Are home buyers foolish?

Seems a rather odd question to ask, after all homebuyers have seen a sharp rise in equity over the last several years.

But a sharp correction in the US seems to have split young buyers on the option of buying.

Some see it as a good investment, but there are apparently increasing numbers of young Americans who view property as an anchor limiting mobility rather than a sensible investment.

When Kimberly walked up to the front door of a beautiful, 7,500 square foot colonial, anchored in a terrific cul-de-sac in northern Baltimore County, she said to herself: “All my life I thought this was what I wanted. But as beautiful as this property is, I see nothing but a money pit and a trap.”

The 32-year old congressional aide who was arriving at the house for a charity event chose to satisfy her curiosity by exploring the grand rooms and perfect fixtures, only to finally decide, “Yeah, not only would I never buy an individual house, I’d be shocked if my friends would as well.”

Read the full article over at CNBC.

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Sherryl

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Melba

….Most of the owners I know in Vancouver bought their detached for less than $200K years back. Your friend who lives in the attic must have paid a lot more. Dumb choice.

Yes, those idiots in their 30’s who bought recently really should have bought when they were 10! What the hell were they thinking?

Oracle

Insanity:

Most of the owners I know in Vancouver bought their detached for less than $200K years back.

Your friend who lives in the attic must have paid a lot more. Dumb choice.

Move to an affordable area if your presently priced out.

Son of Ponzi

@Patrioz
Port Moody is charging people not living in the municipality for parking.
Surely, Vancouver can charge higher property taxes for property owners not living in their properties.

ILoveCharts
Westside Realtor

Pending sale going sideways.

Next step – will talk to client tomorrow and suggest we lower the price to firm up a bid.

That’s the type of conversation that is happening on the Westside these days – based on what I am seeing. I don’t see any uptick in HAM buying, only sellers wanting to cash out.

Insanity

@65 “who owns half the real estate in vancouver? you can’t get CMHC funding for something you aren’t going to live in.”

Up till a few months ago you could get CMHC for anything.

Most of Vancouver SF houses are actually multi family. Owner lives in the basement or garage and rents the rest out to scrape by. I have a friend who lives on the westside, he has 4 different tenants and actually lives in the attic. All the renters have nicer accommodations, pay way less than him after expenses but he is the one plunging toilets, cutting the lawn and worrying if everyone will pay their rent so he can make his mortgage payment. Must suck to own these days. No wonder most people rent.

slurker

That Vancouver venture fund sounds like a complete waste of time (and money), Canada is already overloaded with handouts to tech startups. The number one issue facing startups in Vancouver isn’t lack of funding, at least not in my experience but lack of local talent. It’s also very difficult to recruit people to Vancouver due to the high cost of living. To get top talent you’d need to look at the Bay area and the US. Unfortunately the flow goes mostly in the direction from Canada to the US and not the other way around. As a startup you aren’t very stable and you are basically asking people to move to a city that is effectively as expensive as the Bay area, worse employment prospects in case things go south and most likely worse employment prospects for any spouses coming… Read more »

Bull! Bull! Bull!

renters are the majority in vancouver.

>About 51.5 per cent of Vancouverites rent, according to the 2011 census National Household Survey.

who owns half the real estate in vancouver? you can’t get CMHC funding for something you aren’t going to live in.

http://metronews.ca/news/vancouver/1088962/cope-focuses-on-renters-in-prep-for-vancouver-2014-election/

Insanity

@62 “The years 1979 & 1980 alone witnessed prices doubling whilst rates doubled.”

In the 80s prices went up, then rates went up, then prices when down 45%. Today prices have gone up, like in 1980… guess what the next 2 steps in the cycle are?

George

Vancouver Sun: The City of Vancouver wants to inject itself into the venture capital market, using the power and connections of its economic commission to help raise funds for small and medium businesses. Unhappy with what it says is the inability of local start-ups and medium-sized businesses to get financing for innovative projects, the city plans to create a Vancouver Entrepreneur Fund that would act as a matchmaker between those companies and local and foreign investors. The idea is outlined in a report going to Vancouver council on Wednesday written by Ian McKay, executive director of the Vancouver Economic Commission. But the concept belongs to Vision Vancouver Mayor Gregor Robertson and his staff, who have grown increasingly concerned about the availability of investment funds for local young tech companies which often have to move to more robust venture capital markets… Read more »

Gord

@“”” RE and rates will mostly rise together “””
WOW!

That’s correct, Vancouver houses went up more than 10-fold (inflation-adjusted) in the previous cycle while interest rates went from 2% to ~20%.
http://moneycentral.msn.com/content/data/images/Charts/bondcycle.GIF

The years 1979 & 1980 alone witnessed prices doubling whilst rates doubled. Ask your daddy, he’ll tell you. The greatest myth going amongst you youngsters is that rising interest rates always lead to falling prices.

Best place on meth

Romeo, Ted,

Come on guys, for the love of god please get some new material.

It’s like fucking Groundhog Day around here.

Thanks fellas, much appreciated.

tedeastside

46, Vancouverites arent exactly the most giving people in the world

Boomhour should try Arlen TX

Aggregator

People don’t believe it but the market is exhausted here.

There is no market. It's all HAM and CMHC insurance and guarantees driving everything. Chart

Oliver to roll out new mortgage scheme in t-minus… 

Romeo Jordan

Heard Heard,

People don’t believe it but the market is exhausted here.

It’s done.

Price appreciation no more.

Got gold?

Heard Herd selling

!17K Friday coming soon:-)

paulb

New Listings 206
Price Changes 84
Sold Listings 139
TI:16989

http://www.paulboenisch.com

Roy

Another positive sign of the global recovery (chuckle, sigh). Microsoft cans 18,000

franko

@ %50
“”” RE and rates will mostly rise together “””

WOW!
Had to read it twice to believe it.
That’s too f.@%#*.g stupid to even think about responding to.

Insanity

@50 “The thing people misunderstand is trillions of $ in bond funds will slowly be rerouted over the next decade into stocks, RE and in the process, send interest rates higher.”

Let me get this straight. As bond rates go higher, people will stop buying bonds (which are will be paying a higher rate of return) and put the money in RE (which cost more to hold and yields less unless the price drops) and stocks (which have a higher cost of capital which will negatively impact earnings). Makes perfect sense. Are you an investment advisor? You must be advising Oracle/RC.

Insanity

@51 “Sure, the wealthy have plenty to spend on stocks, bonds and luxury RE.”

Actually the wealthy typically spend a very small part of their net worth on RE where the middle class go all in and will have more exposure to RE than their net worth. Easy credit makes this possible for the middle class. The wealthy view their principal residence (and or secondary residence) as consumption where the middle class think of it as an investment. There is a reason the wealthy keep getting richer and the middle class are falling behind. Oracle/Realty Check is a perfect example of why the middle class will continue to fall behind.

crabman

Don’t confuse high income inequality with the world being “awash in money”. Sure, the wealthy have plenty to spend on stocks, bonds and luxury RE. But the middle class is suffering a lack of money – that’s why the world’s economies are struggling and household debt levels are very high.

Gord

Reality check, QE will be ending this year, but that doesn’t mean we’ll require any further to get the TSX to 30,000 (S&P to 3000). The thing people misunderstand is trillions of $ in bond funds will slowly be rerouted over the next decade into stocks, RE and in the process, send interest rates higher. Yes, I said it — RE and rates will mostly rise together, kind of like they did from mid last century to 1980.

piper

are home buyers foolish? who knows, it’s too early to say. They are only foolish if they outcome is not in their favor.

was it foolish to be a French Canadian separatist in the 1960’s, 70’s and 80’s?

it was.. they lost, but put up a gallant fight and won a few battles.

so, this colours my analysis of the forum question, as it is The Accurate Analog to look into these matters, wrt the stars and lagging demographics.