A lament on affordability
Scullboy sent in a link to this CBC editorial on housing affordability in Vancouver. Its written by a boomer who grew up here and is essentially a lament about the loss of affordability that the current generation is facing. Here’s a few select excerpts:
No one that I grew up with could afford to buy a house in that neighbourhood now and move back in. In my parents’ day, there was typically only one wage earner per family, and now there are two, and still, middle income, middle-class couples cannot afford to buy a house in the city. It is obvious that wages have not kept pace with the inflated price of housing.
Actually, I don’t know anyone who can afford to buy a house in the Lower Mainland (B.C.) anymore, unless they lock themselves into 30- to 50-year mortgages, and do nothing but work overtime for the duration.
This situation has to bottom out sometime. But right now, there is a whole generation of young Canadians who have no hope of owning their own place in a major city. Young doctors are turning down job offers in Vancouver because they can’t afford the housing.
…
The thing is, everyone buys property with the idea it will increase in value, and they will get more out of it in the end than they put in. This equation has been more or less manageable for generations. But there must be a breaking point, and I think we’re almost there.
Banks, which have been making hefty fortunes on all the mortgages on any given house, new owner after new owner, may start to worry about this soon. The bottom-out factor has already started in the USA, and will arrive here too.
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February 20th, 2008 at 4:40 pm
February 20th, 2008 at 5:02 pm
Hat-Tip-2-Sophia
No one that I grew up with could afford to buy a house in that neighbourhood now and move back in.
Bought a house in 1955 for about $17,000,It was improved and sold in 1976 for the princely sum of $100,000. The owners thought they’d hit the jackpot.
Now, houses like the one in my old neighbourhood are selling for well over one million dollars.- MARY-ELLEN LANG
“I sold my kits place 18 months ago for $1.125 (quiet part of 10th just east of McDonald, 50 ft lot, 2 suites plus 2 bdrm main floor, decently reno’d). At the time, I thought i was making out like a bandit. Now, I know I left 100-200,000 on the table. ack.”
At least that much left on the table.. 1.125 is probably less than land value now.”-An
“Check out the balls on this flipper!! Bought in June 2006 for $790k, put in hardwood/granite/stainless and is listing for $1,499k!”-Crabman.
“I paid 217 when I bought in 2004 and sold for 227 in 2006″.-Sofia
carefull parents buy home for them self and always help their children to settle up.
“Do not sell your option(house)for profit our profit is our place to live”-my opinion
February 20th, 2008 at 5:05 pm
STFU.
Ah, just the thing after a long day.
February 20th, 2008 at 5:07 pm
February 20th, 2008 at 5:42 pm
I just go and shop elsewhere. Like groceries, if Safeway want too much for their apples, just go elsewhere. Its my money, my time.
What is the joy of having a huge mortgage, work OT all the time, be stuck in the rush hour for long commute, be stressed, cant afford anything, have no time.
Where is the joy?? Who am I serving?
February 20th, 2008 at 5:56 pm
February 20th, 2008 at 6:11 pm
February 20th, 2008 at 6:15 pm
Live light, pack light, be mobile, be flexible,when the environment is favourable for living, then settle there. Do what it takes to not be at mercy. And one way is to live within means. Most dont have means to own a home here, so why bother live here? Who are you serving?
February 20th, 2008 at 6:21 pm
The real estate prices here are well into the unaffordable zone and have been so easily in the last six or seven years, in terms of price to earnings ratio, at least in my neighbourhood. Even if average earnings were appreciating at a healthy rate, RE prices would still be out of whack, as the rate of price increases is bubble driven.
February 20th, 2008 at 6:24 pm
“where do you go for housing?”
Go to the rental shop, they’re still pretty reasonable and it keeps you out of a 40 year mistake.
February 20th, 2008 at 6:47 pm
But you have to get rid of the revenue house that has been vacant for 6 months as well, and the both mortgages are up for renewal.
Rob/Krrish/Satv can you help this guy?
February 20th, 2008 at 7:19 pm
The case above is a principle residence while your case hold a multiple units. they might have kept the margin otherwise no body leave empty units for sale,in this case owner might be well prepared otherwise he is on mistake.Who deserve to pay for mistake in your case? the owner himself.
I have notice one of my friend put his house on sale and subject is he won’t move out unless he buy another house for him self.
So far he got 25 offers in last six month but did not find the desirable home and finally he is going to accept one cash offer with the subjet to rent that same house for next six month and he will be continue looking for a place for himself unless or otherwise for next six month.
February 20th, 2008 at 7:26 pm
February 20th, 2008 at 7:28 pm
February 20th, 2008 at 7:37 pm
then he will be back with same story hmmm sold for 7 now it’s less than land value etc…..hmmmm?hmmmmmm?hmmmmmm.
February 20th, 2008 at 8:43 pm
February 20th, 2008 at 8:44 pm
My wife and I are pregnant, due in June. Our current Kits rental unit does not have sufficient space for a child and us.
We have been looking about 2 months for a 3 bedroom or 2 and den in South Van, South Burnaby, and New West. I just have to say prices are high, landlords are expecting very hefty monthly payments if their places are not dumps, and even dumps want a lot. I figured we could leave Kits and get an extra room in the above mentioned areas for about the same price… no dice. Not even close. Landlords seem to be able to ask for more than they use to and are getting it.
This makes me wonder a few things. If they are getting their needed rents, then they will be able to make the mortgage payments. All, yes ALL that we called have an accent, making it seem like immigrants are in fact coming here, buying places and getting the rents they need to cover the mortgage. Why is there such a shortage of 2 and den or 3 bedroom places?
Maybe this blow up won’t happen as bad as we are all thinking…
Getting very discouraged!
February 20th, 2008 at 8:56 pm
February 20th, 2008 at 9:06 pm
I was tracking inventories through mls.ca back in 2006 here’s some numbers:
15 Nov 2006 - Vancouver Westside
Single Family - House - 500+
So Broken down by 12 areas:
First 12: 198
Second 12: 339
————–
Total 537
Townhouse - All - 178
Condo - Apartment - $0 to $200,000 - 11
- $200,000 to $300,000 - 188
- $300,000 to $400,000 - 357
- $400,000 to $600,000 - 431
- $600,000 to $800,000 - 198
- $800,000 to $1,000,000 - 83
- $1,000,000+ - 153
——————————
Total 1421
Ladner
======
Single Family - House - 65
Lowest Price - $379,000
Tswassen
========
Single Family - House - 110
Lowest Price - $449,000
———————————————-
Here’s today, as I haven’t done it since Nov 2006.
20 Feb 2008
Single Family - House - 500+
So Broken down by 12 areas:
First 12: 150
Second 12: 253
————–
Total 403
Townhouse - All - 148
Condo - Apartment - $0 to $200,000 - 8
- $200,000 to $300,000 - 58
- $300,000 to $400,000 - 207
- $400,000 to $600,000 - 419
- $600,000 to $800,000 - 221
- $800,000 to $1,000,000 - 116
- $1,000,000+ - 207
——————————
Total 1236
Ladner
======
Single Family - House - 72
Lowest Price - $359,000
Tswassen
========
Single Family - House - 87
Lowest Price - $519,000
————————————————
Results:
Single family homes in Vancouver Westside down 134 listings.
Condos, down 185 total listings.
Ladner SFH up 7 listings, lowest asking price (excluding a floating home) down $20,000.
Tsawassen SFH down 23 listing, lowest asking price up $70,000.
————————————————–
Now, I realize there is no comparable info on the house prices, and I realize that the months don’t coincide, but my whole point is, where is the explosion of property listings? Listings are down, prices are up!
If this blow up happens, it’s not going to be for a while, and probably won’t be as large as we’re expecting based on my above post. But hey you never know?
February 20th, 2008 at 9:31 pm
51 Rob Chipman { 02.20.08 at 6:25 pm } dingus:
I think anytime the phrase “whoa big guy”” gets thrown out we’re doing something right!
I agree with you that the information is out there, and frankly, I think an army of doofuses is a valuable thing - if enough of us sample something someone is bound to detect BS if its there.
And I think its true that I embellished your arrogance somewhat Mea culpa. I guess the reason is that I’m not too concerned that newspapers print a lot of crap, because its been ever thus (that paraphrased quote about reselling newsprint is H.L. Mencken, I think). Its tough for me to take someone who gets their knickers in a knot over that too seriously.
I read the newspaper everyday, but my first stop is the editorial page. I want to know what someone thinks, and I want it to be biased. At least you know what you’re dealing with. When it comes to “news” you have to ask yourself a bunch of questions - why are they writing about this, and not that? what does this writer know about the subject anyway? is it pablum because its a conspiracy of evil, or is it pablum because its a conspiracy of incompetence?
I’m sure Cameron Muir and Helmut Pastrich are both really smart, but let’s not forget that they’ve undercalled the market several years in a row. I may present that as evidence that its tough to predict market direction, but I don’t think anyone can point out an instance where I’ve cited them as experts.
“Balanced conditions”? Yup, gotta love it. Mohican and I split hairs over whether a 40% correction combined with 3% rent inflation each year for 5 years will give us acceptable investment metrics and someone else says “In the meantime we might have a more balanced market!” What is that? Its like a recent article that said lower mortgage rates would help affordaility. I’m sure they will. Lower rates will make it easier to pay 70% of your income for a house. Awesome. Sign me up for more of that affordability! Seems “balanced” and “affordability” mean different things to different people.
February 20th, 2008 at 9:38 pm
Nouriel Roubini | Aug 26, 2006
http://www.rgemonitor.com/blog/roubini/143257
Spin #1: Housing prices are not falling, have never fallen and will not fall
Spin #2: We have never had in US history a recession that was initially triggered by a housing bust. So, it cannot happen this time around
Spin #3: In spite of the housing slump, the levels of activity in the housing market are still very high relative to a few years ago. So, there is now housing bust, only a healthy correction.
Spin #4: If the housing bust gets ugly, the Fed will ease rates and rescue us from a recession.
Spin #5: Credit conditions in the housing market are not tight. Credit growth is still perky and there is no credit crunch. So, unlike the past, there will be no hard landing
Spin #6: Given the increase in housing prices there is still so much net wealth (equity) in the housing sector that most households are richer, will keep on feeling richer and will keep on spending more.
Spin #7: Banks and mortgage lender are still very sound and there is no risk of systemic banking crisis.
February 20th, 2008 at 9:50 pm
February 20th, 2008 at 9:50 pm
Or you might end up on probation just like Snick, or worse/better yet be banned from Satv/Robs blog.
hee hee
February 20th, 2008 at 9:57 pm
If I were you I would stay in Kits. No better place to live with a toddler (beach, etc). And you won’t need an extra bedroom before the little one turns 2.5, which is after the Olympics. And if your place is not a dump, even better: babies don’t like mold.
As for now, rising a family in Vancouver is just not an option. You either move to another city or you pack people into tiny bedrooms…
February 20th, 2008 at 10:34 pm
Craigslist lists homes for RENT.
So… what we have is a steady increase in homes for RENT while homes for SALE are more or less static.
To me this indicates massive speculative buying of property, which in turn is leading to an oversupply of rental stock.
As I mentioned before I think this is similar to what happened in Britain.
Thoughts, comments? Not you Krrish, you don’t count.
February 20th, 2008 at 10:47 pm
February 21st, 2008 at 5:31 am
February 21st, 2008 at 7:09 am
65 coco { 02.21.08 at 6:55 am } Coco has retired Rob’s blog, and been rehired at this one:
http://coconews.wordpress.com/
February 21st, 2008 at 7:35 am
February 21st, 2008 at 8:00 am
i always thought you behaved in a gentlemanly manner and were polite at all times. i’m SHOCKED… to hear this!
oh the inhumanity of it all.
February 21st, 2008 at 8:41 am
I would love to know why people like this write these ridiculous stories. It’s half bragging (I’m going to sell my house and cash in big time on my RE lotto ticket) and half whining (if I sell my house where can I afford to buy another and still keep my hoard of RE lotto winnings). Typical schlock from the CBC and local MSM, they couldn’t analyze their way out of a paper bag.
February 21st, 2008 at 8:43 am
February 21st, 2008 at 10:12 am
Around this time last year Firenze was hitting the market and there were line ups to view them at $1600!
You’ll see Firenze listings languishing on the market with Spectrum listings in the next month or two as the first round of tenants realize they’re paying too much.
February 21st, 2008 at 10:53 am
February 21st, 2008 at 11:02 am
February 21st, 2008 at 11:20 am
Just to clear up. Yes, I was tracking MLS for sale data on areas I was watching where we figured we would end up buying in eventually. The goal of that was to hopefully have some data to show my wife to convince her we shouldn’t buy now. Unfortunately that sort of data never materialized, but by that point in 2006 south of the border there was plenty of bad housing data.
In retrospect, I may have even stopped tracking data around the time VHB’s blog was shut down.
February 21st, 2008 at 11:43 am
Dunno you may find you’re able to stick it out for a while MC_V, which will give you some time to find the right place.
February 21st, 2008 at 12:01 pm
http://tinyurl.com/2n44k6
Lot’s of talk about Japanese style deflation coming up in the USA, only worse. Also talk of revisiting the depression of the 1930’s, only worse.
If you find it hard to believe these commentators I should mention that they were (mostly) all over the housing/credit bubble before it popped so they have some cred.
February 21st, 2008 at 1:15 pm
Could one of those people who picked that option other than Krrish step forward and give some explanation? What on earth makes you think that way? Is it based on facts or just a vivid imagination?
February 21st, 2008 at 1:38 pm
Dosh come out! come out where ever you are!
February 21st, 2008 at 2:08 pm
February 21st, 2008 at 2:12 pm
February 21st, 2008 at 2:27 pm
I live around the corner from a house that has 2 - 3bedroom suites, 1 - 2 bedroom suite - and a huge yard
-been in the family for 25-30 years, no mortgage
listed at $948k - been on the market for 4.5 months - they were offered $900k and turned it down
I could only shake my head in disbelief
February 21st, 2008 at 2:49 pm
February 21st, 2008 at 3:39 pm
You can imagine how he feels about that decision these days.
People in this town are blinded by greed, and frankly many of them are kind of stupid. They have an asset they didn’t really have to earn and because the crash hasn’t happened yet, they believe it never will.
Since the shouse has been in the family for generations, they like many in Van probably haven’t travelled extensively. They really believe everyone actually does want to move here.
It’s that kind of thinking that kept the market going.
I suspect the people who bought in at the top have a nagginng feeling something’s wrong right now.
Oh and for those of you who think “everyone wants to move here”, not a single American I asked during my NYC visit knew the capital of Canada. Most had never heard of Vancouver.
So Dosh and Krrish, how can “everyone” want to move here, if they don’t know where “here” is?
February 21st, 2008 at 3:51 pm
I’ve found the same thing in Australia and Asia, All over the U.S. (big and small towns) and in Mexico the people don’t really know anything about Canada.
People know where Vancouver is in Toronto but they are not threatened by the small town out west that they know as “no fun city”.
Krissh’ story is that his parents bought him a condo and therefore the price will go up forever.
Dosh is just dumb.
February 21st, 2008 at 4:02 pm
That’s why after the games everyone will move here, didn’t you hear?
February 21st, 2008 at 4:12 pm
Wouldn’t it be cool if they announced Miami will be hosting an Olympics soon? Then rich people worldwide would want to move there too!
February 21st, 2008 at 4:13 pm
that’s probably true, but then the US is not the major source of Canadian immigrants. I would suspect people in countries with large emigrating populations do know a little bit about canada. At the very least, they know where the canadian embassy is… what they probably don’t know is what the difference between vancouver, toronto, or any other city is. i don’t know any who decided on vancouver specifically because it’s the “best city in the world”. they just want to move to canada.
February 21st, 2008 at 4:14 pm
“It is damaging to rent debt, simply to buy an asset that is losing value rapidly. It can lead to depression, abuse of a spouse or children, even suicide. It is much easier to simply rent and watch others suffer.
Home values will fall guaranteed!(although they don’t have the nice weather Vancouver has) Southern CA already down 15-25% of peak, wow. Just stay on the sidelines, let somebody else get hosed. ”
February 21st, 2008 at 4:22 pm
I have known a LOT of immigrants in my time. God knows I’ve dated a few.
All the immigrants I knew were aware of two Canadian cities, Toronto and Montreal. That includes all the Latino boys.
The thing about immigrants to Canada is this: They tend to be either very rich, or very poor.
The very rich are either so well off that money’s no object, in which case they buy a giant home in North Van or somewhere like that, or (being good with money) they don’t feel like spending on a bad investment like a condo.
The very poor would either go to Toronto or Montreal which is more affordable, or they would/will never ever come here.
So *that* is Kirsh’s story! Hey Krrish don’t be a ‘tard. Sell your place as fast as you can, wait for the crash then buy in cheap.
Or… you know… don’t. I kind of want to watch the look on your face as the market collapses in on itself.
February 21st, 2008 at 4:25 pm
February 21st, 2008 at 4:25 pm
February 21st, 2008 at 4:30 pm
http://tinyurl.com/2v2e64
for that other 20%
February 21st, 2008 at 4:36 pm
Of course the radio, print media, and TV stations better accommodate the BS is they want any of the lucrative RE Ad business.
Listen how desperately 1130 radio is hustling the RE Business with the wall to wall coverage.
Still I’m not surprised Edmonton had the greatest appreciation, you see they are close to Vancouver (you know 2010, the rich Asians etc)
But mostly because of scarcity of land. They are hemmed by the North Pole to the north, the Pacific Ocean to the west, Atlantic Ocean to the east and USA to the south.
February 21st, 2008 at 4:44 pm
I do think that we continue to see continuing coverage of the social costs of our
lowering affordability.
Some stories I will not be surprised to see.
Working couples “trapped” in a one bedrooms with kids. Retiring boomers cashing out locally moving to central/south america maybe post bubble florida/arizona. The lack of art-space due to increased property values squeezing the affordability of artists to have creative space. Companies having trouble attracting/keeping quality applicants for jobs in the best place on earth.
February 21st, 2008 at 4:47 pm
“God, I hope the spousal abuse thing is for real. I’d love to hear Krrish’s wife is slapping him around ….”
Well let’s hope she doesn’t get reported, the SPCA doesn’t take that kind of thing lightly.
February 21st, 2008 at 4:56 pm
February 21st, 2008 at 5:07 pm
The things that scares me are the stories that are surfacing already (CBC) about young doctors not moving here due to affordability.
What happens to Vancouver if there is a shortage of Doctors, Nurses, etc.? Further downward pressure on the eventual price drops thats what.
Maybe eventually ‘no one will want to live here’…
February 21st, 2008 at 5:14 pm
Westside prices skyrocketed in 1989 as a result of the wealthy moving here from Hong Kong courtesy of the Entrepreneur’s clause ,that fast tracked their immigration.
There were some wealthy Taiwanese folks arriving to offset the Hong Kong folks who moved back in the late 90’s.
We had an influx of wealthy Koreans in the early 2000’s.
Where is the next batch of Uber rich going to come from and why will they pay more than the current prices?
Maybe Krissh hometown, Kazakhstan?
Are a bunch of multi millionaires , from Kazakhstan, trying to move here Krissh?