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December 18th, 2008 at 3:03 pm
Vancouverboom2. Hows the weather up there?
December 18th, 2008 at 2:57 pm
I’ll thank you now Domus #96. i believe in instant gratification.
Kurome #92 You’re right on when you describe those concrete shoeboxes as unlivable. I love the design that doesn’t allow two persons to pass in a hallway and the ones with no bedroom walls or windows. Thats real long term livability all right. You sleep behind a curtain (slider)in the hall. Wasn’t it a hoot how the designers left the doors off even the bathrooms in order to try to give the illusion of space. I thought Murphy Beds for a master bedroom were a nice touch.
Building Tomorrows Ghettos Today. I coined that term when I inspected the first plaster condo project in vancouver ( The Galleria on West 8th), it was obviously a disaster waiting to happen. The downtown condo mess is the same issue. Crap won’t evolve into a paradise, unless you LIKE living in shit that is.
The Permits and Planning people should be ashamed of themselves.
December 18th, 2008 at 2:56 pm
Keepin an Eye on the pinmps,
Please tell you friends about pent up demand and no supply ahead please also teach them to post numbers when they talk about future supply tell them do not shot their arrow in dark don’t even feel shy and also tell them one more thing that a developer need to buy land worth $ 20 million then financing for the cost to develope please tell them that one need guts to develope land.
by the way your link has nothing to offer any change in economy forecast this is something had been discused already.
December 18th, 2008 at 2:25 pm
I am a housing bear, although I remain a natural resources bull (even in these times of heavy discounts).
Reason’s I am a housing bear:
1) demographics: population is just not growing as fast to support double digit growths in RE; maybe a point above inflation is more like it;
2) median income: self-evident point. Vancouver has relatively low median income (even compared to other parts of Canada) and prices were not sustainable.
3) over-supply: huge amount of supply coming online in the next 24 months. it will take years to work through it.
4) observations of people around me: I know people earning less than half of what I earn who, apparently, could afford to buy centrally located apartments, on debt. Conversations with other people always led me to believe that the only argument for the bull market in RE was: prices never go down, you never lose money. Just crazy.
By the way, I am still an RE bear: I don’t think this will be a quick correction. It will take YEARS for demand to catch up again with supply. In the meanwhile, no rush to buy anything: just sit tight and invest your money intelligently. You will thank me in one year, when prices will be down by another 25% (at least) in nominal terms.
Enjoy renting and see your future home dropping in price! DON’T BUY NOW! THERE ARE STILL A LOT OF LOSSES TO BE MADE IF YOU BUY NOW!
December 18th, 2008 at 2:18 pm
Paul: It may only be the athletes that show up! I heard a reporter say that the Whistler accomodations are out of reach for reporters and very few will be sent.
December 18th, 2008 at 2:08 pm
#94, Cashisking, thats freakin’ hilariuos.
“RE agent said he couldn’t tell if market was cratering b/c absolutely nothing is selling … LOL”
I can only say ” How do these guys stay in buisness at all being that stupid.” This recession could be so deep by 2010 that the only people who show up at Whistler are the free riding reporters and government parasites.
December 18th, 2008 at 1:33 pm
Leaving my rented place in the city to go to my seasonal rental at Whistler. Looking forward to the new fireplace installed by my landlord … cost him about – would you look at that – almost the same amount I’m renting for.
He’ll probably make a killing during/after the Olympics so it’s an excellent investment.
On that … I went to an open house in Whistler last week … RE agent said he couldn’t tell if market was cratering b/c absolutely nothing is selling … LOL
December 18th, 2008 at 1:31 pm
Paul
re: Post # 90
“Crime train”
Yes, one early epiphany was hearing a VPD cop being interviewd and his crime stats corroborate yours…60 % of the Property Crimes occur within 500 meters of a SkyTrain line.
If you want to a good pre – view….go to North Surrey Rec Center …. it is part of a transit hub for buses and SkyTrain, an “attempt” at Hi Rises…a University campuses etc. but it shows how an Urban Planners and Councils “urban renewal vision” can turn into a nightmare with all the dubious parties hanging out and open drug -dealing, etc.
Richmond RAV line runs through mostly light industrial/commercial areas …intentionally, so as to create a new City Center OCP via planned conversion (via less resistance from NIMBY’s) to Hi -Rise residential.
However, Hi – Rise are spotted all around the RAV line like an alien space ship / sore thumb and then the Re crash.
The commercial/ light industrial areas will remain there for now ( though some fear the High taxes based on new Highest and Best use assessments may force many businesses out) with the RAV line ” crime train “…one can envision a lot of drug dealing and prostitution in these areas after hours …much like Vancouver had.
BTW: During the civic elections, The Local Richmond papers had maps indicating where the Council candidates lived…most of the incumbents lived in nice SFH neighbourhoods far removed from this future hell hole / City Center ghetto. Richmond Council shares the same double digit IQ as evidence by the dim bulb above their heads, they seem to think Richmond is immune from what has historically happened elsewhere, all things being equal.
December 18th, 2008 at 1:08 pm
PAUL ; “And Kuroame, don’t believe that crap about all the land being used up and gone”
Yeah, sorry i wasn’t very clear. I was just trying to say that from a urban planning perspective we committed a lot of prime land to crapping unlivable buildings, not that we’ve “ran out of space”
December 18th, 2008 at 12:15 pm
I made it a week without posting, but no one seems interested in doing the Friday Free-for-all, so I’ll put it together and post it tonight as usual. Do you guys want me to carry on with the end of the week news round-up posts? You can answer by just voting this comment up.
Thank you everyone who’s contributed posts, we have a good discussion starter from CZ for monday morning.
December 18th, 2008 at 12:08 pm
Mickey Finn #71, have you got a reason for picking 2010 for you call on a rebound? Just curious. Theres a tremendous issue with credit and inventory which I think will be exacerbated at the end of the 2010 Olympics. Job loss , inventory overhang etc. I agree there will be a rebound but my research has it out a bit further. My work suggests 2013-15. I am an investor with some background in economics and analysis, frankly I am neither a bull or a bear. In my business I deal with things as they are and not how I’d like them to be.
And Kuroame, don’t believe that crap about all the land being used up and gone. Vancouvers downtown can be walked across in twenty slow minutes. There is plenty of room for expansion. A new neighbourhood will spring up somewhere else and be marketed as hip and blah blah blah, thousands of idiots will be sucked in because they want to belong and the precess will begin all over again. I wrote a paper a long time ago I called “Building tomorrows ghettos today”, think about it. How many times over the past many decades have I heard that “there is a shortage of land” and they are still building. It’s a load of crap. There are entire areas of the city which are far beyond the economic life of the buildings.
There will be huge urban renewal projects in the future. I can think of several areas which need gutting right now. But heres what going to happen, the government which controls the stock through by-law and planning will pre sell land to a huge developer making sure that the average guy gets no chance to buy and suddenly there will be a need to flush out the poor and get to it.
Kuroame, price appreciation/depreciation is not a problem at all unless you’re one of the ‘new condo owners’ whose ‘inflato bucks’ are disapearing before their very eyes. If you’re not one of those whose ‘bubble wrap homeless shelter of the future’ owners whose bank account is making an ugly popping sound then value obviously is not an issue.
But, if you are one of those happy holders of a 5% down 40 year mortgage who is currently underwater and will be breathing through a snorkel for up to ten or fifteen years when you maybe ‘break even’ ( and for Christ’s sake don’t factor in opportunty cost or inflation) then no, it’s best not to think about value and simply get mad at the city every time you see a new building going up which is competition for yours and putting price pressure on the existing stock because it’s newer and has a new paradigm of functionalities.
OMG, thats an ugly picture isn’t it, being old and poor and having your face pushed into the muck by a new set of tatooed money grubbers crawling out of their grandma’s basement who don’t have the decency to wait until you’ve cashed out.
No-lympics #85, you should check out the RCMP stats for ‘the crime bubble’ which is slated to occur anound the crime train stations in Richmond. Apparently crack heads have a very short attention span and cannot function outside of a 1387 meter bubble. Everything within that 1387 meter bubble is slated to become a war zone. Crime rates are EXPECTED to increase thousands of percent virtually immediatley. Man you don’t want to buying in THAT bubble. Too bad for the citizens of Richmond that the RCMP only tabled that report after the city council had voted in the Sky Train line. Very suspicious to me.
December 18th, 2008 at 11:51 am
hey browntown what is your story?
are you a bull that hangs out on bear blogs for a reason?
http://business.theglobeandmai.....iness/home
December 18th, 2008 at 11:23 am
Seems to me that they are trying to make it cheaper to borrow, hence the ZIRP, but it isn’t working because deflation is emerging, making the real interest rate high. It’s almost as if the invisible hand of the market has decided enough is enough and is counteracting any measures to make it cheaper to borrow.
December 18th, 2008 at 10:43 am
Post # 83
Not to worry, it is simply a reflection of human nature and ones level of education expertise, etc. is irrelevant.
Look at Mr. Madoff and the $50 Billio Ponzi scheme.
One person was quoted as claiming they thought Madoff was a brilliant man, but (drum roll )he now knows Madoff is a brilliant man for having pulled this stunt for so long. Madoff’s clients themselves were Millionaires and Billionaires. Maybe its a “faith” compounded by larceny,an internal greed gene overrides due – diligence and more importantly basic common sense.
Like asking what goes really into a hot- dog the participants don’t really want to know what makes up the truth, they simply hold their nose and focus on the end result.
Much like the Pine Beetle epidemic, which in hindsight if one understands the dynamics, was long overdue, an RE crash was also long overdue.
Back in early 1980′s the boom reached a point that the interest rates reached 20 + %. RE market then crashed. The demand for $$$ upped the cost of borrowing ie the demand for money. In my view this is the way to go, it most certainly weeded out the speculation. Yes some got burned, even those that bought a place simply to live in, but it stopped a lot more collateral damage by frustrating others from making the plunge into what was clearly becoming treacherous uncharted waters .
However, in this latest go around, the exact opposite happened,… as things got heated they made it cheaper to borrow $$$. WTF ? This was the equivalent of the InSite clinic…step right up and get more “credit crack”?
You then attract and create more credit junkies???, no matter how smart and sophisticated one “may” be. What is also amazing is how integrated the ripple effects are, creating a domino effect globally and in many non RE sectors.
I recall the saying the prophet is the most disliked in his own country (or moreso amongst their own peers and acquaintances). Been there and done that on certain issues. You’ll find they were mostly fair- weather friends, you’ll recall Jack Nicholson’s famous line “YOU CAN’T HANDLE THE TRUTH !!! “…but maybe in the future avoid in depth conversations on “business – related” matters.
In the end…the old bromide of “Real Estate never goes down!!!” ..it is a safe sound secure investment…may end up on the shelf next to one’s Bre-X stock and BCRIC shares.
December 18th, 2008 at 10:22 am
ellery
“hedge a little, man”
Sorry, I wouldn’t know what that is. Please elaborate. Speak slowly as if you were addressing a retarded kid.
Thanx
arit
December 18th, 2008 at 10:01 am
A couple of days ago I was driving around Richmond near # 3 RD. and Westminster Highway.
Saw a crew putting the nails in the coffin…err ” putting the finishing touches ” onto a nearly completed Hi – Rise project at Saba and # 3 RD.
What I couldn’t believe was a company commencing the START of a Hi – Rise foundation nearby at # 3 RD. and Westminster Hwy.
The site is not prime, the only “benefit” is RAV err “Crime Train” outside the front door. The project is shoe-horned into a commercial area.
If you include
(i)projects just nearing completion,
(ii) some 1/2 finished and
(iii)the newly started ones…there must be approx. (15) Hi -Rise projects within a block of this site about to throw even more condo inventory onto a dead RE market.
Either they don’t watch the news…or they must know something we don’t.
December 18th, 2008 at 10:01 am
ps. arit you are right. your investment strategy is terrible, and I am worried for you. hedge a little, man.
December 18th, 2008 at 9:58 am
I found VHB because I had just rented an office across the street from Woodwards and wanted to know why they were having a ground-breaking ceremony. I googled “woodwards + development” (I was worried about future construction noise) and landed on VHB. When I looked through the site, many questions I had had about why prices were going up so quickly were on there, and many things clicked into place that day. I read Irrational Exuberance and clicked through many sites (including the mental Housing Panic) and finally settled on HBB, Calculated Risk and VHB.
The thing that tipped me off, even before I knew the expression “bubble”, was hearing the same cliches (rich asians, no more land, throwing money away, priced out forever). On the blogs I found that these same cliches were from cities all over north america. This convinced me that is was all emotional. Well, that, and the level of angry denial I encountered when I (honestly, very innoccently) excitedly relayed some of “Irrational Exuberance” findings to my friends. I would understand if they rolled their eyes for quoting strangers on the internet, but Robert Shiller isn’t exactly a 9/11 conspiracist.
My sister yelled at me “there’s no bubble, everyone says there’s a bubble but there isn’t” and a friend who was moaning that she would never be able to buy also yelled at me for telling her not to worry, she would be able to buy someday (she later bought exactly the month of the peak, and got her wish – she is still excited to have slipped into one of the last 5%, 40 year mortgages). The yelling and sheer strength of emotional response backed up with no reason (olympics, etc.) is what sealed it for me.
I have found the whole thing a bit depressing on a social level. My friends are smart, educated, amazing, and still many of them got caught up, and I also can’t believe how many feel comfortable telling me how rich they were getting while I was throwing money away. I now know one friend is avoiding me for fear I will say “I told you so”, while others have begun telling me how they knew all along it was going to crash
Seriously, though, this whole thing has strained a lot of personal relationships, through jealousy and frustration. That may sound like it’s not much, but it is one of the sadder elements. It’s hurt the city for sure and made me want to leave, though family and friends means I probably won’t.
December 18th, 2008 at 9:57 am
#28 PAUL;
Good points, this city had a lot of potential in terms of urban planning but we used almost every available lot downtown to build nearly unlivable units. I think the real long-term damage was in what we built during the bubble, not the price appreciation.
December 18th, 2008 at 8:47 am
I became a bear in 05 and thought that 02-04 prices were too steep of a run up. The internet provided plenty of well reasoned cases for a global credit problems and made the US seemed like a mess. Locally VHB was a place where that I found the best local information and opinions.
A few couple of 06 points stand out to me. B Rennie’s interview with “if the blogger is right….” quote was and this article in Harpers http://www.itulip.com/forums/showthread.php?t=966 was another. By summer 06 I was 100% willing to sit this hand out.
It’s not that I think real estate is always bad I’ve owned and made money it just simply hasn’t made sense for me here and now.
I’ve become a bear because of the nature of most of the bullish arguments have seemed to be empty.
December 18th, 2008 at 8:19 am
“Western Separatist Says:
Arit, inflation will wipe out your cash long before it buys you a house.”
Well, I never said I keep my powder in cash. Actually I am doing something riskier, and thus do not recommend it to anyone else: I am betting all our downpayment money on the assumption that people will be old and sick. All in one stock. I am buying, buying, buying. All the time. Even now. Do not try this at home.
It’s what we call in the army “Medal or Jail” situation. No in-between.
Regards
arit
December 18th, 2008 at 8:00 am
The issue of inflation has been raised many times because of the increase in monetary supply. The way I see it, the printing of money through easy credit happened long ago and we’ve already had our inflation – first inflation in tech stocks, then real estate, then resource commodities. There’s no asset or resource left to inflate anymore that hasn’t been tainted, except cash.
December 18th, 2008 at 6:44 am
Drove around Richmond yesterday. Interesting that 70% of the people i saw weren’t here twenty years ago. The number of housing lots in Richmond is about the same though. Supply and demand, no wonder they have to build so many condos. Suprising that financial accountants with mba’s sometimes can’t even figure it out.
December 18th, 2008 at 5:30 am
I; like many of you here thought the prices could not possibly be sustained and supported, so I went online looking for some kind of information to support what was just a susspicion – does any one else see this? Thankfully I found VHB (thanks!) and Ben Jone’s site in the US. It was wonderful to read from a whole group of people who also see it. Most of our friends, and some family were hugely into denial -spending like crazy. Now they seem to look a bit defeated…. Sad.
December 18th, 2008 at 2:06 am
Hi Arit:
Great story and welcome to Canada; your 10-year plan (I guess it about 8 years now) sounds like a keeper. I’ve told friends and family that if I ever buy a house in Vancouver it will most likely be about 2014-2015.
December 18th, 2008 at 1:40 am
I’m not someone who is averse to buying. But I’m not going to just do it to have a piece of land. Before moving to Canada we earned a great salary in another country, in a large, important city. I liked to live near the downtown core. There were nightclubs, bars and eateries open 24/7 all around me. That’s the kind of lifestyle I wanted. We rented a great two-bedroom apartment at a really affordable price. I could have bought a place but the district where I lived was mainly an entertainment one, so there weren’t any condos for sale. There were condos a few minutes away but I wanted to live there. Hey, I was a block from the subway and have never owned a car in my life.
I moved to another country and then made my way to Canada. I rented an apartment in the West End. I have children and a husband but we still like to live near the downtown areas, don’t own a car and keep many of the habits we had when we were single so I did not want to buy a big house in the burbs and a SUV. When we started looking around the city we realized the places in our price range were not large enough. We would have to move to Surrey to have a house, and even that was expensive.
I did some math and realized we would have to live very cheaply to afford a place. I mean not going out, having to pinch pennies, never getting to go out for drinks, etc.
Why would I move to Surrey? Why did I come all the way to Canada live so cheaply? So I said to hell with it and we rent a two bedroom.
You only get one life and I am not going to live my life making 99 cent maccaroni to eat every day just so I can have a tiny condo. Some people might say, what are you going to do when you grow old? You won’t have a house then! My aunt has two wonderful houses back in my birth country. She also never went abroad, has not taken a vacation in 6 years, and her idea of a fancy meal is going out for Chinese once every five months. But she has two beautiful houses. She says than in a few years, when she is 65, she will sell them and live like a rich woman.
And I say, so what? What use will it be to have all that many at 65? Can it buy back the youth and fun she lost?
Me, I’m enjoying life. One day, if we find something that we life in our price range, we’ll buy. If not, I will not sweat it too much.
December 18th, 2008 at 1:35 am
inflation will wipe out your cash long before it buys you a house
Too bad we’re experiencing deflation instead. Cash is king.
December 18th, 2008 at 1:32 am
“the satisfaction of paying your mortgage and owning property”
A salesman’s line if I ever heard one. I used to own, and “the satisfaction” is over-rated, especially when appreciation isn’t going through the roof.
I sold because of divorce, and I basically gave my ex-wife everything because I made a lot more money than she did. I moved in with a friend, and I bought a motorbike and toured across Canada and the US. I spent a lot of money doing it, and it was worth every penny.
By the time I met my wife and was ready to buy again, it was ’04 and prices seemed ridiculous. I saw all the supply in the pipeline and knew a correction was inevitable. When we moved in together in ’05, prices were even more insane and I knew it was a bubble like 1981 all over again (now I think it’s worse): double-digit appreciation and everybody walking around spending money like they’re rich when stats showed that they weren’t.
I googled “housing bubble” and found like-minded critical thinkers online…and I’m still here today, enjoying the much-delayed yet finally here correction. Popcorn’s ready!
December 18th, 2008 at 12:01 am
Arit, inflation will wipe out your cash long before it buys you a house.
December 17th, 2008 at 11:33 pm
I evolved into a real estate bear about four years ago… and then into a constantly ranting real estate bear about two years ago… and then into a gloating gleeful real estate bear about four months ago.
My background is in business. Mostly in corporate finance and general management with publicly listed companies. And I’ve done a stint as vp & treasurer of a major Canadian real estate development and ownership company. I have a BA (economics) and an MBA in finance and I am a member of the Canadian institute of chartered accountants. As such, I couldn’t reconcile the trajectory of Vancouver real estate prices with Vancouver incomes, population growth etc. In other words, the numbers just didn’t make sense to me.
I was willing to accept that real estate prices could outpace what would be justified based on average Vancouver incomes and rental rates… and I was willing to accept that such an imbalance could persist for an extended period of time… but I couldn’t ignore the insane pace of new development and the massive build-up of condos, too many of which were being purchased by speculators.
My prediction…
I predict that the overbuilding story is not over. There is still an enormous number of condominiums slated for completion this year and next… thousands of those units will come onto the market and add to the existing inventory overhang… and the only way the Vancouver real estate market will arrive at a new equilibrium is for prices to fall… a lot. In my opinion, prices will eventually fall to a level which will equal about a 50% decline from the peak that we saw last February.
On the other hand, I see the bottom arriving sooner that some of the other posters on this board. In my opinion, the bottom of the market will arrive around the first half of 2010.
December 17th, 2008 at 11:24 pm
I grew up in a small, isolated, hopeless resource community. Getting out and starting a life for myself was a priority. I’ve always been a person who values independence and control over my destiny. I moved to Vancouver as soon as I finished high school. I took out loans and studied. When I finished my degree, I went straight to work to pay off the debt. From there, I worked on building up savings. Only then did I start thinking about real estate. Should I buy or should I rent?
Well, I did what I always do when it comes to financial decisions: I looked at the numbers. The numbers sucked and I stayed away. The year was 2006. It was an easy choice. Sure, there was an irritating social aspect — all those conversations with friends and colleagues telling me I was throwing money away in rent, that real estate only goes up, etc. — but it didn’t change my thinking. The numbers didn’t work.
By 2007, with prices still rising, I started to get really concerned about what was happening to Vancouver. With every condo ad, I saw the city one step closer to doom. It seemed so tragic and yet so hilarious. To think it was all coming down to granite countertops and stainless steel sinks! Buy now or never get your chance to wake-up to a “wood-like” floor!
I looked around the web and found sites like this one. Here, I learned I wasn’t alone in my suspicion. I decided to write my own blog, and I focused on condo marketing because it seemed like the ultimate symbol of where it all went wrong. Really, what better to describe Vancouver in the last seven years than the condo ad?
The rest, as they say, is history.
December 17th, 2008 at 10:59 pm
“No soup for you…”
Arit, you’re too funny.
December 17th, 2008 at 10:48 pm
One thing I never really understood. Nice cars in front of really crappy houses in east vancouver……
December 17th, 2008 at 10:29 pm
Fair enough Arit, but the economic landscape is unstable enough to warrant any “ten year plan” childs play. Ten month plans at a maximum.
December 17th, 2008 at 10:20 pm
anon
“You can do better than watching your nickels and having a bit of a nest egg. Expand your goals. ”
My friend, I cannot imagine anything better than living a quiet peaceful life where I am not in “alert” mode 24/7 with a sig sauer always, always, hurting my right butt cheek. 15 years made a nice impression (literally).
Regards,
arit
December 17th, 2008 at 10:01 pm
Arit, i’m not sure what it’s like in Isreal, i know it is a difficult place. In Canada though there is a lot of opportunity for smart people. You can do better than watching your nickels and having a bit of a nest egg. Expand your goals.
December 17th, 2008 at 9:52 pm
anon
“You will need credit/leverage to protect yourself.”
Excuse me, I honestly don’t understand what you are saying. The credit is there, I am just not using it. I hope you do not mean that the debt protects you?
“You’re almost talking like a child in regards to your finances. ”
Maybe you are right, you know? I worked for ACCPAC (you must know Simply Accounting, it’s sold in COSTCO LOL). And I absolutely disliked programming for the financial domain. It was like I was allergic to it. Finances and me don’t go well together. I quit there. But I am good with Excel, and I am cheap, so I know exactly where every penny goes.
So enlighten me: Why do I want to go into debt?
Regards
arit
December 17th, 2008 at 9:42 pm
I am not a bear.
I am a bull and I think prices are going to fall for a while, they will come back up. When prices will bottom or come back is difficult to say.
This is not the End of Days.
We are not having a Real Estate Armageddon.
People move to Vancouver because its a better place to live than about 90% of Canada and the rest of the world.
People will keep coming and they have to live somewhere…
December 17th, 2008 at 9:41 pm
Arit, you’re too cheap. Consider that at some point a lot more immigrants and inflation will come, you will need credit/leverage to protect yourself. You’re almost talking like a child in regards to your finances.
December 17th, 2008 at 9:39 pm
browntown/Rob/krissh/satv is correct, with low interest rates; make life much easier because now homedebtors, have enough spare change to take bus instead of walk to extra part time job.
December 17th, 2008 at 9:33 pm
“How would you know the satisfaction of paying your mortgage and owning property then?”.
That’s a good one. A really good one. Paying 70% of your salary over 25-40 years for large quantities of wood shavings bond together by glue made in China and the land it sits on in the best case. In a complex or condo you get only the wood shavings.
Dave, here I open myself: I _also_ never owned property. Feel free to mention my mother and her basement. These days must be very stressful for you both financially and emotionally, you can take it out on me if it helps.
Some of us here are not after ‘satisfaction’ as you call it, also known as “The pride of home ownership”. Some look at the dry numbers, and if they don’t make sense, no soup for you.
****************
And now the arit story:
Regarding “Best Place on Earth”.
Our case is different than most of you. Once we decided we want to leave Israel, we could pretty much chose where to go. Being a software/mechanical engineer (sorry modesty, relevant) makes it quite easy to immigrate anywhere.
The US was out of the question, as we do not really identify ourselves with the American values (that’s an entire topic by itself, so we’ll leave it there).
The choice was down to Spain, Australia and Canada, and we chose Canada (again, why?, different topic altogether).
Then the city. Which one? Down to Toronto, Vancouver and Calgary, all three have software development. We both have been in Toronto in the past, but not Calgary nor Vancouver. We saw the pictures of Vancouver, and loved it. So for us, it was, effectively, the “Best Place on Earth”.
After being here six years now, I do see the advantages: beautiful scenery, peaceful, quiet, a nice place to raise the family. And the disadvantages of this city: Not enough roads and highways, no major companies that produce stuff, very lousy drivers (here in Richmond, where we do all our weekday drives)… and of course, house prices. So I cannot promise I will stay here forever. For now it’s OK.
Becoming a Bear********************************
When we landed, we wanted to buy a house, but we calculated we could afford only 180K and still have enough money for food and a frugal life. That ammmount, in 2003, could somehow buy you some wood shavings but not the land under it. So we rented, and saw the insanity begin. Each month we could affor a bit more house, but the house kept running away, climbing faster than my Excel sheets allowed.
In 2005 we started to smell something is funny. We have a family income above average, but everybody around us lives in nices houses, drives new cars, and we rent (1000 a month, 3bdr townhouse) and drive an older car. How can it be?
We are immigrants, surely something we don’t understand. Here in Canada things work differently. Everybody made it except us.
What’s the secret?
So I asked my co-worker, Canadian born here, what’s the deal, and he answered: “If you are not leveraged, you do not exist”. Believe me: I didn’t even understand his answer.
So everybody is in debt.
Then I found Patrick.net, (by Googling “Housing Bubble”, I thought I coined the term!!!) and all the usual suspects.
So…
We came up with the “arit 10 year plan” which started in January 2006 and was supposed to end in 2016 with us buying a house in cash.
But now, I am not so sure I _ever_ want the “”"satisfaction”"” of owning a house. I am re-evaluating our plan with the newly gained knowledge FROM YOU GUYS! THANK YOU, I aquired here in the past 3 years.
I am thinking more like putting all the money somewhere safe and renting forever. Flexibility is very good, especially in tough economic times.
Well, sorry if I have bored you with the arit story, but I think maybe the immigrant perspective deserves some exposure too.
Best regards
arit
December 17th, 2008 at 9:22 pm
oh yeah nutdudes! browntown like econ slowdown, mortgage rate drop puts more payment for bank paydown! rbc can sweat but more cash moneys in pockets for party in pants! yeah!
December 17th, 2008 at 9:18 pm
My story:
In 2001, I started working at a bank in Halifax. 9/11 hit and all of a sudden we had the lowest interest rates in a generation and my employer got on our case to SELL SELL SELL mortgages and all forms of credit. Thankfully, I was raised by parents with solid values when came to things like money, so I always had a healthy skepticism towards the bank and its predatory practices (I refused to force credit cards on university students, no matter how much the banksters insisted).
In 2003, while still working at the bank and having been fully immersed in bubble propaganda, I received a modest inheritance. For the first time, my wife and I considered home ownership. We found a pretty 1930s house on an overgrown lot with an apartment on the top floor. With my inheritance, I avoided CHMC fees and the apartment paid the majority of our mortgage payment. It was cheaper than renting.
Not longer after buying, I became a bubble-head. Neighbours told us we were smart to buy because values were skyrocketing (this was Halifax). The bank, the headlines, the conversations. It was sinking in. Then our credit card limit started shooting up. Even though I wasn’t going nuts, the available credit made me feel rich. I was also constantly doing this or that around the house and yard…it was becoming my life (blech).
In 2005, I had used a bit of credit and was considering adding $15K of CC debt to my mortgage (along with remaining student debt). I mentioned it to my Mom and she told me what’s what. I did the refinance, requested a lower limit, and put away my card.
I felt bad about refinancing. Not only that, but I began doubting the economy. I quit my bank job and found lower paying but more ethical work. I started reading many different blogs about peak oil, politics, and finally the housing bubble. By Xmas, I was reading The Housing Bubble Blog.
In 2006, we decided to move to Vancouver (my home town). I looked at Vancouver house prices on the internet and was amazed, then quickly discovered Vancouver Housing Blog. I needed the voices of reason (thanks to all of you).
We put our Halifax house on the market, reduced it quickly when it sat for a month, sold it, and pocketed our bubble bux. It was a modest amount by Vancouver standards but bubble bux nonetheless. I was also happy not to be a landlord anymore. Even with credit checks, tenants are hit and miss.
We’ve done the home ownership thing and it was……..meh. And we actually had a cute, well-built house. Certainly not worth going broke over, like you’d have to in Vancouver. My wife even told me recently that she couldn’t care less if we owned again. So much for that female nesting instinct.
Maybe we’ll own again, but we’re happy renters for now with our bubble bux in the bank.
December 17th, 2008 at 9:13 pm
Satv, Rob, Dave, Boom2, the following link is for you.
BC economy set to exceed 5%gdp, in 2009 as rich immigrants intend to Vancouver their home- 1 bdr leaky condo in Vancouver to reach 1 million dollar mark
Hurry, Hurry, Hurry, pick up an investment property,now is the best time-just before the Olympics
December 17th, 2008 at 9:03 pm
#51
No man, I am not greedy – had to sell to move closer to normal schools.
regarding the rent/own ratio, I was paying less then the rent – could have paid it completely in couple of years.
regarding the fun – no , I did not have any fun in selling it, and I am quite disappointed that you think I would have fun at other people troubles – but, you know, it speaks volumes about you and your personality.
Anyways, if you think I should buy, let me know the mls of your property, i will give it a try after the dust settles down.
December 17th, 2008 at 9:01 pm
you have to give credit where credit is due, and it looks like boom2, Dave Krrish is right, there is a second leg up, just around the corner, and we better run out and buy quickly Or be priced out for ever.
Let’s face it fellow bears, The Rennie Machine was right.
The Best place on earth, the golden decade and we didn’t jump in shame, what a shame.
December 17th, 2008 at 9:01 pm
There’s a nice little “rent vs buy” calculator at http://www.interiorsavings.com
For my situation, even with a 3% mortgage rate AND property appreciating 3%/yr I’d have to live in the place for 18 years until buying was the better option. I guess I have cheap rent!
December 17th, 2008 at 8:53 pm
Mortgage payments: $3,845.53 monthly
Mortgage balance: $595,435.44
Number of payments: 60
Total payment: $230,731.80 5yr
Total interest: $151,167.24 4.790%
Number of payments: 300
Total payment: $1,153,659.00
Total interest: $478,659.00
*nobody need to buy an Amortization chart you can simply go online http://www.canequity.com/mortgage-calculator/
December 17th, 2008 at 8:49 pm
anonymous 50 Says:
“Timm, buy an amortization table. Even if buying at the top of a boom negative cash flow only last a few years”
And that will give me the satisfaccion of owning property Dave S was refering to?
should I buy now or I’ll be unsatisfied forever?
December 17th, 2008 at 8:32 pm
“so we can have an intelligent conversation”
what a non bableee fish,hey my mortgage helper please countinue as rental slave.
Asalvary,
You are not sure about your decision that’s why you are so disappointed and pretending to having fun i also know the reason behind your disappointment that is low interest rates if you were still in your unit your monthly payment would have lowered but you are renting a place and paying more increased rents than your mortgage,
your post prove that you are a greedy seller who is waiting to get in at low but commision was greater than any drop disappointed again.