said Dean Wakefield, fire investigator. Firefighters from Vernon, Okanagan Landing, BX-Swan Lake and Coldstream converged on the scene. “We’re protecting exposures,” said Lawrie Skolrood, Vernon deputy fire chief. Emergency Social Services personnel also responded and tenants were being sheltered in the Vernon Jubilee Hospital cafeteria. A cause for the fire has not yet been determined.”

Damage was extensive.



No part of the SkyLine escaped unscathed, not even the ConcreteCarPark.

Indeed, from one end to the other – the entire expanse ‘o the Skyline’s TopFloor was ‘crisped’.



On the BrightSide though, Vernon’s Jubilee Hospital was certainly close at hand!

On the NotSoBrightSide… At least one SkyLine occupant remains unaccounted for. Rorey.

Meanwhile…


…back in Kelowna – another OptimisticDeveloper is putting the FinishingTouches on his ParticleBoard MagnumOpus… or is he?

Actually, that would be a resounding, “No”…

[BCLOCALNE​WS: Updated: April 11, 2011 1:42 PM] – “Residents of the Laurentian Heights 3 condominiu​m building at 1405 Kelglen were collecting what personal belongings they could this afternoon after a fire swept through part of the complex at about 4 a.m. Sunday. The Kelowna Fire Department​’s initial response included 21 firefighte​rs, four fire engine trucks, two ladder trucks a Rescue truck, and one command unit. Another 45 career and paid on-call staff were recalled to the scene and to also help maintain firefighting crews for other emergencie​s. Upon their arrival, firefighte​rs were greeted by well involved fire on a balcony of a unit in the southeast corner of the building. It quickly spread into the attic area and throughout the upper part of the building, causing extensive damage to the roof and top floors in the south end of the building.”

Something about those ParticleBoardMansions… Once those flames get going…

They just…

Keep…

Spreading.

And while we’re talkin’, “Spreading” –
“What’s all this doing on MainStreet Osoyoos?”

[OSOYOOS TIMES – May 4, 2011 – By Paul Everest] – “The Osoyoos Times has confirmed that an 18-year-old Osoyoos man arrested in connection to a fire that destroyed two Main Street businesses on May 1 had ties to one of the devastated businesses. Police announced on the evening of May 2 that they had arrested a man late the night before in Osoyoos in connection to the fire. The fire is being treated as suspicious in nature at this time, police added. The Times has learned that the suspect in police custody is Phoenix Lonsdale, a man who the owner of the Osoyoos Christian Ministry thrift store, which was destroyed in the blaze, said had begun playing a piano in the store on a volunteer basis the week before the fire broke out. Lonsdale’s foster mother confirmed to the Times on May 3 that her foster son had been arrested. He is charged with committing arson and appeared in court on May 3 and is scheduled to return to court on May 9.
The fire broke out before 9 a.m. on May 1 and gutted the Osoyoos Christian Ministry church and thrift shop and the Dollar Smart Discount. No one was injured.”

Those Thermoplastic Resins… They don’t like heat.

DryWall & Plaster Lathing doesn’t always fare that well, either.

The Banks always seem to escape unscathed. It’s so unfair!

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Business In Vancouver – “To take a job in Vancouver, Calgary-based senior information management consultant Joey Roa would have to give up living in a 3,000-square-foot house just outside the downtown core.”

Anecdote from Business in Vancouver article ‘Home truths hurt talent search’, as cited in Macleans 1 June 2011
“To take a job in Vancouver, Calgary-based senior information management consultant Joey Roa would have to give up living in a 3,000-square-foot house just outside the downtown core. He’d have to give up his 20-minute on-foot commute for what he figures would be “a considerable drive, at best.” He’d have to start paying provincial tax. He’d see his current $1.15-per-litre gas prices rise to what he terms Vancouver’s “insane” pump prices. And with Vancouver’s salaries failing to keep pace with Calgary’s oil-rich pay scale, he’d likely be looking at a pay cut to boot.”
Needless to say Roa is staying put in Calgary. He’s turned down several offers from head hunters in Vancouver, and the BIV story includes recruiters who are having trouble luring educated and experienced workers to the city. In short, Vancouver is increasingly being seen as a no-go zone for top talent.


Another wave of articles in the MSM this week using strong language: “Outrageous house prices” (Maclean’s), “No-go zone” (BIV), real estate a “culprit” (Maclean’s), the “Vancouver Virus” (Maclean’s), “if house prices crashed” (Maclean’s).
We expect these phrases to ‘prime the pumps’. People hear these words but they don’t hear them; they don’t act on them. Buyers keep buying and prospective sellers sit on their hands. The surging prices and the stories of foreign buyers stalking the city overshadow any doubts that prices will continue upwards. Then, fairly suddenly, prices aren’t going up, then they’re dropping, and then these phrases will return to consciousness. Speculative buyers will disappear and speculative owners, including those who don’t even know they’re speculators, will bring their product to market. – vreaa

Maclean’s – “Call it the Vancouver Virus. The culprit is real estate. Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed.”


‘This little 3 bedroom, 1 bathroom bungalow in Vancouver is priced at $1.5 million. The listing suggests buyers just tear it down and build a new home.’

Excerpts from ‘The real problem with Vancouver’s outrageous house prices’, by Jason Kirby, macleans.ca 1 June 2011

The international media have finally clued in to the wackiness on Canada’s west coast, otherwise known as the Vancouver real estate market. Last month Bloomberg noted that when compared to median household incomes Vancouver homes are more expensive than even New York. The story linked soaring prices to the influx of wealthy buyers from mainland China. Today the Wall Street Journal retraces the exact same material. The warning in both pieces is clear: Vancouver’s housing market has become disconnected from reality and is primed to crash.” …
“Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong. I still think prices here in Vancouver are nuts, but each day as I walk to work past the high-end coffee shops and panhandlers I see more “For Sale” signs going up, along with plenty of “Sold” stickers, too.”

“The real threat to Vancouver isn’t that the housing market might crash. … Far more insidious is the impact housing unaffordability is having on employers and the broader economy. You hear stories of smart, young people leaving for jobs elsewhere. At the same time smart, young people from elsewhere aren’t coming here for jobs. The price of real estate and cost of living are too high, while pay is simply too low relative to other parts of the country.”

“Vancouver is increasingly being seen as a no-go zone for top talent. This is very bad. Worse arguably than if house prices crashed. As Vancouver develops a reputation as a place where only the uber-rich can afford to buy property, it could seriously undermine the economy. Fewer workers living here and earning good pay means a weaker income tax base for the province (though the city is benefiting from property taxes) not to mention less people with the means to shop, eat out and support local businesses and the arts. In addition, if you don’t have a vibrant and enterprising population, chances are new companies won’t get started. Coupled with the scarcity and high-costs of commercial real estate, more companies are likely to move their head offices away. Earlier this month mining giant BHP Billiton shifted its Canadian head offices from Vancouver, a self-proclaimed global mining capital, to Saskatchewan. Who knows how many businesses decided not to come in the first place.

If the economy is left weakened by departing head offices and a scarcity of talented workers, it will leave Vancouver even more vulnerable to that housing crash when it eventually comes. In economics Dutch Disease refers to countries that are overly dependent on their natural resources at the expense of other industries. Only here the culprit is real estate. Call it the Vancouver Virus.


Bingo! -ed.

“I sold our house in a Vancouver suburb for 300k 8 years ago. If I wanted to rebuy now it would cost me 600K. In the same time my wage has gone up less than 5%.”

ACjourneyman at zerohedge.com 1 Jun 2011 20:10“I sold our house in the Vancouver suburbs, 30 miles from Vancouver, for 300k 8 years ago. If I wanted to rebuy the same home now it would cost me 600K. My wage has gone up about 2.00 an hour or less than 5%. I don’t know if anyone else can do the math but it doesn’t work. I guess the 5.00 gas and 1500 a year car insurance doesn’t matter either, hard to live now.”

“One of my best friends has decided to move to Australia. Early 30s, born in greater Vancouver, 2 university degrees. Buying is completely out of the question. Would like to stay but for the high cost of living and low salary.”

human at VREAA 29 May 2011 at 11:38am“One of my best friends has decided to move to Australia with an Australian woman he is dating. Early 30s, born in greater Vancouver, 2 university degrees (one professional), can’t make enough money as a renter to save anything. Buying is completely out of the question for them. They would like to stay here but the high cost of living and low salary is driving the decision.”

human -> Pity about losing your friends. If it’s any consolation, we do like your handle! (Same race as us here at VREAA; please send us more of your kind.) – vreaa

Misallocation Of Human Capital During Speculative Bubbles – “What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

JRoss at VREAA 29 May 2011 11:50pm, in response to a comment suggesting that a couple who are both academics at UBC looking for accommodation in Vancouver shouldn’t have an attitude of “entitlement and elitism” and should consider “some homes in Renfrew area that require some elbow grease for <700K with revenue suites" –
“I lived on < $900 month from a TA at UBC in Point Grey for several years so I could obtain an advanced degree. My wife did same. Why would I or anybody else do that if there were not the potential (potential, not promise) of some future reward? That is not entitlement. That is a meritocracy.
Question for you my obtuse friend – What do you call societies that depart from meritocracy? What tends to happen to them in the long term? And just exactly who are the 'elistists' in same?
You seriously think that is is entitlement for the dentist who fixes your kid's teeth, or the doctor who treats your wife's cancer, or the lawyer who writes up your real estate contracts, or the CA who does your taxes, or the pharmacist who had the misfortune to graduate 25 years after you, or the professor who teaches all of them, to want some chance at a reward commensurate with their efforts? Seriously, what is wrong with you?
You do realize there are very nice places in the world where people who EARN such qualifications are afforded a better life than an 80 year old house in a marginal neighbourhood with strangers in the basement? Why would anybody who is possessed enough of their faculties to EARN one of the aforementioned careers not question what it has bestowed on them and realize they might be better off elsewhere?
You seem to think that we should all just accept the status quo and sign up for a lifetime of debt that will fund your retirement with wealth that came your way mostly because of the accident of the timing of your birth and you actually have the balls to call ME entitled."

Very, very eloquently put.
A speculative mania in real estate causes misallocation of resources. JRoss highlights how people with skills useful to a society can be forced away because of a profound perversion of normal reward dynamics. People are avoiding Vancouver because of these forces. The detrimental effects on our society are mostly hidden during the boom leg of the bubble, but will almost definitely compound other negative aspects of the inevitable deflation.
Forcing hard-working, talented and useful members of our society to avoid Vancouver is just one aspect of this misallocation of human capital. Other manifestations include (1) young people being drawn into short-term-attractive construction work (rather than studies or more sustainable lines of work), (2) professionals decreasing their hours worked or retiring early (as a result of perceived paper profits in RE), (3) people in useful professions selling their homes and leaving the city (because the capital accumulated in their home has hit life-changing levels), etc. We personally know of individuals in each of these categories, and related personal stories have appeared on these pages. People do unusual things in unusual times, and we’re living through unusual times in Vancouver by virtue of our overly-expensive real estate. – vreaa

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

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

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

Peter Ladner Personal Anecdote – “My home that I bought in 2000 is now worth about four times what I paid for it. But I have four kids, three in their 20’s and one in their 30’s, and they’re never going to be able to afford to live in Vancouver.”

Peter Ladner shared this personal anecdote in his recent interview with David Berner on Shaw cable television, 25 May 2011. We’ll archive it here:
“I think about my own home that I bought in 2000, it’s worth about four times what I paid for it now. … I have four kids, three in their twenties and one in their thirties, and they’re never going to be able to afford to live in Vancouver because they’re not already in the market.”

Peter Ladner – Correct Concerns, Questionable Attributions – “Is it always a good thing that property values go up?”

Peter Ladner interviewed by David Berner on Shaw cable television, 25 (?) May 2011. Thoroughly worth watching.

Excerpts from an early section of the interview:
Ladner: “Is it always a good thing that property values go up? The papers, the news: ‘Property values up – Good Thing; Property values down – Bad Thing’ … when you start to look though, at what happens in an ‘insanely hot market’ – which is how one real estate agent described this one – you can start to identify some bad things about property values being too high. … It erodes the economy of the city, because businesses can’t hire people. … Mining company CFO, six figure salary, cannot afford to buy a home in Vancouver. Another story about a couple, both surgeons, cannot afford to buy a home in Vancouver… Stories about companies that want to expand, they need workers, they can’t find them.. the young people can’t afford to live here… They recruit people from TO or Seattle or wherever, the people take one look at the housing market and say they can’t afford to move here, so now the company is thinking about moving to Waterloo… We have a declining number of head offices in Vancouver. …
You’ve also got a dividing rich and poor thing that destabilizes the society and leads to all kinds of unpleasant consequences… and new immigrants who want to move here, work hard, – it can’t happen…
If you’re in the market you are a multi-millionaire so there are a lot of people who love it this way and put a lot of pressure on to keep the ‘good things’ coming… but I think it’s time to look at the downside of it and say.. are we actually losing? … You get a resort town, it’s all hollowed out, there’s a few fancy people at the top, and a few serving them at the bottom, or a lot serving them at the bottom, coming in from Langley or wherever it is, crunched together in some little condo or basement suite, and you’ve got no real vibrant city… artists can’t live here, you don’t have a real community, and young people are leaving, and we spend all this money educating our kids and then they’ve gotta take off.. we lose all that money…”

A few thoughts:
Both Ladner and Berner raise some good general and specific points, and the whole interview is to be recommended to anybody concerned about the Vancouver RE market.
Most central to their discussion, Ladner expresses the desire to open a dialogue on possible restrictions to property ownership by off-shore buyers. He argues that lack of restrictions makes local RE a speculative asset for these investors and results in property being unaffordable to locals. He also emphasizes a “hollowing out” of communities that occurs with absentee owners.
Early in the interview, in the section excerpted above, Ladner also challenges the apparent broadly accepted wisdom that rising RE prices are a good thing, and he describes the dangers of becoming a “resort town”.
Later he makes excellent observations about the lack of dialogue on real estate issues being the result of so many vested interests. Both he and the interviewer point out that they are each sponsored, or have in the past been sponsored, by the RE industry! (“The biggest industry in this city is real estate.”)
Both Ladner and Berner agree in passing that even if foreign ownership was curtailed, they wouldn’t expect property prices to fall much at all, and that the city would still remain unaffordable to many. This is a very important point. It partly challenges the rationale behind Ladner’s concerns about foreign ownership in the first place. We think that it could be argued that both Ladner and Berner are avoiding the elephant in the room, namely the existence of a very broad and deep speculative mania, and the related very high risk of a price crash. It would be interesting to see either Ladner or Berner challenged on their price-resilience assumptions, and to be asked to consider the issue of local speculation. Ladner does at one point acknowledge that the source of the high prices may be related to interest rates.
So, we share Ladner’s concerns about the effects of overly expensive real estate on the community, he states many of them eloquently, and he should be applauded for publicly speaking out. We disagree with him, however, regarding the major cause of the insanely high prices: the cause of our housing bubble is inappropriately cheap financing/loose lending combined with local ‘speculative’ buying (a speculative component to almost every purchase), rather than off-shore ownership (which is important in its own right but far less so than local speculation).
– vreaa

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

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

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

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

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

“My wife and I talk about giving up and moving to the ‘peg (or equivalent) every day.”

Felix Wilcox comment on article ‘Housing costs soar in Vancouver‘ at The Globe & Mail 22 May 2011 7:35pm
“My wife and I live and work in Vancouver, $60-70K annual, no kids, and we talk about giving up and moving to the ‘peg (or equivalent) every day.”