Historically, we ARE a bit pricey

Since governments around the world began printing money for no particular reason in the post-war era, real estate has slightly bettered the historical rate of return on money invested in capital markets or earning interest - about 4.5%. The average Vancouver home worth $8,000 in 1950 ought to be worth about $420,000 now - still out of reach for the average young adult starting out or even ten years later. Such a house would require a downpayment of $105,000 and mortgage payments of about $1700/month, necessitating an income of about $4800 a month or $28 an hour.

All this based on historical rates of return for capital, interest rates, inflation and lending practices.

Know many people like that under the age of 30?

So at $921,000, the average house in Vancouver is a bit overpriced, even allowing for the inflation due to today's larger-size houses. (The average post-war houe was a 2-storey 1400-square-foot bungalow. Today's average is a 2600-square-foot Vancouver Special)

Boomers affected more than prices

And I can relate to the writer's feelings of anger at the boomers - speaking as a tail-end boomer, my career was over before it started - there were only so many jobs in engineering when I finally graduated in 1983, and I worked at a series of menial jobs for five more years until I finally cracked the market at the low end of the scale. It wasn't until 2000 that jobs began to show up that were a match for my qualifications and experience, and now there are dozens - nay - hundreds in my field, all going either unfilled, or being filled by every sort of unqualified semi-professional, whether fresh out of school or from another country and missing the required credits for admission to the masters program. Early boomers are retiring early as multi-millionaires from the bubble in capital and housing markets, leaving a vacancy as sudden as the explosion, and people from GenX on up are being promoted beyond their experience, having been held down in the low-wage ghetto for up to twenty years by the boomer explosion in the job market that began in 1965.

Gold

Things are going to get pretty nasty. Forget real estate. Buy gold. I've been telling people to buy gold when it was around $300 an ounce prior to the Iraq war. It's about $730 or so now, and it's been up past $900 in the last few years. But that's nothing compared to how high it will go when the world has to restructure the currency markets worldwide, and deal with the massive US debt.

Depending on how that washes out we'll probably see an increase in the value of gold of at a minimum of 10 times it's current value, and it could easily be a lot more than that.

The way the current economic crisis is being handled is laughably absurd. Giving money to fix the problem to the nuts who caused the mess. And what do they do? Pay themselves with it. LOL! I guess stupidity knows no bounds. The thieves probably think they'll get away with the heist, but they're creating such a calamity, that governments worldwide will have no choice but to significantly restructure monetary value. In many cases they'll simply confiscate. And really they'll have no other choice. It'll be that or social collapse.

Here's hoping world leaders are smart enough to turn things around, as I'd rather not end up having to use cigarettes and bottles of booze as currency. I've heard that situation isn't much fun.

The wrong target

It has little to do with one's generation, and everything to do with the nature of the economic system. As long as people are allowed to speculate in housing, as long as affordable housing is not a priority, as long as speculators can make more money in investing in real estate rather than a real industry, you will have this problem.

Great article!

Like a capital gains tax, which is (according to the Ministry of Finance) an...

Unfortunately it does not apply to the sale of primary residences in Canada:

http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.html#P92_14422

It was also cut recently:

http://www.fin.gc.ca/toce/2002/cgtc_e.html

Hooray for speculation!

Thar's a cold wind a'comin.

If the projected downturn happens, a lot more than a collapse in housing prices is going to take place. Thousands of Vancouverites are going to lose their jobs - and their homes - and an economic domino effect will cascade throughout the city's economy.

And with a collapse in building values - commercial ones too - mill rates will either have to balloon, or the city will have to drastically cut services. And the Olympic bills will be coming due too.

James Burns posting re Gold put in mind the following thought. It has been reported that in recent years the big US financial houses have been working a "derivatives" scam in which they have borrowed enormous sums of money against Gold they do not actually own. More Gold, it's said, than actually exists out of the ground.

I've read that they've gotten deeper and deeper into the scam as they've tried to keep the price down by controlling the Gold market.

Could it be James, that the gifting of the billions to the big institutions was absolutely necessary to restore liquidity to them lest this largely unknown "bubble" breaks and brings the dollar down with it?

In that event, your cigs and booze example will not be too far off the mark.

cue the violins.

i'm a single, renting/child-free gen X-er, vanessa, and i share none of your sense of indignation.
when one is in a location that one dislikes and can't (or won't) change, one needs to either move to a place they like, or can change, or just shut up and take it.
crying out for pity just does not shine a good light on your predicament.
life is good here.
surely you wouldn't rather be sitting in the dirt somewhere in sudan waiting to see whether today is the day the helicopter comes so you can have a cup of rice to try to cook.

erb

"The price of freedom is eternal vigilance" - Thomas Jefferson.

Or if you don't like that, try Preventative Maintenance.

crash craving?

Wishing for the financial ruin of others, or of a generation in this case, seems a bit sadistic.

Who's to say you need to own a home? If the market prices don't make sense, don't buy one. Rent. Or move somewhere where
you can buy.

As a former resident of Vancouver (1997-2007), one of the reasons I left the city was because my wife and I wanted to have kids, so we moved somewhere where home ownership was more affordable. It was a quality of life decision for us.

I feel what the author is describing is the frustration of being locked out of a bubble market. Why the frustration? Cause she missed the market uptake? I'm sad of a few IPO's I missed out on in the 90's, and in hingsight I should have spent $400
on Apple shares instead of an Ipod, but life features countless wins and losses.

For many young people, Vancouver is a place to rent, and has been for many years now. That's the reality. Pay your rent, and use
your disposable income (which as a renter you probably have much more of than an owner) to enjoy what the city has to offer. Be thankful you didn't overextend yourself by buying into a bubble at the wrong time.

I think too much blame is placed here on the boomers. Vancouver is a unique real estate market; it's a huge industry there
and is highly speculative with lots of foreign dollars entering the market. While the timing of boomers' home ownership allowed them to benefit from this uptake, and in ways they encouraged the market to behave this way, they still aren't responsible or to blame for anything.

Many of the older boomers lost their homes back in the early 80's due to high interest rates, so many know the wins and losses as well. Many of them just happened to win in this more current game. But today's bubble will also hurt many people who bought recently, including those very boomers.

It's sad that people have to play this game, but until society rejects it, they'll be the rules we have to live with.

When the final unraveling of

When the final unraveling of the yen-dollar carry trade and deleveraging of hedge funds ends, the primary reason for the increase in the US dollar, Gold may have its day.

But as with any precious metal or commodity I wouldn't hedge my bets on it.

My dad returned from the second world war to Vancouver and bought a parcel of land on the 4000 block, West 34th avenue (Southlands). Together with my grandfather and pregnant mother they built their home on a radio/tv repairman wage for $7000 (including the cost of land).

Hard to believe.

The Prince Charles Generation?

I'm sure eventually Gen Xers will not only see pricing housing go down, so they can have houses if they want them, but will have that same kind of moment liberal American baby boomers had when the likes of Clinton and Gore got the white house (it's finally our time! [note: it wasn't quite their time until Clinton passed the Lewinsky test.]). In the meantime, let's just imagine them boomers as Douglas Coupland has--that is as "things" which hold up the world, while we make use of our time trying to creatively recover from our childhood wounds. When they're no longer on the ascendent, we can be kinder to them. It's better not to be mean.

When we get our houses, let's just be sure to keep them as playpens.

(Essay on this subject: http://www.scribd.com/doc/3798307/Soothing-SatireMending-Our-Way-to-Better)

Cheers and more,
PatrickMH

Isn't that nice?

Vanessa Richmond:
"I admit that while I like most boomers individually, I have no warmth for them as a group. Simply put: their gains are at our expense."

Eh voila! Vanessa clearly identifies herself as one who actually dislikes a substantial chunk of society. A new prejudice is established here and this one is not based on skin colour or religious affiliation but on length of existence on the planet.

The moaners always find some scapegoat; nothing changes. We know who some Germans blamed for the ills of the world in the early 20th Century and, closer to home, we remember who Jacques Parizeau blamed ("money and the ethnic vote.") for the 1995 vote that retained the integrity of Canada. General Motors an others are not feelong bad about their lousy products but are now blaming their demise of the good cars that the Japanese make!

Fact is we're all lucky to live in Canada and be able to borrow money to buy a home. Can't do that everywhere. Fact is the vast majority of Canadians buy a home to live in and very few of them do so as a speculative venture.

Fact is too that Vancouver real-estate has experienced a somewhat 'perfect storm'.

1) Vancouver's a beautiful place to live and in an world of increased mobility Vancouver's real-estate prices have inflated along with other great places like San Francisco, Sydney, etc.

2) Real-estate to a considerable degree replaced tech-company investments after the 2001 tech-crash.

3) The city planners of Vancouver extremely successfully redeveloped and developed plans for residential properties in the city centre, bucking the North American trend of urban sprawl and inner-city emptiness and consequently increasing inner-city land values.

4) Vancouver has gradually developed a employment base that differs from traditional resource industries and those employed enjoy living in the city, rather than the suburbs.

5) Vancouver did not (boomers action here) permit the construction of a freeway system that would have encouraged larger and more accessible suburbs, ergo more value in city properties.

6) Vancouver is the Canadian city that enjoys the mildest climate in the country and everyone east to Newfoundland knows this and therefore, when asked, most would like to live here.

Etc.

Prices may well come down but even then the most viable and affordable option is large multi-unit buildings and not necessarily with a view. As has always been the case worldwide and has defined the growth of just about every city on the planet, most people without tons of cash start out buying something outside the centre of the action, somewhere on the city fringes.

Blaming boomers is a nasty sickness, you'd would probably relieve your debilitating and socially distasteful psychosis by studying the international history of urban planning.

********

"He Who Covets is always Poor."
[Claudian, fourth-century Latin poet.]

Fundamentally, the ponzi

Fundamentally, the ponzi scheme known as banking requires making ever larger loans to keep the scam afloat. As mortgages are the principal way that new money gets injected into the economy, what is required? You guessed it... rising property values.

Until the banking scam ends, more of the same.

Gutsy Article, So True

Wow. Another eye popping piece from the venerable Tyee. Ms. Richmond has found her voice. I hope we see more of this analysis in the future.

And she raises a very, very good point. As a boomer, I'd like to add a couple of qualifiers. First, MANY boomers feel the same way Gen Xers do. Exactly the same. Like the US, there are two factions making up this cohort. The minortiy elite, and the majority. Many boomers are composed of laid back, non aggressive people, and single moms who raised their kids. Inspite of working hard to promote tolerance and progressive ideals, the ruling elite conquered the boomer world via the same old techniques: media dominance, political cronyism, corruption and greed.

Indeed, boomers faced the exact same challenges as Gen Xers face now: how do citizens mobilize effective social change. That is the task. Educating the public through voices like Ms. Richmonds is a crucial step.

Great article!

The Sense of Entitlement is Irksome...

I get tired of whining like this...especially from people of my "generation".

When I wasn't making enough money to live where I wanted, I found a new job that paid more.

When I wanted to stop renting, I stopped going to restaurants and banked enough for a 5% downpayment.

If my ability to pay the mortgage was ever in danger, I'd get a second job to protect my home.

In short, I made adjustments in my life to afford a home. It wasn't rocket science. It didn't require me to become a doctor or a lawyer. All it took was a bit of real hard work and discipline. There's nothing stopping any educated, healthy Gen X'er from doing the same...except themselves.

This whole idea of being "locked" in a class predetermined by birth has always been wrong and self-defeating. We live in one of the most free societies on earth, where we're capable of steering our destinies. But it doesn't come free of charge. It takes your effort, your involvement, and yes...sometimes your sacrifice.

Monthly payments...

You forgot to mention the the biggest factors in deciding if/when to buy a house is the monthly cost not the house value.
The first house I bought in 1986 in the UK was at 13% interest.
A 25yr mortgage would cost:
$400,000 mortgage @ 3.25% = $1,900 mth ( CIBC variable rate, I pay this now on a smaller mortgage)
$400,000 mortgage @ 13.25% = $4,4800 mth
(wow look out in 2yrs when people with good jobs go to renew there terms)

So don,t cry about house prices, buy now they are a bargain compared to 2 yrs from now when inflation kicks interest rates over 10%.

Matt

forgot

@ 13.25% house price would need to be $170,000 to give you the same monthly payment as $400,000 at 3.25%.

If you thinking of buying but are waiting for prices to drop do you think they will go that low..eh?

Debt & Planning

Call it a ponzi scheme or simply a security against a debt. As you wish.

The beginnings of a mortgage system have been found as early as 1190. English common law included a law that would protect a creditor by giving him an interest in his debtor’s property. According to this law, the mortgage was a conditional sale. Although the creditor held title to the property, the debtor could, in the event the debt wasn’t paid, sell the property to recover his money.

City planning has much to do with high costs and the refusal of high-density escalates prices.

"Analysis

City Population Losses are the Rule: Nearly all major cities (municipalities or local area authories) in the developed world that have not expanded their boundaries and achieved full development within their boundaries have population totals below their peak. Within this category, only Vancouver and Miami have increased their populations. It is notable that these cities have attracted large numbers of immigrants --- Vancouver from China and Miami from the Caribbean. (New York has recently reached its peak population, but the four boroughs that were fully developed in 1950 have a total population below the 1950 figure)."

http://www.demographia.com/db-paris-history.htm

http://www.demographia.com/

Look for:

dhi-ix2005q3.pdf

Amen!

Amen!

Representing Gen Y

The real debate isn't about social change, political apathy, or an epic battle between underdog Gen Xers and their Boomer overlords for control of the economic reins of success, as has been suggested here; it's about an altogether ridiculous real estate market which is inexorably linked to an even more ridiculous and fragile financial system that is once again rearing its ugly 'reality check' head.
I represent the cohort of youth staring into a quickly expanding abyss of job prospects, a void once filled with immeasurable potential for success now strikingly empty. We've been told all along that as Boomers retire the way will be cleared for Generation Y's quick climb up the latter. Turns out what was meant to be retirement is now an evacuation - a forced one at that, like rats leaving a sinking ship. I for one am glad that I was too young to board that ship in the first place - and that includes the real estate ship. Sure, housing prices in Vancouver are dropping and will continue to drop, interest rates will be low, and eventually we'll reach a point that will be looked back upon as the very best time to buy real estate for our generation - but the point remains for me: I'll still be reluctant to board a ship that I know is still full of holes. Is renting so bad? Maybe not. My reasons for buying a house will always be strictly utilitarian, not for turning a profit - for now the one that I rent serves that purpose fine, and will do so until I decide that on my own I'm sufficiently buoyant.

There's tons of cheap real estate right beside Greater Vancouver

Everyone thinks you need to move to the interior for cheap housing... however, you can buy a single-family house in Blaine WA for well under $200K.

everyone has a sad story

Vanessa:
You could be writing about people making obscene profits on the stock market and be equally justified.
Just like in housing there are fluctuations and there are cheap and expensive stocks.
A beginner would be well advised to buy at the cheap end, be it stocks or housing.

Given a choice many people prefer to live in certain areas, so how exactly would you decide who should get to live there?
Even if we started all over again, in no time the Vancouver area would be crowded and some would squawk about not getting a choice property ( or a property at all)

Glen Clarck tried to put an extra tax on homes that were over a certain value, and soon learned that many who owned such homes in fact had no spare money to pay a tax with.

At one time I owned a few houses in the greater Vancouver area, as well as a business.
As it turned out the business got sideswiped by Suppliers who decided to also be competing with my venture. In the end I could not pay their profit on the supplies and also compete on their quotes on identical work!
Long story to explain that when I did the ethical thing and paid off my bills, I was no longer able to afford living in town!

Yup, I could have declared bankruptcy!
Yup, I could have defrauded my creditors by extending my credit and dumping inventory to my advantage before going under. Do not think I did not have offers from unscrupulous businessmen to that effect.

So much for being honest and law-abiding!
As a result I now live where I can afford to live and even here the prices have risen to the point that I would not be able to buy in today!

So, you are not the only one with a sad story, it is not generational, but a matter of luck and timing.

Perhaps you also need to move to a place where you actually can afford to live?

You will learn that the sun also rises in other places and with the Internet everything is available no matter where you decide to live.

Big Picture

Just a reminder to everyone hoping for values to plummet that Greater Vancouver had a population of 1.17 million people in 1981 which and is now somewhere around 2.2 million in 2008. 30,000 to 50,000 people will be planning to move here each year for the next 30 years. Last time I checked Vancouver doesn't pruduce new land. This is the real reason why values have gone up so high and will continue to do so for the long run. All you renters out there, I suggest you start looking to buy soon as it's a great oppotunity right now.

Renting is fine

I used to be bothered by Vancouver real estate prices, but they will fix themselves. The price decline from the Spring 08 peak is very dramatic. Prices have already declined 15-20% since then.

But you know what, I don't care anymore. Once you find a good rental, life is easy. Nobody is going to present me with a $100K assessment for my leaky condo, no politician can force me to pay skyrocketing property taxes for the Olympics, and I won't have to replace a roof or furnace of a house.

If I lost my job tomorrow, I owe nobody anything in debt payments and even have savings. So I may survive the coming hard times.

The same can't be said about the house-poor homoaners of Vancouver. The boomers, in particular, are going to suffer horribly. They are watching their home equity and RRSPs get hammered at the same time, just as they get ready for retirement.

I am not jealous of boomers at all.

Just get on with life and forget about homoanership. It is not what its made out to be. You can still raise a family, if you wish.

Children don't know or care if their home is owned or rented.

If it makes sense to buy...do it.

Home prices will go up and it will go down. If it make sense to own than to rent, then buy a home you can afford.

Over the long term homeownership build equity and financial discipline. Follow the market closely, and work with your realtor. Just be realistic with your own expectation and learn to enjoy your life.

We cannot change what's around us. Make the best out of your own situation. You are either a renter or a home owner. Pick your choice and be happy with your decision.

Just get on with life

I'm not that old but markets go up and they go down. You can't directly blame the boomers.

I moved here 20 years ago and the wave of Hong Kong immigrants started pushing prices up around that time.

During a planning course I took before I moved here, the instructor said that when mortgage qualification rules were changed to consider the wife's income, prices starting moving up because more money was chasing the existing pool of properties. Supply and demand says prices will start to move up. (late 70s to early 80s?)

With the Dot Bomb, corporate governance failures (e.g. WorldCom) and the electricity trading fiasco (e.g. Enron), investors globally turned to real estate.

So, lots of reasons, but not really ONE easy target to heap the blame on.

Cheese with that?

"Until about a decade ago, you could be a middle class worker, or even an artist or a hippy, and still comfortably get a mortgage, and have kids."

This is pure horsewiffle. I am one of those awful boomers and the labour market that existed before those horrible boomers started to retire absolutely sucked. The job market in 1998 was absolutely awful with an unemployment rate of 7.7%, which in itself was hugely better than 1993 when it peaked at 10.8%. The reality is that the entire period from 1982-1999 were really hard time for us end boomers because all the jobs were filled by the time we graduated. Sure houses were cheaper but that is a reflection of fewer people having the money to buy them. I won't even get into the interest rates of the era.

Age has some benefits, though. I have seen real estate booms in Vancouver before, for example when the writer here was in diapers, in the run up to Expo 86. It crashed like crazy after Expo and bottomed out in 1992. There were thousands of vacant homes in Vancouver, people just walked away from them.

The same thing is happening now. When the average working person cannot buy into the market at even an entry level then the market is bound to collapse. I have some news for you: a 2BR wood framed condo in Fairview, guaranteed to leak, isn't worth a half a million dollars. It never has been. I saw people the writer's age buying them all through the real estate insanity that ran from 2002 on. They all thought they were getting rich on the equity but since none of them sold, they are all crying the blues now. Boo hoo, that is what you get for being a sheep and following the crowd. That condo is worth $200k max and that is where it is heading.

So I am one of those greedy boomers. Well, let's look at that affluent lifestyle, shall we? I don't rent movies, I borrow them from the library. I have an old tube TV I bought at Sally Ann it it works fine. My audio system (a good one, too) also came from there. Car, well, I have a teeny little one. We shop at Superstore when they have the $35 off coupon and save our PC points. I buy lots of stuff at Value Village. My coffee to go is in my thermos. I get cast off bikes for my kids and fix them myself. I don't even know how to use an iPod and I have basic cable.

And yes, we are homeowners. Bought a tiny townhouse 15 years ago. I scraped up the down payment doing a second job. When the neighbours "moved up" we stayed put. Why? Well, all "booms" end and some hard times always come. Better to have some cash in the bank for those situations. Better than having weddings in Mexico, ski vacations and all that silly consumer nonsense.

Greed is ageless and universal. So is stupidity and even more so is blaming others for your plight.

Moot point

This whole article is based on the flawed premise that the Vancouver housing market is somehow going to "crash." Not possible. Vancouver Is Different, as realisticman pointed out above. Vancouver is a World Class City. It has a mild climate. It rains half the year. 2010! 2010! 2010!

Also, Metro Vancouver's housing market will bounce back, according to Peter Simpson (chief executive officer for the Greater Vancouver Home Builders' Association, so this guy knows what he's talking about!). It's not like Peter Simpson is some crazy guy claiming that the gains of the last few years will continue unabated. He is reasonable; he admits that the market will become more "balanced."

BS

Vancouver is not "world class." That is someone's fantasy, a person who has never been outside Vancouver. It has one fairly nice street, Robson. Compare that to Ginza in Tokyo or Myong-dong is Seoul. It is little league.

And Peter Simpson: he is a shill for the contractors who are all crapping bricks at the moment as they cann their illegal Mexican workers. There are projects going bust all over the place just like in '82 as the idiots who pre-bought walk away from their deposits.

And of course it will "bounce back" but in how many years? I highly doubt that we are going to see the reams of cheap money we have had in the last ten years or so. The nonsense that went on in Vancouver won't even bottom out for at least five years.

Over the last five years, I almost vomited every time some homemoaner (love the term, thanks!) gleefully told me about their assessment and their plans to borrow against said equity for a stainless appliance set and island kitchen reno. When I was asked what mine was, I said, "I don't know what it is, I need to live somewhere and my 15 year old fridge still works fine."

Insanity is contagious.

Cheaper Real Estate in the Burbs

Gordon_Ramble wrote:

Everyone thinks you need to move to the interior for cheap housing... however, you can buy a single-family house in Blaine WA for well under $200K.

____________________

You're right on this count, however it's not a realistic option for everyday living for most people. U.S. law only allows Canadian property owners to stay up to six months at a time without legal status. Mortgage might be difficult to arrange as well. The Nexus cards work great for border crossings, though.

The municipalities outside Vancouver provide much better value.

Behind the times

Actually, this article was obsolete before it was published. All markets have cycles and real estate in Western Canada is just at the tail end of this down one.

I'm a tail-end boomer too, have owned houses in the past, but, being on the tail end of the boom, like so many others, found for years that employment was harder to come by and less well paid than it was for our 10-15-years-older brethren and sistern. So, started business, sold house to pay off debt of starting business, and voila, renters again. For the past five years.

We live in Victoria. We could have moaned about missing the big years of real estate run-up, but frankly, we were too busy working and raising our four kids in our rented house. Haven't had time to care. Just figured that the lack of affordability would one day come home to roost, and so it seems to be. Maybe in a year or two we'll consider buying again. Maybe not.

What this has taught me is that you don't have to own a house to raise a family and be happy. Or be financially solvent. That business we started? Going fine. Not invested in real estate, so what. There are lots of other vehicles, and I feel quite free to move wherever I want, independent of real estate prices, once my kids are through college. Stay in Victoria? Not likely. I'm thinking Europe, or wherever my kids are.

Blessings in disguise, look for them.

Blame the boomers?

First of all, I like the article; I can relate to it. As always, the writing is good.
I'm not sure we can blame the boomers for this, but they certainly had it better.
I've had this conversation with my dad, and when he bought, 1 or 2 years salary bought a house with a nice big backyard.
I guess being on the 'tail' end is what sucks from what the comments say here. I'm a tail end gen x, and I'm going to blame the idiot gen x yuppies that have more money then brains (or maybe just very few brains), and have been buying houses for far more than they are worth and buying condos that don't even exist!

If you can find a decent place to rent, it is far less stressful. I'd love to have my own plot upon which to tinker and etc, but then there is reality.
If we all find a way to give up commuting and work productively from home on The Internets, then maybe I can move far away and find a little bit o land for myself.

World Economic Collapse

Yes, this article is so last year.

Read the current economic news and realize we will soon look back fondly to the days when home ownership was our main worry.

Speculation

The Japanese don't generally have a problem with people not being able to afford a home. Why? Because they decided to nip speculators in the bud. They tax home sales 50%. Period. No exceptions that I know of. So property there is affordable if you want it, because nobody is going to make a huge profit on it. People can generally afford to buy in the areas they grew up in. The exception if course is the big cities, but that's a whole different economy. Outside the big cities, properties remain affordable because there is no short term speculation, as there is here.

The vast majority of people being burnt today are those who bought houses as an "investment" not as a "place to live". Well, tough luck really. I bought my home because it's where I wanted to live and I wanted my own home, not because I was expecting to make a huge profit in a few years. That still holds true, regardless of what someone else happens to think my house is worth.

The main people being hurt are those who, for various reasons, bought high and now HAVE to sell low. Those people I feel sorry for. The rest, well, not so much.

Great Article

Good thoughts Vanessa, although you're a little too hard on the boomers!

Not all boomers have profited from our real estate bubble, and there are many who have profited from the real estate bubble who are not boomers!

Real estate is a demand driven market. Some of Vancouver's demand is caused by people wanting to live here. This is a good thing, and an inevitable result of Vancouver being a great place to live.

However, some of the demand is caused by speculators hoping to profit quickly from rising prices. This speculative demand feeds on itself (until it prices itself out of the market at which point there is a crash). If we did something to curtail this form of demand, then Vancouver residents would be in a better place. On that I heartily agree with you.

Let's try to have more of our housing owned by the people who live in it, and encourage speculators invest in other things.

Sammy G

Selling low

Nobody had to to buy high and sell low. Anybody with two brain cells to rub together could see that what was coming was obvious because no matter what any real estate leech, oops, agent tells me, a 2BR 1000 square foot leaky condo ain't worth a half a million bucks.

I DO NOT feel sorry for these lemming fools who paid more than the asking price for their humble abodes with the SUV parked out front.

Boomer Fantasy Island

I've had an idea for a few years now. Everybody who is not part of the Boomer Gen needs to get together and plan a big Event for our wonderful 'Boomers'. We will call it a "Reality Show", where they get to all live on a cruise ship, or a nice tropical island somewhere. The catch being that they dont get to come back.
Of course, we wont mention this part. We just tell them about the great golfing opportunities and give them maybe a three month supply of food. Once the majority of these self-serving pleasure seekers are out of society, the rest of the younger (and older) generations will finally have an opportunity to live a healthy, abundant life.

Thank God "Gen X and Y" out number the "Boomers" 7-3 and represent the new majority in North America. Their time is passing as we speak. We just have to make sure they all don't completely ruin the economy/environment/planet before they all die.

So, who with me?

Okay that was silly (above)

I'm pretty sure if I had stayed in my hometown of XX, Ontario I'd now own a pretty little house with a yard and I'd have a 25yr mortgage and a new car (rather than a beater and a bike). I'd no doubt be up to my eyeballs and beyond in debt too, because chances are I'd mostly just shop in my spare time.

But that scenario doesn't even make sense because I know me, and I would have lost my mind and been in the nut house by now without mountains and ocean and a multi-cultural society around me. We DO have it good here- it's not the greatest place on earth, that's just pretentious bullshit, but I don't mind renting. At least it's pretty much stress-free. I'm with 'patiently waiting' above... I hear ya!!

Is renting so bad? HELL YES!

TDH asks:
"...but the point remains for me: I'll still be reluctant to board a ship that I know is still full of holes. Is renting so bad?"

YES YES YES it (renting) is TDH.

Consider this:
You pay 1/3 (or about that much) of your income to someone else that uses that money to pay down the mortgage on the property that you live in. You do this for 10-15 years and the landlord gets rich while you...keep on paying.

What about teaming up with 2 or 3 of your friends, pooling your resources and collectively buying a house? At least then you are "collectively" going to reap the benefit of living somewhere (for about the same $$$) and after you all decide to 'move on' you will have 1/3 to 1/4 of the profits from the sale.

Which way is better...pay pay pay rents or get paid from better organizing your life?

Re blamees

The consensus above appears to favour "buyer beware", and what better advice could there be?

I can remember, however, reading commentary some four years ago which warned that the sub-prime mortgage market was unsustainable, and why. But that was a result of my being an omniverous reader, and being exposed to information the average person wouldn't see.

So if blame is to be apportioned, I would point my finger at the MSM, which should have been (and maybe was) aware of the situation and so, making their trusting readers / viewers aware of it.

But that would have angered their business advertisers who employ Chamber of Commerce types who continuously hype that everything is rosy - and getting better too - so just buy, buy, and buy some more.

So that is the information the "lemmings" had when buying their over-priced housing.

And that is how the "system" works.

ME2

Yes, they will, won't they? Amazing just how little mention is being made of that.....and Campbell is doing his pre-election tax cuts besides.

I wonder which services will get the ax shortly......?

Paying interest is throwing your money away

"Consider this:
You pay 1/3 (or about that much) of your income to someone else that uses that money to pay down the mortgage on the property that you live in. You do this for 10-15 years and the landlord gets rich while you...keep on paying."

A couple years ago, after being told that I was throwing away my money on rent, I did shop for a condo. Well, to my surprise, the cost of bank interest/condo fees/taxes significantly exceeded the rent on an equivalent unit.

A few times I found places that would rent for barely over $1000, but ownership costs were easily $2000. Keep in mind that with a 30-40 year mortgage, you pay almost no principle in the first few years.

In the end, I was "throwing away" hundreds of dollars less each month by renting. You're not really "throwing away" money as you get a place to live (and maybe a good landlord that fixes stuff for you).

That group mortgage scenario is a recipe for trouble. I wouldn't touch that with a ten foot pole.

So make a bank rich or a landlord rich at a lower cost, its your choice...and that won't change until real estate is a lot cheaper.

Wilfred Laurier...

I've gotta disagree with ya.

The 1979 - 1981 boom:

During this time period, the CIBC Prime Rate increased to 17.5% in April, 1980 (one year prior to the 20% prime rate in June, 1981) and the beginning of the collapse of the housing market.

Things in that inflationary period of time just did not make any sense. It was like the Wild Wild West... greed and speculation ruled in BC.... in total contravention of the rest of the Canadian/North American market. People across Canada were wondering what was happening out here in terms of the BC housing market.

And then by October, 1981, the BC economy fell of the edge of a cliff with housing prices collapsing and unemployment sky-rocketing well into the double-digits. Very brutal economic turmoil.

The CIBC prime rate then began a slow downward spiral to 11% in April, 1983 (from over 20%) but BC economic conditions were still horrible.

Housing prices still remained flat after the early 1980's mini-depression.

Interest rates remained in the 11% - 12% range until July, 1986 (Expo '86) when they dropped to 9.75%. At that point in time, BCTV was touting the "Whistler Boom" regarding the phenomenal growth in construction up there at the point in time.

Eventually, 1987, 1988, 1989, and 1990 saw a huge spike in housing construction/prices all over BC due to pent-up demand.

There was a short housing slowdown in terms of sales in late 1990/early 1991 with the spike in interest rates up to 14%.

The CIBC prime rate dropped to as low as 6.25% in 1992 and during 1992, 1993 and into 1994 housing construction/sales again boomed until 1994, when housing construction/sales slowed, not due to any further interest rate hikes, but due to faltering economic conditions in BC.

During that 1994 - 2001 period, housing prices in BC remained relatively stagnant until circa 2001.

The rest is history. ;)

http://www.fin.gov.bc.ca/PT/bcm/ref/cibcHistoricalPrime.pdf

Wow I've never read anything

Wow I've never read anything so biased at the people who worked and saved and borrowed to buy a house.My husband and I were in our 30's with 1 child and 1 on the way and we borrowed money, we bought a house that we could afford(not Vancouver west side)in Coquitlam. We lived there for 7 years, we sold for more than double in 7 years and bought again in POCO.
My point is we sacrificed for 5 years on 1 income with 2 kids. We ran 1 car, we spent 300 per month on food.And we now have a great house with equity.
We worked for it, we sacrificed. It annoys me to see things like this in print.
"If only. I think they're confusing us with themselves. Most people I know are working artists, musicians, professionals and small-business owners in their 30s and 40s: the so-called creative class.(then get a real job like we did" A small minority "got in" to the housing market before the spike; the rest rent basement suites, apartments, or duplexes, pay high rent (to boomers, mostly) and make sacrifices to live in the city.(then don't live there, its your choice don't complain about it" Few expect they'll ever be able to own in Vancouver.(Ever heard of the suburbs?) For many, the cost of housing means if they stay in town, they won't be able to afford to have kids. Or, if they move somewhere affordable enough to have kids, they'll have to leave their support networks, aging parents and job prospects behind. And without the security of home ownership, retirement also looks shaky.

One friend's mom (a boomer) said if our generation were to stop spending so much money on dinners out, we might be able to afford homes. She and her husband bought a house in West Vancouver 40 years ago, and comfortably raised three kids on one middle class salary. She’s inferring it's what we could have if we smarten up.

Why does everyone think its a right to own property? One friend's Mom had a plan and saved and sacrificed and happened to be at the right place at the right time.
and if it happened to you, it would be democracy at its finest.
I just want to know when we started thinking that we were owed anything? What happened to earning things in life.

Renting is a Mug's Game in The End...

Besides the very valid arguments here that show why renting is essentially "throwing your money away", there's one overwhelming reason why the sacrifices of ownership are worth it: long term stability & security.

Once you own a home, you're never worried about rent increases, or your landlord selling your building to someone less scrupulous. You don't worry about "rental crunch". You don't worry about being evicted over phony renovations that are really meant to skirt the rent control laws.

Also, over time, your mortgage payments go down as your principle gets paid, leaving you with much more disposable income than you could ever have renting. However, the price for this is having to make difficult lifestyle decisions in the first 5-10 years of your first home.

Yes...there's maintenance, but most homeowners learn to save for the most common things.

There's a lot of arguments to be made as to why renting may be a good decision for the short term. But long-term, owning your home wins hands down every time. It's worth doing what you need to do to get it done.

housing

After 25 years of renting and moving and moving and renting, and even being homeless for a period, on this Wet Coast I grieve everyday for having left La Belle Province for these faraway pastures,er... clearcut rain forests.
Renting HERE is next door to homelessness.
All you do is pay the mortgage for somebody else while they tell you what you can"t do to make it feel like home.
On the Gulf Islands, particularly Salt Spring Island, all the workers who serve the well to do retired property owners, pay enormous rent just to take care of these people"s property while they are on vacation.
Very ABSURD.
My reasons for having to move were: places being renovated to hike up rent or places being torn down to put in a condo development.
In Victoria, an entire block in good old OAK BAY , an entire block of heritage type houses were destroyed.
My daughter had to attend her graduation ceremonies while we were in boxes and having to usher in real estate agents on a daily basis.
Yea sure... move somewhere else.... find me a job and I will, be sure it is on the east side of Canada, please.
Also, if I pay their mortgage, expenses for 3,4,5 years and they FLIP the place, shouldnt I get a piece of the pie, a sliver????

I agree with a lot of the

I agree with a lot of the posts saying don't blame the boomers. This isn't all the fault of boomers. My parents worked their butts off to buy a home in Vancouver in the seventies. And no, they did not go out to dinner or buy as many clothes as my generation does.

Vancouver is a market of real estate speculators. We attract wealth from around the world. Think about it. There is a reason all those purchased condos are empty or rented out and it is not the fault of our parents who grew up here. It is because EVERYONE wants to live here and you've got to compete with the demand, which drives up the prices due to limited available land.

I am lucky my Baby Boomer parents gave me a bit of money for a downpayment on a condo a few years ago, which my fiance and I recently sold and upgraded to new duplex off the Drive... a lot of my friends who grew up in Vancouver like me got the same boost to purchase condos because there parents don't want them to move to Alberta or Ontario. We pay the rest...but it helps to get the boomer boost! And it usually comes to those who grew up here and deserve to continue living here if they want to....

Boomers unfairly blamed

I am in my sixties and probably one the writer blames for high prices.

Well let us look at one situation, mine,

I got married bought my first home at $66,000. I raised two kids and supported a wife on a salary that was less than $40 thousand most of my working life.

My sixty thousand dollar home was re-mortgaged twice to get through the recessions I lived through, I paid as high as 18% on my mortgage and for close to eight years had a morgage rate over 9%. Now you figure out what that house cost me in upkeep and mortgage interest and tell me that my sale price of $300,000 last year (I live in the valley) was out of line.

Yes we had lower house prices, but a lot of the time I paid high mortgage interests. Quit your whinning and move like I had to, to an area that you could afford housing. If you cannot afford to live in Vancouver move to where you can.

AHGGGGG

Reading comments like these make me want to bash my head in.

"And it usually comes to those who grew up here and deserve to continue living here if they want to...."

In response to Popin - I

In response to Popin - I should clarify that it is not that I think only people who grew up here are entitled to live in Vancouver. I just meant that if one choses to live in Vancouver, they should realize that they won't have the same home purchasing power as they would anywhere else in Canada. The market will never be a bargain here. I don't think it ever has, but there are certainly policies that can be put in place to allow more people to get into the market.

Murdock has an idea

Although if you had read the article you would have had to suggest that 22 or 23 of your friends get together to buy a house instead of two or three, the co-op idea really ought to be higher on the horizon than it is, considering everything.

Buying a ticky-tacky liddle 3 br house for 800k won't work though.

What you really have here is a design problem. How to make a dwelling that will serve a group, fill all their needs for the present and the future, and cost nobody more than a year's salary, more or less.

What materials, what layout, what techniques exist that will enclose and service a space to give privacy and ownership, beauty and utility, and fulfil the spirits as well as the families of a group of humans?

At 1 year's salary each, mind.

Bulls Eye

Housing in the crasp of the average Canadian citizen along with rentals in a country with much land and resources. Its been the greedy that have keep the average citizen from their dreams as they stir up the market and over stimulate until she is left cold. There is no need for the homeless that was created by the Liberals and the NDP are good at creating slums while segreating and discrimating against those it says it serves. The sooner people are off the streets the sooner they become productive memembers of society and usually move on while rentals revenue goes into governments coffers and into the market place while stimulating long term investment while saving our streets from becoming a toilet as many more find themselves unemployed and homeless. Governments are not landlords and do not make for good landlords as money goes from government to government instead of into the market place to stimulate economic growth. So whats the excuse?

And they all came falling down

Houses are set to drop considerably as markets tumble and many find themselves on unemployment trying to make those mortgage payments when they are all maxed out on your credit. And those that have cash are hanging on to it as many look for safer places to invest their money or keep safe. Save on Meats is closing their doors along with a whole lot more as lists of business going under appear on forums as not to buy warranties you know like the auto companies.

Policies

"there are certainly policies that can be put in place to allow more people to get into the market"

jfeds, what policies do you propose?

Owning can be good

leftofcentre,

Yes, owning can be a good option if real estate prices are in line, or cheaper than, renting. I lived in Halifax for a few years, and owned at the time because it was cheaper than renting.

Yes, forced evictions can be a concern for renters. Know your rights and fight back.

However, condo owners need to fear assessments. Recently, on the BCTV news there was a sad story about a townhouse complex in Langley. The families living there deferred maintenance and ended up getting assessments for $70K each. Owners were turning on each other, even getting violent. This was a cost they couldn't absorb.

In Vancouver, unless you're wealthy, its better to rent. Our buildings are crap.

and patiently waiting

You appear to be misinformed about landlords getting rich of your rents as I've worked in the industry for both large and small property owners and land developers and when it came to properties we rented we did not break the bank. In fact most of time money went on fixing plumping and repairing electrical and painting apartments creating a great deal of work in the communities they have rental properties while paying taxes on rental income and investments. You buy fridges and stoves and washers and dryers and they break down and you buy more because its necessary for the tenants. You replace windows and doors and take a loss when tenants damage the place. Elevators need to be replaced and the list goes on. I did the books and even did up lease hold agreements for 99 years when working for a land developer. Its hard work often tenants can be a pain but its long term investment as after all that you put into your communities and provide a good service you end up owing the property.

morechatter, you illustrate my point

It can be very good deal for tenants if they find the right landlord who takes care of the property.

Mind you, there are a lot of crappy rental buildings and slumlords too.

You have to shop around and not get too worried about being in the hippest part of town.

I fully expect the landlord is making good money or else why bother? Do they enjoy subsidizing housing? Be my guest.

Worries

Hopefully falling real estate prices will be the only thing we're worried about. Feeding, housing and finding work for a hungry planet in the face of depleted stocks, a worsening environment and rapid population growth may make us wish for the days when all we had to worry about was real estate prices and Premier Campbell's contempt for those he thinks are beneath him.

BC is not immune to the turbulence engulfing the planet, we're just not in the front line.

But soft! What light through yon window breaks?

"Vanessa Richmond:
"I admit that while I like most boomers individually, I have no warmth for them as a group. Simply put: their gains are at our expense."

Eh voila! Vanessa clearly identifies herself as one who actually dislikes a substantial chunk of society. A new prejudice is established here and this one is not based on skin colour or religious affiliation but on length of existence on the planet.

The moaners always find some scapegoat; nothing changes. "

Nice thoughts. I look forward to some silence in the future on the issues and solutions of past left-wing provincial governments and their ministers. Life's too short to moan and look for scapegoats.

Listen up, Luke! Truer words were never spoken by R'man here!

Wilfred Laurier

"Vancouver is not "world class." That is someone's fantasy, a person who has never been outside Vancouver. It has one fairly nice street, Robson. Compare that to Ginza in Tokyo or Myong-dong is Seoul. It is little league.

And Peter Simpson: he is a shill for the contractors who are all crapping bricks at the moment as they cann their illegal Mexican workers. There are projects going bust all over the place just like in '82 as the idiots who pre-bought walk away from their deposits."

My fervent apologies. Apparently I have mistaken you for some kind of mindless neocon wannabe. Well and succinctly said.

I give up...

I've been waiting patiently here for someone to pick up on what Realisticman identified two days ago - that Vanessa's screed is nothing more than Generational Chauvinism. I'm astounded that the Tyee saw fit to print such hateful comments. Would she have been given space if she'd instead argued that she shouldn't have to drive behind pokey Chinese motorists? Maybe if she throws in the qualifier that she loves dim sum.

Natural rhythm.

Some of my best friends are Jews.

Vanessa, you'll always find anecdotal 'evidence' to underscore your prejudices.

What I find equally dismaying is that most here, rather than denouncing the article for the dangerous claptrap it clearly is, accept the prima facie case and go off on a ramble about renting vs. owning. Or work or moving. Or gold.

Or Huna.

I'd say 'Not much of an article, but what can you expect from a woman?', but the irony would be clearly lost on the readers.

Now, about the other stuff

I admit it, I'm a boomer. And I'm within sight of paying off the mortgage after twenty years. I was 'only' forty years old when we moved in. Lucky me, I guess.

Lucky that I and my partner had Union jobs. Lucky (?) we didn't have children. Lucky that she came to the relationship with enough for a down payment on our house. And, no, she's not a Boomer, she's pre-.

Certainly luckier that virtually all of our Boomer friends, who have never been able to afford to buy in the city. Admittedly, some are artistic, but none are hippies.

There has never been a day in that twenty years that I felt that the 'market price' of our house fairly represented its intrinsic value as shelter, but was wildly inflated by its value to speculators. Not one day.

Vanessa would gain (in this quarter, at least) a much more receptive reader if she were to recognise that it's a speculative real estate market that keeps the people who make this city function from housing security. I have a friend who lives (rents) across the street from a new Vancouverist condo development in the West End. Typical slender tower on a pedestal of townhouses. After two years, all of the units have been sold, but only two are occupied (unless the rest are peopled by the blind who have no use for lights). The number of housing units owned by speculators and unoccupied is obscene.

We're creating a city of the rich and the homeless. With the receptionists, and dental hygienists and bus drivers and baristas either commuting from the 'burbs or getting squeezed on the rental market.

Finally, how have I benefited by the inflated housing prices? If we sold today (or, better, had sold last year) where would we gain, given that all the rest of the housing stock in the city has risen along with ours? And it's not as if, at this stage in life, I'm going to borrow against the equity in our house. So, what possible 'gain' have I made? It's all on paper - doesn't mean a thing.

The only ones who ever gain have already been identified here - real estate agents, mortgage lenders etc, because they make their money on percentages of inflated 'value'.

Otis, scanning thru, several

Otis, scanning thru, several people, including myself, have commented on the wrong-headedness and prejudice in Vanessa's diatribe.

As for the housing problem, it is plainly due to a lack of political will. All regular housing (that for the wealthy excepted) could have a 100% capital gains tax on it if you sold say before 5 years. Housing could be limited one per family per city. Both of these regulations would kill speculation. Real estate could have been reserved or expropriated for lower income housing. The housing coop program could be vastly expanded. A cap could be put on lot size and square footage, killing off the price-inflating McMansion. The federal government could turn the CMHC into a mortgage bank, issue its own mortgages at at cost for regular home buyers and cut out bank usury, bringing down the cost.

People need to do homework first...

Patiently Waiting wrote:

"However, condo owners need to fear assessments. Recently, on the BCTV news there was a sad story about a townhouse complex in Langley. The families living there deferred maintenance and ended up getting assessments for $70K each. Owners were turning on each other, even getting violent. This was a cost they couldn't absorb."

______

Yes, you're right...that happens. But when you're buying, it's usually pretty easy to pick out the complexes that have problems or disfunctional strata councils. Just by doing basic things like reading the strata minutes and having a credible building inspection before you buy usually reveals the big bills coming up around the corner. Stratas that defer basic maintenance and never raise maintenance fees are definitely the biggest red flag.

When my wife and I bought, the market was at peak value. Homes would be sold the day they were listed. But we committed to taking our time making decisions. We also decided we would never buy into a new complex or a pre-sold project.

Because of this, we missed out on a few places we were interested in. We didn't offer on places where the strata minutes revealed problems. We also walked from an offer on a place we really liked that refused a building inspection.

After a month, we did find a place we liked with a strata that was on top of things. We know in a couple of years, we're probably facing a $4-5K assessment for new fencing, so we're saving for it now. The big items, like roofing and plumbing, are likely 10-15 years away, and our contingency will be large enough to cover the bulk of it. But we're saving for that day as well.

All I'm saying is that it takes a little foresight and sacrifice to make it work. The author of this article simply blames an entire generation for her housing misfortune, when it's obvious she's not willing to make the effort or even place 100% of the blame where it really belongs: on herself.

It's kind of sad to me that

It's kind of sad to me that people are so unwilling to look outside of their own perspective and see the issues that others are facing in their lives with any element of compassion.

The author wants a simple home something she grew up believing was obtainable and is frustrated that it seems right now out of reach. That is a real feeling held by many people in Vancouver I think it's a mistake to dismiss it as whining.

If you've "got your own" good for you but the path that you took may not work for everyone or even be a possibility.

On the flip side the boomers are not all wealthy land barons with coffers full to the brim as they ride off into the sunset.
Many have desperately needed the value of their holdings to increase as they near retirement.

If they haven't retired yet and had their saving in the market they probably have taken a massive hit. We have just seen the second greatest decline in the stock market since the great depression recently.