What’s your savings rate?
I thought the topic on what people pay for rent in Vancouver generated some interesting and informative discussion, so I’d like to do something similar on the topic of income and savings. As the majority of visitors here are… let’s say ’sceptical’ about the Vancouver real estate market and likely financially cautious I don’t expect the results here to reflect the city at large, but I’m curious to see how much people are saving.
One argument for home ownership is that it acts as a forced savings plan, because the average person doesn’t have the willpower to save on their own. If you’re sitting out of the market waiting for a correction and renting for less than a mortgage would cost are you saving the difference? If loans disappeared and real estate in Vancouver was suddenly only available for cash would you be ready to swoop in?
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April 28th, 2008 at 8:27 am
I have no desire to own a home just for the sake of owning. It’s a question of what makes sense. If I could afford to own and the cost of ownership wasn’t much of a premium compared to renting, I would have no problem taking the plunge. Not that I’m waiting for the market to drop. If prices stay high, I’ll just keep renting and save the difference.
April 28th, 2008 at 9:21 am
April 28th, 2008 at 9:34 am
It’s only a an effective savings plan if the yield on the house is larger than the yield on the mortgage. Otherwise it eats your income without either savings or consumption to show for it, unless a greater fool comes around and makes up your losses.
And let’s not forget it’s a forced dissavings plan if the market price of the house declines. Even the meager savings you’re making (principal part of mortgage) can go up in smoke.
April 28th, 2008 at 9:36 am
April 28th, 2008 at 9:45 am
This is true only for those who cannot control their spending when they have free cash flow, otherwise it’s a fallacious argument.
“How do you guys save so much?”
The question you should be asking is how do some people survive with so little. Once you answer that, anything above that is discretionary that can be saved. Welcome to Vancouver.
April 28th, 2008 at 10:14 am
I’m one of those high savers. I don’t have a 6 digit income. (far from it!) The number one way to live cheap - stay out of debt. Pay off your visa every month, rent, buy a used car with cash, pay off student loans, etc.
I want to buy a condo. I want the home ownership part. But I won’t until the “buy vs rent” numbers works for me. Until then, without hardship, I save.
April 28th, 2008 at 10:28 am
http://au.biz.yahoo.com/080425/17/1pp8j.html
Scholar Threatened for Warning of Housing Bubble in Taipei
An academic who warned of a property bubble in Taipei in a letter to a newspaper editor April 12 has received a threatening letter telling him to “shut up” or a contract killer will be sent to murder him.
The Wenshan police station in Taipei confirmed Thursday that its officers were investigating the intimidation case.
Chang Chin-oh, a professor of land economics at National Chengchi University, warned property hunters in his letter to the editor that the property market in Taipei is showing signs of a bubble and that although the market is no longer flourishing, housing prices are still being maintained at abnormally high levels.
After the letter was published, Chang received a computer-printed letter from the “Greater China Real Estate Alliance,” warning him to keep his mouth shut or his life will be in danger.
Chang told reporters that the caution he set forth in his letter to the editor was well-intentioned, as he felt he has a duty to share the findings of his research with the public.
April 28th, 2008 at 10:49 am
April 28th, 2008 at 10:50 am
It’s not hard to save 20 to 30% of your income. Just refuse to spend it. Look harder for the rental units. Bargain a bit if the landlord is asking too much. Stop buying things you don’t need.
Best way to control your spending is to cut all credit cards. Spend cash only. No debit cards. Go to the bank to take out cash. Make it harder for you to spend.
April 28th, 2008 at 10:51 am
I use:
http://finance.move.com/HomeFinance/cal … entBuy.asp
but it has some drawbacks. Any thoughts?
April 28th, 2008 at 11:04 am
But beyond that, I save money because I don’t blow money. Having money in my pocket is no excuse to spend it. Really, once rent, utilities and food are paid for, what is there to buy? Do I really need that latte or the extra round of drinks at the bar? Must I buy that book or can I just get it at the library? When hanging out with friends, do we need to go shopping or can we just walk the seawall and have a great time?
It isn’t about being cheap but making choices that allow me to spend less.
April 28th, 2008 at 11:06 am
April 28th, 2008 at 11:19 am
April 28th, 2008 at 11:28 am
I guess we could save more but at some point you have to do some living! Saving any more and you are no better than the folks who can do nothing because they are saddled by a massive mortage.
I agree with the folks who don’t use credit cards, only cash as the main way to savings. I use to try and do only 10 transactions a month on my bank card (all cash withdrawals) and not use my credit card at all. Try that for a few months and you’ll be amazed by your saving.
April 28th, 2008 at 11:29 am
The number one rule of personal finance, and so few people understand it, let alone practice it.
Don’t people who talk about “having to borrow to get by” understand that not only is borrowing not income, it reduces your disposable income?
April 28th, 2008 at 11:36 am
No better except for the whole mountain of cash vs. mountain of debt thing..
April 28th, 2008 at 11:39 am
2008-04-28 09:36:27
How do you guys save so much? I don’t think I’ve ever heard of anyone saving 40% of thier income. I have trouble saving 5 or 10% and I don’t live that large.
**********
Combined net monthly income (dual, no kids - yet) = 8000
Monthly saving due to work pensions = 2000
**********
Monthly rent (2 bed, 5 mins walk from work) = 1500
- due to this, no car (saves c. 1k a month all up)
Monthly food, utilites, moderate social spending = 1000
Monthly clothes, coffee, skiing/kayaking/etc = 1500
**********
Monthly savings (some of which then goes on holidays etc) = 4000, or there abouts.
We could save more, but we save 4k a month on average (6k including our pensions) (some months less, some more) and still have a lot of fun. Sure, we have no kids yet, and things will get more expensive then, but we won’t be spending the money on skiing/shows/eating out as much - at least for the first few years.
April 28th, 2008 at 11:52 am
A high income helps (I’m not being facetious), but frugality (not cheapness) is even more important. Even as a postgraduate student, I was able to amass about $50K through saving and investing. But all through my life I have spent a lot (in %) on food and entertainment - it is important to me. What’s not important to me is having a lot of stuff and especially stuff that has no intrinsic value other than impressing other people.
April 28th, 2008 at 11:54 am
It’s as if we are preaching to the choir here…
April 28th, 2008 at 11:56 am
$259000 Studio unit. Better than rent! (Joyce) (map)
HOT studio Newer Laminated floor… 407 sqft. 1 locker. Kitchen, bathroom looks like brand new….
Price is perfect for couple or new starter.
Very easy on Mortgage monthly… batter than rent!
****
“Batter than rent” indeed! Where do they find these people?
April 28th, 2008 at 12:00 pm
Whybuywhenucanrent’til’13?
**Forecasting a 50% drop in Van area RE prices by 2012**
April 28th, 2008 at 12:16 pm
April 28th, 2008 at 12:41 pm
True, but you could compare the results here with a benchmark. For instance, on the savings rate question, you could assign the midpoint value for the ranges and then combine that with shares of votes to get something approaching an average (let’s say you also assigned a maximum savings rate of 50% for the 50+ category and a minimum savings rate of 0% for the 5- category). This would yield a figure of 20.8%. Compare that to the savings rate of about -5% BC wide.
(Doing the same for the income and savings questions, you get stated incomes of 111,200 and stated savings of 94,600…not too shabby).
April 28th, 2008 at 1:22 pm
I’m a high saver (probably 60%, instead of the 40 I put in the poll), with a moderately good income (but not 6 figures), and savings well into the 6 figures. I have no car, with my work and apartment on the skytrain line. I have been a tenant of the same place for many years and my rent is under market. While I came from a poor family, and almost took welfare in the 80s, a fortunate scholarship program allowed me to have no school debt. I have never had a debt. I’m allergic to debt. I’ve seen people in debt, and they frighten me.
Oddly enough, I should probably use my credit card more because it is a cash back one. The more I use it, the more money I get back. Postdated electronic banking pays each bill when it is due, so I don’t get charged interest. Technically, VISA pays me to use their credit card. But it’s a credit card, and it’s scary.
I enjoy traveling, especially if I can visit (and stay with…) friends around the world. I love bargains, but don’t eat at home enough to save money on food. I feel bad when I buy things, and despise malls even though I live near a large mall. I loathe getting christmas gifts I don’t need from family or friends that can’t afford to give them. I like buying the occasional good gift where and when it is appropriate or needed, even if it costs alot. (But I’ll still try to get a bargain for it)
I could save more money, but can afford a few things and still save (over?) half my net earnings. I must admit, it’s kinda neat having investment/interest income instead of having to pay interest on a loan/mortgage. I just hate paying taxes on my out of RRSP savings. It just doesn’t seem fair to punish me for fiscal prudence.
I don’t understand how people function paycheck to paycheck.
April 28th, 2008 at 1:23 pm
Sounds like we are great candidates for stated income mortgages! I think a lot of people reading here are dual income so don’t think we’re all doctors, lawyers, and bankers.
April 28th, 2008 at 1:55 pm
Good question! In our case, the magic words are: “prepare a budget, and stick to it”.
In our family (hubby + wifey + kiddie) we bring in a net of $4500 a month. From these:
- $1200 go for renting (in Bby 30 minutes from work, by bus), telephone, cable, internet, hydro, and transit bus pass
- 1000 go for groceries, dining out (at least twice a month), clothing, kitchenware, other minor things
- 300 go for books, magazines, toys (for kids and not-so-kids:), etc
Total expenses: $2500
Savings: $2000
We don’t have (or need) a car, we use our 1% cashback credit card for anything that we can (and pay it in full every month), max our RSPs every year, and keep track of every dollar that comes and goes in MS Money, which we started using 10 years ago.
Also, last, but not least, reading in this blog what others are doing has given us some very good saving tips, and the assurance that we are not alone in this “bubbly” world.
April 28th, 2008 at 2:00 pm
It takes you about 15 years of a 25 year mortgage to have any reasonable principal reduction from your payments to the point where you can call it a
“nestegg”.
Realtors take 7/3% from a sale if need to make “a withdrawl”….removing a big chunk of your “savings”.
Banks charge you interest and fees if you pledge your house as collateral for said “withdrawl”.
If houses do not appreciate due to speculation, and that is the only time that they do IMHO, you generate no financial gain from your “savings”.
‘.
April 28th, 2008 at 2:00 pm
- marry someone who makes a decent income and is also a saver (essential!)
- don’t eat meals out if you can help it. Find recipes on the internet and make great-tasting, healthier food at home for a fraction of the cost. Make lunch the night before for work. Today’s lunch was chicken salad and butternut squash soup. Delicious!
- buy stuff on sale
- don’t buy crap just because it’s on sale
- cut coupons and get deals where you can
- don’t pay fees for services you don’t really need
April 28th, 2008 at 2:30 pm
April 28th, 2008 at 2:33 pm
First, I think I would trust the results from this anonymous survey more so than any stated income mortgage application that came across my desk. But I’m not sure I would buy the results of a similar poll over at BCRET.
Second, point taken on the dual incomes, but compared to a median family income for BC of 60K…well, you get my point. Like I said before, it’s preaching to the choir here.
April 28th, 2008 at 2:44 pm
April 28th, 2008 at 2:52 pm
-Get out of the game of paying bank fees. As a matter of principle, I think it’s wrong to pay fees for the “privilege” of using my own money. Get a no-fee chequing account. For example, PC Financial gives you unlimited Interac and CIBC ATM transactions.
-Open a high-interest savings account and get in the habit of moving money into there; ING Direct and others offer these accounts and they are free and easy. Interest is paid monthly.
-Never finance a purchase on a credit card. Credit cards are to be used for ease of payment, the 30-day interest-free grace period, and to collect points from spending. If you can only “afford” the purchase because you’re using a credit card, you can’t afford the purchase. Period.
-If you have credit card debt, do whatever you can to pay it off. If you have a line of credit, use it to pay off the credit card. At least that way the money you owe will be at a much lower interest rate.
-Never use a credit card to withdraw cash. Never. Very high interest is charged from the moment you withdraw.
Anyone else have any favourite tips?
April 28th, 2008 at 3:11 pm
You buy a home for $1m and in addition to the purchase price you pay about $1M in interst to the bank. How am I saving money when a $1M purchase just cost be $2M?
April 28th, 2008 at 3:14 pm
http://globaleconomicanalysis.blogspot.com/
Dosh,
If someone bought a house at the peak of the California real estate market, how much money have they saved by buying a house?
April 28th, 2008 at 3:16 pm
April 28th, 2008 at 3:18 pm
Today they are at 57.
April 28th, 2008 at 3:58 pm
My biggest tip (already mentioned by Tacoman) is to use personal finance software like Quicken or Microsoft Money. Nothing makes financial decision making clearer than tracking and categorizing every dollar you earn and every dollar you spend.
If you do this, then when it comes time to budget/save/etc., you can easily see which areas of your spending you can reduce without drastically affecting your quality of life.
April 28th, 2008 at 4:03 pm
As opposed to an old starter? Geesh…
April 28th, 2008 at 4:08 pm
I believe that once house prices return to fundamental levels there will be the opportunity for almost everyone who is employed to buy a place to live in once again.
April 28th, 2008 at 4:17 pm
We’re Number 10!
We’re Number 10!
Huzzah for Vancouver.
April 28th, 2008 at 4:22 pm
***********
Err, and I thought Toronto had higher average incomes than Vancouver….
April 28th, 2008 at 5:13 pm
In the end I’ll always have my downtown condo. It’s like an insurance policy. Prime real estate in a desirable city!
April 28th, 2008 at 5:49 pm
Problems with that calculator.
1) Will not allow a negative appreciation rate, I put in zero.
2) Will not allow you to buy outright.
After that it said I would save 2 million over 40 years. Just for fun. I would expect appreciation to resume at some point, though.
Then I put in 4 % appreciation, 3% inflation and 5% savings rate and only saved 600,000. You can make banks a LOT of money with mortgage interest.
April 28th, 2008 at 6:01 pm
April 28th, 2008 at 6:04 pm
April 28th, 2008 at 6:08 pm
2008-04-28 18:04:24
It is too difficult and slow to save based on Canadian tax rates on income.
***************
Nonsense.
April 28th, 2008 at 7:02 pm
It didn’t cost you $2M. The present value of a future payment is less than the nominal amount. The house actually cost you $1M.
Obviously you save money buying a house at historically normal prices - not today’s prices - because that’s how landlords make a profit. They are selling a service - shelter - for less than it’s costing them. Buying a house means being your own landlord.
You save money borrowing money to buy a house when the present value of the net rental income exceeds the purchase price, i.e. buying is cheaper than renting on a net discounted cost basis.
In simpler terms, that’s when the price/rent is at historical levels.
Of course that’s true for buying versus renting everything else be it a car or skis, but for some reason people have a much harder time making the rational choice for a house than for other things.
“Saving money” is not the same as “savings” BTW, the former means buying something cheaper (in the case of a house the service of shelter), and the latter means consuming less than your income. But the former is the best way to make the latter possible.
The principal part of your mortgage payments is savings, which really has nothing to do with buying a house. It’s investing in fixed income (paying off a debt).
Bears for some reason like to say a house is not an investment. Actually it’s very much an investment, and if people evaluated houses with the same metrics as professionals use for stocks or bonds or commercial RE they wouldn’t be overpaying for one.
A house is only a good investment if you pay the right price for it, just like anything else.
BTW Pope, could you add preferred shares to the poll.
April 28th, 2008 at 7:27 pm
I’m saving as much as I can, but my retirement plan is simple — max out the RRSP, max out the new savings plan when it kicks in, and put money in the high interest bank accounts.
But in the end, it’s as simple as reducing you expenses, and for me that means moving down to central/south america (or spain/portugal) and where the cost of living is 1/2 what it is here. I figure I can probably retire by the time I’m 50 or 55 and live cheap after that.
April 28th, 2008 at 7:48 pm
It points out that 100k puts the average family in the top 15% of earners in Los Angeles. I think it goes to show just how over-extended the average Vancouver family likely is. Good reading:
http://www.doctorhousingbubble.com/when … into-debt/
April 28th, 2008 at 8:13 pm
The last time I renewed my mortgage it was at a lower interest rate so the payments would have been much lower. I got a rather strange look from the banker when I said, I’d like to add several hundred dollars to my mortgage payments. I’ve reduced the amortization period by ten years so far.
The largest chunk of money I save comes from not owning a car. I even rent my parking stall. I rarely eat meat. And shop at thrift stores. I don’t take exotic vacations. I live in a much smaller place than I’d like to. But that’s not forever.
I look at it as a process and try to shave a little bit off my expenses every few months.
That said, my savings plan is not perfect. Most of the books I want are not available at the library. I spoil the dog. Life is too short and some things are non-negotiable.
April 28th, 2008 at 8:28 pm
I know this is California where public transit is pretty bad, but $875 a month so you can own two cars, $500 for entertainment and $250 a month towards vacations? I’ll bet the house has 3.5 bathrooms and way more space than they need to live.
April 28th, 2008 at 9:18 pm
April 28th, 2008 at 9:21 pm
Note there is no correlation in industrial countries between income tax rates and savings rates.
The US is near the bottom on income taxes, yet it has a negative savings rate. Japan is also near the bottom, but it has a very high savings rate.
Looking the other way, Germany has high income taxes, but it has a much higher savings rate than Canada or the UK (I think UK has gone negative actually).
Even within Canada, BC, which has the lowest income taxes for the middle class (yes lower than Alberta), has the country’s lowest savings rate - negative.
Err, and I thought Toronto had higher average incomes than Vancouver
It does, a lot higher, and that shows you how insane RE prices are here. BTW a big chunk of local income comes from - surprise - RE, which means we’re in for a Florida or San Diego-style death spiral once the party ends.
April 28th, 2008 at 9:37 pm
http://www.canada.com/vancouversun/stor … 804&k=5982
April 28th, 2008 at 9:55 pm
“Don’t people who talk about “having to borrow to get by” understand that not only is borrowing not income, it reduces your disposable income?
Comes down, some of the time, to poverty premiums. Now, I live near Yaletown - and yeah, it does indeed sometimes come down to Keeping Up With The Joneses.
But if you’ve got kids and an median income & the kids need medications, milk, diapers, etc., it goes on the credit card. You hope like hell that something in your economic picture changes and the work you’re doing will pay off. I think there’s a lot of that going on out there - wages aren’t going up but credit is cheap.
We’re not doing badly - putting away 10%, getting those student loan debts chunked down - and we’ve managed to add about 30K to our net worth in the past 5 years. Our net worth is still negative, but we’re rapidly advancing on zero. But I’ve been really poor. I have indeed put essentials on credit, and I have also used those awful check-cashing places, and I knew what total crap it was at the time. I’m not a spendthrift: I don’t like shopping - and I brown bag, make my own coffee, buy used, have no car, all that jazz.
As we get richer, it perversely becomes easier and easier to make choices that save me money.
April 28th, 2008 at 10:02 pm
Home Prices Drop in Areas with Longest Commutes
http://tinyurl.com/4oo8oc
April 28th, 2008 at 10:16 pm
In the last five years I’ve dug myself out of student loans and am finally enjoying the benefits. But to get to this point was rough. To save money I’ve lived in some pretty horrible places.
April 28th, 2008 at 11:16 pm
http://globaleconomicanalysis.blogspot.com/
April 28th, 2008 at 11:25 pm
I’m not sure you get it. Buying stuff on credit means you get less stuff for your money than paying cash. In aggregate, of course - you’re trading more stuff today for a lot less stuff tomorrow. But tomorrow arrives pretty quickly, and then you’re going to be getting less stuff for the rest of your life.
If you cannot support ordinary consumption needs on a median income, you are living beyond your means, and you are going to be forced to accept even less consumption in the future than if you hadn’t borrowed. Multiply by 4 million (BC) or 300 million (US) and you have a whole society that has hocked its future.
I’m talking about consumption. Borrowing money for investments makes sense if the yield is higher than the cost of borrowing. Like houses used to be.
April 28th, 2008 at 11:56 pm
Two things top economists agree on regarding what is going on in world economic picture are 1: it is not good, and 2: we have never seen anything quite like it before. We are staying liquid in case some of the very interesting, scary and increasingly likely scenarios come down.
We also drive 10+ year old cars and saving has become a bit of a game these days. It really helps (I guess on to the tips) to have a significant other that is not into ’stuff’ either. And we have found that we are now anti ’stuff’ as statement about how hard the consumer lifestyle has become on the planet. If you have not seen it yet this is a great site on that topic: http://www.storyofstuff.com/ It is very well done.
We still live very well enjoying skiing and getting out doors in all kinds of ways. Just at the moment we do it from a basement suite that is close to the outdoors we love. Our rent is ridiculously cheap.
Quicken, as suggested above, helps as it provides a reminder on how the money is piling up and how liquid we are if needed.
Sure we’d like to buy back in at some point but for now this works quite well.
April 29th, 2008 at 6:04 am
The US is near the bottom on income taxes, yet it has a negative savings rate. Japan is also near the bottom, but it has a very high savings rate.
I say: You are comparing apples and oranges here. US, traditionally had a positive savings rate (not as high as Japan mind you) during the last couple recessions and NEVER had a long recessionary period like Japan does now. Instead, the last tech bust in the last recession was not deep, severe and long enough. This bolds true with Canadians as well. So, people’s thoughts then were to spend more and save less. This was the breaking point and got us where we are today — a negative savings rate. Whereas, Japan has been and STILL IS technically in a recession since the early 80s. When you are in a recession especially a long one like Japan where property prices keep dropping and dropping slowly every year, what do you think people’s thoughts would be? Capital preservation!! It’s a no brainer. It got to a point that nobody wants to spend, everybody wants to save. In fact, this is actually BAD for the economy. Because if very few people want to spend, you would then need to create less products and provide less services. What do you think if we all save and spend less? There will be few jobs on the ski hills, few jobs at Starbucks and very very few jobs at local restaurants — people bag everything to work or cook at home. In fact in Japan, the most secure and recession proof jobs were in the governmental agencies. And this is true to this day as well.
While some people save more money than others, the real driving reason for mass savings is a catastrophic event like the great depression or a LONG recession. We may have one coming soon.
Having said that, saving money especially when you have kids is very difficult. In fact, Canadian Money Saver in 1999 had an article about a woman who made her millions in the dot.com and how she managed to save, invest and own her own home and pay people to mow her lawn. She then criticized how everyone couldn’t be like her and parents especially being so financially poor and their inability to retire young.
There was a great debate about who she was and how daring she was making comments that parents spent money and credit like it was free. The woman promised to write more articles, but when the great dot.com bust came and went, she disappeared never to reveal her other financial success secrets. I forgot her name, but later we found that she was single, never married and never experienced in raising kids, but made comments that raising them would be as easy as being single.
The point I want to make is this, raising a kid is not cheap. For those who are single and save lots, please drop down to a kiddies store, there’s one on Marine Drive next to a McDonald restaurant called TJ kiddies store. Check the prices out and check especially how busy the store is. While a single individual can save lots by choosing certain inexpensive products and forgoing the rest, a growing child needs the best nutrients and products. You can shortcut if you want, but the best child grows up with the best food, best education and best care available. This is something that woman and I think many of you singles do not understand. We have been parents ourselves and believe me, we tried saving but at 40% or even 30% is difficult. Your child control your expense. Ask any parents around and most of them use credit. I know we did and we are still frugal with money. If your kid is sick, really sick like one of our friends did with a tumor like lump on her chin. Eventually doctors here recommend them to send their child over to Toronto for expedited treatment. They had to pay for their stay for a month, leave their jobs and pay for their own plane ticket. That was an out of pocket expense that they did not expect and neither would our government pay them back. Their kid was in great pain if that child has to wait a year for elective surgery and their parents see their child in pain, would you DO ANYTHING to save her. Sure they are out $10,000 and owe the credit card monies. But that’s part of raising a kid.
This is a cost that as a parent can not foresee or plan for that. And yes, they did use maxed out on both of their cards.
So saving money is easier when you’re single. It gets more difficult as you start a family and have kids that will eat into your savings fairly quickly.
April 29th, 2008 at 7:12 am
My wife also eat my income by saying “oh honey you have got highest rate of pay than her”
I like to pay 100% of my income to lower down mortgage debt because money have no value if it is not in the market.about financial freedom I have a line of credit in that case I assume I pay nothing to bank because i can use that money anytime just to cut this sort.
In economy and real estate sense”saving is not a saving unless you save your money with a sense from paying more later than today”.
Real Estate is up,Rents are up,feul energy prices are up,Grocery prices are up.definitely saving without spending in the above have no value.
In my first case I have a paid of condo if i can just stop there despite low income all my money is in pocket while you guys-most of singles,tenent,no car and plan to proceed the way it is.if our parents thought the same way we were not even here in this world.
Nothing to force or change the topic,I like your views it’s all about how to stay happy but nothing about you are right or i am right as long as we are happy my opinion.
April 29th, 2008 at 7:55 am
Sheepless,
This is with two kids, what kind of vacation do you think 4 people get for $3k? And I believe that $500 for entertainment would cover sports, music lessons, summer camp, babysitting, the odd dinner out, etc… $500 may be a little high but not by much.
Granted if you’re going into debt by $1100 a month losing the vacation, entertainment and new cars would quickly turn the negative balance into a positive.
April 29th, 2008 at 7:58 am
The vast majority of kids stuff - especially clothes - is over-priced crap. So much of it ends up at Value Village ’cause kids outgrow it before the third was that -really - places like VV are where the bulk of “kids shopping” should happen.
“Toys” are even worse. Here’s a hint to prospective parents - unless you intellectually cripple your offspring EVERYTHING is a toy to a wide-eyed, new-to-the-world youngster!
Kids certainly cost money. I can remember distinctly the moment when our first became a line-item on the family food budget. But for the vast majority it’s only stifling if you let it be. It’s a shocking thing to say, but iPods for pre-teens is a PARENTAL choice!
April 29th, 2008 at 8:31 am
Like real estate itself, there is effectively no limit to how much you can spend on your kids. At some point you need to trade off your wants with your means and there will inevitably be someone richer whose kids are afforded more. When I was growing up I saw lots of families going into debt to support their children’s lifestyles; it was a conscious choice and I assume they knew the consequences. For many it is worth it but it’s difficult to know where to draw the line.
April 29th, 2008 at 8:43 am
We have a kid. We give him the best. Best food, best clothing and best gear. I just bought a new SUV so he could have a safe vehicle to ride in. We bought him one of the best strollers. Yes 2. One for $750 and one for $400. And yet, we could still save 30% of my income. It is simple. Just refuse to pay more for items like real estate.
Canada is going into a recession. The R/E markeet is falling. Cash is King. Buy less starbucks. Eat out less at Earls. Just spend less on things that don’t matter. Do things free or cost less and that’s good for your health. Walk the seawall. Go to the park. Go swimming. Fashion is a waste of money. Get rid of your cell phone.
April 29th, 2008 at 9:09 am
April 29th, 2008 at 9:27 am
I think some of the facts are missing from this story that might temper the sensationalism. Of course of all the cities in GVRD I think Richmond is ranked close to #1 for fiscal irresponsibility.
April 29th, 2008 at 9:28 am
I wouldn’t eat at Earls if it was free.
April 29th, 2008 at 9:58 am
I moved here from NYC, and see similar things happening in the RE market here that were going on in NYC in the early 90s. RE prices in NYC starting rising quickly after a short recession, and everyone thought there was no way it could continue to go up. Well, it did. A condo I looked at in Manhattan for $350,000 in the early 90s is now worth 1.5 million today!
So, when I arrived here in Vancouver, I decided I wasn’t going to get shut out of the market before it became unattainable like happened to many people in NYC who kept waiting for “The Big Crash” and for prices to tumble. Most of those people are STILL waiting years later. I’m glad I didn’t wait this time.
April 29th, 2008 at 10:11 am
April 29th, 2008 at 10:29 am
April 29th, 2008 at 10:42 am
And instead of taking the money and running, you put more on the table.
Come back this time next year and tell us how you’re doing.
April 29th, 2008 at 10:59 am
I am getting an MBA. When I graduate I will leave Vancouver to make more money elsewhere. Many of my classmates feel the same way. Does that sound like New York to you?
April 29th, 2008 at 11:05 am
Here is the Case-Shiller index for New York:
1990: 80.89
1991: 74.59
1992: 74.59
1993: 75.54
1994: 76.61
1995: 78.28
1996: 78.63
Exactly what similarities do you see to the current RE market in Vancouver?
The current CS Index for NYC is at 200, compared to the baseline of 100 in 2000. The Vancouver HPI is currently at 253 for condos vs. the baseline of 100 in 2001. So in this decade, Vancouver has gone up more than NYC, and New York is currently 7% below its peak and falling.
April 29th, 2008 at 11:35 am
April 29th, 2008 at 12:19 pm
Glad you got in while you did. NYC rents and salaries are high enough to better justify the high prices. I don’t see rents in Vanhattan keeping pace yet.
April 29th, 2008 at 12:20 pm
Crabman, you can quote all the indexes and numbers you want, but, it’s a simple fact that a typical condo in NYC in 1990 more than doubled in price by 1996. I was there, I know.
April 29th, 2008 at 1:01 pm
How did the immigration process go?
Were you able to get a work permit right away?
Did your company sponsor you?
Or are you just independently wealthy?
If yes then how do you like paying the non resident tax?
Do you prefer paying higher taxes and higher prices to be in Vancouver versus New York? What industry could you work in here that pays more than New York?
If you really exist you’ll have no problem answering these questions.
April 29th, 2008 at 1:07 pm
I think this will be my last post here. This place is hostile to anyone but those who cling to their doomsday fantasies. Not interesting.
Bye!
April 29th, 2008 at 1:11 pm
Life on the internet can be brutal. Thanks for the comments.
“it’s a simple fact that a typical condo in NYC in 1990 more than doubled in price by 1996.”
Comparisons to NYC have been made here before. The main difference is the high prevalence of high salaries in Manhattan. Certainly not everyone who works there earns high wages but the ones living in Manhattan likely do and the ones that don’t earn as much commute from other cheaper boroughs and cities.
The future can change but what I know now is that the total sum of salaries in Vancouver cannot support such a large ground swell in prices. There are pockets of affluence in the city due to differences in income but I just don’t see the current distribution of prices compared to the distribution of incomes being sustainable unless prices drop or incomes rise.
April 29th, 2008 at 1:20 pm
If you can’t even make up, er, answer what basic industry you’re in that brought you to Vancouver then you should take a deep breath and come up with a plausible scenario before getting mad for being called out as a BullS*itter.
April 29th, 2008 at 4:06 pm
April 29th, 2008 at 4:29 pm
t.fu = tom vu
looks like bdk was the only one to sniff it out.
a lot of baby bears i guess, this gig is age dependant.
April 29th, 2008 at 5:26 pm
Bud - prices in NYC - even in Manhattan - cycle up and down and even crash on a very regular basis. A typical decade has swings of 25%. You can look this stuff up. Because of Manhattan’s history and uniqueness, the data is better than for most other locales.
My favorite stat is that inflation-adjusted total return for commercial real estate in Manhattan between 1899 and 1999 is…
…wait for it…
negative 30%.
April 29th, 2008 at 5:47 pm
http://tinyurl.com/3qn8g4
didn’t think so
April 29th, 2008 at 6:42 pm
Well, that just says it all, doesn’t it? Confronted with numbers the troll scampers away in defeat to lick its wounds.
April 30th, 2008 at 7:20 am
April 30th, 2008 at 9:14 am
I am a bear about where this market is headed, but I don’t need to validate my position by making all homeowners feel like overextended idiots.
April 30th, 2008 at 9:53 am
Christine, I have to agree that I find many comments here pretty insulting. The frustration with many long-time commenters here is that many of the arguments used to promote the “bull” case are filled with half-truths and in some cases blatantly incorrect information and logic. I think most commenters on this blog don’t show up just to insult someone (though maybe there are those that do) and have a genuine interest in dispelling some of the myths floating around.
I have found some of the best comments come across as curt and agressive but that’s because these commenters are smart, have done their research, and have answered the same questions over and over again for years now. I don’t think it’s anything personal; just be prepared to defend your position against some significant and well thought critique. I’ve made a few comments/arguments here that were shot down in no time flat. I sucked it up and learned from it.
April 30th, 2008 at 10:03 am
well said-t.hu is very smart,he did not spend a minute to figure out what the hell is going on here.
April 30th, 2008 at 10:07 am
2.In school if I wrote an essay without doing any research and cited all sorts of my own “facts” which were obviously made up and then for the bibliography wrote “why don’t you give me your tax returns and i’ll show you” it would not have passed.
Tom Vu’s reaction proved he was making it up.
April 30th, 2008 at 12:05 pm
that’s not true that was just expression of his feeling about the way thing should be so while asking you that question about tax return he also declare his exit with this
“I think this will be my last post here”
so his question was in flash back to change around as what should have done to be wise.
April 30th, 2008 at 12:26 pm
April 30th, 2008 at 1:25 pm
“expression of his feeling about the way thing should be”
Exactly! it was his feeling, it was not fact.
As for your repeated comments about Garth Turner, he has always said that boomers who have most of their money tied up in their houses should consider selling. He is an MP and makes a lot more than your typical warehouse worker, he’ll also collect a large pension for life.
He is not saying “I’m an idiot and I bought a condo at the peak and think everyone else should buy at the peak so they can be like me” you’re confusing yourself with him.
Do not get confused about who you are as you will never be an MP and will never be able to buy a house thirty or forty years ago like he did. His points apply here. There are hundreds of land rich and cash poor baby boomers in Vancouver west who have 90% ,or more, of their equity in their house. You never want to have all your eggs in one basket.
To dumb it down for you:
Imagine if you had $1.5 million dollars solely in tech stock ,that you bought at it’s peak price in early 2000, because some warehouse worker told you that it would never go down, would this have been a good idea?
Wouldn’t it have been better to have bought a house and some bonds too? Or some art. Or the best investment
Rare Stamps!
Posting under different names won’t fool anyone. There is no one else on here who writes like a 7 year old girl.
April 30th, 2008 at 1:28 pm
http://www.spectator.co.uk/the-magazine … -own.thtml