A week ago we had a community driven interview of Petr and Ola, creators of the instant classic Vancouver Real Estate quiz “Crackshack or Mansion?”. You asked your questions and voted up the comments you wanted to hear answers to. Well we’ve sent the highest rated questions on to Petr and Ola and here are their answers:
How long have they lived in Vancouver?
PETR: I have lived here since 2002 and Ola has lived here since she was about 10 years old.
Do they rent or own? (wouldn’t want to presume even the obvious!)
PETR: haha. We rent.
OLA: …one of these “special” 1950’s bungalows.
If they rent, have they been tempted to buy?
PETR: Ola had considered buying a place with her friend in about 2007. I thought the bubble was pretty much at its peak back then and strongly encouraged her to wait. A lot of her friends were getting into the housing market (or thinking about it) and I think the mob mentality almost got the best of her. It didn’t take long to convince it’s a crazy idea (to buy with a friend, and at these prices).
OLA: I shudder when I think about it now. Even if prices kept going up and interest rates stayed low, it’s insane to tie yourself down with other people like that.
Have they considered leaving Vancouver because of RE prices?
PETR: Even though we are convinced this is a bubble that will have a severe correction, the prices will probably still be too high for us. I wouldn’t pay 200,000 for most of those million dollar mansions. The city is nice but it has a lot of competition for the pretty city of the month award. The bubble will pop everywhere so the interior of BC will look pretty good.
OLA: I must admit, owning my dream home has been a fantasy since I was 8. However, my dreams are extensive and require many acres and handcrafted woodwork. It would be a trophy for career success. It would be a frivolous indulgence when I have excess cash flow. Enslaving myself to a peach-coloured 80’s built condo isn’t really a replacement for that.
What is the effect of the RE market on their own social circle? Are friends overextending to buy RE?
PETR: We both know several people that have bought recently. We don’t know their financial situation but based on their careers it’s a safe assumption that they are severely overextended. I hope it works out for them but it likely won’t unless they sell and swallow all the closing costs.
Are they experiencing pressure to buy from family/friends/colleagues?
PETR: Not at all. Most people have no clue of anything outside of the nighly news. They understand their knowledge limitations so they don’t try to convince anyone.
OLA: My step dad tried to pressure me into buying in 2003. But I was a university student on loans then and it couldn’t happen. Hindsight being 20/20, it could have worked out well if I sold at the peak… but it’s hard to gauge the peak. Since the driving force is credit, and the credit pushers do whatever they want, whenever they want, it’s impossible to see the end of the gravy train far in advance. Pete & I were convinced it was the end a few years ago, but then the credit spigots were cranked even farther.
Are any friends leaving for more reasonably priced pastures?
OLA: I know some people who bought further east in the Lower Mainland. Save a hundred thousand, take 2 hours of commuting off your life each day. The bubble is the worst here, but it’s Canada wide so there’s not much one can do within the country.
Hi Petr and Ola, thanks for making such an entertaining site, I’d like to know how much exposure this got outside of Vancouver. Do you get many visitors from other countries?
PETR: We don’t know where our hits come from but I suspect most of them are Canadian. We have done interviews on many networks (all but one in Canada). We did a long interview with Al Jazeera English which was very cool. They took us to the houses on the game and interviewed us from the front doors. From what I understand they are doing a very extensive story on the Vancouver real estate market. They asked Garth Turner for an interview but he was unavailable.
OLA: Judging by the forum hits we get, we’re biggest in Vancouver, big in Canada, and also make a splash in other bubble cities. The appreciation seems greatest from people who are out-priced.
Do you have mls number for the mansion in the game since many people are interested in buying after seeing picture.
PETR: Hahahaha. I’m sure the interest is huge. They are easy to find on mls.ca if you put in the price range. There are a few that have been removed and at least one with a reduced price.
I’d like to know if they’ve gotten any hate mail from Crack Dealers who are pissed that they’ve exposed their sham: the selling of a temporary “high” followed by a lifetime of debt, to the unsuspecting masses looking for escapism. Also, please ask the same question again replacing “Crack Dealers” with “Realtors”.
PETR: Hehe, I like the question. No crack dealer complaints, they’re used to being made fun of. I think realtors will soon be pacing up and down east Hastings at 2am asking if you want to buy a house. Maybe the two could work together. You are much more likely to borrow 1 million if you’re high.
OLA: No hate mail to our virtual “face”, but we’ve heard multiple accounts of them rolling their eyes whenever the game is mentioned.
You’ve done a lot of interviews now. Have any of the interviewers tried to justify the prices or is everyone just as shocked as we think they’d be?
Did the dynamic duo have any reservations about doing the project under their real names and has there been any negative or positive feedback of “going public” with the view that real estate in Vancouver is ridiculous.
(answering both at once)
PETR: Most of the interviewers really loved the site. I think a lot of them are renters and related to it just as much as everyone else. I was very cautious at first because I know how much Vancouverites defend their bubbles. I was expecting a lot of backlash when the site started blowing up. I am a teacher in one of the areas that is highlighted in the game and was expecting angry parents and bad press but none of that happened. I have only had one negative comment. One lady was mad that we accused her of having lived in a crackhouse (she got 15 out of 16).
We were misquoted a couple of times by interviewers (probably homeowners). They represented us as being angry, distraught, pranksters. I am anything but distraught; I don’t owe anyone a million dollars.
OLA: one article talked about our site, then quoted some “expert” as saying that well, we’ve learned one of life’s hard lessons: real estate prices are tied to land values. Another “expert” chimed in that Vancouver prices are high because the city allowed too much dense development. If that’s not dredging the bottom of the justification barrel, I don’t know what is! (ED: you mean this gem?)
I believe Crackshack or Mansion, fresh in people’s minds, is helping to burst the bubble psychology and that it will prove a big part of the psychological wave down – where rate adjustments and changes to underwriting kick the financial legs out from under the bubble.
My question is, did you point out the “Emperor’s New Clothes” intentionally to help with that, or was it that you’d reached a point where you just couldn’t be silent about insanity any longer? We know you as readers of Garth’s, and savvy on the fundamentals but your timing and execution also seems perfect, and I am curious as to your thoughts on that!
OLA: Haha, I’ve been calling it the “Emperor’s New Clothes” in all the interviews, but sadly nobody has quoted me for it. I’m glad someone else sees the parallel! We’re totally that little girl in the story, and I think that’s why it resonates well.
PETR: I don’t want to overstate the impact of the game but I do think it will make a difference. Friends of mine bought a couple of months ago and after the game came out they were openly discussing regretting the purchase (when they were celebrating the week before). The timing was pretty much perfect but that was an accident. This bubble is old news to a lot of people that care to do a bit of research, but most people respond best to a silly game with pictures
At first I felt guilty about posting peoples houses and probably making it harder for them to sell (Ola was wise enough not to have that guilt). I look at it differently now. The bubble was a terrible thing on the way up and will be devastating on the way down. If the combination of all of us can help pop it earlier, we are doing a community service. It’s probably too late though, the bubble is too big and the damage will be severe.
OLA: The worse the damage, the cheaper the scraps