Families With Children Leave Vancouver – “We bought a townhouse in Port Moody in 2006, sold it in 2011 and bought a house. We couldn’t have done that in Vancouver. Absolutely not.”

“Last month, The Sun reported preliminary results of a Vancouver school board survey that found many families are leaving Vancouver due to the high cost of housing.

The purpose of the survey was to pinpoint the cause of the declining enrolments, which is bad news for school boards because fewer students means less government funding and difficult decisions about cuts to spending and closing schools.

In each of the past three years, the Vancouver school district has had a net loss of 600 to 700 students, the report shows. A typical elementary school in Vancouver has about 300 children.

Tracking where the students who left Vancouver schools went isn’t easy; there is no central source of this information.

Ministry of Education figures show a drop of about 10,000 students in all B.C. schools between 2008 and 2013, which could be attributed to people having smaller families, people moving out of the province or other factors.

While it may be difficult to pinpoint exactly where Vancouver’s students are going, at least some of them are heading to the eastern suburbs.

Catherine Cowan and husband Trevor are among those families, moving to Heritage Mountain in Port Moody from Burnaby in 2006, primarily because of the lower cost of housing but also for the town’s livability, good schools and community feel. Before moving to Burnaby, they lived in Vancouver.

“We bought a townhouse (in Port Moody) in 2006, sold it in 2011 and bought a house. We couldn’t have done that in Vancouver. Absolutely not.”

– from ‘Go East: Families leave Vancouver for suburbs Surrey, Coquitlam, Langley school enrolments rise while more expensive areas see decline, Tracy Sherlock and Brian Morton, Vancouver Sun, 4 July 2013 [hat-tip RESkeptic]

“My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”

“I can’t believe it!
My neighbor and his wife, who are in their late 60s, just put their house on the market.
I talked to them often before, and they said they would die in that house and leave it to their only son.
But now they say they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.
To make matters worse, 1 year ago they took out a HELOC for $30k to help their son buy a condo.
Two week’s ago their son received a note from his strata that a special levy of $40k to cover inefficiences in the building envelope has to be paid.
Another leaky condo!
Needless to say, the old couple has no other assets than their rapidly depreciating house, so they are panicking.”
– Real Estate Tsunami at VREAA 23 May 2013 10:53pm

Hello again to all readers.
Posts recommence with this powerful anecdote from RETsunami.
We will aim to pop up anecdotes here on an occasional and irregular basis; we trust they will be appreciated nonetheless.
Keep well.
– vreaa

“They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”

“I was in a Starbucks in Kits today listening to two very Vancouver ladies talking RE. They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours. These ladies were concerned because one of the couples were heavy pot smokers. They wondered how the other couple would feel having clouds of dope smoke wafting in through the open windows on warm summer evenings. I just looked at my wife, who had been listening intently as well and whispered TWEB (This Will End Badly).”
– lexlimo at VREAA 4 April 2013 7:17 pm

Their Children Have Left Vancouver – “One of the rarely discussed consequences of the huge RE price inflation in Vancouver has been the separation of the extended family.”

“Cheaper housing, follow me.”

“One of the rarely discussed consequences of the huge RE price inflation in Vancouver has been the separation of the extended family.
My own adult children have left their home city (Vancouver) partly because of better opportunities elsewhere, but mainly because of the ridiculous cost of housing. The dream of raising a family in a single family home in Vancouver is an illusion. Their options are to commute hours a day or live in a box.
Well over half my friends are in the same boat. Their children have left Vancouver. They are raising their own families in other cities and other countries. My neighborhood looks nothing like it did even ten years ago. The neighbors don’t say hi to each other and the traditional cultural events in the community are gone.
I loved my city. It’s still beautiful (when the sun shines). But now, I find it kind of lonely and hollow.”
– Uwinsome at greaterfool.ca 11 Mar 2013 11:23pm [hat-tip Bob G]

Excellent comment.
A city does best when RE is reasonably priced; when the cost of shelter is not an excessive hurdle to young industrious individuals either remaining here or moving here.
The speculative mania has pushed RE to prices that are two to three times reasonable values, and has consequently forced people away from Vancouver; it has been a deeply destructive force.
– vreaa

A related anecdote, previously headlined 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 (former candidate for mayor), Shaw cable TV interview, 25 May 2011

Two House-Warmings In South Surrey – “One thing I noticed is that no one talks about home prices going up anymore. They talk about how expensive Vancouver is and how prices will drop there, but not where they live.”

“Went to two house-warmings this week. Both in South Surrey.
While we were there we were bombarded with how great Surrey is and we should consider moving there. With close to an hour commute each way to downtown, no thanks.
Even though the townhouses were cheap (in today’s market anyways: you can get a brand new 3/4 br for the price of 1 br in the city), I was not at all enticed.
Previously, after a house warming I would feel like wow maybe I should just bite the bullet and go buy, not anymore. After the new house smell goes away, I realized how house poor all these people have become, and really their lifestyles are not any better than mine, perhaps even worse with all that extra commuting.
One thing I noticed is that no one talks about home prices going up anymore, that was different from a year ago. They now talk about how expensive Vancouver is and prices will drop there, but not where they live because it is so cheap already how can it drop. I guess they think it will always be other people’s problems.”
– 4SlicesofCheese at VREAA 10 Mar 2013 10:04am

Realtor Stories – “A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before has he done this.”

“A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, while talking about a completely unrelated matter, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before in 20 years has he tried to drum up business from us. We know a total of zero people with a spare $2 million, so this was completely ridiculous and seemed rather telling.”
– Sheesh at VREAA 19 Feb 2013 11:16am

“A friend of mine 3 years ago quit a well paying full-time job to dabble in RE. When the slowdown started about a year ago, she was lucky to get her old job back.”
– Real Estate Tsunami at VREAA 19 Feb 2013 9:25am

“My land-lady who is a very good friend of [a Vancouver realtor] tells me that there are no buyers coming – she says market is very bad… very obvious to anyone who actually uses their brain… but quite an admission from someone who has been a part of this giant scam.”
– vancouverbubbleman at VREAA 14 Feb 2013 3:30pm

“I’m hoping I can buy my daughter a decent size condo in Vancouver when she graduates from UBC next year. Even if she finds a good job, she will never be able to afford home ownership without my help.”

“When prices become unaffordable, demand should come down. At least that is what I’m hoping for, in the short to medium term, so I can buy my daughter a decent size condo in Vancouver when she graduates from UBC next year. Even if she can find a good job after graduation she will never be able to afford home ownership without my help. Renting is obviously a viable alternative if condo prices in Vancouver don’t come down. Or she can just return home and stay with me, my wife and our dog :)”
– comment by Simple Living at The Globe and Mail, 11 Dec 2012, 12:54am

Later on in the same thread ‘Simple Living’ adds:
“If I can afford to pay cash up to $1 million for a condo for my only daughter, it’s my choice and it still is simple living by my standard.” &
“$200,000 a year combined income will not buy you much of a condo in Vancouver at present, let alone a house. That’s why property prices in Vancouver right now are beyond what most working class people can afford. As soon as mortgage rates go up, a lot of over extended home owners will be in serious trouble.”

“Pegeen and Michael have invested heavily in the B.C. real estate market, which poses some risks if prices fall. They have about 64% of their wealth in real estate [actually, 81%]. As a benchmark, pension funds tend to target 10% to 15%.”

“I see no problem having 81% of my wealth in real estate…”

“Midlife reflection led Michael and Pegeen to feel their lives would be fuller if they adopted two children, so they have set the process in motion. Their plan is to adopt siblings between the ages of 5 and 10 years.
The couple can afford the new additions to their family. Over the years, they have built a consultancy that pays them well even though they have plenty of time off to travel. They spend about a quarter of each working year out of the country.
“We hope this won’t change once we have kids,” Michael writes in an e-mail. When the children join them, they will have to move from their two-bedroom Vancouver condominium to a three-bedroom home. High prices in the city mean they will likely have to rent, Michael writes.
With no company pensions, they have to provide for their own retirement. They are well-fixed to do so now, but they know having children will change things. They have an investment adviser “but don’t really have a plan,” he adds.
Their major assets are a portfolio of stocks and B.C. real estate – their condo, a vacation property and a half interest in a rental property in a smaller city.
Their goals including scaling back to working half-time so they can spend more time with the children, continuing to travel abroad on business, maintaining their current lifestyle while still providing for the new additions to their family, and “retiring early at 60 with few worries and the kids’ education taken care of.” Neither one has life or disability insurance and they wonder whether they should buy some.”

“We asked Eric Davis, a financial planner, investment adviser and vice-president of TD Waterhouse Canada Inc. in Kamloops, B.C., to look at Michael and Pegeen’s situation.
“Life is pulling this family in many directions,” Mr. Davis says. … They need to give some serious thought to setting their priorities. …
If they sold their existing real estate, they would have enough money to buy a three-bedroom house in Vancouver if they chose to, Mr. Davis says. Because of the nature of their business, which takes them out of the country part of the time, “they could consider buying a cheaper property outside the expensive Vancouver market but [that is] still accessible to airports.”
Mind you, Pegeen and Michael have invested heavily in the B.C. real estate market, which poses some risks if prices fall. They also carry substantial debt in the form of a $390,000 line of credit.
“From an asset allocation standpoint, they have about 64 per cent of their wealth in real estate,” Mr. Davis says. “As a benchmark, pension funds tend to target 10 per cent to 15 per cent.” …

Monthly net income: $10,000 (variable)
Assets: Non-registered portfolio $380,000; RRSPs $80,000; TFSAs $40,000; U.S. IRAs (individual retirement accounts) $160,000; condo $600,000; vacation property $500,000; share of rental property $75,000. Total: $1,835,000
Monthly disbursements: Housing expenses $630; transportation $200; groceries $800; clothing $100; line of credit $1,000; charitable $100; vacation and travel $500; personal discretionary (drinks, dining, entertainment, pet expenses, sports, hobbies, subscriptions) $1,410; dentists, drugstore $150; telecom, TV $185; RRSPs $815; TFSAs $410. Total: $6,300 cct
Liabilities: Investment line of credit $390,000

– from Mid-life couple need to set their financial priorities, The Globe and Mail, 26 Oct 2012
—

This ‘Financial Facelift’ is noteworthy in that it is the first that I can recall where any advisor has explicitly mentioned the possibility of Vancouver RE dropping in price.
Relatively minor point: We disagree with the math – Their net-worth is actually $1.445M (subtract their liabilities), of which $1.175M (or 81.3%, not 64%) is in RE.
That aside, look at the advice: They are in ‘midlife’ (40s?) and it is suggested that they are being unwise having ‘64%’ of their wealth in RE; the wisdom of a far lower figure is implied.
Think about it: what percentage of Vancouver homeowners in their forties have less than 64% of their net-worth in RE? Many (most?) have a far greater percentage in RE simply by virtue of the cost of their homes. We don’t know the exact numbers, of course (we’d love to know them) but we suspect it’s a very substantial portion.
As a group, Vancouverites are woefully overdependent on RE for their future financial health, “which poses some risks if prices fall”.
– vreaa

“Sure, But She Has A House To Die For…”

“The Chamber’s Guest House Bed and Breakfast in North Sydney, N.S., where a Fred and Millie Weeks stayed, is shown on Monday, October 1, 2012. Media reports in Nova Scotia say a 77-year-old woman arrested in connection with the suspected attempted murder of her husband in Cape Breton is a woman who became infamously known as the “Internet Black Widow.” The reports say the woman arrested is Melissa Ann Friedrich, also known as Millie Weeks. …
Weeks had been convicted of manslaughter in the death of her husband, Gordon Stewart, in the 1990s in Nova Scotia. She also received a five-year prison sentence for theft and forgery in 2005 involving a man she met online. Two of the men she dated in Florida had fallen ill and one of them died, but no criminal charges were laid, according to the Halifax Chronicle Herald newspaper.”
– image and text from ‘Internet Black Widow’ arrested, G&M, 1 Oct 2012

For the gorgeous character house above, many Vancouver men would take their chances.
– vreaa

“Every time the conversation has gone to real estate in the past, the verdict has always been that Vancouver will never go down. Now, all of a sudden, these same people are saying that the bubble is “finally” bursting.”

“I’ve been running with the same fairly large group for a year now. Every time the conversation has gone to real estate, the verdict has always been that Vancouver will never go down. Now, all of a sudden, these same people are saying that the bubble is “finally” bursting, and the group members are teaching each other new terms like, “under water.” It’s amazing how fast it goes.”
– N at VCI 18 Sep 2012 at 9:13pm

In years to come, these same people will also tell themselves that (1) they ‘knew’ all along that it was a bubble and (2) they didn’t act because, who could have known it was a bubble? (backed by the related falsehood “You can’t identify a bubble while it is happening”, care of Greenspan and others.)
Yes, we know that’s a complete contradiction, and makes no sense, but, humans are like that.
– vreaa

“I am a boomer, I see the problems that high housing prices are causing for the younger generation. I have two children; one challenged with a large mortgage, another priced out of the Vancouver market.”

“Yesterday while visiting friends and family, I started to talk about the price of Real Estate and how I see it affecting the younger generation.
Let me first say, I am of the boomer generation, I see the problems that high prices for housing is causing the younger generation. After all, I have two children of my own and see the problems that they are dealing with. One family challenged with a large mortgage, another one of my children priced out of the Vancouver market.
Now back to the conversation, I stated that the prices were out of reach for the normal working family and a family member made the argument that it was all relevant. He claims that prices of houses for his parents were cheaper than he bought and when he bought his first home he was making $300 a month.
True, he was making that money back in 1966, but in that same time period my father was making $70 a week and bought five acres and a two bedroom home for $9800. If we round that up to $300 it would have taken my father less than three years of work to purchase that home.
Two years ago, I looked at the same property, it now was selling for over $800,000. My son is in the $40,000 dollar range, like most people that is an average wage, it would take him 20 years of work to purchase the same property.
Wages have not kept up to inflation, let alone the cost of housing. This is going to cause the housing market to stagnate and if the young generation are lucky, prices will fall. There is some sign of that happening now in Vancouver.”
– from ‘House Prices and Young Folk’, by ‘RA’ (a ‘Retired British Columbian’) at their blog ‘Voice of the Wet Coast, 28 Aug 2012

“Now they want to sell and buy a bigger place closer to her job. They will be down tens of thousands.”

“Know of a couple purchased 1 one bedroom in Vancouver for $430s.
This was back in 2010 and they were just getting married at the time.
I know the wife and told her I didn’t think it was a good idea since they didn’t even have a downpayment.
They were so worried about “buy now or be priced out forever”, went to his family for a loan for the 20%.
Fast forward to this week. Couple now has a 1yr old and the place is feeling too cramped. On top of that her job situation is changing and she needs to work in Burnaby.
Now they want to sell and buy a bigger place closer to her job.
They will list the unit for $419K to start.
They’ll be lucky to get $400 and minus the transaction costs, will be down tens of thousands.”
– kansai92 at VCI 9 Aug 2012 12:08pm

“I just heard of someone who bought a house in East Van with 7 other people! Dude, you’re signing up for a mortgage with roommates? Yeah that ought to work out, good luck with that!”

“I don’t live in Vancouver, but I read ‘vancouvercondo.info’ for the same reason I read the US bubble blogs. The insanity is entertaining. I just heard of someone who bought a house in east van with 7 other people! Dude, you’re signing up for a mortgage with roommates? Yeah that ought to work out, good luck with that!”
– Nex at VCI 6 Aug 2012 2:24pm

“I agree. I think it’s crazy that roommates would purchase property together. I’ve had lots of roommates in my day and it never seems to work out. I can’t imagine being stuck to a roommate for 25 years for a mortgage!
Vancity Credit Union actually has a mortgage product specifically designed for roommates. It’s called the “mortgage mixer”. From the Vancouver Sun:
“Vancity also has a “mixer mortgage” where roommates can go together to buy a home they wouldn’t be able to buy otherwise. ‘It also works well for parents and children, because the parents can own part of the home as an investment, while it helps the child get into the market,’ McKinley said. “It definitely helps people get into the market younger.’”
– Joe_Blown_Away_By_High_Housing_Costs at VCI 6 Aug 2012, in part quoting from Vancouver Sun 19 Apr 2012

“PermaBull dad whips out the latest print copy of some housing classified and shows me a 30 year old townhouse just off Lougheed Highway, I just roll my eyes and said haven’t you watched the news lately, prices are going down.”

“Visited the parents for dinner yesterday.
PermaBull dad whips out the latest print copy of some housing classified and shows me a 30 year old townhouse just off Lougheed Highway, I just roll my eyes and said haven’t you watched the news lately, prices are going down. I could pay cash for the place, but I would never want to live in that neighbourhood.
He replies you shouldn’t listen to news reporters and agents, they all have an agenda (about recent bearish news stories).
Yet he listens to the same exact people when they say prices are going up x% this year and x% next year etc.
Oi….”
– 4SlicesofCheese at VREAA, 31 July 2012 12:23pm

The Story Of Burnaby Joe – “He finished high school and has worked in the building trades his whole life. Owns his own home. Now bought his 18 and 19 year old daughters each a new condo.”

“I had some drinks with a friend last night who told me about a friend (let’s call him Burnaby Joe) of his who has contributed to the craziness here in Vancouver. Burnaby Joe is in his mid-50s, born and raised on the east side of Italian parentage. He finished high school and has worked in the building trades his whole life. He owns his own home (probably mortgage-free) in Burnaby.
Anyway, my friend told me about Burnaby Joe’s pretentious and spoiled daughters–18 and 19 years old – who have almost as many shoes as Imelda Marcos in their “clothes room” at home. Each of these girls is as of recently the proud owner of a new condo in the North Burnaby area.
How many of these cases are around? How did Burnaby Joe finance the purchase of these two condos? Cash? HELOC? When the market turns will Burnaby Joe both the means and fortitude to hang on while equity drops monthly?”
– oneangryslav2 at VCI 11 Jul 2012 11:32am

“My wife doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease.”

“I’m starting to feel a bit of angst. My wife (from the East Coast) doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease. Could get dicey.”
– Patiently Waiting at VCI 29 Jun 2012 8:32pm

“For my parents to be getting a 500K+ 25yr mortgage at age 62 with 51K income seems to me completely ridiculous and crazy. How could they have been pre-approved for this?”

“There’s been a recent development within my family that is causing me a lot of distress.  My parents are 62. My father takes in 40K after tax as he gets disability payments for the rest of his life and my mom does not work. They also take in 11K a year from renting out the basement of their Vancouver special which they bought in 1989 for 179K. On Friday, they told me they bought a 800K+ house in Burnaby using a 300K downpayment from a condo they sold in 2010. I don’t think the deal is final as they are getting a house inspector to look at the place on Monday. However, they claim they were preapproved for a 25 year mortgage. They plan to rent out the top suite to my brother, sister-in-law and their newboard for $1200 a month, and they also will rent out the basement suite.

To me, getting a 500K+ 25yr mortgage at age 62 with 51K income is just completely ridiculous and crazy, especially with the recent developments and current malaise of the market. They always spout the same nonsense about how house prices can’t go down, running out of land, house prices being propped up by mainland Chinese & drugs, Canadian banks more prudent than Americans.

So my question is how could they have been pre-approved for this mortgage 10x their income at age 62? It just seems impossible to me. Am I missing something or is there some loophole where a financial institution would actually lend this couple this much money? I am desperately trying to convince them not do this but this ‘can’t lose’ Vancouver real estate mentality is just too hard to break.”

– tektite at VCI 24 Jun 2012 8:53pm [hat-tip ‘AP’]

“I have a friend right now who is in serious financial trouble because his mother-in-law is demanding to be repaid the down payment she loaned them.”

“I have a friend right now who is in serious financial trouble because his mother-in-law is demanding to be repaid the down payment she loaned to them (they thought it was more of a gift). This amount is basically all the equity they have so, if they are even able to sell the house for what they paid for it, they’ll be screwed. It has also ruined the relationship between the siblings. I can imagine this playing out more frequently if house prices take a significant hit.”
– Observer at VREAA 23 Jun 2012 3:08pm

“I have a relative that used a HELOC on her parents’ home to purchase a Coquitlam home in 2010.”

“I have a relative that purchased a Coquitlam home in 2010. She and her husband took a heloc on her parents home. Parents home bought for $520K and now worth $925K. There was about $300K mortgage on the home. Well, not anymore. They borrowed $130K for the Coquitlam home. Purchase price %60K, put down $80K, and $40K went to reno’s and other home costs. They bought in pressure times. Paid $40k over asking too. They’re left with massive debt and put risk to the parents as well. The loc they borrowed, they have only paid interest on it. So that loan is still the same at $130k. So basically, the home was purchased with 100% financing. The home is worth about the same as the price they paid in 2010.”
– Van east guy at VREAA 22 Jun 2012

Summary:
Vancouver home: Market Value $925K; Debt (Mortgage + HELOC) $430K
Coquitlam home: Market Value $650K; Mortgage $560K
Total Market Value: $1.575M
Total Debt: $990K

Classic intergenerational wealth destruction scenario.
An extended family goes from holding fairly safe equity in one home, to leveraged RE speculators.
The parents had the incredible good fortune of holding a home through a housing boom that had increased the home’s market value by $405K. They had the option to realize that $405K after-tax gain but did not take it. One can only surmise how that windfall may have altered their future financial health and their retirement plans. Instead, they decided to leverage the paper gain into more RE.
A 40% drop in housing prices will completely wipe out all the equity this extended family has in RE. And this is by no means an extreme example.
– vreaa

More Social Isolation In Vancouver Than Other Cities? – “Residents feel increasingly estranged from their friends, their neighbours and their communities. More than half of respondents agreed that Vancouver is becoming a resort town for the wealthy.”

“A survey conducted by the Vancouver Foundation and released today found Metro Vancouver residents feel increasingly estranged from their friends, their neighbours and their communities.” …
“Affordability factored heavily in the survey results, with roughly equal numbers of people reporting living comfortably and finding it difficult to get by.
Significantly, more than half of respondents agreed that Vancouver is becoming a resort town for the wealthy and that there is too much foreign ownership of real estate. This view was particularly common among people aged 25-34, a group whose responses to many survey questions revealed a marked cynicism about the state of their communities compared with other age groups.”
– excerpt from ‘Social isolation has far-reaching effects on us and our neighbours, survey says’, Tara Carman, Vancouver Sun, 18 Jun 2012

“I am in that age group and this accurately describes how I feel.”
– joe_blown_away_by_high_housing_costs at VREAA, 18 Jun 2012 9:25am [Thanks for the link to the article, joe. -ed.]

The Vancouver Foundation survey itself available from their website as a pdf:
Connections and Engagements, A survey of metro Vancouver, June 2012, Vancouver Foundation

More from the Sun article:
“Bob Cowin spoke about losing a sense of connection with his neighbours over the years. Cowin moved into a new subdivision in Coquitlam in the mid-’80s where the developer had landscaped the front yards, but the backyards were nothing but mud. Neighbours got to know each other creating their back gardens and building the retaining walls that were necessary because most properties backed onto a mountain slope.
“Swinging a sledge hammer and dashing down to the local building supplies store for a different drill bit resulted not only in walls but also relationships,” Cowin wrote in an email.
A year after the retaining walls were finished, Cowin noticed a new kind of wall going up: cedar fences between properties that made the neighbourly conversations that used to happen over the fence impossible.
A burst of young children brought the adults in the community together in a different way, forming child-minding co-ops and walking school buses, Cowin recalled. The elementary school became a social hub, and the neighbourhood held yearly block parties.
Then the children started middle school and didn’t need their parents as much, he said.
“The street was extended, and the sense of a local place disappeared. Houses started being sold, and a different, and increasingly multicultural, demographic moved in.”
Cowin feels the increasing ethnic diversity was a mixed blessing for his neighbourhood.
“It has been great for our kids, who, thanks in large measure to the schools, have developed a tolerance and intercultural competence that I admire,” he said. “For the adults, language and other barriers have made it tougher. My new neighbours are still fine people, but it takes more effort and intentionality to maintain relationships.”
—

The entire Sun article is worth the read, as is the comments section below it.
The phenomenon of “isolation in the city” (“water water all around but not a drop to drink”) is by no means new. Is Vancouver really any different from other big cities in this regard?
We don’t know of any data that could allow one to objectively compare. Are the findings in this survey very different from similar surveys elsewhere?
We are certain, however, that there is a substantial subgroup of locals who feel strained by Vancouver’s housing prices: either by the financial burden of ownership, or from the distress of feeling ‘priced out’ and (for many, but not all) the consequent sense of ‘not belonging’. And we know that such strain is not good for the health of individuals, families and communities.
Also, the very high cost of housing creates an implied large wealth disparity across the owner/non-owner divide that would not be present in times of more normal housing markets. Such a disparity is closely correlated with dissatisfaction within a community.
– vreaa

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

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

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

1) They have no idea how the market works.

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

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

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

2) They have no clear idea how debt works.

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

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

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

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

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

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

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

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

5) Any alternative is seen as impossible.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“My hubby owns a condo in Whistler with his sister, they bought when she suckered him into thinking this was a ‘great investment’. Currently, the thing is worth about what they paid for it, 10 years ago.”

“My hubby owns a condo in Whistler with his sister, they bought about ten years ago when she suckered him into thinking this was a “great investment!” (He didn’t know me then, if he did, believe I would have hit him over the head with a frying pan before letting him go through with this bad investment.) Here are the numbers:
– The condo cost about $225k. It’s in a rental pool, meaning the property management company takes 40% of every dollar earned. The condo owner is on the hook for everything-strata fees, hydro, property taxes, maintenance, updating the suite etc. Oh, and a mortgage.
– Every single year since they’ve owned it, they’ve lost about $10k per year. I did some quick calculations and came up with the strata fees, property taxes and property management fees take up 94% of their revenues. So, even when they don’t have a mortgage on this sucker, they are guaranteed to lose money, or make pennies.
– Currently, the thing is worth about what they paid for it, ten years ago. If they’re lucky. Property in Whistler doesn’t look so hot these days, despite his sister telling me for years she was going to be a millionaire after the Olympics. (Ya, right). I haven’t heard this lately from her. I wonder why.
– The other kicker? They don’t ski. When we go to Whistler, we’re not even allowed to stay in the condo (she’s the majority owner), because it takes away from the potential rental pool revenue. Ya, I’m a bit bitter about this damn investment, hubby’s trying to get out of it, as I’ve been throwing these numbers at him for ages. He just says “Uh huh” and looks pretty glum.
So my point in….never EVER should anyone ever invest in real estate with a family member. It’s bad news. I’ve come to the conclusion that the only person you should buy real estate with is your spouse. At least then if you get divorced you can sell and split the proceeds. With other family members, it can be a horror story if you want to sell, you’ll have to convince them to cough up the cash and buy you out. Good luck with that!!!”
— Dian as cited by Garth at greaterfool.ca 20 May 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“The older guests at the table decried the run-up in prices that makes it almost impossible for their children to buy on the West Side, while the kids looked to their parents as the lender of first resort to help them get into the market.”

“Recent conversation around the Kitsilano dinner table turned to — as it almost always seems to do — real estate and the role of foreign buyers in Vancouver.
The older guests decried the run-up in prices that makes it almost impossible for their children to buy on the West Side, while the kids (also at the table), looked to their parents as the lender of first resort to help them get into the market.”
– Peter Mitham in his article ‘Can We Combat Uncontrolled Offshore Ownership?’, Business in Vancouver, 23 Mar 2012

Prices reached heights over the last two years where even owners began to see how this could  negatively impact their own families.
Throughout the mania it has been common for down-payments to come from HELOCs on other properties. This leads to even more equity:price leverage for the  population as a whole.
– vreaa

“I’m in my mid-late twenties and I would love to buy a house but I just don’t have the money. My elders tell me I can buy a house with little to no downpayment at all. Terrible advice.”

“I’m in my mid-late twenties and I would love to buy a house now but I just don’t have the money. I work full-time and make a reasonable wage for not having any dependents but it is very difficult to save a a $20,000 downpayment. My elders tell me I can buy a house with little to no downpayment at all. Terrible advice. My rent is still slightly less than a mortgage payment (with utilities included). All I can do at this point is keep feeding my RRSP.”
– tiredofsex in the comment section at the Globe and Mail 5 Apr 2012

A 20-something who is perhaps wiser than their ‘elders’.
– vreaa

Spot The Speculators #82 – “They are “borrowing” wedding rings until they can afford to buy real ones as they are maxed out on their HELOC’s. When I asked them why they don’t sell the condo or apartment I was told they need them to keep going up in value.”

“My sister is getting married and planning their wedding. With a house and apartment in Vancouver and a condo at Whistler you would think they were flush but no… The entire wedding is on their line of credit and they are “borrowing” wedding rings until they can afford to buy real ones as they are maxed on what they can get on their HELOC’s. When I asked them why they don’t sell the condo or apartment I was told they need them to keep going up in value. I’ve given up giving guidance anymore but felt chills when I realized that they need the places to go up in value so they can increase their credit lines to maintain their current lifestyle….god forbid what will happen to them if (when) the value declines.”
– ChemGuy at VREAA 5 Apr 2012 1:30pm

“My mistake was to not realize the intensity of their belief in the cult of real estate, and that any appeal to reason would be met with vitriol, as with any other cult.”

“Here’s another, less-discussed perspective on this RE madness: the sickening feeling of watching those you love commit slow financial suicide by buying yet more RE, right at the peak, and the fractures created when we try to warn them.

A week ago a family member called to say that they have just bought a house near us. Great, except that (1) they are buying the new place at the probable peak of the market, (2) they are keeping the old house “because (they) think it will be worth more later” (it’s only gone up about 8% total in the last 5 years, less than the rate of inflation), (3) they also (I think) “own” two rental places which have dropped about 10% in value in the last 3 years and a non-revenue property (which is just straight expense), and (4) they have young children. Good thing they have well-paid, secure government jobs.

For otherwise intelligent, financially savvy people to simply assume that real estate always goes up or at least not down much, nor for very long, (and they’re 40, so as far as they know, it does always go up) and not even cross-check their assumptions simply stuns me. I’ve been trying for the last 18 months to get them to reduce their risk, given that we’ve got to be close to the market peak and the chance of a significant move downward is probably far higher than that of even a 5-10% move upward. So, at risk of making them even madder at me, I sent them another massive email detailing all the reasons RE is extremely risky now. Of course, they desperately need real estate to continue upwards, so they wrote back a mean, rude personal attack email, cc’d to the entire wider family.

It’s so futile. In the end when they lose their shirts in the big collapse, they sure won’t thank me for the warning they ignored nor even acknowledge that they got a warning! Sigh. At least since they cc’d the entire family, they are the ones who will end up looking foolish, although they are attempting to make me look foolish now. It’s too bad that it will be some years before we’re all proven right about the upcoming crash severity and length. (and, they will probably quietly struggle along financially for many years afterward without any of us being the wiser).

I was awake most of last night stewing about this, and in tears due to the very mean things that were publicly said to me. Unfortunately all of the family will now be mad at me for causing what will probably be a semi-permanent rift. The only way forward that I can see is if & when they are proven wrong in the coming years and are in a bad financial situation, they might admit I was right. But, I doubt this will happen, it will be too painful for them. Guess I just should have kept my mouth shut for all the good it has done, leaving me feeling like the unwanted evangelist in the room (albeit with a better supported belief) 🙂

My mistake was to not realize the intensity of their belief in the cult of real estate, and that any appeal to reason would be met with vitriol, as with any other cult. “

– ‘JCH’, via e-mail to vreaa,21 Mar 2012

Couple Moving To Vancouver Ponders Rates – “My girlfriend & I have decided to move back and settle in Vancouver. We have put this move off for years due to the insanity that is Vancouver real estate … however, nesting instinct is taking over and we certainly aren’t getting any younger!”

“I have been following your site from over here in the UK for almost a year now. Both my girlfriend (who is Canadian) & I have decided to move back and settle in Vancouver. It’s been a very tricky decision as we will both be leaving secure jobs and I personally believe that Vancouver will be spending the next 3-5 years recovering from the most incredible 10 year credit binge. We have put this move off for years due to the insanity that is Vancouver real estate … however, nesting instinct is taking over and we certainly aren’t getting any younger! Needless to say, we won’t be taking out an $850k mortgage for what look like new 1:1 scale model houses and will settle as mere 2nd class citizen renters to begin with.
Anyway, the real reason for this email… I see there is real potential that the BoC will lower interest rates. As you may know, the base rate over here in the UK is dictated by the Bank of England and has been kept at an historical low since ’09 (0.5%). However, base rates don’t necessarily correlate with that what is paid by the home-owner … the latest over here is that LIBOR has increased and home-owners are going to get stitched (perhaps even those on capped rates!).
[See ‘‘Mortgage timebomb’: RBS and NatWest make first move with rate hike for 200,000 customers – Halifax could be next’, MailOnline, 2 Mar 2012]
If Canada were to join the sub 1% club, what is the likelihood that the national banks would pass this lower rate on?… will homeowners get the better deal or will it the banks use this as an opportunity to raise capital against an increasingly dodgy looking uninsured (non-CMHC) lending book? As sentiments change and exposure to risk increases, banks could very well end up closing their doors to other banks. Record low base rates would only offer some protection to the homeowner at this point.
Also, if the amortisation period is being lowered along with interest rates, central policy could very well be to help stem the influx of fresh meat into the housing market whilst protecting the financially feckless… but for how long could this façade be played out for?
Not sure if my assumptions are relevant over in Canada, but I hope it at least offers an alternative perspective on the subject of rates and the consequences that are already playing out over here in the UK…”
– from ‘FotheringtonSmythe’, via e-mail to VREAA, 4 Mar 2012

This is an anecdote that supports one aspect of the bull argument – that people will keep coming to Vancouver despite very high RE prices.
As for the question about rates, perhaps readers can add their thoughts.
We personally believe that the market is so overextended that, at some point, it will implode regardless of how low rates go. – vreaa

“I left Vancouver in 2005. When I go back to visit, the conversation usually turns to RE with snooty relatives boasting about their $1M houses.”

“I left Vancouver in 2005. Sure glad I did. When I go back to visit family, the conversation usually turns to RE with snooty relatives boasting about their one million dollar houses. I can’t wait for the housing bubble to pop and humble these folks. It will be a tough fall to reality for Vancouver.”
– Uh Oh Canada at greaterfool.ca 6 Jan 2012 10:37pm

“They asked “How do I know it could go down 3%? In the long term real estate always goes up.” I was angry, and stammered “Fine, you are 72 right now so in the long run you will probably be in a geriatric home. The condo will be liquidated to pay medical bills. Get your cash out now and enjoy it rather than hanging on.”

“The old timers aren’t that keen to cash in, my folks have two places, one in Van and one on the island that they like to visit about once a month. I created a model for them that showed even with a modest 3% decline they are better to sell and take a loss now than hold on and still stay at the empress every weekend amg be ahead. They refused and said they like to open the closet and have their stuff and if things got bad they could rent it out. I next showed them that if they sold now, at a loss, and rented a place over there, they would still be better off and de-risked. Their response was “How do I know it could go down 3%?”. My response was I don’t but Van has dropped more than 10% since the peak and how do they know it is not going to fall”. In the long term real estate always goes up was what I was told. I was angry at this point and stammered fine, you are 72 right now so in the long run you will probably be in a geriatric home and the condo will be liquidated to pay medical bills; I just want you to get your cash out now and enjoy it rather than hanging on.”
– YLTN@Work at vancouvercondo.info 10 Jan 2012 at 8:35am

Imagine 10,000 couples in this position.
They find it hard to conceive of substantial price drops.
The market drops 5%, 10%, then 15%. Then 20%.
How do the 10,000 respond? Not all in the same way, of course, but what percentage would, at 20% off, come to market?
– vreaa

“My father built the house, with help from my siblings and I as we grew up. They don’t need the money for retirement as they have good pensions.”

“My parents bought in 1983…owe 25k on their mortgage…currently assessed at 953k. They wouldn’t sell the place for all the gold in christendom. My father built the house, with help from my sibblings and I as we grew up. They don’t need the money for retirement as they have good pensions (not gov’t, but decent), plus, they have some RRSP’s…
The difference between my folks and their boomer colleagues is that my folks never took out a HELOC…they didn’t spend their paper gains along the way and therefore will not have to worry about paying them back on the way down. My mom’s been telling me that it was a bubble since 95…I think some people are going to be very shocked and dismayed. Only time will tell, eh.”
– T at VREAA 11 Jan 2012 7:34am

T posted the above in response to this comment of ours:
“Is there really any Vancouver homeowner who “doesn’t really care what happens to the Vancouver home market”?
There may be a few… those whose total net worth is so large that the run up in RE prices has been of no consequence to their projected future financial well-being… And, similarly, where a drop in prices of 30 or 50% would have no substantial consequences.
But how many folks do you know like that?”
T’s parents would represent homeowners for whom the market run up and future direction makes little difference. But we believe such owners make up a very small percentage of the total. Most homeowners are very interested in current home value and future market direction.
– vreaa

Spot The Speculators #71 – “I loaned a family member $20K three years ago to help them with a liquidity issue while they were closing on their house. I asked why they didn’t borrow against their Yaletown condo but the response was that they had already borrowed against it for their place at Whistler.”

“I loaned a family member $20K three years ago to help them with a liquidity issue while they were closing on their house. I asked why they didn’t borrow against their Yaletown condo but the response was that they had already borrowed against it for their place at Whistler. They bought the house with a DP from the Whistler equity. The loan was only for 3 months…still haven’t been paid as the bank won’t loan them any more.
They are going to pay me back half next month after going to the loan shark (Alpine credits). Scary $hit! I bet my folks they will be back in Yaletown in 5 years with no house and no Whistler property.”
– yltnboomerang at VREAA 10 Jan 2012 8:57am

Most Vancouver RE speculators are far less obvious about it than these cowboys.
Jumpin’ the loan shark.
– vreaa

“My friend bought here, and so did her mom. Two units. They got their deposit refunded the day after because they decided the units were too small, but before that, they had raved about how it was perfect. They then went the same day and bought elsewhere.”

“Update on my friend who I mentioned earlier was gonna buy here.
Well she did, and so did her mom. They bought 2 units, said it was a gong show at the sales center.
They actually commented how it was like in China now, how everyone goes crazy sales day and everything gets sold out day 1. After I mentioned China real estate market was going down recently, she was genuinely shocked and thought I was crazy, and said no way, then after awhile said well depends which city and not big cities.
Then I sent her ‘Property Prices Collapse in China. Is This a Crash?‘, by Gordon Chang, Forbes, 6 Nov 2011
I ask where do you get your info about Chinas market, no answer. But she says news always overhypes the situation. Which I replied can be used in both ways. Just look at RE pump stories.
She said the same thing as many people believe about Lower mainland real estate and why prices will remain high,
-everyone wants to be here
-China money (millions of millionaires coming)
-who cares if market goes up or down, as long as you have a comfortable place to live
-you may die tomorrow (lol)
But guess what, they got their deposit refunded the day after because they decided the units were too small. But before that, they had raved about the location and price and how it was perfect,
The same day they got their deposit back they went and bought at the Viceroy, which was “perfect”.
The whole conversation was like living in bizarro world.”
– 4SlicesofCheese at VREAA 29 November 2011 at 6:11 pm

“I’m 200% certified woman and would be perfectly happy in a 800 sq ft apartment with a decently sized balcony for my BBQ. My man is the one who “must” have the house that goes for $1.1M in Vancouver.”

This leisurely exchange at saskatoonhousingbubble earlier this year:

“Women are driving the housing bubble, because they got to have the expensive house or it’s no good.” [ February 2, 2011 12:53 PM ]

“Bull. I’m 200% certified woman and would be perfectly happy in a 800 sq ft apartment with a decently sized balcony for my BBQ. My man is the one who “must” have the 2-door garage, huge backyard and all the dirt bikes and hot tubs and kayaks he can fill it with.
That house goes for $1.1M in Vancouver and our median salary is $40,000. I WISH I had your problem.”[May 3, 2011 3:09 PM ]

“Lately, I am sensing a shift in opinion among friends and family where more and more are complaining about the high prices of RE and whether it’s a good thing or not for the city and families.”

“Lately, I am sensing a shift in opinion among friends and family where more and more are complaining about the high prices of RE and whether it’s a good thing or not for the city and families, especially among the Xers and Yers who are mostly being priced out completely. I think the recent stories on Global TV just reflect that change in sentiment.”
– ‘Troll’ at vancouvercondo.info 12 oct 2011 11:37am [as previously discussed, this ‘Troll’ isn’t actually much of a troll]

Getting The ‘Financial Intervention’ From The Family RE Cult – “There’s a real blind spot when it comes to understanding the true cost of owning vs. renting. It’s impossible to have a rational, informed discussion when the people you’re talking to have their own set of imaginary facts.”

“I was recently ambushed by my family and endured what can only be described as a financial intervention. I got the “cheaper than rent!” lecture, followed by “get on with your life” and “it’s part of growing up”.

I am the lone holdout among my siblings, all of whom recently purchased “cheaper than rent” strata units in the suburbs that cost far more than their old rental units in town. Their mortgages alone cost more than they used to pay in rent. And of course this does not include strata fees, insurance, property tax, repairs, maintenance and any potential future increase in mortgage payments if interest rates go up in the next 3 decades.

When I pointed this out I got a blank stare followed by “but we don’t want you renting forever”. There’s a real blind spot when it comes to understanding the true cost of owning vs. renting. It’s impossible to have a rational, informed discussion when the people you’re talking to have their own set of imaginary facts. Like when they told me that “real estate doesn’t go down in price”, which is demonstrably false. When I mentioned that it had in fact gone down many times in the past and we happened to be witnessing the greatest global real estate correction in living memory I was met with more blank stares. They were clearly embarrassed for me that I had such an odd set of beliefs and eventually just gave up and talked amongst themselves about their futures flips and dream houses they would build with their imagined profits.

It should be noted that all of them purchased in the last 18 months, and none of them have sold or profited. Two of them arrived in cars gifted by my parents, as they can’t afford a car now. The fact that they can’t afford basic transportation now that their “cheaper than rent” condos are draining their bank accounts is lost on my parents who rewarded them for “getting on with their lives”. Two of them also spent most of the last year without functioning kitchen appliances and could not cook and/or store perishable food items to feed their families because again, the “cheaper than rent” condo cost so much they couldn’t even afford a $100 craigslist special. And again, they were bailed out when Santa Claus delivered shiny new appliances. I guess that’s also “part of growing up”.

I never myself bring up the subject of real estate around them, but it is THE topic when we’re all in the same room together. It didn’t used to be this way. And most of the people in the room have worked or did work for a financial services company so they should be able to do the basic math and realize their error.

I’m not against owning, and I don’t believe that real estate needs to be cheaper than rent to be worth buying. Sometimes when you pay more you get more. And I understand that they’re building equity so long as the prices stay high and they do the required repairs and maintenance to at least keep the place worth what they paid for it. The problem right now is that the home equity being built up is more than cancelled out by the drastically higher costs of owning. They’re betting on indefinite price increases because in reality they can’t afford these places and will need to sell sooner rather than later. They’re all talking about selling even though they only bought in 2009. And they all imagine they’ll buy something bigger and better with their profits.

As for my parents, I don’t know what they’re thinking. This is an emotional issue for them and they feel like realty savants because their modest home is worth more than they paid for it in the 80s. They’re financially bailing out their kids who borrowed house-sized mortgages for their starter condos, and pressuring their other kid to do the same. I don’t get it.

– ‘nobody you know’ at VREAA, 9 October 2011 at 11:46 am

A wonderful account; many thanks ‘nobody you know’.
It takes an immense amount of personal fortitude to keep your head when all about you are losing theirs.
You eloquently describe what other Vancouver housing bears have experienced in various forms of social interactions.
You also describe the inherent speculation in all purchases (“They’re betting on indefinite price increases”).
– vreaa

Such Stupidity Should Not Be Rewarded – “I have a relative that said that she and her husband would ‘buy their dream house’ when their east Vancouver shack, for which they paid $750K, “doubles or triples in value over the next few years”.”

“I have a relative that said that she and her husband would ‘buy their dream house’ when their east Vancouver shack, for which they paid $750K, “doubles or triples in value over the next few years”. She’s a high school teacher; he works in sales.
Such stupidity should not be rewarded.”
– VancouverContrarian at greaterfool.ca 4 Oct 2011 at 10:03 pm

A City Obsessed – “I can’t remember the last time I went out with friends and real estate didn’t come up. Don’t we have anything else to talk about?”

“I was at the grocery store and ran into someone I hadn’t seen in several years. We caught up for about 90 seconds about work and kids and what neighbourhood she was living in and then (totally unsolicited) the person started going into defense mode why she was renting. I told her that I was also renting and that I thought it was going to be the correct solution in the medium term. What struck me was how quickly the emotions as well as the topic of home ownership came up in the conversation. Real estate is top of mind for everyone in this town ALL the time, whether you’re a bull or a bear.”
– buffates at vancouvercondo.info 1 Sept 2011 6:46am

“We are obsessed, as a city. I can’t remember the last time I went out with friends and real estate didn’t come up in some way, in the conversation. Odd, isn’t it? Don’t we have anything else to talk about?”
– pricedoutfornow at vancouvercondo.info 1 Sept 2011 7:15am

“I ran into an ex-colleague while out biking. After greetings, without skipping a beat, he went into a 2 minute run-down of his housing moves and deals over the last five years, culminating in proudly telling me exactly what his westside house was now worth. He literally became breathless during the last bit.”
– westsidefrank, via e-mail to VREAA, 30 Aug 2011

“When I remember my previous life, in European cities: the topic was never ever mentioned, or just a brief sentence like: “I just bought a HOME.”
– painted turtle at vancouvercondo.info 1 Sept 2011 7:23am

Psychologist In Denial – “His house is the sum total of his life’s savings, the thought of it coming down 30% is more than he can stomach. He refuses to read about the US housing crash; he might even deny its existence.”

“People get very defensive about their housing investments. My own father is like that. He refuses to countenance the possibility that housing values will ever decrease in Vancouver. A retired psychologist, he poured just about all his money into his gargantuan home. Given that his house represents the sum total of his life’s savings, the thought of it coming down 30% is more than he can stomach, apparently. He even refuses to read about the housing crash in the US. I suspect he might even deny its existence.”
– Jim at Ben Rabidoux’s ‘The Economic Analyst’, 31 Aug 2011. [Hat-tip to Ben, whose site is a daily must-read for anybody trying to keep up with economic developments in Canada.]

Wow, quite a story.
Illustrative, and also poignant.
Retirees are overly dependent on RE for their financial well-being.
Blind hope is not a good financial planning strategy.
Being a (presumably) intelligent professional is no guarantee that you will be wise with your finances.
There is a strong tendency for people to ‘talk (and act) their book’.
Psychologists are human too.

It is very difficult for most Vancouver owners to apply sensible analysis to the market while past performance, optimistic headlines, rote slogans, BBQ-talk, and their own hope, distracts them.

– vreaa

The Costs Of Inheritance – “Waiting impatiently for loved ones to die so you can use their money. Nice.”

“In 2006, a study showed that about 1.5 million Canadians were relying on their inheritance as the primary source of capital to fund their retirement. On average, Canadians expected to receive a total of $150,600 in cash or cash equivalents, and $151,200 in non-cash inheritance. But in reality, inheritance sums received were significantly less – the average inheritance received that year was $56,000.” [BMO report, July 2009]
“36% of the wealthiest families have received an inheritance; the average amount of that inheritance was $136,000.” [G&M, 8 Nov 2010]

—
[Following responses to Snats, at VREAA, commenting “Waiting impatiently for loved ones to die so you can use their money. Nice.”]:

“I had a friend from high school with that exact plan – then her brother died and she kicked her inheritance-to-be plan into high gear. She convinced her mother to sell her house and move in with her and her boyfriend. The mother agreed, put the house on the market for about $1.5M (Kitsilano) and after paying off the reverse mortgages and deferred taxes mom had acquired over the years to help out her offspring, daughter realized less than $150,000. This was not exactly the plan the daughter had envisioned but I wonder if that is what is in store for many a baby boomer.”
– rmac at VREAA 22 Aug 2011 10:12am

“Yeah, my friend had the same plan until his widowed father remarried a much younger woman who is making sure that she will get the house. His wife’s parents are in care (actually two care facilities) which is costing over $10,000 a month for housing and care. They are paying for their care through their real estate equity.”
– Vangirl at VREAA 22 Aug 2011 11:17pm

—
Behaviour around the issue of inheritance is complicated, even at the best of times. Expectations of inheritance may lead to tension amongst siblings, ambivalence about parents’ longevity (“Waiting impatiently for loved ones to die”), distress about parents spending their money on care (or anything else), and a multitude of possible social shennanigans.
In a time of a speculative mania in housing, when the market value of an average property is so high compared to income that it becomes a life changing lottery win, issues around inheritance become proportionately exaggerated.
In Vancouver, real estate is the largest source of expected future inheritances. -vreaa

Talking With Friends About Real Estate

“I have stopped trying to convince people in Vancouver that real estate is overvalued. What’s the point? It’s not worth my effort. I find it’s much more satisfying to agree with them-they have no idea I’m being sarcastic. When they say things like “Real estate only goes up” and “Vancouver is the best place on earth!” I smile and nod.
I’ve found that the “real estate always goes up” argument is dying in other places of the province. People on my old street in Kelowna saw their property values go from around $500k in 2008 to now $350k-they are no longer cheering so much for real estate there. Others have condos that are underwater and are having problems finding tenants. I do believe this will happen here too, it’s only a matter of time before people realize that real estate values are no longer soaring and it’s harder and harder to find justification to buy.”
– pricedoutfornow at vancouvercondo.info 26 Aug 2011 9:07am

“I was talking to a colleague about my views of Vancouver’s impending crash but had to stop as I didn’t realize that her husband is in construction and a crash would really hurt their income. It was the look of total fear on her face when I listed the facts that made me stop and ask why she looked so dour.
It is a weird feeling nowadays when I talk doom and gloom wrt real estate as I feel that it is starting to get through and my facts make people uncomfortable. When this happens I try and think something that will make the person feel better such as “well you bought years ago, you’ll be ok”. I just wish that all those caught up in the rush to the top had taken the same tact when berating me about throwing my money away on rent and how stupid I was to sell.”
– YLTN@Work at vancouvercondo.info 26 Aug 2011 9:29am

“Last evening, I was in a real estate conversation with my wife’s family and I should win an Academy Award for my acting skills. (Lot’s of nodding and smiling)”
– specialfx3000 at vancouvercondo.info 9:39am

Spot The Speculators #48 – “Lots of locals buy houses around me, and they all say foreigners are making houses unaffordable. They do not see the irony in this.”

alx at vancouvercondo.info 15 July 2011 1:28pm –
“Got a friend who’s getting married. She and her soon-to-be husband were renting in east Van before and they talked about how rent was reasonable and houses were too costly to buy. But now that they are getting married, suddenly “buying a house” is a given.
He said he prefers a house over a condo because for the extra he pays, he can get a tenant that helps with 1/3 of the mortgage. He hopes the interest rate doesn’t go up too soon. He wants to buy in east Van.
It’s sad and telling of the times and city we live in. No one questions why we should already count on being a landlord by buying a house.
Why should interest rates stay low for a long time?
Why should crappy houses cost $1 million?
Why did this crappy house cost less than half that, just a decade ago?
No, they are not rich. They are not foreigners. Seriously, lots of (local) people buy houses around me, and they all say foreigners are making houses unaffordable. They do not see the irony in this. I did not even try to persuade them to do research. I am mentally exhausted from trying to deter people from taking on a pile of debt on an asset sitting on top of a cliff.”

Another example of a seemingly innocuous ‘family’ primary residence purchase that is based on the expectation of ever continuing supranormal price gains. With forced landlordism to boot. – vreaa

“Three friends are planning on moving away due to the disproportionate cost of living:income ratio. One is going to Calgary and the other two are going to UK and Australia.”

Vansanity at vancouvercondo.info 19 Jul 2011 3:40pm –
“This week I’ve had the conversation with 3 friends that are planning on moving away due to the disproportionate ratio between the cost of living:income.
One is going to Calgary and the other two are going to UK and Australia (Australia has its own housing bubble to deal with but it sounds like the incomes are higher in their field).”

“I sold my condo in Surrey and moved into a rental townhouse in Burnaby. My sister explained to me that I didn’t understand the importance of leaving real estate for my children.”

MBA at VREAA 5 July 2011 7:30am –
“I sold my condo in Surrey and moved into a rental townhouse in Burnaby. My sister to me explained that I didn’t understand the importance of leaving real estate for my children. I didn’t find that argument compelling. I was planning to have kids while she already had kids and a house in the Fraser Valley. I was moving specifically because I wanted to be a better parent. If housing prices continued to rise, I was never going to be able to move “up” out of a condo anyway, a decidedly unfriendly place to raise children. But more importantly, I was spending 2 hours a day in traffic commuting over the bridge AND my wife needed to work full time to feed the mortgage and strata fees. I decided that my children would be better served having me home for those two hours a day than they would be from this etherial real estate winfall when I die in 60 years. That’s without addressing the inconvenient logic that I pay less in rent now than the interest portion of my mortgage + strata fees + property taxes + levy to fix the roof I was paying in the other place. I am now able to put 10% of my paycheque plus all of my wife’s part time pay directly into savings. I think my kids will be ok because they will have a father they get to see and a mother that can afford to stay home with them full time. I still don’t have kids, but I’m pretty sure when they are adults they will approve of the choices I’ve made on their behalf.”