The problem isn’t prices, it’s the buyers

Over on Medium there’s an Op-Ed by Spencer Thompson on the high cost of Vancouver Real Estate.

Not just the literal high cost of property, but the risk of a greater price paid by the city .

The secret that no-one actually wants to talk about is that the quality of a city is mostly determined by a simple factor — the number of smart, ambitious people who live there. These people are the ones who want to drive that city forward by investing in opening businesses, donating their time to the arts & community, participating in city planning, etc… Without them, growth wouldn’t happen and you wouldn’t get all of the benefits that great cities enjoy.

The biggest contributor to the decline of a great city is simple — it’s the decline of those smart people. When they decide that the cost of living in a place outweighs the benefit, they move. They don’t just take their money with them, they take their intellectual and future capital with them. This is dangerous. When people aren’t willing to make an investment in a place to live any more, the city doesn’t just lose their taxes for the year, they lose a massive function of potential jobs created, culture added and future capital they can put to work.

Read the full article here.

Now clearly Mr. Thompson is a believer in foreign investors as a primary driver of prices in this city, but whatever the cause, HAM, Drugs or Credit, does he have a point? Do high real estate prices risk driving out ‘smart people’ who would contribute to a brighter future for the city?

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benti
Guest
benti

You mean the buyers of NY Waldorf Astoria Hotel for 1.95 $ billion? A poster at another forum compared it to the Japanese buying Rockefellar Centre. The sign of a country topping out. Only time will tell whether this is ‘it’ for China’s gambling addiction.

Zero Down Forty
Guest
Zero Down Forty

This is a baseless article that makes a lot of claims and assumes they are givens just by the simple fact that the writer writes them.

There is no data given at all. Are educated people choosing to live elsewhere? The author makes this claim but is it true? A guess? Van’s pop growth rate has slowed a bit over the last few decades, but at around 30k/year still increasing. Has the % of educated people dropped? Looking at Metro Van labour sector stats not much change in employment sector types between 2001 and 2011.
(http://www.metrovancouver.org/about/publications/Publications/2011NHS_Bulletin_LabourForce.pdf)

Lots’s of conjecture but no info.

VanRant
Member
VanRant

Vancouver is a sad, sad city. Lots of empty houses. Talented people have to move away to make a living. Half the people on the street does not speak english. Only jobs left here is servicing the HAMS, eg. Mercedes and cell phone sales, chinese restaurant servers and lawn mowers.

kabloona
Member
kabloona
From CNN.com: ‘I bought a house for $1,000’ 😉 https://ca.finance.yahoo.com/news/bought-house-1-000-112200050.html?cmp=cafb_finance “Antjuan Wyatt and his wife recently closed on a three-bedroom, 1,500-square-foot house in a leafy, middle class Detroit neighborhood. The house needs some work — new furnace, new plumbing, new windows. But that’s OK, because Wyatt bought the place at auction for $1,000. “We were looking for a home in the suburbs, but the prices were too high,” said 27-year old Wyatt, who works at a local Chrysler plant and dabbles in real estate on the side. “I was surprised I got this for $1,000.” In four months (and $30,000 in repairs), Wyatt hopes he can move into the refurbished gem with his wife and their two kids. Wyatt bought his home through a new program run by the Detroit Land Bank, an entity charged in early 2014 with addressing… Read more »
space889
Guest
space889

I would have thought that wages and income for professionals would be on the rise if there were a genuine shortage of skilled workers. But it looks like there is no shortage since our wage and income are lowest in the country!

Where is the brain drain??

van guy
Guest
van guy

As equities continue to sell them off, bonds are being bought up pushing yields lower. So maybe rates won’t sink this market, so what will? We have run out off answers here 🙁

ham
Guest
ham

Van guy,

I felt ur frustration for years. I bot in 2012 in richmond on the dip. Lowballed and got my sfh for 680k. I can get 850k right npw if I wanted to. If it drops to 500k, I dont care.

VMD@work
Guest
VMD@work
Vancouver is a city where even the top 1% earners (200k+) find it difficult to afford a mediocre SFH west of Main St, nevermind west of Granville. Van West and West Van SFH market is dominated by high Networth households rather than high (local) Income households. As a healthcare professional with good job-mobility, I had just terminated my work in Vancouver to focus on my suburb location. The 2 hour round-trip commute is not worth my time. I had other colleagues moving to Alberta to work as well, higher salary by 20%, lower top-bracket income tax rate, no PST, cheap gas, cheaper housing. Some may envision Vancouver to become “playground of the rich”. But unless the wealth in Van West/West Van can have a downstream effect on the wages of the public sector, the “Rich” will find the quality of… Read more »
/dev/null
Member
/dev/null

@space889 – but shortage relates to the difference between demand and supply, so couldn’t supply be low (few skilled workers) and demand low (few jobs for skilled workers) thus no true “shortage” and no upward pressure on wages?

Shut It Down Already
Guest
Shut It Down Already

3, “Half the people on the street does not speak english”

Oh, the irony.

space889
Guest
space889

@/dev/null – yes that could be true as well…but we are also getting bombarded by the skill shortage and the need for more TFWs so looks like the demand is there??

space889
Guest
space889

@VMD@work – The school here sucks because the curriculum here sucks, there is no way to get rid of bad teachers, no incentive for good teachers to excel, and most importantly no demand for excellence from students. Failure is not allowed lest we hurt someone’s precious self-esteem. Everyone should get A and parents demands it because our kid is special and most talentest kid ever!

I feel sorry for these kids when they have to compete globally for any kind of better than average opportunity or job after high school. Reality of not being able to add up 2 + 2 is going to hit them hard. Unless off course they get lucky enough to work for government as police, CBSA officer, CRA, etc then 2+2 is whatever they say it is.

Ryan
Guest
Ryan

no one is entitled to live here. fking move already.

Zero Down Forty
Guest
Zero Down Forty

No one is entitled to make free money by parking it in a concrete box downtown and having inflate by double because of government induced easy money polices and mortgage subsidization. Fking raise rates and close the CMHC already.

Slagathor
Guest
Slagathor

…Lowballed and got my sfh for 680k. ……. If it drops to 500k, I dont care…..

$180k loss over 24 months and you don’t care. It’s the new economy: the old rules don’t apply (obviously), looses are the new gains! Welcome to Moroncouver.

Slagathor
Guest
Slagathor

…..No one is entitled to make free money by parking it in a concrete box downtown and having inflate by double because of government induced easy money polices and mortgage subsidization….

What’s ‘entitled’ got to do with it?

Zero Down Forty
Guest
Zero Down Forty

…. no one is entitled to live here. fking move already…..

What’s ‘entitled’ got to do with it?

VanRant
Member
VanRant
Interesting comment from Jo over at garths about CMHC: “If I hear more statements that CMHC “helps house” Canadians I will scream. I have lent money as part of my job for over 14 yrs at a major trust co, bank and a large non bank lender. I also study financial crisis and macro trends for many yrs. let me be clear: The purpose of CMHC and Genworth is to heavily subsidize mortgage debt so that the massive debt bubble that has held up our economy keeps growing. Credit must keep growing at inflation plus about 2% per Richard Duncan as without this, the economy stalls out and the illusion of ” growth” disappears. Phantom collateral values begin to collapse and GDP stalls out with unemployment shooting up. CMHC since 2000 became a favourite tool of the politicians to keep… Read more »
VanRant
Member
VanRant

“CMHC Brings Home Ownership To The Masses, And Billions In Risk To Taxpayers”

http://www.huffingtonpost.ca/2014/10/07/cmhc-mortgage-insurance-canada_n_5945846.html

southseacompany
Member
southseacompany

@18 Good point, especially last paragraph;

On that note, this in today’s Huffington Post;
“CMHC Brings Home Ownership To The Masses, And Billions In Risk To Taxpayers”

http://www.huffingtonpost.ca/2014/10/07/cmhc-mortgage-insurance-canada_n_5945846.html

southseacompany
Member
southseacompany

@#19. Slightly faster draw than me!!

crabman
Guest
crabman

I’m guessing our mayor and his donors (a.k.a. developers) don’t really think there is a problem?

http://www.vancouversun.com/news/metro/Mayor+Gregor+Robertson+show+panel+affordable+housing/10270618/story.html

“In the first significant public appearance of mayoral candidates in the Vancouver election, in which affordable housing was on the agenda, Vision Vancouver Mayor Gregor Robertson was a no-show.

But if Tuesday’s breakfast panel session organized by the Urban Development Institute was supposed to inform its members about the election, most developers were no-shows as well.”

ham
Guest
ham

Slagathor,

a loss of 180k in 24 months? Not planning to sell.In for the long haul. My house is my home, my trading account is my investments. Bearish on equities though

ham
Guest
ham

Ever wonder about Jesse? The biggest bear here!! Or was the biggest bear. Yup, hes gone. Enjoying his new home now

Westside Realtor
Guest
Westside Realtor

Our new ‘catch phrase’ to selling clients:

“The high end of the market has gone illiquid”

Ie. No buyers.

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