“We spoke to a friend of ours yesterday. Even though she has purchased a house, she wants to keep (and rent out) the condo she’s living in, because she thinks prices will only go up.”

“We spoke to a friend of ours yesterday. Even though she has purchased a house, she wants to keep (and rent out) the condo she’s living in, because she thinks prices will only go up. She estimates her condo to be worth $530K, and rent she would receive to be $1800/mo. After taxes and condo fees, this appears to be a yield of 3%, without taking into account repairs/upkeep on the unit itself. She’s getting a one-year fixed rate of one point something percent to finance the thing. Sounds crazy to me!”
– from ‘s’ via e-mail to VREAA 13 Jun 2013

Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”

“I am currently renting in West Van. It has been difficult to find decent, “affordable” rental accommodation on the North Shore. For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted.
Went for 23% below the list price. Owner been in the place for 11 years, and over that time, the value of the property increased on average 5% a year. I negotiated hard, walked away twice, and eventually the seller caved, just like I knew he would.
I’ve been renting for 5 years now, ever since a health crisis with one of my young children moved me back here. I was the bear amongst all my peers who are all “owning”. I still think there will be a crash in the Lower Mainland – but I think it will be an uneven crash. Certain areas will crash worse than others. I don’t think the entry level house market in West Van will crash. I think it will take a 10-15% drop and then move sideways or at inflation for a generation.
There is some value in staying in one place.”
– chumpy le chump at VREAA, 2 Jun 2013 4:36pm

All the best with your purchase, chumpy.
Does the “few hundred more per month” include all expenses (and assume no downpayment?). Share the math if you care to.
Further:
That’s 70% increase over 11 years (5% p.a. compounded)? Is that representative of the price increases on similar properties?
As we’ve said before, we expect all property types to revert to long term means; we don’t expect any to somehow be exempt.
– vreaa

A Bed in the Bathroom, Why Not? [Let Us Count The Reasons…]

“Here is another great Vancouver rental listed on Craigslist [link no longer active]. A bed in the bathroom..”

“Rental information:
Newly finished 1 bedroom with own ensuite. Furnished.
Access to dining room, living room and kitchen on main floor.
$500/month includes utilities, washer and dryer, and wireless internet.
Close to transit and shops.
No smoking. No pets.
Perfect for international students and short term renters.”

– from ‘Vancouver rentals: A Bed in the Bathroom, Why Not?’, vancitybuzz.com, 28 May 2013 [hat-tip space889]

Outrageous!
The underlying message, of course, is that we are Tokyo.
Again, consider this idea in relation to Canada’s vast expanse of land.
The bubble continues to grossly distort our thinking.
– vreaa

The Rare Individual With A Negative Ownership Premium

“I love moving. The longest I’ve ever lived in one apartment is 3 years. I usually move every year or two. Sometimes I move after only a few months. Some of my moves have been because I was renovicted by the landlord. Sometimes I move because the landlord never does repairs and I am sick of taking him to the RTB. But even if there are no problems with the apartment, I’ll start thinking about moving after one year. After two years in the same apartment, I start getting really antsy to move. Real estate bubble aside, I could never buy real estate because I could never commit to live somewhere long term. I don’t really understand how people do it? Don’t they get bored with their homes after a few years? Don’t they get tired of looking at the same view every day for years on end?”
– perma-renter at VCI January 22nd, 2013 at 4:31 pm

“Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”

7541 Kerr Street, East Vancouver (Fraserview)
2518 sqft SFH on 45×110 lot

“We considered renting this SFH a few months ago. It stayed on the market for a few months, looks like the landlord never got any tenants (rent went from $2500 to $2200) and today when I walked by – – it’s for sale for $999,999! Gee… tough choice, rent for $2200 a month or… buy and have a mortgage of $4,310 per month (based on 3.09%, 25 year, 100k down). Why would anyone buy?
Thanks, I think we will remain renters until prices come back down to earth. Or never buy in Vancouver.”
– pricedoutfornow at VCI 5 Apr 2013 7:38pm
—

Think of this situation like this:
This landlord can’t find anybody who will pay $2,200 per month to actually use the house as a home, but they are hoping to find somebody who is prepared to pay over $4,310 per month to make use of the house as a financial instrument, by using it to bet on increasing prices.
The house’s fundamental value is that which one could calculate based on a yield of less than $2,200 per month. The speculative market has been valuing it at substantially higher than that. As the speculative mania unwinds prices will fall to reflect fundamental values.
– vreaa

“Rentals are being phased out in our condo building because they are just too hard to manage and they bring down the value of the units.”

“Rentals are being phased out in our condo building because they are just too hard to manage and they bring down the value of the units.”
– comment by Kensington, 27 Jan 2013 4:00pm below ‘2012 a record year for Vancouver rental housing’, CBC News 27 Jan 2013

It’s still all about ‘value’ (read: price growth), and not about ‘income’.
The changes contemplated by this strata usually occur in red-hot price growth phases.
During weakness, when prices are descending, the potential for rental income becomes more important in the calculation of fundamental value, and in making a property attractive to buyers (thus offering more support to prices).
This strata appears to be late to the party.
– vreaa

“These things are obvious when viewed from the outside.”

“Had a nice talk with a doctor department head tonight. He moved here from Chicago where he’s still paying the mortgage on an underwater property. He looks at the prices here and he can see that it doesn’t add up. He was wondering when the tipping point would come for Vancouver. In any case, he has no intention of buying here for now. These things are obvious when viewed from the outside.”
– N at VCI February 8th, 2013 at 12:18 am

When a group is trapped in the jaws of an asset bubble, the vast majority of participants don’t have the capacity to ‘view’ it ‘from the outside’.
With perspective, the speculative mania can be seen very clearly for what it is.
– vreaa

“Our landlords are booting us out. My wife has been onside until now, but with the threat of homelessness she’s wavering. I feel that buying now is akin to climbing out of the lifeboat and back onto the Titanic.”

“Our landlords are booting us out of the house we’ve been in for 5 years. (She’s divorcing him and booted him out, and we’re next down the eviction chain as he’s moving in when our lease expires in a few months.) So we’re desperately looking for rentals in the same neighbourhood (Cambie) due to schools and work. Or we’ll buy somewhere like North Van and uproot everyone but only once.
After being around these boards for 5+ years I feel that buying now is akin to climbing out of the lifeboat and back onto the Titanic. The wife has been onside until now, but with the threat of homelessness she’s wavering. So I’m trying to decide how big the potential downsides are. Pay $3k in rent for 1-2 years then buy (and deal with 2 moves) or bite the bullet and buy now and pay that much for the mortgage (until rates go up). The potential savings by renting and delaying a purchase is what I’m trying to estimate.”
– /dev/null at VCI 22 Jan 2013 11:21am

“Sorry to hear that. Here is my view. We (a family with 2 kids) are renting half-a-duplex in Burnaby for $2000/month for about 5 years. Good area, decent schools, commute is ok. The landlord is a nice person, but has (and always had) thoughts about splitting the place into two units and rent them for $1500+$800 (this trick worked for a while for the neighbour landlord, until last year when they have started having problems with finding good tenants for the downstairs unit). I am tracking the rental pool in the area pretty closely and found that a lot of 5bdr/SFH in the $2300-$2500/month range entered the market last year (starting late summer I would say, most of them accidental landlords). Places like ours are steady in the $1800-$2100 range for the last 5 years, and the influx of of those 2300-2500 homes definitely helps keep those prices from growing.
Last fall, I had a number of conversations with my landlords and gave them the full picture, mentioning that we would have no problem finding something decent in the very same area. Of course, we were perfect tenants all these years. Apparently, it worked out, everybody seems to be happy now.
Back to your situation. First, I think buying something just because “we have to move out of here anyways” is a plain bad idea. Do the math and then decide. Second, I personally wouldn’t mind renting for another few years in your situation, even if it comes at a bit higher price comparing to the deal you have now. Rental pool in our (yours and mine) sector is improving, it’s renter’s market.
Yes, I know moving is painful. I know your wife wants a nest (mine too). Yes, – peer/parent pressure, accidental landlord risks etc. But the risk of losing money by buying something is just way too high these days. My $0.02.”
– C.Junta at VCI 22 Jan 2013 12:51pm
—

Great analogy from /dev/null.
Whether you’re on the Titanic or in a lifeboat, the speculative mania is at the very least time-consuming, inconvenient, anxiety-provoking, and distracting.
– vreaa

“A friend of mine had to ditch his Vancouver Kitsilano rental condo because every month he was dishing out expense after expense but his rental income didn’t come close to covering the expenses.”

“One can have problem tenants even in great areas in Vancouver based on my experience. However, unless you are paying almost entirely in cash, you will have a losing investment. A friend of mine had to ditch his Vancouver Kitsilano rental condo because every month he was dishing out expense after expense but his rent didn’t come close to covering the expenses (with a 20% down payment). My family has OK luck with Vancouver rental property but that’s only because they paid cash but even then some of their tenants have been problematic. Victoria has worked OK, too, but that’s because we bought years ago – again the cash flow just isn’t there if you were to buy today. I will say I have had excellent results over the last six years in Saskatchewan – specifically Regina. And I’m still buying there. Even today, you can still buy a SFH for $300,000 or so in a good part of town and get $1800 month rent plus utilities and get your pick of good quality tenants. And that’s without an in-law suite – you just buy a place in a good part of town, rent it to tenants with good jobs and not worry too much. You can get other homes at even better cap rates in not so nice parts of town but they will be high maintenance and definitely not suitable for the out of town landlord. With a vacancy rate of 0.8%, it is actually easier to get good quality tenants with stable jobs in Regina than in Downtown Vancouver, believe it or not.”
– westar99 at RE Talks, 15 Dec 2012 4:11pm

Matthew Klippenstein Looks Back On Being A Vancouver RE Bear Since 2006 – “Although he and his wife earn well above the average household income in Vancouver, they’ve decided to continue renting.”

“This might be of interest to readers; as a Burnaby-ite (and way-premature housing bear) I noted the Canadian housing and debt situations in the first article I wrote for Green Car Reports about electric cars in Canada. [excerpt below]
I don’t want to throw the blog off-topic, but figured the link might be of mild amusement. I guess the older 2006 MacLean’s article reference might qualify under your “delaying buying” category. And if you had one, “premature calls of the top”. 🙂
– Matthew Klippenstein, via e-mail to vreaa, 22 Jan 2013

“Is that a housing bubble? A January 2013 cover story in Canada’s national newsmagazine MacLean’s argues that the housing market has become a popping bubble. While the U.S. housing bubble peaked in 2006, Canadian real estate peaked in spring 2012, with household debt reaching levels seen in America at the peak of the U.S. housing market. If Canadian consumers pay down their debt in coming years, the higher up-front costs of electric cars might stifle sales, even relative to 2012. (Full disclosure: the author was quoted in the above-linked magazine seven years ago arguing house prices were a bubble back then. He and his wife used the money saved by renting to purchase their plug-in Prius last fall.)”
– ‘Plug-In Electric Car Sales In Canada: A 2012 Review’, Matthew Klippenstein, Green Car Reports, 21 Jan 2012

“Every day Matthew Klippenstein, a 30-year-old fuel-cell engineer, goes online to wait for the sky to fall on the housing market. “House prices make me angry,” he says. Although he and his wife earn well above the average household income in Vancouver, they’ve decided to continue renting. “We’d rather be able to enjoy our lives and be able to afford to have kids.”
Klippenstein watches local housing prices on the site RealtyLink. He feels prices are inflated, and bases this view on information he’s gleaned from blogs forecasting a drop, and on the logic of Canadian financial gurus like Eric Sprott. … Klippenstein thinks the market will correct itself in the next 18 months. “When the bubble bursts,” he says, “there will be a lot of people who got swept up in a speculative fever, who’ll lose a lot of money.”
– from ‘Bubble, bubble, toil and trouble’, Kevin Chong, Macleans, 29 May 2006 [yes, two thousand and SIX – ed.]

“Life has worked out very well. I’ve learned to laugh at myself. 😉
We do still rent (the money saved did after all help us get a plug-in car!) and most importantly, are content to do so. Planning to move in the next year or two, since our place is getting a bit small with the three of us. Though admittedly, the problem is more than likely “too much baby stuff” than “not enough square feet”. Timing will somewhat depend on how fast and far the market falls.”
– Matthew Klippenstein, via follow-up e-mail to vreaa, 23 Jan 2013
—

Thanks for all this, Matthew.
Vancouver was indeed already locked in the jaws of a speculative mania in real estate by 2006.
Earlier, actually.
– vreaa
—

Matthew Klippenstein blogs at ‘Eclectic Lip‘.

Spot The Speculators #97 – “We are moving to Burnaby in March, so we decided to keep our house in North Vancouver and put it up for rent.”

“We are moving to Burnaby on March, so we decided to keep our place and give it [for] rent, it has never been rented before, very well cared and Very nice designed two levels, 3_Bed, 2_Bath, 1 seperate entry Den, located in one of the nice and quite neighborhood.
You have the option to choose(Furnished: $2700 or unfurnished: $2500).” – craigslist ad, 21 Jan 2013 [hat-tip Guy Smiley on VCI]

The ‘speculator’ classification is based largely on the assumption that they have purchased in Burnaby.
– vreaa

“Our landlord subsidized our housing costs to the tune of $200,000 cumulative over 5 years.”

“I left Vancouver. Lived in the same amazing apartment for 5 years while dear Landlord subsidized our housing costs to the tune of $200,000 cumulative over 5 years. After 5 years of no rent increase, you would think that on leaving they would be ready to raise it !!!!
Wrong – – – –
Rent is down 8.5% on a nominal basis, 20% on inflation adjusted bases and if you are taking out strata/taxes, rent is down even more!!!
I would so love to go back to it – but now at that price point there is serious inventory and competition so the landlord is being aggressive to get the vacancy time as low as possible.
Did we throw money away on rent? No !! We lived it up, had a great place, and saved $200,000 compared to the cost of owning.”
– yvr2zrh at VCI January 19th, 2013 at 1:03 am

Author Of ‘Real Estate Investing for Canadians for Dummies’ “jumped into the market 3 years ago with a 2 BR apartment in Mount Pleasant”; Reports Ownership Cheaper Than Renting; Leaves Out Math

“This columnist jumped into the property market three years ago with a two-bedroom apartment in Mount Pleasant. The mortgage payments at the time were on a par with where rent was heading, so the move made sense. Despite increases in strata fees and property taxes since, the move continues to make sense – perhaps more sense than ever.
Tallying mortgage interest, property taxes, strata fees and assessments, as well as home insurance paid in each of the past four years versus rent and home insurance paid in 2008 (the last full year in which rent was paid) shows that home ownership has steadily cut household expenses. Preliminary figures for 2012 indicate savings on housing costs of more than 20% versus 2008.
Poor affordability tends to give first-time buyers in Vancouver fewer options than those in other cities, but the pay-off – for those who can manage it – is significant.
So long as mortgage costs remain in check, the payoff seems set to continue, but low interest rates and increases in rental costs have so far put accounts in this buyer’s favour.
(The exit strategy and ultimate return on investment is a significant risk factor, of course, but we’ll leave that matter for another column.)”
– from ‘Rental market tight despite rise in Vancouver vacancies; apartment sales projected to hit record-breaking pace’, Peter Mitham, Business In Vancouver, 8 Jan 2013 (“Peter Mitham has written about British Columbia real estate since 1998 for Business in Vancouver and many regional, national and international publications. He is co-author of “Real Estate Investing for Canadians for Dummies”)
[hat-tip Sarbaz]

Priceless stuff. And that’s a major problem — no ‘price’ – no numbers, no math.
We’d love to see the details. The claim seems to be a stretch.
Just for a start, is this a comparable 2BR to the prior rental?
—
Also, interesting to note that an author of a RE investment text:
1. “jumped into” the property market, and
2. talks of the ‘return on investment’ – for his home!
– vreaa

“People are listing properties for CRAZY prices hoping uninformed renters will pay their crazy mortgage.”

“$2000 / 3br – 2000ft² – Renters Don’t Pay These Prices (North Shore)
Renters don’t pay these crazy prices. There is more rental inventory coming on every day, and there will be even more at lower prices next month. People are listing properties for CRAZY prices hoping uninformed renters will pay their crazy mortgage.
All Craiglist prices are very negotiable and in the North Shore about $1 per square foot is fair. Unless the place is amazing (which every landlord thinks their property is) don’t pay much above this rate!!!”
– from craiglist, 5 Jan 2012 [hat-tip edinacloud]

“I took a big gamble and bought a house in the Oakridge area a few years ago for around 700K, on limited income. I sold it last year because I knew I got lucky and didn’t want to push my luck.”

“I took a big gamble when we bought a house in the Oakridge area a few years ago for around 700K on limited income and sold it last year because I knew I got lucky and didn’t want to push my luck. Now we’re renting a condo in Vancouver.”
– Dashgall at VREAA 14 Dec 2012 10:45am

This is an example of speculative behaviour being bailed out by luck. Despite that, ‘Dashgall’ does deserve some respect, not for the initial bet (which was, indeed, a rash gamble), but (1) for having the insight to sell rather than “push (his/her) luck”, and (2) [special points for this one] for being able to admit that the profit was the result of luck, rather than attributing it to one’s own new-found investment genius (the commoner explanation used in this scenario).
Only a very small percentage of market participants will end up having sold in even the vague vicinity of the top. The majority will remain invested in the RE market one way or another, and ride their paper-gains down as the market collapses.
– vreaa

“I rent at Park West in Yaletown and was just at the holiday party, met several of the people in this building. I was under the impression that Yaletown was filled with speculators, but it seems that many of the people who live here are renting.”

“I rent at Park West in Yaletown and was just at the holiday party, met several of the people in this building. I was surprised by how many of them are renting. I was under the impression that yaletown is filled with speculators, but it seems that many of the people who live here are renting.”
– yvrness at VCI 12 Dec 2012 9:15pm

“Meaning of course that most of the condos are owned by speculators and are being rented out while their fortune grows.”
– Eddie, ibid.

“I would say about 50% of downtown condos are rented. That actually confirms the amount of speculation – just not by the people living in them. The owners live in their parent’s Surrey basement suites in order to afford the negative cash flow.”
– Anonymous, ibid.

Kelowna Garden Shed Rented Out To ‘Homeless’ Couple Makes CBC News

“A B.C. woman has been fined $500 for renting out a garden shed to a homeless couple and their three dogs.
A power cord that ran from the woman’s house in Kelowna, B.C., supplied electricity to the small metal building, for which she was charging rent of $200 per month.
– from ‘Homeless couple, 3 dogs, lived in garden shed’, CBC, 7 Dec 2012 [hat-tip Nemesis]

Baloney Budgets – “I understand you’re trying to make Vancouver look like a place people would want to live. Every one of these case studies is misleading, and you are doing people a disservice by offering them as accurate.”

“Every one of these case studies is misleading, and you are doing people a disservice by offering them as accurate. I understand you’re trying to make Vancouver look like a place people would want to live (and therefore make money off assisting them with their relocation), but please exercise some ethical restraint. 1) There is nowhere in Kits Allison can buy a month’s worth of groceries for $170, unless she’s living off of plain oatmeal and carrots. Shopping at IGA, Safeway or Choices could easily run a person $100 per week, not including much protein, and she can forget the occasional bottle of wine. 2) Gerald is spending almost 50% too much on his apartment. Back before people thought of housing as a place to sleep instead of one more status symbol, the lender rule was no more than 28% of your gross salary should go towards housing. His $36k/year is $3000/month; 28% of that is $840, so his $1225 rent is $385 too high. An actual financial planner would tell you the same thing. But since he can’t rent a studio in Coal Harbour (or maybe anywhere in Vancouver) for $840, he’d be stuck in a basement suite in Dunbar or Kits. Do any of your prospective clients know how much of the city lives in someone else’s basement? Also, what about paying off his student loans, or did he luck into rich parents? 3) You have not factored in the impact of interest rates returning to their long-term norm of about 7% (never mind the rate reset they’ll face in a few years, courtesy of the bank). What does that do to Mara and Jeff’s mortgage amount? Also, where are these people eating out so cheaply? A nice dinner plus wine four times per month at the listed total means their final bill with tip is $60 every week. Please show me a restaurant where a couple can get a “nice dinner” including a bottle of good wine for $52 including tax; I’d like to go there. Do they have any existing debt to service? 4) Same interest rate problem as Mara and Jeff. Misleading people as to the actual costs of living in this city helps no one but yourselves.”
– Dan, commenting below an article at 2vancouver.com titled ‘Vancouver Money and Budgets: A few case studies’ [23 Nov 2012], that sketches out proposed budgets for people in Vancouver in 4 different situations. As Dan points out, the budgets have elements of fantasy about them. [hat-tip to VCI; posted here for the record.]

It’s expensive to live in this city, largely because of costs associated with accommodation. This is very, very bad for Vancouver: It forces young people away, and diverts resources from other areas of the economy. We’d bet that relocation companies like ‘2vancouver.com’ have some relevant stories they could tell. – vreaa

“Usually I see 5 or 6 three bdrm rental units for rent in Vancouver or Burnaby at $1600 p.m. or less. But recently that figure has gone up to around 35 to 40.”

“I’ve been looking at 3 bdrm rental units the past year. Usually I see 5 or 6 units for rent in Vancouver or Burnaby area @ price 1600 or less. But recently that figure has gone up to around 35 to 40.
You can get decent place for 1350 to 1550 per month with around 1100 sqft.”
– house burden at greaterfool.ca 17 Nov 2012 3:49am

Counterintuitive to some, the rental market will also weaken as RE prices soften and drop.
– vreaa

Cost To Rent A Luxury Two Bedroom Unfurnished Apartment In Desirable High Income Cities, And In Vancouver

– from ‘Sticker shock: Cost of living varies widely’, Mercer, 9 July 2012 [hat-tip clive]

Vancouver rents are pretty much in line with incomes; RE prices aren’t, yet.
– vreaa

“If house prices here don’t revert, ever, when I die at 100, I will have lived 100 years in rentals.”

“If I die tomorrow, I would have lived my entire 38 years (whole life) in rentals. And if house prices here don’t revert ever, when I die at 100, I will have lived 100 years in rentals, too.”
– Ray at VREAA 12 Sep 2012 12:35pm

“Would I buy in this market if I was in a “normal” situation? No. Does selling now and renting make sense for my family personally, given our current situation and lifestyle? No. Ergo, we’re staying put.”

“We love our house and location, will have paid it off entirely (and way early) in a couple of years, and will be able to put all the money we currently pay in mortgage into funding an early retirement. We’ll still have property taxes and maintenance, but it’s a helluva lot less than we’d pay to rent a similar home in our neighbourhood, and these costs can be covered completely by renting out a spare room for a few months in the summer to an international student if we want to do that (we have done it and enjoyed it in the past, so it’s familiar territory). Our family is in Van, so are both our jobs, so moving to another city makes no sense. Another reason that I am not interested in renting, besides the potential issues with crappy landlords, instability and the lousy quality of a lot of rentals I’ve seen is that we have lots of pets and fish tanks, and renting isn’t feasible for us. It’s hard enough to find rentals with just kids…try telling a landlord that you also have multiple cats, two large dogs and three 100 gallon plus tanks and watch them run screaming.
Would I buy in this market if I was in a “normal” situation? No. Does selling now and renting make sense for my family personally, given our current situation and lifestyle? No. Ergo, we’re staying put.”
– RESkeptic at VREAA 17 Sep 2012 7:49am

Sounds sensible, and we agree with the logic entirely.
Bearish opinions voiced here are not to be confused with a recommendation that each and every owner sell their home.
For people where a drop in the market value of their home of 50% is less inconvenient than the hassles of renting, owning continues to make sense.
– vreaa

“A few months back, when I told my landlady, as I often have in the past, that I think prices will fall, she said, “Why would they?”

“[The National piece] resulted in “bubble” and “crash” being said on TV. And that will be enough to change the tone of the conversation and make people think about whether we might be at the top.
A few months back, when I told my landlady, as I often have in the past, that I think prices will fall, she said, “Why would they?” That’s the attitude that has propped up prices: the failure to even consider price drops. Once that bedrock belief is brought into question, nature will be free to take its course.”
– N at VCI 21 Sep 2012 8:55am

Speculation in reverse.
We agree that, once Vancouverites see that prices can fall substantially, the (superficially) ‘virtuous’ cycle that is a speculative mania, will turn vicious.
– vreaa

“My deflation bet: I rent a lovely condo on Vancouver’s waterfront. I have no interest whatsoever in buying real estate here. My long term savings are mostly in cash.”

“It seems that consumer spending is the biggest force in the economy…and I wonder if consumers aren’t getting tapped out…financially and demographically. I wonder if they have used too much credit to buy “stuff” and are now at risk of setting off a vicious circle of deflationary trends if either the economy slows or interest rates rise…or both of those things happen. I wonder if manufactures made a boo-boo and figured that consumers would keep buying “stuff” and now those same manufacturers are sitting on warehouses full of inventory…financed by banks…and if that inventory doesn’t move the manufactures will have to lay off workers…making their contribution to the vicious circle of deflationary trends.” …
“My deflation bet: I rent a lovely condo on Vancouver’s waterfront…I have no interest whatsoever in buying real estate here. My long term savings are mostly in cash.”
– Victor Adair, Senior Vice President and Derivatives Portfolio Manager, Union Securities, at moneytalks.net 10 Sep 2012

“‘Love It or List It Vancouver’ will feature families in the city struggling with homes that no longer suit their needs.”

“Former “Bachelorette” star Jillian Harris is taking the helm of a new spinoff of “Love It Or List.”
The Canadian interior designer and TV personality will co-host “Love It or List It Vancouver.” …
“Love It or List It Vancouver” will feature families in the city struggling with homes that no longer suit their needs. Harris will show homeowners a design in hopes of persuading them to stay put. Meanwhile, a real estate agent will work towards getting them to relocate to a new property. Her new co-host will be announced at a later date.
The series is slated to launch next winter.”
– Vancouver Sun, 13 Jun 2012
—

“Jillian Harris will be hosting Vancouver’s love it or list it and they announced her sidekick. Never heard of this guy before but I think he’s not a real realtor but an actor that the network brought on board…hmmm… I was hoping they would get Mike Stewart or Ian Watt some well known realtors who would most likely be great on the show but instead they went with someone else so who is this guy is he really a licensed realtor?” – red_lantern at RE Talks, 6 Sep 2012

“She, not he. It just happens she rents a condo from a friend of mine”. – unicas, ibid.

“Rents? HAHAHA.” – timber2012, ibid.
—

South Surrey Speculators – “It sold for $1.85M. Six weeks later and I assume it is time for possession and lo and behold it’s on craigslist, for rent at $5K/month. At 5% down and a 4% mortgage they would need to pay $10K/month and they think renting it for $5K/month is a good financial move?”

“I looked at a home in South Surrey last June (I own a place in Burnaby but plan on moving there for a variety of reasons – I’m looking at next spring / summer to make the switch but go to see a few places to get better feel for the neighbourhoods). The address is 3312 144A St and it is a lottery home from 7 years ago and listed at 1.95 million. I didn’t think much of it, really weird layout and other issues. Somehow it sold a month later for $1.85 million which was very surprising. Anyways….
6 weeks later and I assume it is time for possession and lo and behold I see it on craigslist [see above].
Trying to rent it out for $5K/month… At 5% down and a 4% mortgage they would need to come up with roughly $100K and pay $10K/month and they immediately think renting it for $5K/month is a good financial move. This is going to be fun to watch.”
– an observer at VCI 7 Sep 2012 10:29pm
—

“Investors are prepared to buy houses they will rent out at a loss, just because they think prices will keep rising—the very definition of a financial bubble.”
– ‘The global housing boom. In come the waves’, The Economist, 16 Jun 2005

“Currently I rent here in Vancouver as it’s the only fiscally sane option. Returning mortgage rules to responsible levels makes it far more likely that one day I’ll be a first-time buyer.”

“We do clearly have a bubble and it will burst. It’s wreaking havoc on Vancouver’s ability to retain creatives, families, and increasingly even high-earning professionals. It has a profound negative effect on quality of life here. I am just starting a family. Currently I rent here in Vancouver as it’s the only fiscally sane option. Returning mortgage rules to responsible levels makes it far more likely that one day I’ll be a first-time buyer.”
– Many Franks, comment in the Georgia Straight, 3 Aug 2012 16:27

“We keep trying to pay up in rent to get a bigger, nicer place. They are invariably listed for sale.”

“We keep trying to pay up in rent to get a bigger, nicer place. They are invariably listed for sale. I’m talking three in the last week that my unsuspecting wife finds on craigslist. Pretty soon this is going to piss her off. I’m scared.
All I can say is thank God we’re not forced to move yet. That was three out of three by the way.”
– Thomas Holloway (Zerodown) at VREAA 23 Aug 2012 11:37am

The mania has made renting less stable and more of an inconvenience than in more normal market environments.
– vreaa

“We have decided, again, not to buy this year. Been the same since 2007.”

“We have decided, again, not to buy this year. Been the same since 2007. But we are going to move to either Bowen Island or Squamish to rent while the wee ones are still at home. Looking at a nice place on Bowen that was just taken off the market – absolutely gorgeous house listed at $599K that is renting for $1800. By my math that’s a monthly price:rent of 333 or 27.7 annualized.”
– ArthurFonzarelli at VCI 21 Aug 2012 10:58am

“So the next place I rented was the main floor of a house, and guess who lived in the basement? The owner.”

“I used to live in a basement suite when I was in college. Fortunately it wasn’t damp or moldy, but it was too dark for my taste and I didn’t like someone living upstairs from me.
So the next place I rented was the main floor of a house, and guess who lived in the basement?
The owner.
If that’s what it takes to buy a house in Vancouver the trolls can have it.”
– Legacy at VCI 21 Aug 2012 9:58am

“I moved away in 2002 and returned to Vancouver in 2008. As a specialist physician, I have a nice income, allowing me to buy a house in the Oakridge area. I grew up here in the 80s and 90s and remember a gentler, quieter town.”

“I moved away in 2002 and came back to Vancouver in 2008. As a specialist physician in this city, I have a nice income, allowing me to buy a house in the Oakridge area.
However, I have to echo some of the others here that the city is not the same one that we all grew up in. I grew up here in the 80s and 90s and remember a gentler, quieter town. All Vancouver wants to be right now is with the big leagues–the New Yorks, San Frans, Londons, etc. However, it is not in the same league as the above. Vancouver is nice to live in, yes, but it does not have the culture that true world class cities have.
The other thing is, people here are so obsessed with buying. I suppose it has to do with ego. And that is one thing you’ll notice. After a decade or more of being told by the mainstream media, the government, and ourselves that we’re the best place in the world to live, we have bought into that craze. Fact is, Vancouver has problems, lots of it. I’ve lived in many other major cities in the US and have been to Europe and Asia and Vancouver has the same problems that other big cities have..
The other thing here is, nobody wants to rent. People complain they are priced out of the city, but in actual fact, you can rent a nice basement suite in a nice part of town for dirt cheap compared to San Francisco or NYC. If you want the lifestyle and the good schools in Vancouver, and the short commutes and can’t afford to buy, then rent. It is not throwing your money away. Most people in the big city rent anyway.”
– Brian at VREAA 1 Aug 2012 12:42pm

Westside Renter – “Am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”

“I am 41 years young living in Vancouver. I earn $100K a year and I have $275K cash, $20K TFSA, $200K in RRSP. I have no debt, but renting a place on the west side. My question is, am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”
– Finally at greaterfool.ca 1 Aug 2012 12:10am

41 years old; $100K income; $500K net-worth; no RE exposure.
Important unknowns:
Dependents?
Guaranteed pension?
Capacity to save?
Level of investment savvy?
Target age at retirement?
– vreaa

“I sold the last of my 3 places recently. To be honest I was a bit worried about how it might impact my ego having to convert to being a renter and the feeling that I might be throwing money away.”

“I sold the last of my 3 places recently and I’ve said how happy I was to be out of the market. That’s certainly true but to be honest I was a bit worried about how it might impact my ego having to convert to being a renter and the feeling that I might be throwing money away. Well I’m happy to say it’s fantastic renting! All of the problems I used to have to spend all of my spare time fixing – the hundreds of trips to Home Depot, etc, not just on repairs but filling the house with things that perfectly outfitted it. At first I missed those trips but now I realize all the money I was spending. When renting we don’t have to worry about how the place looks because we might need to sell one day. And all the time and energy I’m saving allows me to be doing what I should really be doing – spending time with my young kids.”
– No Noise at VCI 13 Jul 2012 6:09PM

Bear Wins Bet – “Earlier in the year a bull at my work asked me for my prediction for house prices for end of 2012, to which I said 10%-off and he immediately bet me $100 so I took it.”

“Earlier in the year I mentioned a bull at my work, who knows about my bearish views asked my prediction for house prices for end of the year, to which I said 10% and he immediately bet me 100 dollars so I took it.
He came up to me fri and said looks like I might owe you 100, so we kind of got into theories about what is causing the recent declines and he believes it solely has to do with the global economic troubles, namely Europe.
He believes the uncertainty is causing people to slow down buying.
I go on to explain the exact same thing I told him a few months ago, locals over extending themselves and local incomes do not support prices and the recent mortgage rules magnify how sensitive locals economic health are.
But no he still believes what he believes and says I focus only on facts and not the “fuzzy things” his words, such as everyone wants to live here, no land, growing demand etc.
Sigh”
—
“(When he suggested the bet) he got so frustrated debating me that he basically said fine whats your prediction, I said 10%（which I thought was conservative) and he was the one who suggested we bet $100.
He was so sure of himself I think he thought I would have backed down after money was on the table and all the people listening to our conversation.
At the times he had a little group of bulls around him and they all thought I was crazy. Most of those bulls are in the bear camp now. Although I don’t believe they really know the extent of what is to come, they just parrot what they hear in the MSM currently and right now that is bearish news.
This is a smart guy too, and had sold in 08. I think he felt he lost out and never should have sold then because prices dropped but of course shot back up to new highs so he now believes Van RE is bulletproof.”

– 4SlicesofCheese at VREAA 8 Jul 2012 at 1:15am and 9:13am

Bets can be fun, and socially important (they often serve the purpose of modern day duels!), but, as we all know, that’s not where the real ‘betting’ is happening.
– vreaa

“Are you a landowner in Pitt Meadows?” – “No, a happy renter while the market collapses.” – [Laughing] “That won’t happen!”

“I was just walking into the IGA in Pitt Meadows, where the front page news is property taxes squeezing pensioners and fixed incomes.
There out front of the store stood an older gentleman beside a table, with signage relating to the hot topic and asked me if I was a landowner in Pitt Meadows, I blurted out without a thought “No, a happy renter while the market collapses, which will sort the tax issue at hand.” The man burst out laughing and proclaimed “That won’t happen!”.
May I note that adjacent to this IGA are the foundations for a 388 unit condo building. They’ve got the posts up for the signage to face Lougheed, but the marketing placards aren’t up yet. At the same time, behind the IGA, there is a rezoning app for a 97 unit residential mixed use, all within arms length of 4 other condo/townhouse developments that appear to be certainly under six to eight years old.”
– from Aldus Huxtable, via e-mail to vreaa, 8 Jul 2012

“I asked our new landlords if they planned on selling. They said they considered it, but decided they were likely to end up as “wealthy land owners” if they just hung on. My husband and I are both born and raised here, and we’re never seen stranger times.”

“We’ve been in a big 100 year old fourplex near Main Street, virtually rent-controlled, for nearly 14 years. Our landlords, who are far from amateurs (a family business that includes an entire apartment building), felt that the market had “plateaued” and listed the house about six weeks ago for $1.4 M. It wasn’t exactly what I wanted to hear but I supported his decision and still do; they’ve been excellent, honest, non-gouging landlords.

I’ll admit the open houses were extremely unpleasant given how long we’ve been here; our kids have spent their whole lives here. It sold in a couple of weeks to I believe first time buyers, who have evicted us to take over our suite. After a bad couple of weeks, someone responded to one of the signs we put up in the neighbourhood and we’ve put down a deposit on a lovely place (albeit for more rent, but much nicer than we currently have, and still reasonable by Vancouver standards).

You couldn’t pay me to be in the new owners shoes. They just put down (presumably) $1.4 M for the privilege of living in a suite that rents for $1525 and on top of that have to manage 3 other suites. It’s an old house so the bedrooms broil in summer and freeze in winter, and running the microwave trips the fuse. The wood in the sunroom is rotting. The laundry is down 3 flights of stairs and around the back of the house (no joke in the middle of winter). I’m guessing the value of Vancouver houses over $1 M will drop fairly soon, given F’s new cap. Yet amazingly I’m guessing they’re over the moon at their opportunity to “get into” the market.

Our new landlords are in the their early 30’s with not particularly high-paying jobs. I’m guessing Bank of Mom and Dad had everything to do with them owning a house. I asked if they’re planning on selling it, and they said they considered it back in the spring, but decided they were likely to end up as “wealthy land owners” if they just hung on. So unless they have a material change of heart, it looks like we have some stability again.

My husband and I are both born and raised here, and we’re never seen stranger times.”

– Exile on Main Street at VREAA 6 Jul 2012 7:06pm

Scientists Skip The Math – “No calculations or economic analysis are needed, my co-workers in the science/engineering/technology sector and my friends are always certain that buying is always a better choice. My choice to rent always seems to puzzle them.”

“My choice to rent always seems to puzzle other people. No calculations or economic analysis are needed, my co-workers and friends are always certain that buying is always a better choice. My friend just bought a house before the mortgage rule change, and didn’t take my advice. We all work in the science/engineering/technology sector (not in Alberta) but he is completely oblivious to what’s happening in the rest of the (economic) world. He’s the type that truly believe Canada entered and emerged from the 2008 recession unscathed. Actually, he didn’t even know there was a crisis in 2008 and there will (probably) be one from the next country exiting the Eurozone! It’s sad that these are the types of people that are trying to give me advice.. All I can do is be as humble as possible… but it’s frustrating… My point is – the herd thinking is a very strong force. One that I refuse to believe in.”
– Petr Syk at VREAA 8 Jul 2012 5:54am

“This weekend I was hit with a notice to end Tenancy. The owner has claimed they will be moving in. I know that they also own at least 4 other places in Vancouver and that they reside in China.”

“This weekend I was hit with a notice to end Tenancy. The owner has claimed they will be moving in. I know that they also own at least 4 other places in Vancouver and that they reside in China. How many of these other 4 investment properties have also been given notice? Will the owner also be “moving in”?
I knew this was going to happen as I believe fear has hit East Asia. If I do find out the landlord has sold and not moved in as promised I’m privy to some compensation. However, with a owner out of this country will I ever see the money?
Will renters in Vancouver be forced to move as a record number of speculators love their money out of the market?”
– via e-mail to vreaa, from ‘please withhold my name’, 3 Jul 2012

It is highly likely that plunging prices will be disruptive to many renters.
Amateur landlords will be bailing, and that will often involve renter eviction (legal or not).
At the same time, as we approximate prices supported by fundamentals, where good old-fashioned cash-flow makes owning properties good investments, we will increasingly achieve a situation that is good for renters seeking long-term stability.
– vreaa

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. For now, I will continue to rent.”

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. I rent a large beautiful home with a pool in the Dunbar area. Landscaping and pool maintennace are included in the rent, so needless to say, I have a very nice life style here. For now, I will continue to rent. If I ever consider purchasing a house here, I will offer well below market value. For now, I am having too much fun and can’t be bothered to look at the crappy homes listed for so much money.
The reason that I came to Vancouver is that my two children are attending UBC. They are now close to graduating and will likely have to leave Vancouver for a place with a more reasonable cost of living/RE. I will likely leave as well so that I will be in a better position to help them financially. This is too bad, as I like Vancouver, the people and lifestyle. I am afraid that many people are going to be seriously hurt by the artificial RE market here and will end up losing everything or become slaves to the bank for the rest of their lives.”
– DR, via two e-mails to VREAA, 24 Jun and 2 Jul 2012

One Chart – Canada is “a country where house prices still haven’t found fair value.”

“A chart that shows those countries where housing prices still haven’t found ‘fair value’.”

– chart and excerpt from ‘Of housing booms and busts’, David Keohane, ftalphaville.ft.com, 26 Jun 2012 [hat-tip Ralph Cramdown and JS]

[If you find charts eloquent, see also this post from two years back: ‘Two Charts: All You Need To Know About Canada’s Housing Bubble’, VREAA, 26 Aug 2010]

“We sold the townhouse in Richmond in July 2011. We realized that it was time to get out if we want to realize the equity growth. The urge to buy something next – a SFH – was tremendous after we sold.”

“We sold the townhouse in Richmond last July 2011 – we realized that it is a time to go out if we want to capitalize the equity growth. Since then the prices in our segment are only going down. Slowly though. The urge to buy something next – a SFH – was tremendous after we sold. The anxiety that we would loose the opportunity and all the media hype around it etc. I am so glad that we resisted and renting now. We rent a new (expensive) home in the best area that we would not be able to buy in. I found the experience of renting to be very beneficial for my overall understanding of the house we would need, it is like we got to try different type of houses before we get into the “no turn back” purchase contract. I already see that I would not want the house like the one we are renting now although it is new and my understanding improved of the necessary features our family needs. I am looking forward to move out for the next home experience. Some people would try to scare us by “renters forever” – well, it is better than to be forever in debt, when the bank owns part of your home.”
– olga62 at VREAA 12 Jun 2012 9:09am

“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

“If I sold now, I would be in a position of weakness – I’d have to rent.”

“It’s a sunny afternoon in a Toronto industrial park, and a group of about 60 laid-off factory workers are gathered for a farewell barbeque.
The Honeywell workers lost their jobs 15 months ago as the valve and parts maker shifted production to lower-cost factories in Hungary, China and Mexico.
But it isn’t as easy as picking up and moving. “I have to take care of my father – he’s 82,” says Brendan Andrews, a machine operator, who lives in Belleville, Ont.
Instead, he’s accepting an $11-an-hour job – a wage reduction of 50 per cent – that is non-unionized. He started on a 7 am to 7 pm shift last week.
Mario Garofalo also can’t move. The 42-year-old assembler, who worked at Honeywell for 14 years, doesn’t want to sell his house and leave his parents, girlfriend and nieces and nephews behind. “If I sold now, it would be in a position of weakness – I’d have to rent. I would use up money for other things, and on living expenses,” he says.”
– from ‘Stuck in place: Canada’s mobility problem’, G&M, 6 Jun 2012 [hat-tip KC via e-mail, and Makaya at VCI]

Years of RE-cultism blurs the thinking.
– vreaa

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

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

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

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

“My Confession: Bought a house in 2003, around $400K on the East side. Sold in 2005 for around $600K. Thought I did great. Now that same house is probably valued around $1.1-1.2M.”

“OK here’s my confession:
Bought a house in 2003. around $400K in the East side. Sold in 2005 due to personal reasons, for around $600K. Thought I did great.
Thought I will wait out the house market because it is too overvalued. Still waiting. Now that same house is probably valued around $1.1-1.2M.
I still believe it will crash, been following this blog and others for ages. But so far no luck. Been waiting 7 years. Very tough with all the friends and family saying I’m stupid.
However, renting a beautiful house on the west side in a neighbourhood I could never afford to buy in, so life is good overall. Actually living in a house nicer than all my friends and family for the monthly cost of a mortgage on a crack shack in east van.
So not feeling too bad actually! Still looking forward to the crash… hope it happens this year.”
– popgoesthebubble at VCI 1 Jun 2012 7:53pm

It’s tough being a bear in a speculative mania.
The crash will be a ‘process’. It certainly won’t happen in a single year.
– vreaa

“THREE SINGLE HOUSE READY MOVE IN (VANCOUVER WEST)” – “Still lots of speculation going on out there.”

“vancouver, BC craigslist > vancouver > housing > apts/housing for rent
$4500 / 5br – 3600ft² – THREE SINGLE HOUSE READY MOVE IN (VANCOUVER WEST)
Date: 2012-06-01, 3:21PM PDT
Reply to: xxxxxx@gmail.com [Errors when replying to ads?]
1.1936 W 35 AVE 5BR 4BA 3600SQFT GOOD SHAPE,MOUNTAIN VIEW. $4500
2.836 W 31 AVE. 7BR 6BA 4000 SQF,VERY WELL MAINTAINED,4000SQFT, $4800
3.3847 W 24 AVE BRAND NEW HOUSE.5BR 5BA 2780SQFT $48OO(NO PET FOR THIS ONE)
ONE YEAR OR LONGER LEASE.
SERIOUS TENANT PLEASE.
STABLE INCOME AND GOOD REFERENCE REQUIRED.
PLEASE SEND TEXT MESSAGE TO GARY 604 xxx xxxx
PostingID: 3051764634″
– craigslist ad 1 June 2012. [Spotted by Patsan at VCI 1 Jun 2012 4:35pm]

“This Gary guy has at least 12 West Side and Richmond properties advertised for rent. They are all vacant and available now and if you goggle the address all were recently purchased. Most of the properties on the West Side sold for close to 3 million and the Richmond ones are in the 1.5 million range. The guy must be a rental agent or ring leader behind investors who have recently dropped at least 20 to 30 million on houses to rent. The ads all state minimum 1 year lease so they are not looking for quick flips. None of the ads have photos or much details. The guy doesn’t have any houses advertised that appear to have been previously rented so he must be a newby to the game.
When you look at the yields they will get if they do get their asking rents they are below 2% after property taxes. Still lots of speculation going on out there. Actually considering the poor sales on the West Side and Richmond of late maybe speculators are the only ones buying.”
– Anonymous at VCI 2 Jun 2012 7:25am
—

A point of interest for those watching Vancouver RE is whether momentum-style speculators who have bought Vancouver SFHs will attempt to sell if price trajectories start to suggest we’re joining other failing housing markets around the world. We are of the opinion that many will.
– vreaa

“Talked to a friend tonight who just moved into a $700K rental apartment at UBC. The wood-framed building, on leased land, is two years old and floors are already sagging.”

“Talked to a friend tonight who just moved into a rental apartment at UBC. Building is two years old and floors are already sagging, so much that her closet doors keep opening by themselves, and drawers have a hard time staying closed…
Market value? $700,000, for a wood frame condo on leased land.”
– jumpin in at VCI 30 may 2012 10:48pm

Shift In Attitude – “I have a co-worker who used to espouse the whole “buying with family” strategy. I’ve noticed a change in her attitude these past few months. Twice now she’s asked me what I pay in rent.”

“I have a co-worker who used to espouse the whole “buying with family”
strategy. She did exactly that about 2.5 years ago, buying a large (very nice) home in the suburbs with her sister and brother-in-law (co-worker herself is also married).
As a renter (natch) I used to get the whole bull spiel from her– you’re just paying someone else’s mortgage, there’s limited land, prices will only go up, up, up! Familiar refrains to many on this site.
But I’ve noticed a change in her attitude these past few months. Twice now she’s asked me what I pay in rent ($700, includes everything but laundry, and yup it’s a 2 bedroom basement suite in Surrey, so laugh away– I’m loving it). The second time I told her, she admitted “That’s really good”. Confessed to me shortly after that she’s tired of sharing space with another couple. Apparently the brother-in-law is lazy, doesn’t help out equally, and both sister and brother-in-law are very disorganized in paying their half of the bills. Count on her to do it all, with the promise to pay her back.
Guess she’s tired of playing mommy. Her husband apparently rarely leaves their bedroom, preferring the one room where they don’t have to share space. All of their initial plans– convert the basement to a suite, expand the deck, re-finish furnishings– have fallen by the wayside due to lack of help from the other half of the house. She’s just given up, and I suspect she’s just waiting for their 5 year term to be up to sell.
Here’s the kicker– in an attempt to make herself feel better and (I think) redeem her situation in my eyes, she proudly told me about a month ago that she and her husband paid off just under $8000 of their mortgage last year. They have minimal cash savings, so this $8000 is what their “savings” increased by in one year (in their minds, in any case). I didn’t have the heart to tell her that my partner and I had socked away over four times that amount in the same period of time. All made liquid more easily than equity.
I know what the raging bulls will say- “This is the internet. You can say whatever you want here, and nobody can verify it.” Fine. Believe that to your detriment. But I can’t be the only one sensing a shift in attitude. It’s oh-so-subtle, but it’s there. And it’s different than 2008, that’s for sure.”
– Rololo at VREAA 22 May 2012 9:12pm

“We have been looking to rent. Most landlords seemed pretty eager, were willing to offer at least $100 off and almost hounded us when we didn’t call back. The same units are still on craigslist, indicating an oversupply of rental units (or a price mismatch).”

“A little off-topic but I wondered what you guys would make of the rental market. We have been looking to rent for a few weeks now and have seen mostly tower and new condo units (1BR and 2BR) for $1100 to $1450. Most landlords seemed pretty eager, were willing to offer at least $100 off and almost hounded us when we didn’t call back.I can still see the same units on craigslist that were offered 3 weeks ago, indicating an oversupply of rental units (or a price mismatch). Is there an actual excess of housing in BC or do I just happen to look at an unattractive market slice? Do you guys think rents are going to go up (more and more people who assume the crash will happen are waiting to buy, therefore increasing demand for rentals) or down (since desperate investors need to rent out their units even at a loss)?”
– suspectum at VCI 22 May 2012 11:32am