“I’m leaving. There is no scope for even holding the line in Vancouver. I am not having my living standards degraded incrementally until I am living like a college student, which is about the best that could be hoped for here.”

“It certainly is over for me- I’m leaving! There is no scope for even holding the line in Vancouver.
I am one of the most versatile and competent people you could probably ever get to work for you in nearly any type of business, and have watched all the work move farther and farther out towards the valley since around 1998. I have also watched the quality of jobs deteriorate to the point a large proportion of jobs on offer are contract, part time or consultant, for about half what similar work would pay in other regions of Canada.
The obsession with RE has poisoned Vancouver- it has been a tremendous misallocation of resources, there was a link recently on one of the sites that indicated there are roughly 40 more business licenses in Vancouver than there were in ~1997…this doesn’t bode well for anybody. The idea that wealth is created only via real estate investment or other get-rich-quick schemes has driven investment away from business. What’s more many businesses that might well do OK in Vancouver can’t survive because the businesses that support THEM aren’t here. Warehousing and jobbers have fled the Vancouver area over the last decade, as an example.
The constant war on automobiles here has made it complicated and costly to operate a car, and I’d remind you, the people in those cars are going to work, who do we think pays for everything? The AirCare fiasco has had one primary achievement, it’s taken away basic transportation from single mothers in the LM.
I will be moving out of province, to a city I frankly detest, but that I have familial ties to that offers me about twice the income, twice the space, half the red tape and niggling issues, virtually no crime or street people or rain and I’ll visit BC as a tourist next time. 21 years is enough, I am not having my living standards degraded incrementally until I am living like a college student, which is about the best that could be hoped for here.
I’ll miss my beach, but little else, unfortunately. Most of the things I consider the good stuff about Vancouver haven’t actually existed here for many years.”
– whiteshoes at VREAA 3 Jan 2012 3:20pm

“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

“Four years ago we sold our Vancouver Westside house for $1.5M. Thought we did pretty good. Yesterday we see the identical house situated right next door to ours listed for $2.76M. Now that’s insane.”

“An example of the lunacy in Vancouver West: Four years ago we sold our house for $1.5M. Thought we did pretty good. Yesterday we see the house situated right next door to ours listed for $2.76M. Same vintage and everything. Now that’s insane.”
– Dr. WAYNE at greaterfool.ca 8 Jan 2012 6:33pm

Insane? If you still owned your house, you’d think it made perfect sense. 😉
Whatever you do, don’t buy an equivalent house back now. [See: Isaac Newton; South Sea Bubble].
– vreaa

RE Bubble Used As Metaphor In Unrelated Vancouver Sun Free-WiFi Story – “…but like any real estate bubble, this one may be about to burst.”

‘Laptop hobos’ may soon pay more for the privilege of Wi-Fi as cafés begin to crack down on users who overstay their welcome. Free Wi-Fi has become the norm in café culture — even MacDonald’s started offering it this year — but like any real estate bubble, this one may be about to burst.
– from ‘Laptop hobos’ face crackdown’, by Denise Ryan, Vancouver Sun, 6 Jan 2012 [hat-tip to E.G.]

Reminiscent of the very recent post on the Vancouver Aquarium exhibition signs.
Our psyches are saturated with the speculative mania in the housing market.
– vreaa

“For me, this spring will determine whether or not I buy a house. If things crack up, I will sit tight, if nothing happens and the global economy improves I might buy.”

“For me personally this spring will determine whether or not I buy a house. If things crack up, I will sit tight, if nothing happens and the global economy improves I might buy. I am sick to death of renting a crap house for 3k per month!!!”
– paulb. (a Vancouver realtor) at vancouvercondo.info 31 Dec 2011

“Strongly considering buying a townhome in Whistler, but don’t want to step in yet if there will be further drops.”
– MultipleOffer at RETalks 2 Jan 2012 9:53pm

These two prospective buyers plan to step back if the market shows weakness.
We believe that the majority of prospective buyers plan the same strategy.
Falling prices will cause demand to drop. This will beget lower prices; and so on.
– vreaa

Sentiment & Prediction – “This city is for those with equity. Your governments have abandoned you. Everyone wants the RE gravy train to continue and measures will, and have been taken, to keep the party going. Nobody cares about a small, silent minority of prudent renters. You are invisible.”

“Ah…another year and another year of failed predictions to come for the bears…
I always love January…its the start of the delusional bear “wishful thinking” season…
January rolls around, and out comes the threat to prices from a blossoming inventory; soon, after no price declines, we move into Spring, with the criticism of stupid buyers as bears watch strong sales and inching up prices; then comes summer, with declining inventory, and wails of dirty asian money and cheap money; then comes fall with increasing inventory, but no price declines despite “poor” sales; then comes the next year…
Ah, repeat….for the 7th year of failed predictions for some of you (circa 2005)
You have one life to live bears…
Maybe its time to take a page out of “formervancouverresident”‘s play book, and move on…
This city is for those with equity after not “sitting on the sidelines” for almost a decade and those rich Asians that have no problem laundering their ill-gotten gains here.
Face it, the federal government has abandoned you; your provincial government has abandoned you; and your local government has abandoned you. Everyone wants the RE gravy train to continue and measures will, and have been taken, to keep the party going. Nobody cares about a small, silent minority of prudent renters… you are invisible.
Your family and friends all question your intelligence for sitting on the sidelines, and quietly whisper “I wish they would just do the right thing, and settle down, and buy a place”…
Time to move on boys and girls…”
– Move On at vancouvercondo.info 1 Jan 2012 11:35am

Vancouver RE has indeed been in a speculative mania since 2005, perhaps it started as early as 2002-2003, and ‘Move On’ is correct to note that a small group of bears have been pointing this out since then. Remarkable, eh? The audacity!… the tenacity! But that is what happens in bubbles. Bears look sillier and sillier until they suddenly, spectacularly, look right. (Then everybody goes back to ignoring the contrarians, again…).
But ‘Move On’ is wrong about other things:
Just because a bubble expands for a long time doesn’t mean it transforms into a stable entity. On the contrary, it becomes more and more likely to implode, and the implications of the implosion get more dire the bigger it gets.
Also, there are no powerful ‘hands’ supporting the speculative mania. It has been the product of self-perpetuating market forces and myths; the results are far larger than any entities could hope to ‘orchestrate’. Conversely, when the bubble begins to implode, governments will be powerless in attempts to keep it inflated. Market forces are far more powerful than any available ‘measures’.
‘Move On’ will be proven wrong; until then, ‘Move On’ appears to the superficial observer to be ‘right’. This is always the way it is with these market phenomena.
– vreaa

Shiller – “The idea that buying a home is such a great idea is just wrong. Home prices may well decline for the next 30 years, in real terms.”

Interviewer (Morgan Housel, Motley Fool): “Is that what homeowners should expect, that their house will give them a place to live, that it will keep up with inflation, and nothing else?… Is that the basic model that homeowners should think about?”
Robert Shiller: “I think it’s a reasonable first approximation to assume that home prices would just keep up with inflation… [But they can go down too, they went down for the first 50 years of the 20th century] … The idea that buying a home is such a great idea is just wrong.. They may well decline for the next 30 years .. in real terms.”
– from ‘Robert Shiller on Why Home Prices Could Fall for Several Decades’, Morgan Housel interview, Motley Fool, 23 Dec 2011
—

Shiller is describing the US market, where prices in many regions have dropped to the point that they are coming close to values as determined by fundamentals. In a market such as Vancouver’s, where we are starting with prices at 2 to 3 times fair value as determined by fundamentals such as rent, income and GDP, the chances are far and away that housing will underperform inflation over the next 30 years. Most local market participants would see that prospect as preposterous. – vreaa

“Real estate is at a premium in the ocean. There’s hardly a rock on our coast that isn’t covered with life. So if you’re looking for a good solid surface to settle down, docks and other structures may be just the real estate you’re looking for.” [Vancouver Aquarium advice to sea-life.]

– Exhibit text, Vancouver Aquarium, December 2011

Use of RE as any kind of metaphor in the text accompanying a Vancouver aquarium exhibit would be interesting enough. This example is even more intriguing because of the ideas of ‘running out of ocean floor’, real estate being “at a premium”, and perhaps even the message that critters need to compromise if they want to find a place: “Stop gurgling about it: Pay for a decent rock, or move to a peripheral new warf.”
During a speculative mania in housing, real estate gets increasing mention in the local popular culture.
We have previously noted Vancouver examples of RE infusion into childrens’ books, sports fan behaviour, murder reporting, short films, celebrity visits, sports star bios, and musician bios.
Once a bubble pops such mentions simply disappear.
We doubt you’ll find use of ‘Real Estate’ metaphors in exhibit text at aquaria in Japan, Spain or Ireland.
– vreaa

“I had a chance encounter with a Vancouver RE agent who caters to Chinese investors. Turns out she is here in the Phoenix area looking for investment properties for her clients.”

“Had a chance encounter with a Vancouver RE agent (who caters to Chinese investors) this morning. Turns out she is here in the Phoenix area looking for investment properties for her clients.
As well, she already has a few of her own places she rents out as vacation properties.
Didn’t have a chance to ask her what she thought of the Vancouver market – but it was interesting to see her down here on behalf of her clients.
The going rate for a vacation rental Oct-Apr is about $ 2200-2500 a month, and about half that the rest of the year. This is for homes with less than $ 150K into them (if bought within the last year or so).”
– Snowboid at greaterfool.ca 28 Dec 2011 12:01am

Wow, look at those fundamentals.
That’s roughly an average of $1860 p.m rent (less expenses) for $150K.
What would that cost you in Vancouver?
And the US hasn’t yet bottomed.
– vreaa

Visual Anecdote – Season’s Wishes

RE Features In Story And Discussion Of Vancouver Execution Style Slaying – “I’m in business for myself. I know how hard it is to get ahead in this city doing it the legit way.”

“Vancouver police are poring over clues to try to figure out who wanted to execute a 38-year-old mother of four less than two weeks before Christmas.
Thuy Yen “Jenny” Vu was shot several times as she sat in her BMW SUV just after 3 p.m. Wednesday with her three-year-old son in the back seat.
Const. Lindsey Houghton said neither Vu, nor her husband, Stephen Michaelson, are known to police. Nor is Michaelson a suspect in the deadly shooting in front of the house the family shared in the 6400-block of Bruce Street.
“At this point detectives have told me it is far too early to speculate on whether this has any connections to gangs,” Houghton said.
“It is far too early to figure out the motive for this….detectives still have far more questions than they do answers.”
Vu and Michaelson bought the house in November 2010 for $1.11 million, property records show.
Vu is listed as a hair stylist and Michaelson as a businessman on the land title documents.
Houghton could not say what kind of business Michaelson is involved in.
Also in November 2010, Michaelson purchased an acreage in Rossland, B.C. for $468,000.”
– from ‘Husband not a suspect in BMW SUV shooting: Vancouver police’, by Kim Boland, Vancouver Sun, 16 Dec 2011

“What is the name of the business? I have been trying to find that out.”
– Kim Boland, the Vancouver Sun reporter, at her blog 19 Dec 2011 12:49am

“I have no doubt there must be some link to organized crime. I have heard she had involvement in grow-ops. But she does not have any charges.”
– Kim Boland at her blog 18 Dec 2011 11:31pm

—-
“Wow – Million dollar home, acreage in Rossland and an X5 among probably a lot more – shouldn’t be hard to figure this one out for the police. Likely a message for dad to pay up!”
– joe at Kim Boland’s blog, 15 Dec 2011 10:15pm

“Is there anything except for million dollar homes in Vancouver? And Beemers rule the lease market cuz Mercedes won’t play.”
– putmeincoach at Kim Boland’s blog, 15 Dec 2011 11:08pm

“Good luck finding a house in Vancouver that ISN’T a million dollars.. dumb comment.”
– Anonymous at Kim Boland’s blog, 16 Dec 2011 12:07pm

“Actually, it is not a dumb comment. Sure, the majority of homes in Vancouver are a Million+ but there ARE cheaper, less expensive places to live. The obvious point that the poster was making is that these are people of means, OR people who lived as though they were. Who knows what the truth is at this point. Hopefully the investigation is going well. Obviously there is a lot of information that the police find out that they don’t release to the public. So for now it’s just theories and speculation, AND common sense. I’m big on that.The theory (at this point) that there were loan sharks involved seems credible. More credible than the belief that all the people involved, including the victim, are completely innocent. Only one I know for sure is innocent is that little boy.”
– Common Sense at Kim Boland’s blog, 18 Dec 2011 11:39pm
—-

“No one deserves to die like that. [Posters] are right [to point that out]. But people are also trying to figure out why this terrible slaying happened. Police say it was targeted. So it is understandable why people speculate.”
– Kim Boland at her blog, 18 Dec 2011 11:40pm

“I don’t know Jenny or her husband so I won’t pretend to know all the facts. That said I won’t stick my head in the sand and pretend like this story sounds innocent.
Jenny apparently was a ‘stay at home’ mom for the past years, spending her time at yoga; and her husband is a ‘businessman’. She apparently owned a home in Burnaby, and they bought $1.5 million dollars worth of real estate in one month. Credit is fairly cheap, but you would have to be earning quite the income to make those moves.
Considering they were only on one income with 4 kids, the story tends to sound all too familiar. Pretty you’d girl; loves the good life. Enjoys the ‘finer’ things in life; is attracted to the bad boy who can provide her that fast luxurious lifestyle. Young meat head is attracted to the hot toys and women he attracts with money. After not too long he’s in too deep or addicted to the lifestyle. Some people in this city rack up huge debt trying to keep up with the ‘Bacon’s’. Others say f’k the 9-5 and light up a grow show or two because working a crappy job and or being broke in this city is harsh and gets you no love.
I’m in business for myself I know how hard it is to get ahead in this city doing it the legit way. I know how hard it is to get approved for a mortgage these days after they tightened the lending rules.
Am I jealous? To be honest sure sometimes when you see these people buying all that expensive stuff, traveling, partying, seemingly with no cares in the world, I’m only human. I’m not jealous of the fact that these things usually catch up to people. I’m not jealous of constantly having to look over your shoulder. I’m not jealous of the pain her family must endure for the rest of their lives. I hope the kids get good care, and can adjust to the reality of life with no mom. No kid deserves that.”
– YVRGOODTIMES at Kim Boland’s blog, 20 Dec 2011 2:11am
——–

Even though we don’t yet know all the facts behind this ghastly event, the discussion it has already induced is noteworthy. These thoughts about the discussion as much as the incident itself:

“I’m in business for myself. I know how hard it is to get ahead in this city doing it the legit way.”
There will always be those who chase the quick buck.
But in Vancouver today, things are arguably more extreme than during typical times: almost a decade of too-easy money has subverted our society’s principles and beliefs regarding honest work and honest pay. A frontier mentality appears to prevail.
Honest pay is too meagre; quick profits from whatever source are too attractive. Citizens who work hard for conventional wages are considered suckers. People are drawn to fast-and-loose endeavours, be they legal or not. Property flipping; Grow ops; Loan sharking; Gambling; Smuggling; Stock trading…. anything where the potential rewards are disproportionally large compared to the labour involved.
Our economy has been  juiced by massive amounts of debt, with abnormally large amounts of  money released into the economy through the speculative mania in housing. This has caused alterations in behaviour that are deleterious for the long term health of our society.
The misallocation of resources is the resultant central crime of the bubble; we should all rail against the speculative mania for that reason.
– vreaa

Merril Lynch; Scotia Bank – Canadian Housing Boom Overextended

“Merrill Lynch warned Monday that prices could correct by as much as 10 per cent in the next two years in Canada because of weakness in the economy, expressing particular concern about Toronto’s condo market.”
…
“Canada’s housing boom is among the most long-lived in the Western world at 13 years, but the next few years could chip away at the gains that have seen the average house increase in value by 85 per cent since 1998.
In a report released Tuesday that said the Canadian housing market was the strongest in the developed world in the third quarter, Bank of Nova Scotia economists said “the slow pace of the global economic recovery, intensifying sovereign debt concerns, weak consumer confidence and high unemployment all continue to weigh on residential property markets” in 10 countries it tracks.”
…
– from ‘Canada’s housing boom among longest in Western world’, G&M, 20 Dec 2011

Both institutions are overly optimistic in their guarded expressions of caution. – vreaa

“I know, I know; I’m unrealistic expecting more than a 10% correction”

“I’ve had to endure drivel from people I work with in Vancouver who:
1. bought a house 5 years ago in just outside Shaughnessy for $650k which is now worth… wait for it… $2 million
2. a house in East Van. which is ~90 years old and bought 4 years ago for ~270k is now worth ~$800k…
… I know, I know, I’m unrealistic expecting more than a 10 % correction”
– atomic at greaterfool.ca 17 Dec 2011 5:44am

A Realtor Sells A House To Himself In North Vancouver – “The untangible feeling of pride of homeownership I feel is overwhelming and I strive to work harder and longer to make sure my clients achieve the same exciting, rewarding, and satisfying experience!”

“This past week I made the highly anticipated move from my condo to my first house on beautiful Cortell Street in North Vancouver. The new house is a very well maintained, updated character cottage from 1928, with extensive kitchen and bathroom renovations.

The Location is one of the finest in North Vancouver, in the quite and sunny southern pocket of Pemberton Heights, 2 blocks from Capilano Elementary with its coveted IB program. The yard is a gardener’s dream, landscaped and set up with an irrigation system and automatic lighting. The garage is tiny, but my truck just fits in it:). Some of my favourtite features are the classic hardwood floors; the fully renovated kitchen with Viking Gas Convection Stove; the loft with skylghts and views; the many species of birds that call the magical garden home; the protected Royal Walnut Tree in the front yard that I’m forbidden by the District of North Van to touch; the gas fireplace; an exposed brick wall; large south-facing wood deck; the antique claw-foot soaker tub; and the detailed door fixtures, built in cupboards, and wainscoting.

The windows, electrical, furnace, on-demand hot water supply, and roof have all been replaced in the past 6 years. The neighbourhood is a charming mix of cute and character, ultra modern, and brand new masterpieces. My west-side neighbour’s house is currently being gutted, there is a handsome new custom mansion across the street, and 2 brand new houses being built on Cortell, so for a Realtor who loves homes, I feel like a kid in a candy store:). Speaking of candy stores, 2 blocks away is the infamous Corner Store, a Pemberton Heights landmark serving up great coffee, sandwiches, groceries, and snacks in a warm neighbourhood environment.

I am thrilled to have the talented eye of Missy Kaniuk from Design Project in charge of the re-design of the main level & renovations to the basement! We are going to paint the wainscotting white, and the wall in the living room and entrance a tope/grey/olive tone, the office a tope green with white baseboards, and the bedroom white with a dark wood door and window trim, using paint by Benjamin Moore. The exterior will be white with blue or charcoal trim and ‘fire-truck red’ front door. In the long term, I want to refinish the floors a dark oak & install crisp white crown moulding in the bedroom, den, and bathroom!

The downstairs has a finished bathroom but the rest is exposed framing, washer/dryer, furnace, and a work shop. I am planning on renovating the basement so the walls and ceiling are finished with electric heat, pot lights, new washer/dryer, guest kitchenette, and a bedroom. With the help of a great plumber, electrician, framer, and Rona I hope to create an additional 650 sq ft of finished living space. The main challenge is the uneven floor which will require a skilled leveler (which I will be meeting on Saturday morning – Basement design details to come, stay tuned!).

Upstairs will be a guest room & office on the dreamy East side of the loft , and a TV room on the West Side to enjoy the city/ocean views.

Follow my blog for updates on the reno and life as a homeowner! The untangible feeling of pride of homeownership I feel is overwhelming and I strive to work harder and longer to make sure my clients achieve the same exciting, rewarding, and satisfying experience!”

– Realtor Stu Bell, at his blog stubell.com, 24 Nov 2011
[hat-tip to reader who e-mailed the link]

That ‘untangible feeling of pride’ is one factor contributing to the ‘ownership premium’, the amount that one is prepared to pay for a home over and above the cost of renting it. Stu clearly gets a great deal of pleasure out of owning this home, and his personal ‘ownership premium’ is likely substantial (whether he had to pay more than rent equivalent to purchase this house or not). One wouldn’t want to get into a bidding war with this kind of buyer for a home on which their heart was set.
The story is saved here as a fairly intense example of the current Vancouver love affair with home ownership. We believe that this infatuation is closely related to rising prices, and that the feelings will become less intense when prices are falling.
“Will you still need me?
“Will you still feed me?
“When I’m 64(%-of-the-price-you-bought-me-for)?”
– vreaa

[For another recent example of related emotions, see the TV announcer exchange at “Real Estate stories are always great, they never get tiring, you know?”]

If real estate values were to fall by 25%, or even 15%, there’d be a social crisis – “I have friends that are selling their possessions to make payments. The scary part is, I tell people the truth and they look at me like I am from Mars.”

Tom is sixtyish. Rents a swishy place in a glass tower in downtown Vancouver and has his wealth in liquid assets, smugly invested. “A lot of my friends (mostly poor media types) are in deep trouble,” he says. “I have friends that are selling their possessions to make payments. One gal had to be talked out of a reverse mortgage yesterday. I begged her NOT to do it and explained the basics. The scary part is, I tell people the truth and they look at me like I am from Mars.”
As we all know, real estate did this to BC. The average SFH is now $1.1 million in Vancouver, and $592,034 in Victoria. The average family makes $83,300 and $76,600 respectively. Figure it out. If real estate values were to fall by 25%, or even 15%, there’d be a social crisis. Global TV would have a kitten. Whole condo towers would be full of under water owners. People with the bulk of their net worth in a house would suddenly understand how Americans felt when their market tumbled.
– story relayed by, and commentary from, Garth Turner at greaterfool.ca, 4 Dec 2011

“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

We Came; We Saw; We’re Leaving – “Vancouver is “nice”. I was sent here by my firm 6 months ago for a permanent transfer. My wife and I are leaving. It’s just not nice enough.”

“Vancouver is nice. That’s it. It’s “nice”. I was sent here by my firm 6 months ago for a permanent transfer. My wife and I (we’re just under 30) are leaving. It’s just not nice enough.”
– RayRay at VREAA 1 Dec 2011 7:13pm

“Similar situation here … moved permanently but have started considering other options. Not asking for “free lunch” or “entitlements”, I will gladly pay for housing and a city premium, but YVR is off the charts. Have colleagues and friends with similar background in other cities and I can easily compare what value/cost you can get for your money.
People have completely lost perspective of the insane prices or what it takes to generate that kind of money. Prices are raised 100,000 – 200,000 without thought. Or crappy, expensive shoebox condos that would buy a house with acreage 30 mins. south are sold out. Insane, really.”
– Clipper at VREAA 1 Dec 2011 10:11pm

“I was in Seattle a couple of times last month. If you like city life and the west coast check it out. Nice houses in nice parts of town are half the cost of Vancouver or less. Hell, you can get a nice house in an inexpensive suburb for $250,000 easy. I’m seriously considering it as I could be mortgage free in my 40s if I go back to the States.”
– nobody you know at VREAA 1 Dec 2011 10:33pm

“People have completely lost perspective of the insane prices or what it takes to generate that kind of money.” (Amen)
RayRay, Clipper, nobodyyouknow -> How much would prices have to drop for you guys to consider staying? – vreaa

Squamish Townhouse – 2008 $499K, 2011 $358K – “It was supposed to be an investment, not a nightmare.”

Roberta and Johnny can’t wait to dump the Squamish condo townhouse they bought three years ago. “It was supposed to be an investment,” she says, “not a nightmare.” Not that the tenant’s much trouble. She’s not. But it’s tough to know what you paid $499,000 for thirty-seven months ago is now worth $358,000.
At least, that’s the offer they have. Worse, the deal has hair on it. Lots of conditions. Long close. Small deposit. Not much of an offer at all, actually. But better than no offer, the alternative in a town where the market’s died.
Johnny writes: “A side note of potential interest is that the owner of a comparable unit in the same complex priced $100K (yes, one hundred) over ours and that has been sitting on the market without viewings for months, if not a year now, called me the other day and left a message saying that he wanted to talk to me about my price. He felt that I would be leaving “a lot of money on the table” and gave indication that I must not understand the state of the market in the area very well. In the meantime, another comparable brand new unit (one of many that are coming out) in a complex down the street was just listed under headlines of ‘receivership pricing’ for $345K. Needless to say I haven’t called him back.”
– Excerpts from a story relayed by Garth Turner at greaterfool.ca 29 Nov 2011

Sellers compete with other sellers, not with buyers. – vreaa

“If I’d paid for it all myself, the price cut wouldn’t bother me as much, but there’s a lifetime of my parent’s blood and sweat in it. Developers’ profits are outrageous. The price they set when the housing market kept going up was far more than the real value.”

Danny Deng and his bride-to-be dreamed of their lives together as they walked through the showroom for a Shanghai housing project almost three months ago. Pooling his own and his parents’ savings, a loan from his boss and a 1.1 million yuan ($172,000) mortgage, he bought an apartment and secured his fiancee’s hand.
On Nov. 19, Deng faced off a ring of security guards three rows deep wearing camouflage and carrying shields as he joined more than 100 homeowners rallying in front of the development’s sales office. His transformation from newlywed to street protester came after China Vanke Co. slashed prices for future buyers at the Qinglinjing complex, erasing about 20 percent of the value of his three-bedroom unit overnight.
“If I’d paid for it all myself, the price cut wouldn’t bother me as much, but there’s a lifetime of my parent’s blood and sweat in it,” said Deng, a 30-year-old electrical systems salesman. “Developers’ profits are outrageous. The price they set when the housing market kept going up was far more than the real value.”
– from ‘Shanghaied Home Buyers Take to Street’, Bloomberg, 29 Nov 2011

Then why, Danny, did you buy it?
We know: Because you thought that prices would continue to go up, and up, and up, right? Right.
And if they had, you’d be taking credit, not complaining, right? Right.
Speculators are the same everywhere: Shanghai, Sydney, Spain, Ireland, Vancouver.
The outcomes of speculative manias know no cultural bounds.
– vreaa

—
More of Danny’s story from the article:
For Deng, the pain is more than financial. Tears swell in his eyes as he recounts the moment his father handed him access to his life savings of 360,000 yuan to help make the down payment.
The gift made Deng consider himself a member of the “ken lao” generation, meaning to gnaw on the elderly.
“I was depressed, uncertain, touched and a bit ashamed,” he said, asking not to be identified by his full Chinese name because of the personal nature of his story. “I had been proud and didn’t think it was their business. But when the moment really came, I knew it was impossible to manage only by myself.”
Deng had moved to Shanghai three years earlier from a small city in the north to be closer to a girl he met in college. When talk turned to marriage, his girlfriend insisted they buy an apartment first, he said.
“At my age, I should get married and I should have my own home whether or not I can afford it so that I can be the same as my classmates,” Deng said.
Deng saw an ad on Soufun.com for pre-sales of a project called Qinglinjing, meaning “Clear Forest Path,” that was being constructed near a soon-to-be built subway station next to the future home of the Shanghai Disney Resort. Deng and his girlfriend visited a showroom to walk the wooden floors of the replica 96-square-meter (1,033-square-foot) apartment, planning how they would fill its two bedrooms, living room and study.
“We loved it,” Deng said. “It suits us for the next three to five years because we plan to raise a child soon.”
The snag was its 1.7 million yuan price tag. Chinese policy requires a minimum 30 percent deposit. Deng had saved 70,000 — not enough. That’s when he called his parents, then borrowed another 50,000 yuan from his boss, and secured a loan of 1.1 million yuan paying as much as 7.8 percent interest from Agricultural Bank of China, he said.
On Sept. 28, Deng and his girlfriend signed a contract with the developer, happy after winning discounts including 40,000 yuan off for being a member for the Soufun.com website and a 20,000 yuan markdown by collecting 20 stamps on a red “home- passport” issued by Vanke. The end price: 1.58 million, or about 13 times Deng’s annual wage.
The next month, they got married. Paying the mortgage will take up 40 percent of the new couple’s combined salary.
… “I didn’t have a choice,” Deng said of the decision to buy. “I don’t want to be too different. Otherwise, maybe for a long time, I would be alone.”

Wow. Poignant story.
And so many similarities to what is going on to Vancouver: Bank of Mom and Pop; ‘girlfriend insisted they buy an apartment’; plans to move in 3-5 years (but now likely stuck); etc.
Also, some differences, too: 40% of income? (low for Vancouver); 1,033-square-foot apartment (MASSIVE by Vancouver standards), etc.
– ed.

Realtor – “The market will come off the rails in Vancouver next year. Smart money does not chase a falling asset. Spring will be a disaster out west; it may self-perpetuate.”

“The market will come off the rails in Vancouver next year. We’re seeing some China buying reductions but there will always be some Chinese money, however smart money does not chase a falling asset no matter how much they want their kids to go to the “best Schools”. Give me a break – they are not so great that Vancouver is better at education than other cities, that losing 500K is not noticed. Spring will be a disaster out west – as soon as the mainstream media pick up on this – it may self-perpetuate.”
– A Vancouver RE broker, quoted by Garth Turner at greaterfool.ca 27 Nov 2011, who also added “The first half of this year [2011] was hot, the second half will show a dramatic cooling. Tons of sellers have given up, and will flood the market with renewed listings in the Spring [2012]”.

“Smart money does not chase a falling asset. (Price drops) may self-perpetuate.”
Readers will recognize that we’ve been saying exactly this for sometime now.
We’d ourselves probably call it ‘momentum money’ rather than truly ‘smart’ money.
But, regardless, yes, buyers will dry up into price drops; that’s what happens when speculative bubbles burst.
Price drops will beget price drops.
– vreaa

Spot The Speculators #68 – “Trev and Anna paid $1 million for a SFH near Main Street. They must spend $150K to make it livable.”

The story of ‘Trev and Anna’ is relayed and discussed at greaterfool.ca by Garth Turner, 27 Nov 2011, a must read for Vancouverites. Here is the core anecdote:
Trev and Anna paid $1 million for a place near Main Street. Sadly, it was unrenovated, so they must spend $150,000 to make it livable. “We plan to stay here 10 years,” Trev adds, “and we were fortunate enough to put down 50%.
“We’ve set aside an RESP for our kid maxed out to the level the government will contribute. I have a limited partnership investment of $50,000 which is projected to provide us with a 7% return. Our combined income at the moment is 120k per year. The house has a separate suite which will provide us $900 per month income. If times get tough then we can rent a spare bedroom to a student for $700. So, we will have $50k after renovations to invest.
Should we seriously consider selling the house when the renovations are complete, rent for a while and then re-invest? The concern is that we will be house rich. If we are planning on staying there for 10 years does this still apply?”

So:
House value (generously presumed) $1.15M.
Mortgage $500K.
Other assets $100K.
Networth $750K.
Percentage of Networth in RE 153%.
These guys are gambling on ongoing price increases.
They will potentially lose ALL of their equity in the coming crash.
(These houses will very likely sell in the $500K-$550K range again at some point).
The idea of them overextending themselves this much into a ‘livable’ Main Street SFH with tenants in the basement and perhaps one in a bedroom just boggles the mind. – vreaa

Sandy Garossino – “I want to tell two stories from the campaign trail…”

“One of them was a childcare worker in her forties, making less than $11 an hour, caring for children of 3 families in her home on the East Side. Rents are going up but her income is not, and she is being forced out. Despite having a job, she has no security and is hurtling toward disaster.
Another day I was meeting seniors in the west end. A group gathered and were telling me that they spend on average 60-70% of their monthly income on rent. Most had saved for decades for a comfortable retirement, and were now eating into those funds every month just to survive. All of them live with ice in their bones for fear that they will be evicted from apartments they have lived in for decades, and most believe that no landlords will take them because their monthly incomes are so low.
One woman told me that she will be through her savings in three years, and then she doesn’t know where she’ll go or what will happen to her. She worked hard and saved for 47 years, and blinked back tears as she choked on the word ‘homeless’.”
– Sandy Garossino, Independent Candidate in the recent Vancouver civic elections, at her website votesandy.ca 22 Nov 2011

“I looked for a decent house for 3 years and have given up. I am not willing to spend all my money on a tear down. Just crappy value all around.”

“I too sold my company, no I did not make near $2M, I did ok in my books and I am seriously considering putting some money into other real estate investments NOT in Vancouver. I also looked for a decent house for 3 years and have given up. I am not willing to spend all my money on a tear down. Just crappy value all around. Vancouver is nice, yes, but it also rains 8 months of the year and costs an arm and leg to do it. Central California, a little in from the coast, up in the foot-hills on a few acres… now that sounds decent.
Why does everyone stay in Vancouver if it’s so damn expensive?”
– Cali Calling at VREAA 22 Nov 2011 7:07pm

“A client who is a PhD scientist moved to Vancouver about six months ago because her significant other lives and works here. She has called it quits on her Vancouver job search and moved back to California because she just couldn’t find a job here that was remotely close to what she was doing before.”

“I have a client who is a “scientist” in a specific field that I won’t mention here. Needless to say she has a PhD and even worked for years in silicon valley within the IT sector. She moved to Vancouver about six months ago because her significant other lives and works here (government job). She has called it quits on her Vancouver job search and moved back to California because she just couldn’t find a job in Vancouver that was remotely close to what she was doing in California. That is Vancouver for you, the third largest city in Canada. It seems to be Vancouver is the BPOE if you are: a government employee, realtor, mortgage broker, or blue collar construction type.”
– DEFAULT NAME at vancouvercondo.info November 3rd, 2011 at 2:48 pm

“Even I can’t ‘afford’ a house. What am I supposed to do? Go buy a shack for $1.2M that I know is probably 4x overvalued, only to be the last sucker in before the big crash?”

“I sold my business a few years ago and retired with a nest egg of a couple million dollars. But even I can’t “afford” a house. What am I supposed to do?… Go buy a shack for $1.2M that I know is probably 4x overvalued, only to be the last sucker in before the big crash? I’m not going to take that chance so I’m forced to rent a little modest place while I wait for the madness to end. And, by the way, if you think $2M = rich in Vancouver, you are sadly mistaken. With today’s artificially low interest rates (that are keeping the real estate bubble alive), I can barely generate enough of an income to support my wife and kids.”
– anonymous commenting in ‘The Province’ (13 Nov 2011 11:14pm)

Repost: It Is Dangerous To Blame The Consequences Of A Speculative Mania On One Sector Of Our Community: Let’s Make Sure We Don’t Do That.

[This was originally posted here almost exactly six months ago, VREAA 18 May 2011. Reposted in view of discussion regarding foreign ownership in local press, and in light of upcoming election. – vreaa]

Imagine you own a beach house in a resort area and you decide, at the end of a beautiful summer, to revive the memories of your youth by organizing a BBQ and bonfire on the beach in front of your home. You invite all your local friends, you organize the food, and you ask everybody to bring along their families, their friends, and their own booze. With plans for a whopping big bonfire, you also ask them to bring wood. Everybody complies, similarly eager for a beach bash. One of your buddies, Ken, has access to some really good firewood, so he brings a trunk-load of the stuff. The BBQ goes well, drink and chat flows, you and your buddies start to build the bonfire. Everybody is in a disinhibited party mood, and you all somewhat unwisely start constructing the bonfire a little too close to the house. A couple of people mention this but, the wind is blowing in the safe direction, it’s an arguably fair distance from the house anyway, and, besides, there is a fire extinguisher in the kitchen, right? Consensus is that the fire site is fine, and a really seriously large pile of wood accumulates.
So, the bonfire is lit, it looks glorious, and, in the fading light, everybody has a great time… marshmallows, jokes, dancing, singing. Everybody piles on the wood they’ve brought; everybody is particularly grateful to Ken, as his supply burns extremely well, it gives off a wonderful aroma, and it warms everybody very nicely.
You can see where this is going: The wind changes, the fire roars, the fire extinguisher is woefully inadequate, the house burns down, neighbouring houses catch sparks, the whole beachfront is destroyed, and everybody blames Ken.
Did I mention that Ken is from mainland China?

—
The speculative mania in Vancouver RE had its roots in the early part of last decade. Vancouver housing was already pricey by Canadian standards, the good-weather premium was baked in. Things really took off after 2003, when very low interest rates allowed home prices to divorce themselves from fundamentals such as local incomes. This effect occurred in all major Canadian centres, it was a monetary and not a local effect. Through 2004, 2005, 2006, 2007, local Vancouver speculators threw themselves onto the fire, borrowing large amounts to buy primary-residences and ‘investment’ properties at prices that were only justifiable if you thought that prices would continue up forever. People told themselves all the necessary stories to reassure each other that prices could, indeed, only go up: Best Place On Earth; Running Out Of Land; Olympics; and, yes, Limitless Demand From China. Under ‘normal’ circumstances, 2008 might have marked a top, but we all know that little about Vancouver RE is ‘normal’. Prices started dropping from the summer of 2008. Perversely, shortly thereafter, the world financial system imploded and interest rates, already at low levels, dropped to essentially zero. Vancouver RE didn’t need a bail-out, but it got one anyway. Prices had only been able to drop 15% before being re-ignited, taking out prior highs, and blazing on to their current dizzy heights. Now, with Australia finally pulling back, our real estate is arguably the most overpriced in the entire world. We are the last remaining pristine and unimploded RE bubble.

The most important fuel for this market fire, by a very, very long way, was and is local speculation. Local buyers, through all of these years, have continued to mercilessly overextend themselves to purchase property at prices that they would never dream of paying if they foresaw a significant risk of price downside. This applies to primary residences as much as it does to ‘investment’ properties. If locals had not speculated, or had speculated less, prices would not have gotten so very far divorced from fundamentals. Yes, there is a direct influence of foreign buyers on the market, more so in some areas of the city. But these buyers still participate in less than 5% of all property transactions. In the part of the city most affected by this phenomenon (the high end of the westside), realtors report that 50% of sales are to this group. That means, of course, that the other 50% of sales are to locals, overbidding on properties by arguably a factor of two or three times fundamental value. Our speculative mania has attracted non-local momentum players, and, yes, there may be a need for some consideration of specific limits on their activity; but let’s be very clear that these players are only a small part of the entire phenomenon.

There is no easy way out. That is the nature of speculative manias, they harm many on the way up, and a lot more on the way down. There is no way of ‘landing’ them ‘softly’. By their nature, they run out of fuel and implode. We have built and ignited a bonfire here that was long ago completely out of control and destined to raze the whole block. It would be very unfair and disingenuous to blame the outcome on our buddy Ken, who we invited to the party, who only brought wood with our encouragement, and whose fuel we appreciated while all seemed okay.

We are very concerned, however, that our city is setting up for such a scapegoating. Canada’s policies of multiculturalism encourage people to celebrate their differences. This is hunky-dory when everybody is rich and has adequate resources; it is easy to celebrate your neighbour’s good fortune when you are experiencing similar luck. But, if you put the economic screws on a society that has been encouraged to emphasize difference, it is probably more prone to developing ethnic fault-lines than a society that puts more effort into celebrating similarities.

There has been more and more media prominence given to foreign buyers recently. Local politicians such as Peter Ladner are pointing to this group as the cause of our lofty prices. We are concerned that many are going to be getting their wires crossed by associating foreign buyers with the existence of the bubble. There is a very real subsequent risk that many of those who suffer the consequences of the imploding Vancouver RE bubble will mistakenly blame foreign buyers and, by extension, specific ethnic groups, for the whole phenomenon, and for the inevitably devastating outcome.

As we said in our end-of-2009 predictions for the coming decade: ‘A Real Estate Bear Market Will Be Vancouver’s Defining Social And Economic Event.’ We hope that, as a society, we will be able to successfully navigate the substantial challenges of that event in a mature and wise fashion.
It is dangerous to blame a speculative mania on one small sub-sector of our community.
Vancouverites built this bonfire, and Vancouverites need to take responsibility for its consequences.
No scapegoating.

– vreaa

Spot The Speculators #66 – ‘Conservative Guy’ Becomes ‘Risk Taker’ – “In 5 years we will have saved up enough to buy a larger home (with a bsmt suite of course) and keep this house as a full rental.”

“My wife and I just purchased a house (with illegal bsmt suite) with a legal carriage house in Kelowna. We worked out the financials and with the rent we can get from both the basement suite & carriage house, we can cover our mortgage entirely. We are going to live off of her paycheck and bank mine every month so that in 5 years we will have saved up enough to buy a larger home (with a bsmt suite of course) and keep this house as a full rental. We spent 5 months looking for a place and were very discerning – often turning down places with all the bells and whistles for a more modest, older home with revenue potential. I am in my mid-thirties and we even took a year off to travel (backpacking) so its not like we hit the lottery. We made the choice to buy because it made sense financially not because it was “our time to become homeowners”. We’ve taken a risk and I really believe that you need to take some risks in life for the potential to be rewarded (and I’m a naturally conservative guy).”
– Shane at VREAA 14 Nov 2011 10:10pm

Shane, you seem like a very honest and straightforward guy, and we wish you well. For the sake of consistency and integrity, we have to point a few things out; and out of respect for your intellect we’ll ourselves be completely honest.
First, in your probability calculations, how heavily did you weight the significant price drop outcome? You are exposing yourself to substantial downside risk, with leverage. Kelowna may have already dropped, but it’ll drop further in the coming Canada wide RE bubble deflation.
Secondly, you haven’t purchased a single family house, you’ve purchased a multi-family dwelling. You’ve purchased the real estate you need to live in for the next five years AND you’ve purchased two other rental ‘units’ that are speculative bets on future housing price strength.
Thirdly, you’ve taken on the job of landlords. You will be paying in elbow-grease and inconvenience in addition to the math you’ve already done. You’ve also exposed yourself to tenant delinquencies in the event of an economic downturn.
Fourthly, if you do get to buy the second house before the deflation you will likely have leveraged your exposure even further. What percentage of your net-worth is currently in RE? What will that figure be after the purchase of a second house?
– vreaa

‘The Province’ Poll – “Should the City of Vancouver put restrictions on foreign ownership of city real estate?” – 81% Respond “Yes”

– from The Province, 14 Nov 2011

Policies On Housing #6 – “Mayoral candidates Gregor Robertson and Suzanne Anton each said they would not put limits on foreign investment, which many observers believe is behind skyrocketing real estate prices in Vancouver.”

“At a public debate last week, both Robertson and NPA leader Suzanne Anton said neither would put limits on foreign investment, which many observers believe is behind skyrocketing real estate prices in Vancouver.”
– from Stephanie Ip, 24hours, 13 Nov 2011

—
[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing‘ for an introduction/rationale for this series.]

“87% of BC residents believe real estate is a good investment”

“87 per cent of residents of B.C. who were polled believe real estate is a good investment (compared to 84 per cent of Canadians).”
[From an investment perspective, when 87% of any population take up one position, it is wisest to take the opposite position. – vreaa]

Question: “The amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments”.
32% of canadian respondents could not make additional payments of $300 more per month

70.2% of Canadian homeowners have a mortgage and/or HELOC on their homes.
Of those, 22% (1.5 million owners) have less than 25% equity in their homes, and 47% have less than 50% equity.
10% of home owners with mortgages have taken out equity during the past year.
The average amount taken out was about $49,000.
During the past year renovation activity resulted in $28.5 billion of equity take-out by mortgage holders.

“Many Canadians believe that other people have taken on too much debt or have bought homes for which they are unprepared. But, when responses about their own situations are aggregated, most believe that they have been responsible. The contrast between these sets of responses is interesting. Actual behaviour by people and their beliefs about their own behaviour tells us more than does their beliefs about the behavior of other people: overall these responses suggest that prudence rules the land.”
[Alternative interpretation: Individuals are inherently biased towards making overly optimistic forecasts regarding their own future prospects. Thus these individuals may be accurate about seeing risk in the situations of others, but far less so when it comes to assessing their own risk. – vreaa]

– Annual State of the Residential Mortgage Market in Canada, Canadian Association of Accredited Mortgage Professionals, Nov 2011 [pdf], and discussion thereof (‘British Columbians think prices unreasonable but real estate still a good investment’, Vancouver Sun, 9 Nov 2011)

Policies On Housing #5 – Ellen Woodsworth, Cope City Council Candidate

1. What do you see as the main housing challenges facing Vancouver?
Homelessness and affordable housing is a chronic problem in our city. Many residents who wish to start a family and live in Vancouver are forced to move out of our city to find affordable housing. COPE is committed to creating a Vancouver where seniors, immigrants, youth and families are able to choose the communities they want to live in, build a family in and grow old in.

2. What measures do you propose to address those challenges?
Vancouver has been critically unaffordable for far too long. The lack of affordability is threatening families, seniors, immigrants and our local economy. COPE is committed to the following measure to address this issue:
• We will launch an “Affordability Crisis Commission” to determine the extent of the new crisis and recommend positive solutions to keep families, seniors, students, new immigrants and small businesses in our city.
• COPE will protect affordable housing by closing by-laws loopholes that allow affordable units to be replaced with high-end condo rentals
• COPE will set a target of creating 1000 affordable rental units in Vancouver every year. Real affordable housing, not high-end rental condos.
• Rent banks
• As a city councilor Ellen has voted to the 10 housing plan

3. What is your policy on housing densification?
New housing in Vancouver should be about the type of housing that is created and NOT the volume of housing or the number of units that are being constructed. However, it is important to built a wide range of housing to meet the range of housing needs in our city. Affordable housing should be the number one priority of housing densification projects in Vancouver because affordable housing will create a Vancouver where everyone can afford to live where they choose. As a Vancouver City Councillor, I supported the 10-year City of Vancouver Housing Plan.

4. Would you support policies that would lead to a drop in real estate values?
We live in a great city and a very desirable city. Seniors, immigrants, youth and families move to Vancouver because of the many opportunities that are available here. Directly building and maintaining a supply of affordable housing separate from market developments is going to promote affordability all over Vancouver and make our communities more inclusive. Housing will target specific groups like students, artists, families and seniors.

5. What is your own family’s housing situation?
We rented a row house for 32 years. It was recently sold and we are now looking for housing.

—
[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing‘ for an introduction/rationale for this series.]

North Shore Owner – “I like this city less every year. If we didn’t have the family ties, we would leave in a heartbeat for better opportunities. Anyone who can leave here should get out and not look back. This city is the real estate and social equivalent of rat poison.”

“We’re in our late 30′s and were *extremely* lucky in being able to purchase a home on the North Shore where we grew up with the profits from selling our previous home at the peak of the boom. We plan to stay here for a long time, so a collapse isn’t going to affect us in the same way that it would if we planned on “cashing in” by selling the place (always a dumb thing to count on anyway!). We have well paid secure jobs and a low enough mortgage that we could handle living on one income if needed. We would never have done it otherwise. I see people my age with $500k mortgages and it makes me just cringe. I have no idea how they can live, given salaries in this town, unless they’re dealing drugs on the side, and a lot of people probably are.
The only reasons that we stay in this town is that our family is all here and we are not financially stretched. I like this city less every year, and if we didn’t have the family ties, we would leave in a heartbeat for better opportunities elsewhere. My advice to anyone who can leave here is to get out and not look back. This city is the real estate and social equivalent of rat poison.”
– RESkeptic at VREAA 7 Nov 2011 10:13am

Flip Watch – 2556 Trinity Street – Bought Mar 2011 $773K; For Sale Jun 2011 $888K Ask; Price Drop Nov 2011 $868K

2556 TRINITY Street, Vancouver, BC, V5K 1E2
“The house above, at 2556 Trinity Street, frame covered with a coat of stucco, was built 60 years ago. It has two tiny bedrooms, one bath, contains just 940 square feet and is butt-ugly. It was listed in March 2011 and sold in two days to a realtor who paid $773,000. Now it’s back on the market, this time aimed at Asian buyers – at the ‘lucky’ price of $888,000. That’s an increase of 15% in 75 days, and multiple offers are expected. Says blog dog Doug: “It’s one thing for Joe Public to be speculating on real estate, but when realtors are effectively buying and selling to each other pocketing the commissions or cutting them out completely while inflating the price adds another level to the pyramid and one more ball in the air.”
Well, guess what? It’s still for sale. Now for $868,000 and on the market for 205 days. MMMMMM things seem to have slowed a bit in those parts.”
– Ronaldo at greaterfool.ca 9 Nov 2011 8:58pm
[featured here 17 Jun 2011]

Math on this, anybody?
At what price level does the flipper start losing?
– vreaa

“The result of this simple math? – Moving scheduled for spring/summer next year.”

“My wife and I work full time and study non-stop, household income is around 80k (after tax)… the same jobs pay 20 – 30 % more in other places and cost of living is 20 – 30% less, the result of this simple math? – moving scheduled for the spring/summer next year.”
– Not Ready To Be Slave at vancouvercondo.info November 2nd, 2011 at 9:52 am

“My wife and I and 3 small children are getting the hell out of this province. I know many in my trade that are fleeing this city, can’t be good for the economy, good luck Vancouver!”

“I am about a year away from becoming a journeyman electrician, once I get my ticket we’re GONE! My wife and I (middle class) and 3 small children are getting the hell out of this province, maybe even out of the country. Not sure where we are going yet LOL but anywhere is better than Vancouver. I know many in my trade that are fleeing this city, can’t be good for the economy, good luck Vancouver!”
– Sparky604 at vancouvercondo.info November 2nd, 2011 at 8:43 am

Policies On Housing #3b – Sandy Garossino, Independent Candidate for City Council

[We have previously featured Sandy Garossino’s interview with The Mainlander as part 3a of this series. Here follows her specific response to our questions. -ed.]

Thanks for getting in contact. Here follow Sandy’s responses to your questions regarding her position on housing policy.
This is an important issue for Sandy and we appreciate being able to share her thoughts with your readers.
Sincerely,
Sandy and team

1. What do you see as the main housing challenges facing Vancouver?
Battling homelessness is a constant challenge. My worry is that a housing crisis has now spread into what is termed in Hong Kong as the Sandwich Class—those with incomes above subsistence levels but below the wealth required to buy medium level property. Excessive buying of residential property for investment, rather than shelter purposes has driven housing prices to stratospheric levels relative to local median incomes. A housing crisis for the middle class stresses the entire system including our ability to house the homeless.
The larger context is the challenge that faces all global investors. Apart from labouring for wages, the way to make money is to build or invest in a business, buy stocks and bonds, or speculate on assets like real estate or gold.
In the current climate of global uncertainty, almost nothing in the world is matching Vancouver real estate for return on investment, security, and long term value. My concern is that our real estate market has morphed into a stock market, and human beings who need affordable homes are being forced out of competition.
Vancouver’s future rests on a healthy knowledge economy as well as small and medium sized businesses that will provide long-term employment. Both these sectors need young people and immigrants with good prospects and disposable incomes. Because housing prices have now detached from the local economy, we cannot offer a promising future to the very people we need to build it.

2. What measures do you propose to address those challenges?
The most important thing is to recognize that we have a problem and we must commit to solving it. We have to gather critical data, including clear information on the extent of non-resident purchasing of investment properties. We can then have an informed discussion about solutions such as incentivizing capital toward rental properties or investment in local businesses, taxing unoccupied properties at the business rate, or considering innovative zoning options. This is a sensitive issue and we need a made in Vancouver solution. Lets bring experts together to generate savvy solves that turns this into an opportunity for Vancouverites.

3. What is your policy on housing densification?
My mind is not made up on density. We must take care to add density of residences for human beings as opposed to density of investment units. A second priority is that density should be absorbed by the City on terms that meet neighbourhood objectives.
Adding density in an attempt to moderate housing prices is unlikely to work. We have to look at the demand side. That said, there are many positive benefits of the right kind of density and I am open to those.

4. Would you support policies that would lead to a drop in real estate values?
This is a time for great care in policy development.
We may well be in a real estate bubble and a sharp drop in values for other reasons is not out of the question, regardless of government policies. However, government’s role should be to modulate severe market swings and not precipitate them. Shocking the market has potential to wreak havoc on households, especially those who may be over-leveraged or recent buyers.
I think we can be more surgical in our responses. Finding solutions that look at targeting specific real estate practices can help solve some of these problems while also encouraging investment in other asset classes.

5. What is your own family’s housing situation?
I have been a homeowner for 24 years. My first house was purchased in 1987 in Point Grey for $125,000, with parents and in-laws supplementing our down payment. The opportunities that created such security for our generation have vanished and it is vital that we stand up now for young people and families.
As a homeowner, I understand the concerns of Vancouverites about possible drops in real estate values and the risks associated with broad, generic approaches to housing policies. We need to find specific, pragmatic solutions tailored to the Vancouver market.

—
[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing’ for an introduction/rationale for this series.]

Policies On Housing #4 – Tim Louis, COPE City Council Candidate

My answers to your questions are below. Please let me know if you have any additional questions or concerns.
Best,
Tim

1. What do you see as the main housing challenges facing Vancouver?
Affordability. The average person is no longer able to afford the purchase of an apartment or a house. Even worse is the situation for people who are homeless.

2. What measures do you propose to address those challenges?
If elected I will propose the creation of a blue-ribbon committee to determine whether or not Vancouver taxpayers are getting good value for money from Vancouver City Council’s property endowment fund. This fund is worth over 1 billion dollars. I believe that the City of Vancouver could be using it to build social housing at no cost to the taxpayer.

3. What is your policy on housing densification?
As my mentor the late Councillor Harry Rankin said, “If it was not for development we would all be living in caves.” For me the question is not for or against development, but development for who — development for the benefit of the developer, or development for the benefit of the people who will live in it and for the benefit of the neighbourhood around it. I would like to see City Council empower neighbourhood councils to make all rezoning decisions that are above a certain size. I am not opposed to higher densification per se. It is the negatives that come with higher densification that I am concerned about, in particular, traffic congestion. We need to look at ways to allow developers to build car-free accommodation.

4. Would you support policies that would lead to a drop in real estate values?
People who already own homes would be unfairly hurt by a policy that would lead to a drop in real-estate values. If the current homeowner has taken out a mortgage for say 90% of the worth of their home, and values then drop by 10%, the homeowner has lost 100% of her or his equity. I am strongly supportive of policies that would bring new housing to market at below market cost.

5. What is your own family’s housing situation?
I am very fortunate. My partner Penny and I purchased our home in 1988. It came with some wonderful tenants for whom we have not raised the rent once since 1988.

—
[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing’ for an introduction/rationale for this series.]

Seller Epiphany – “I sold and have $2M in the bank. My original plan was to wait until prices settled before buying a knockdown and building again. But a feeling has come over me I thought I could never have: I am beginning to hate Vancouver.”

Alex sold his house two months ago for $2.5 million. The buyers were Chinese, from Mainland China. “What else?” he asks. After all, this was West Vancouver. “They wanted our furniture too. We are now renting a furnished house. I have $2,000,000 cash in my account.”
“My original plan was to wait until prices settled before buying a knockdown and building again. But for the last two weeks a feeling has come over me I thought I could never have. Something snapped. I am beginning to hate Vancouver. I use to defend Vancouver to death against the East. Yes, I made lot of money here. But Vancouver is beginning to disgust me. The arrogant, snooty belief that nothing can go wrong here. The multiple offers for homes. The fact there is no industry or decent paying jobs here except if you are a Real Estate agent who drives around in a Porsche and advertises on billboards like a fashion model or actor.”
“Meanwhile we continue to build higher and higher on the North Shore mountains destroying the environment. The Governments have prostituted themselves to the highest bidder, selling citizenship for money and changing the nature of our neighbourhoods. This is not a healthy change. Marine Drive has become gridlocked. Disgusting monster homes with huge retaining walls being built. Everything has become too expensive here and beyond logic.”
– Alex in West Vancouver as relayed by Garth Turner at greaterfool.ca 9 Nov 2011

The interesting thing is that Alex has probably had these thoughts brewing for years. They have now crystalized with the sale of his house. The emotional attachment to the hopeful bullish position has departed, so the thoughts rise up, and become conscious and articulated.
There exists a super-saturated solution of these thoughts in the minds of Vancouver owners. They know that housing is very, very overvalued; they know that Vancouver is a nice city, but limited in all sorts of ways.
What will it take for everybody to suddenly realize the truths they already know? What will the seed be around which the realization rapidly forms?
What will do it is falling prices.
Unlike Alex, very few will be able to sell before they admit these thoughts.
The moment prices pull back substantially, RE will look different.
Owners will realize what they already know: that their $1.1M SFH or $400K condo are very modest structures, very overvalued, with lots of downside risk.
This realization will bring sellers to market as they attempt to realize their fantasized paper gains.
Prices will drop further; price drops will beget price drops.
The irrational strength on the way up will become irrational weakness on the way down.
This is how markets work, how speculative manias unwind.
– vreaa

News1130 Radio Poll – Is it smarter to rent or buy in Metro Vancouver?

– News1130 Poll, 9 Nov 2011
[hat-tip ‘TPKFAA’]

“At the time he absolutely believed it 100%, and so did I. How did we get sucked in? I figured it out: It’s possible to have your ego get so pumped up that it completely destroys all logic and common sense.”

“Little vignette. During the dotcom bubble when our company stock was flying while we rushed crap out the door just to be able to book the revenue, I overheard from my cube one of the sales guys ask: “How is it possible customers go along with this and we still get paid?” to which, our GM very loudly proclaimed: “We’ve worked very hard and earned it!”. This will stick with me forever. The reason being at the time he absolutely believed it 100% … and so did I. Our GM was a very sharp guy. So how did he get sucked in? How did I get sucked in? Took me a bit, but I figured it out: It’s possible to have your ego get so pumped up that it completely destroys all logic and common sense. So, let me ask the bulls, AFTER all that you can see laid out before you (San Diego, Phoenix, Miami, Las Vegas, Shanghai, HK, Spain, Ireland, Greece, blah-blah-blah), how can you think this will end differently for you? Have your heads really become that enormous? (PS. Homer wrote a nice little volume about this.)”
– chubster at VREAA 6 Nov 2011 2:44pm

Spot on regarding “can’t happen to me” psychology.
Amazing, isn’t it?
Completely relevant to why so many Vancouver owners/buyers see the dots but don’t connect them.
– vreaa

Property Prices Collapse in China – “When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse.”

“Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun”…
Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate. Even state-funded experts are more pessimistic. For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.
When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse.”
– excerpted from ‘Property Prices Collapse in China. Is This a Crash?’, Gordon Chang, Forbes, 6 Nov 2011

Effects on Vancouver RE?:
1. A very, very small direct negative effect (a handful of prospective buyers who may have been dependent on funds from these Chinese projects will now be unable to buy here)
2. A very much larger indirect negative psychological effect:
— Things “Chinese” and things “Real Estate” can ‘crash’.
— ‘China’ feels closer to home for Vancouverites than does ‘Ireland’, ‘Spain’, ‘Phoenix’ etc.
— The simple experience of hearing ‘32%-off’ and “price cuts of 50%” has a bracing effect.
– vreaa

Policies On Housing #3 – Sandy Garossino, Independent Candidate for City Council

[Sandy Garossino had been invited by e-mail to be heard as part of this series. Her office indicated she would respond to our questions. While we await that response, here are excerpts from an interview she did with Andrew Wit and Sean Antrim in The Mainlander, 5 Nov 2011. The whole interview is a ‘must-read’ for those interested in the issues. Thanks to readers who alerted us to this interview. -ed.]

Andrew Witt: … I think that everyone recognizes that there is an affordability crisis in the city. In 2008, Vision Vancouver was elected on a platform that would address housing, homelessness and the affordability crisis, but we all know they have done little to tackle the problem. How will you address this issue, and what distinguishes your platform from that of Vision Vancouver?

Sandy Garossino: Almost everyone that I have heard discuss this sees the affordability issue. I’m talking here about broadening this beyond homelessness and subsidized housing, but also market housing for the average working person. Almost everyone who talks about this, talks about it in the simple supply and demand equation, and their point is to increase supply. Because I deal with Asia, I understand capital markets in Asia, and I have dealings there, this seems to me to completely miss the true nature of the issue and the challenge that we confront. Just to give you a little bit of a background, our median income levels in Metro Vancouver place 20 out of 28 urban regions in Canada. Our median income levels for 2010 were below Sudbury, Windsor and St. John’s Newfoundland. We have the highest real estate prices in Canada, relative to median income. We have almost the highest real estate in the world. Relative to median income, we are 56% higher than New York City and 31% higher than London, so there’s clearly a serious distortion in the market. One of the first challenges we have is we don’t have the data. We don’t have information that can pin-point exactly what is going on and the extent to which capital is entering, and the extent to which that capital is non-resident, and how much that is affecting the market. We need to know a lot more than we do. But based on anecdotal information, which is turning out to be corroborated in news reports, it looks like global capital is having a massive impact.
I don’t know if you saw the CBC report, where on Cambie Street bungalows were sold for an average of $3.4 million to a mainland Chinese buyer. So, this is a non-residential purchase, we know there is a flight of global capital. What most people, even many people in land development and even many people in government are not perhaps cognizant of, is the extent to which rules in other parts of the world are creating a funnel effect that is driving global capital here. The challenge is not that there’s inflow of global capital because in some ways it could be quite beneficial and benign, the problem is that it is pooling in a single asset class, residential real-estate, where there is a compelling public interest. We’ve got median income levels at Sudbury levels, and we’ve got average real estate prices that are twice the average of Canadian real-estate prices. When people are feeling that they are choking, it is because they are. It is not only choking individuals, it is choking small businesses, because there is no disposable income. Businesses can’t recruit people, they can’t recruit talent, and universities can’t recruit talent. It is corroding the entire local economy, which is primarily a small medium enterprise economy. So what to do?

Sean Antrim: Bob Rennie, when he was recently speaking to the UDI, argued that it is not money coming from around the world. He looked at all of the property taxes were going out, and found that only single digit percentages of them were going to mainland China, or even just out of the country.

Sandy Garossino: I was quite struck by that analysis, because if you or I own property in a foreign country, you would have a property manager in that local environment, and that property manager would take care of all of those things. It is completely irrelevant where property taxes were mailed to. We need better evidence. Anybody who lives on the West Side, as I do, knows how false that is. There are people in my community who describe that they are the only occupied house on their block. There are houses sitting empty. We have a situation where in the marketplace, we have excess housing. We’ve got residences, thousands of them, both single-family homes and condominiums sitting empty. Well, we’ve got a rental crisis. We need to start looking at the levers. And what can be done? I don’t have the answers because this is a really complex question, but obviously we don’t want to shock the market, because that would take a bad situation and make it infinitely worse. So my approach is to ask what are the surgical tools you could start to use. So on rezonings, if we are going to be doing spot-rezonings which at least in the short-term foreseeable future we will continue to do, those rezonings should perhaps be made conditional on all the units being occupied, regardless of who the owner is. Because off-shore owners frequently do rent out their property, and often when they do they rent it below market value, that can be useful. There’s no reason in the world that we should be rezoning properties to build towers that are not going to be fully occupied. Everything should be fully occupied.
Secondly we should be looking at some of the solutions that other countries and cities have looked at like Singapore, which creates zones. Some zones are totally open for the international market, and some zones you can’t buy in unless you are a resident.
—

Sandy Garossino: ” … let’s look at the low-hanging fruit. Empty condominiums, and empty residents are investment properties, they should be taxed. If it is the case that business subsidizes residential housing, it should be subsidizing residential housing, not investment units. Investments should be taxed at the business rate. I would be looking for those kinds of mechanisms. We should be looking much more closely at the nature of capital that is coming in. It can be perceived as a threat because it is operating in a negative way, that has pooled so much. It is also an opportunity – one of the real interesting features of this capital is that, generally speaking, I think it is individuals, and they also have a tolerance for lower rate of return on income, lower return on investment, than the local developers. One of the challenges of STIR is that local developers actually want a decent return, or a lot of return, on their investment. That is really difficult when you have really high bank costs, but actually the non-resident investors are prepared to live with empty-units. Return on investment is not their primary objective, they are looking for something else. We should be looking to channel that investment into rental housing, channel it into financing some of these more innovative situations.”

Sean Antrim: “Bob Rennie has talked about “social housing condos” as people buy them as investments, I’m not sure if that is what you are talking about?”

Sandy Garossino: “I am thinking in concept. I think we actually need all of the players at the table, we need developers, they do understand planning costs, and we need everybody at the table, rolling-up their sleeves and really saying “OK, we are going to crack the code on this,” and we’re going to find solutions that are not going to destroy the equity that recent young buyers, the last thing they want is anybody who is actually able to shoehorn themselves into a property and for them to lose their house because we have a crash. We can’t have that.”
—

Andrew Witt: “You have served on a number of different art-institutions Boards. In Vancouver there are a lot of art spaces that are under erasure, especially under the threat of real estate speculation. … What is your strategy to fund these projects as well as maintain Vancouver’s dynamic artist-run culture so that it is not displaced entirely.”

Sandy Garossino: “I see this in the broader context, in cultural context. The real cause of the problem, is that real-estate prices are off the charts. Being able to fund small boxes and little spots here and there is not how you instill energy and dynamism in a cultural community. My daughter is an artist living and working in Montreal. She is in the music scene, she is rising. Things are happening there. Why? It is not because of her space, it is because she is around other exciting artists and musicians. They have a a whole scene there. It is not a typical postal-stamp place that is affordable. It is about having an environment which is artist-friendly, where it is possible to be an artist where other artists want to be.”
—

Sean Antrim: “Why should people vote for Sandy Garossino on November 19th?”

Sandy Garossino: “Because we do need to get new voices in and, in particular, if you look at the development issue, there’s just a huge amount of money being poured into the parties and we need to have much more wide-open ability for interesting people to come forward. The other reason is that I will attack this affordability issue, and I’m going to get right to the heart of it, and not tinker around the edges and say there, we’re done. We’re not done until people can afford to live in this city.”
—

[This post is not to be seen as a VREAA endorsement of any of the above positions. See ‘Policies On Housing’ – The Positions Of Local Entities On The Challenges Facing Vancouver Housing‘ for an introduction/rationale for this series.]

“I have grown up in this city and love it, but add me to the list of people seriously considering moving away. I simply can’t afford to take on the risk that paying $1M for a house and relying on ongoing record low interest rates for the next 20 years requires.”

“Add me to the list of people seriously considering moving away. The prices in Vancouver now are insane. Its quite depressing as I have grown up in this city and love it, but I simply can’t afford to take on the risk that paying 1M for a house and relying on ongoing record low interest rates for the next 20 years requires.
As well, the business economy in Vancouver sucks and is getting worse not better. Do some research and look at how many major head offices have LEFT Vancouver in the last 10 years (mostly from being bought and HQ moved). We don’t have many high paying private sector corporate jobs left in this town, and a few land developers, real estate agents, and pot growers aren’t going to fill in that gap. Right now it appears that a lot of these places where I live are being bought with overseas money, but how is that creating a sustainable real-estate market?
Its sad, but it appears my next home will be Toronto. It sucks, but at least they have high paying jobs to go along with their real estate prices.”
– kmanvan at vancouvercondo.info November 2nd, 2011 at 11:39 am

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

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

“What finally did it for me was not being able to expand my business because my suppliers had fled the city. I don’t think there is any future for Vancouver. There are too many interested parties in positions of influence making money from the status quo.”

“Vancouver was never a career mecca but up until a few years ago it was possible to survive in Vancouver on Vancouver wages. I always loved the Vancouver weather, the multicultural nature of the city and the hopes and dreams for an urban utopia by the sea.
That all ended when speculation went wild. Of course real estate prices went so far beyond the means of someone earning a living in Vancouver that it is both hilarious and sickening at the same time. The rental market also became absolutely terrible (unless you enjoy living in the spider-infested mouldy basements of speculators or the expensive upper floors of a poorly-maintained house that is in constant danger of being flipped by its speculator).
What finally did it for me was not being able to expand my business because my suppliers had fled the city, industrial leases and commercial property taxes were being affected by the inflation of residential prices and industrial land was being taken over to build condos for speculators. Never mind that it is impossible to attract middle-class workers to move to Vancouver.
I could not have been a greater enthusiast for Vancouver. I was involved in the community and City Hall. Now I feel anger and resentment. I feel I have been betrayed by my own government, which has facilitated the displacement of Vancouverites by using government policy (low interest rates and taxpayer-backed CMHC guarantees to reckless lenders) to fuel speculation in Vancouver. I am also unhappy that the Federal government has encouraged the Robber Baron class of arrogant Communist Party cadres in the People’s Republic of China to deposit their ill-gotten flight capital in Vancouver real estate. I cannot compete with that kind of foreign wealth and I am not interested in being run over by a Chinese teenager street-racing a Lamborghini Murciélago in Vancouver. I lived on the west side of the city and that is the part of Vancouver that has been most-purchased with money from the People’s Republic. The west side is the low-density side but it is half the geographic area of Vancouver. It seems like the best part of Vancouver has been purchased by China (and not Canadians of Chinese descent in Vancouver).
In a very short time, Vancouver has gone from being the gumboot paradise by the sea to being a tense situation with a rapidly falling standard of living, reduced career opportunities, an economy based on real estate speculation and no hope for someone trying to make an honest living in Vancouver. It seems that Vancouver has become a playground for rich, evil douchebags making money elsewhere and a living graveyard for the middle-class Vancouverite making a Vancouver salary.
I now live in another Province. I made a very expensive move to flee the madness. I miss my home Province but I could not afford to live there anymore. I will cherish the good memories and I will try not to think about what Vancouver has become. I don’t think there is any future for Vancouver. There are too many interested parties in positions of influence making money from the status quo.”
– Runawayscreaming at vancouvercondo.info November 2nd, 2011 at 8:34 am

“We can technically afford to buy a house in Vancouver, but I can’t help look at basically everywhere else in the world, and see how much less we’d end up spending on housing and how much more we’d get.”

“I can empathize with the sentiment here. I’m myself entertaining the idea of leaving. I guess me and my wife are slightly in a different position though, while we could technically afford to buy a house in Vancouver I can’t help to look at, well basically everywhere else in the world, and see how much less we’d end up spending on housing and how much more we’d get.
The rents in Vancouver aren’t very high compared to many other cities we’d be thinking of moving to but I’d be hesitant to start a family in this town due to the risk of having the rented dwelling sold and us being forced to house-hop around.”
– slurker at vancouvercondo.info November 2nd, 2011 at 9:33 pm

“When I tell people we rent our house, their eyes change. It is as if there is shame in being a tenant. People need to borrow heavily to lead a normal lifestyle. This is not what we want.”

“Deirdre Marconato regularly hears her neighbours and acquaintances say that Vancouver is “the best place on earth.”
“It’s a very pretentious phrase, but it is accepted as an immutable truth,” she said.
Ms. Marconato also thought that Vancouver was a great place when she arrived in 2008. She and her husband, who has an international career as a financial analyst, had decided to sell their flat in Hong Kong to move to the West Coast, where Ms. Marconato was born. They wanted to settle with their daughter in a friendly neighbourhood, close to good schools, ocean and mountains.
But when we spoke to her in her upscale West Vancouver neighbourhood in late June, Ms. Marconato was busy packing her last moving boxes. Her adventure was coming to an end after three years in Vancouver, with the family now returning to Hong Kong.
Upon arrival in Vancouver, the Marconato family soon saw that something was amiss. They were well-off, and used to the cost of living in Hong Kong, but they were shocked when they saw the local Vancouver house prices. They initially decided to rent.
However, being a tenant in Vancouver is to be part of a subclass, Ms. Marconato soon realized. “When I tell people we rent our house, their eyes change. It is as if there is shame in being a tenant,” she said.
Community life in West Vancouver is not what she imagined. “At least 60% of homes in my neighbourhood have been sold over the last two years. Many are empty. It’s a very cold atmosphere. We invite people over, but it is never reciprocate. I lived in London, Paris, Singapore and Toronto, and I have never experienced a situation like this.”
Furthermore, West Vancouver is not immune to crime: several gang shootings took place in the district in the last two years. A student of the high school attended by her daughter was stabbed outside the school.
A few months ago, a headhunter contacted Ms. Marconato’s husband to offer him a job in Hong Kong. The decision to leave was made quickly.
Ms. Marconato is disappointed that her “Canadian dream” has ended.
“I do not understand how people live in Vancouver,” she said. In Hong Kong, life is expensive, but wages are high. Here, jobs are not highly paid. People need to borrow heavily to lead a normal lifestyle. This is not what we want.”
– from ‘Fièvre immobilière: quitter Vancouver’, by Nicolas Bérubé, La Presse, 15 Oct 2011
[translation by Google; paraphrasing by your editor].

Carney ‘Not Complacent’ About Level Of Household Debt or Housing

“Bank of Canada Governor Mark Carney said, in testimony to the Senate Banking Committee, that he isn’t complacent about the level of household debt in Canada or the state of the country’s housing market.
The Bank of Canada has highlighted in its financial stability report the risks posed by record levels of household debt, and Carney said in a speech in Vancouver earlier this year that there are signs some local housing markets are moving away from fundamental values.”
– Bloomberg, 2 Nov 2011

Another oblique and lukewarm show of concern.
When the housing bubble implodes, BOC will say they ‘warned’ Canadians of the risks.
Well, Canadians are not listening. They continue to borrow as much as they can; two out of three new mortgages are at variable rate.
We know that the BOC can’t raise interest rates in the current environment, for fear of dangerously slowing the economy. But Mr Carney could use his considerable influence to lean on Mr Flaherty. If the government sincerely wants to do something about the over-borrowing, they should tighten mortgage lending. But they won’t do that, because there are too many interests vested in the continuing speculative mania in housing.
– vreaa

“It’s not normal that you can sell a condo in Vancouver and with the profit buy a 5 acres piece of land and build a house somewhere else in Canada.”

“It’s not normal that you can sell a condo in Vancouver and with the profit buy a 5 acres piece of land and build a house somewhere else in Canada. We moved to the Eastern Township of Quebec, 75 min. from Mtl, it’s not like we moved to some third world country, despite what your opinion is on QC. And that we were both willing to quit our job to do so, again not normal.”
– Ultraman at vancouvercondo.info November 2nd, 2011 at 12:31 pm

We believe this is sound logic.
This kind of ‘abnormal’ pressure caused by value discrepancies will reconcile.
– vreaa

“I left Vancouver earlier this year to work in Germany. People are still shaking their heads as to why I left. They kept telling me to buy even though mortgage would have been 2.5 times my rent.”

“I left Vancouver earlier this year to work in Germany. People are still shaking their heads as to why I left as I had a decent job (also above the average) and kept telling me to buy (even though mortgage would have been 2.5 times my rent) I now live in Germany where renting isn’t frowned upon and my rent combine with car payment is just under a third of my take home monthly salary. There are a zillion challenges to living here, but affordable living is NOT one of them. What’s interesting though about German real estate is that the word bubble is never thrown around. Housing prices go up very slowly (a bit beyond inflation so it seems) so no one’s getting rich, but no one’s losing their shirt either. You buy a house as a place to live in and slowly build equity, not as a means of getting rich. And, renting is a perfectly acceptable way of living, even well into your 50′s.”
– katherine with a k  at vancouvercondo.info 2 Nov 2011 3:48am