Vancouver #1 in net worth

According to a study released by Environics Analytics, Our fair city surpassed Calgary in 2008 when it comes to net worth.  This is due to a number of factors, including increased household debt and rapidly dropping houseprices in Calgary compared to a slower drop in house prices here.

Net worth, which measures someone’s assets minus debts, dropped 6.2 per cent for Canadians as a whole last year. But Calgary residents saw their wealth plunge 12.3 per cent, while Vancouver’s residents were able to hang on to much of their riches. There, net worth fell just 3.1 per cent between December, 2007, and December, 2008.

Though house prices in both cities continue to drop, they are dropping faster in Calgary which makes the Vancouver numbers look better by comparison.  The report draws no connection between an economy based primarily on a real estate and it’s risk for a downturn in net worth, though it does mention the local obsession:

Vancouverite Sebastian Albrecht rode that Pacific wave. He has a lot of his money tied up in real estate. And it’s these investments – with prices down less than 10 per cent from their peak last year – that has made the city surrounded by mountains and ocean the richest in Canada, supplanting the country’s energy capital Calgary.

Mr. Albrecht bought his first condo a decade ago, after university. He stretched himself – and slept in a sleeping bag on the floor for a couple months in the unfurnished home.

A decade later, he lives in a $600,000 home that he bought two years ago for $500,000 and also owns – and rents out – a $350,000 town home and a $300,000 condo. He has some money in stocks, but only about 10 per cent of his net worth.

The three leading provinces for net worth also lead for household debt levels: BC, Alberta and Ontario.  Each province has it’s own particular challenges.  Alberta has a boom and bust economy based on energy prices, Ontario has been hit hard by a manufacturing downturn and locally we’ve seen job losses in resources, tourism and the entertainment industries.

As the recession and real estate market correction grinds on it will be interesting to see where the stats put us in a year as the report points out that it’s only current up until the end of 2008:

The survey doesn’t cover 2009. In the first six months of this year, prices for existing homes were down 8.6 per cent in Vancouver from the same period of last year, and 9.8 per cent in Calgary, resale statistics show.

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other ted
Guest
other ted

"the pacific wave" interesting metaphor. Like all waves this one builds moment, gains in size at which point people jump on board. Like all waves it will come crashing down. Lets keep a watch or pool and see how long it takes these clowns like sebastian mentioned in this article to end up filing for bankruptcy. We should add to the wiki page tracking these clowns.

mark downs
Guest
mark downs
He has a lot of his money tied up in real estate. And it’s these investments – with prices down less than 10 per cent from their peak last year – that has made the city surrounded by mountains and ocean the richest in Canada, It is completely insane to have 90 percent of your networth in a single asset class in a single market. The article doesn't say, but I'm assuming the properties he lists aren't completely paid off, making them leveraged investments, which would mean he actually has more that 100% of his net worth tied to the local housing market. That works great over a ten year boom, but does anyone really believe we'll go through a one year correction and that will be it? There's a word for this investing style – it's called gambling. When… Read more »
mark downs
Guest
mark downs

Oh yeah, and a 10% year over year loss is considered a good return these days? Wow, I guess I've been setting my sights too high.

Mark Upton
Guest
Mark Upton

Ahh the sour grapes! Whatever makes you happy.

GenX
Guest
GenX

Have you been keeping up with current events? Considering the recession last year, any investments that have a slight negative return (real estate or stocks) is considered above average!

"mark downs Says:

July 20th, 2009 at 11:10 am

Oh yeah, and a 10% year over year loss is considered a good return these days? Wow, I guess I’ve been setting my sights too high"

mark downs
Guest
mark downs

GenX: Yes, I know that overpriced assets correct. That's why I've only been dabbling in the stock market looking for bargains over the last six months. For most of the previous year 90% of my networth was in GICs. The GICs have pretty lousy returns, but I'll take +3.5 percent over -10% any day.

Coincidentally that's also why I'm staying out of the Vancouver real estate market for now. I for one don't believe we've seen even half of this correction yet. It's a bit early to be patting yourself on the back for only loosing 10% from peak.

mark downs
Guest
mark downs

And just before anyone else points it out, yes, I know it's 'losing' not 'loosing'. Like most people I make mistakes and for the record I've had my share of investment losses (just in case you think I'm trying to come across as holier than thou).

You can't time markets. That's the whole point of diversification and the reason it's a bad idea to have 90% of your net worth in one relatively illiquid asset.

jesse
Member

"Mr. Albrecht bought his first condo a decade ago"

…for 60% of its current market value. Net worth is assets minus liabilities so it shows how most people bought when prices were significantly lower.

I love it how most of his INVESTMENT portfolio is in real estate. So diversified.

NO -LYMPICS
Guest
NO -LYMPICS

Whats the point of this story?

Its got more holes than swiss cheese.

What was the price of his 1st condo?

What did he sell it for? aka profit.

How did he make the leap to a home….dual income family or a batchelor?

He paid $500,000 for his $600,000 house, and will claim he's "made" $100,000.

He's renting out 2 condos ?

How long ago did he buy them ? … this detail is omitted

What's the mortgage on those ?

What were his borrowing rates?

Highly doubt that the rent covers the mortgage.

As mark downs stated, this seems like a leveraged investment.

Too many details are missing…methinks this is simply a baited hook info-ad by the RE pimp industry.

Anonymous
Guest
Anonymous

I love this from Mr. Albrecht:

"“The difference in Vancouver is it's more diverse than a lot of areas in Canada,” Mr. Albrecht says. “Calgary has oil. Toronto is finance. Here, there's a lot of creativity. I'm amazed how some people make money here.

By the way, Toronto is not only finance–there is media, education, communications, etc., etc., etc., What a loon that Mr. Albrecht is.

BBY
Guest
BBY
Hey I was hiking the grouse grind the same time as Albrecht was finishing his 12th time up. Cool. Anyhow, as previously stated, the story is pointless; he purchased RE at the low end of the curve as it was going up and leveraged well. Congrats. Good for him. Really. However, we have now reached the top of the biggest bubble we've ever seen and it is going down. If his investment RE is cash-flow positive, he could keep them or sell them. If they're cash flow negative and he has equity in them, he should sell them. If he was part of creating this story as a way to influence the market (i.e. It's a great time to BUY!), then he's a piece of crap. And another important observation that I don't see is that the price peak for… Read more »
NO -LYMPICS
Guest
NO -LYMPICS

Did the Grouse Grind 13 times in one day ?

Time for the urine test ?

He might get steroid rage and beat up Bob Rennie !

That would be a terrible blow to our RE industry !

Je T'aime Moi N
Guest
Je T'aime Moi N

from the original postL "As the recession and real estate market correction grinds on it will be interesting to see where the stats put us in a year "

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Conjecture not is this? The confirmation bias is that the current uptick in activity is part of the correction. Well let's bequeath the Nobel Prize in Economics on da bearz.

airborne canine
Guest
airborne canine

ING is 3.25%. I think you could get 3.5% for a 5 year term with a bank if you have a good relationship and you negotiate, especially for over $100,000. I was offered 4% at National Bank recently but I would never lock my money in for anywhere close to that length unless the rate was at least 7%.

mark downs
Guest
mark downs

Anonymous: I think he was referring to my post. I was referring to past GICs because I don't want to lock in for five years right now. You actually can get get 3.85% on a five year gic right now though, either with Achieve or Outlook, as long as you meet their small $1000 minimum:

http://www.outlookfinancial.com/products_and_rate

(I haven't used either of these and can't vouch for them)

exercise is good
Guest
exercise is good

Whatever you think of his investment choices Mr. Albrecht climbing the grouse grind 13 times in one day is an impressive achievement and was done for a charitable cause. I can't imagine why anyone would have a problem with that. I think he'd be wise to dump some local real estate and diversify, but he's got my respect for the grind climbs!

I think BBY had the best point – the article is comparing net worth between the two cities even though the Calgary correction is a full year ahead of ours.

NO -LYMPICS
Guest
NO -LYMPICS
$hit Hits the Fan for Dummies CMHC – Canada's Breaking Point http://www.americacanada.blogspot.com/ Everyone here is probably very well aware of who CMHC is. For any international visitors, CMHC was formed as a crown corporation in Canada after World War II to address the shortage in housing. It's mandate was to make home ownership accessible to all Canadians. CMHC primary deliverables is mortgage insurance and mortgage backed securities. Think Fannie and Freddie. In 2001 GE Capital was permitted to join CMHC in the Canadian mortgage insurance industry to provide competition in the marketplace. GE Capital began insuring Canadian mortgages and issuing NHA-MBS (Mortgage Backed securities insured by the Government of Canada). In response to competition, CMHC began its trip down a new road. In 2002 total outstanding mortgage debt in Canada was still a cool $467 billion. This was predominantly issued… Read more »
other ted
Guest
other ted

Everyone thanks for getting back to me. I was about to phone my bank. Thanks for clearing that up. You were talking about 5 year terms. I don't lock in that long. I might have to depending on what terms they allow me to break the term. right now for short term GIC's things are grim. Once I get back from holidays I will have to take another look.

NO -LYMPICS
Guest
NO -LYMPICS
Cont'd Securitization has accounted for 90.5% of all growth in total Canadian mortgage credit outstanding since 2007. Its market has grown from 100 billion in 2006, to 130 billion in 2007, to 260 billion by Q1 of 2009. CHMC plans to expand securitization of debt to 370 billion by the end of 2009 as per the conservative government request. All of these securties are traded on an open exchange and insured by the Government of Canada. Currently TD issued 59 billion in securities outstanding, CIBC 51 billion, BNS 32 billion, RBC 45 billion and BMO 27 billion. This explains why, if you are like so many, your eye balls popped when the bank preapproved your mortgage. Many individuals are being granted 500-800K for their first home purchase if their household income ranges from 110-170K. The banks don't care. You either… Read more »
NO -LYMPICS
Guest
NO -LYMPICS
BTW: Mssr: Albrecht is a REALTOR From the article: Mr. Albrecht bought his first condo a decade ago, after university. He stretched himself – and slept in a sleeping bag on the floor for a couple months in the unfurnished home. A decade later, he lives in a $600,000 home that he bought two years ago for $500,000 and also owns – and rents out – a $350,000 town home and a $300,000 condo. He has some money in stocks, but only about 10 per cent of his net worth. Born in the city, an entrepreneur at heart, the 34-year-old worked in IT and then started a clothing import-export business and dabbled in real estate – until he became a ****realtor**** himself three years ago, a perch from which he sees a cross-section of Vancouver and the people who generate… Read more »
oneangryslav
Member
oneangryslav

NO -LYMPICS: I don't know about the credibility of the piece being called into question. They do note that Mr. Albrecht is a real estate agent. Had they not mentioned that, then one could attack the journalist's credibility.

The average person should be at least aware enough to understand that Mr. Albrecht may have just a little bit of a conflict of interest, given his profession. As long as the facts are disclosed–as they were in this case–I don't think it's shoddy journalism.

NO -LYMPICS
Guest
NO -LYMPICS

oneangryslav:

What I meant was no-one on VCI seemed to mention it(ie Albrecht was a realtor,….nor was it quoted above ).

One had to read the full story via the link provided to find this out.

One can extrapolate a lot from what is and is NOT mentioned in the article. Is Mr Albrecht a fool….should he not cash out his assets and sit it out, or is he promoting himself as an expert( hey everybody I'm buying and holding !!!), and trying to lure greater fools ?

I always wonder how "certain" people get to be quoted in articles, wether they be puff pieces or not.

NO -LYMPICS
Guest
NO -LYMPICS
Let's see. Can't pay the mortgage payments = the bank forecloses? Not necessarily. Owner may still be "own" it. Good or bad? http://blog.cleveland.com/metro/2009/07/bank_walk… QUOTE: Renetta Atterberry thought she had lost her East 102nd Street house. So she was shocked to learn in January — five years after her mortgage company filed for foreclosure — that it was still in her name. Worse, the long-vacant rental home had been vandalized and she faced a raft of housing code violations. Since then, she has been saddled with debts of about $12,000 to pay for demolition and back taxes. "I thought I had nothing else to do with that home," said Atterberry. "I was so embarrassed and humiliated by this." Her mortgage company didn't buy the house and never took it to sheriff's sale to see if somebody else would, leaving Atterberry the… Read more »
patriotzed
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patriotzed

These so-called ” bank walkaways ” are another troubling development in the foreclosure crisis, particularly in cities like Cleveland with weaker housing markets, say housing advocates and government officials.

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Can’t happen here…right?

No it can't happen here.

1. Vancouver house prices may well come down 50%, but that would still make them high by North American standards. No lender is going to pass up a foreclosure to avoid city levies for demolition or back taxes. The lot value alone would far exceed this.

2. Lenders of insured mortgages (i.e. just about all risky mortgages in Canada) must foreclose to get their principal back from the insurer. They are not going to pass that up.

rp
Member
rp

The math doesn't add up. Average household income in Vancouver is 70k, yet average household assets are 500k ? That's ridiculous!

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