My house-building dad is back from a winter away in the sun. We got into it over dinner regarding our current situation. His advice: you just have to get in the market. Don't wait. We have a regular father/son relationship where Daddy is always right and son is always arguing to be right, so I went at him good and hard. I pulled out all the stops. It was a good show.In my search of facts to back up my points regarding the unsustainability of this market that has ignored the fundamentals for far too long (something Daddy taught me never to do), I found this dandy blog: Captain Capitalism.
I won't bore you with the familial details of the trials of the father/son interpersonal relationship, but I will say this: I had the stats, he had the emotion.
His argument: everyone wants to be here. No. Check that. The bubble-boomer generation wants to be here. They will keep coming and prices will keep going up. This time it is different. Victoria is different than Spain.
The statement that preceded the sweet sound of silence: you leave every winter because you can't stand the grey and the wet, and you're a boomer.
Then The National came on CBC after the hockey game. In their first few stories they had a segment on the troubles of the US market and the economists in Canada talking about rate hikes and whatnot to protect the Canadian economy. It was a balanced story, but definitely not a pump job on the RE, stock or consumer markets.
20 comments:
HHV - 1; Dad - 0
That must have felt soooo good.
My parents have stopped bugging us about buying because after many, many talks they now understand.
I know someone who says that one of the reasons they bought a house was because it was their parent's best investment over 30 years. I can bet in that case that the parent's did the usual talking and the kid's did the listening but no thinking for themselves.
S2
HHV,It is interesting that our parent/child situations are completely opposite. I've been calling for a bubble-POP for about 2 years, and it's a standing joke between my kids and myself. All of us are renters, except one.
THEY have not lived through any RE downturns, and they all think they're 'smarter' than me, because they're more educated than me! It is ironic that 2 of my kids have m inors in Economics! (A lotta good THAT did!!)
One's a statistician, the other's degree is in Finance/economics, and another is an IT specialist, with a banking/accounting background to boot.
You WOULD think that their collective brains would figure out the supply/demand, affordability, etc, arguments. Mais NON, they tease and aggravate me every time we get together, asking exactly when this bubble-that-keeps-expanding is going to pop, AS I KEEP SAYING.
I just asked 2 of them WHY they have not yet bought a house, although they have healthy down-payments. As a matter of fact, I believe one of them can afford to pay cash for a modest 1st home.
Strange how they won't commit to that....Is fear stronger than greed? The thing that sickens me is when people justify their lunacy in buying at present prices. I've heard so many buyers say: "At least we're IN this market now."
They make it sound like a win-win situation. I had to tell a young lass to smarten up. She was desperate to OWN something, because "paying rent is a waste of money." I explained that it COSTS money to own a house. Is she willing to fix roofs and other leaks? ALL that some people see is their ability to pay monthly mortgage amounts.
With zero down, you don't "own a house." Who are you fooling? Your lender owns your house, not YOU. BTW, those with zero down will actually fare better if the market pops and they have to sell for any quick reason. They simply hand over the keys to their bank , right?
My favourite story is the one about the young couple (mid-20s) , who bought a condo to live in , plus a house to rent out, within the last 2 years. The reason is that they are definitely going to make a huge profit on both, within a YEAR, so that they can sell both, then buy their dream house with the QUICK, SURE proceeds.
But wait, what will happen to non-owners who have hundreds of thousands in savings in the bank? If banks start going belly-up, isn't this money gone? FDIC covers $100k per account/name. Mutual funds are not insured. Can't win.
My parents had to sell their townhouse last year (because it had stairs), and are currently renting too. My dad is the most bearish person I know (he is an Elliot Wave follower).
I have been renting a house for the past year and half and I notice that people really seem to look down their nose at you when they find out you are a "renter". Either that or they feel sorry for you or somehow believe they are superior. I think this "lower class" perception is a big reason why people feel the "need" to own. It is more the perception that somehow you are a loser than any real need to own a house.
Sadly, but ironically, your parents are probably placing you in this category too.
I agree Olives.
I have a friend whose boyfriend bought in this highly inflated market, partially based on her 'location, location, location' rant but that is another story, who says to me 'but when you don't have a house you have nothing'.
Yep, I'm living on the street folks.
So many times I have tried to explain to them about investing the money that is saved by renting and not buying. They just don't get it and I know it is because they wouldn't save or invest their money so they assume that others don't either.
S2
For them (and I suspect a lot others) buying is a forced savings plan.
I should defend my father... we like to argue about all sorts of things: politics, economics, whose a better fighter etc...
My dad is going to build two houses this year. He built one last year and is mortgage free now. He plans to make enough this year from the current boom so that he doesn't have to touch the market again.
He has been in and around the industry since 1976. He knows what he's doing. He's made money, he's lost money, he's lost homes and he's lost businesses. He's learned from his mistakes and is generally a very cautious person.
The reality of the situation is he'd like to build us a house this year. My fiance and I looked at him, looked at each other, giggled and said "no thanks". This triggered the discussion.
We're committed to waiting out the downturn. I can't say when or if it will happen. If it doesn't happen soon in Victoria, we'll leave and go somewhere more affordable.
I'd like to say that we see signs of a downturn now. Am I certain? Of course not. As PB said yesterday at Victoria's Truth, the score is still Bulls 16, Bears zip.
I may have 'won' a brief but passionate family debate, but only because I was able to dig out a dandy personal reference to argue against the logical-not "all boomers want to be here" nonsense, but the reality is the stats support people making money in this market, even for the foreseable future. I hope he's right, I'd hate to see his retirement dreams put on hold for any length of time.
I wouldn't say that the bears were zip.
Listings did go up.
I'll have to check with my husband to see exactly by how much.
Remember, listings go up, then demand down and then prices down.
S2
listings were up 25%. Housing starts (canada-wide) down by 17%.
HHV
Then it is Bulls 16; Bears 1
S2
Olives: over on KIV in the tenants thread I'm the anon right above you.
S2
HHV,
That is the crazy thing - your dad has "been around the block" and still doesn't anticipate a large correction?
It's understandable that people between the ages of 20 and 40, who have only lived through the good economic times of the past 15 years or so would anticipate it all to continue - but your father and others above 40 have seen bad times. (I recall the early eighties even though I was a teenager).
S2 (a.k.a. Anonymous heehee) - I agree with you on the tenant situation. I will NEVER have another basement suite. If it is a requirement, then you CANNOT afford the house. It really is a quality of life issue.
Olives said "I notice that people really seem to look down their nose at you when they find out you are a "renter". Either that or they feel sorry for you or somehow believe they are superior." That is SOO true. I don't suppose it ever crosses anyone's mind that SOME renters have piles of cash, and simply choose not to own. Or, at least, that several renters are in very high-income brackets.
HHV, if daddy wants to build you a house, you could agree, based on the cost per sf? If he can save you the contractor's mark-up of about 30%, then at least you get what you want, if the price of a lot is decent??
Anon $2: I enjoy your views. Why don't you open a google account? Maybe use a name like "harmony?"
Today's Times-Colonist article about Victoria real estate
http://www.canada.com/victoriatimescolonist/news/business/story.html?id=ebae6201-8c6a-4229-bed5-56d77424af7f
Note this little paragraph:
"The number of properties for sale on the listings service continued to increase with 3,305 properties available at the end of April, up 26 per cent from the 2,627 properties in the same month a year ago."
S2
The price of a lot is indecent right now. Nothing available in town for under $250K. To make it feasable, a $250K lot needs to have a home on it with a market value of over $500K.
Even with our 'discount', we won't stretch ourselves into it. We'd have to build in a suite just to reduce our mortgage payments. I'm seeing lots of vacancies in the rental pool right now. I'd be curious to know if people are having a hard time renting out their units.
To get a lot under $200K, we'd have to move to Langford and buy two cars. In reality, the contractor's markups on one or two houses is not that significant. For him to build us a house, we'd have to pay him a premium or its not worth his time, which I understand and agree with. It's not worth the risk in our minds.
I'd rather him build us a house when the market has corrected or at least flattened considerably, and when labour and supplies come down (price of lumber has come down 25% this year already).
S2,
if you go to verb.org and look at the monthly stats page, that 'article' appears almost word for word. Glad to see that the cut and paste skills are getting sharpened at the TC.
"I'm seeing lots of vacancies in the rental pool right now. I'd be curious to know if people are having a hard time renting out their units."
We have been on the hunt for a 3 bedroom house to rent,no up/down,a complete house in a good neighborhood in town and its tough to find something decent that isn't a gouge. Saw one where they wanted $1800 for only a main floor of a house, what a joke.
Lots of suites but I cannot believe some of these people trying to rent out one BD suites for $1250 plus. There is no way they can be getting renters at this price,we don't get the single people who can afford that, the ones listed on Craigslist are the worst of the bunch.
Waiting to see what May 1 units come up where people just gave notice. We'll stay put til the numbers make sense.
Over on the bear site I go on they are discussing ways to spruce up the house for sale.
Decluttering, fresh flowers, cinammon boiling on the stove.
One person says that because of this they sold their house for only $10K less than asking.
Again, no one says boo to the fact that people are talking about having to stage to sell now (if that ever works?) and the fact that someone sold UNDER list.
S2
I am very curious on the Vancouver numbers about to come out, they have had a ton of listings the last while and that is where any correction has to show up first to be condsidered the real deal.
HHV, You' re right again about lot prices. We looked at a property on Cordova Bay, 5155 Lochside. Someone bought .8 acre with an old house on it for I think, $690k, then sub-divided into 4 lots, A, B, C & D.
The original listing suggested than it could be split into THREE lots. However, the buyer made it FOUR. Each lot is well-sized in total square feet, about 8000 or more.
BUT, each frontage is only 45 feet wide. Not too many choices of house plans there! They were being offered at around 300k each, then dropped to about 280k each. Now, Spring 2007, the prices are UP to 339k to $389k EACH . As far as I know, none are sold. It's been about a year now.
I guess I admire that you have the patience to wait things out. It is so refreshing to find younger people who are NOT out for instant self-gratification, and neither for bending to 'peer pressure.'.
Go for it, you will get what you want in life, and SOON. You deserve the best.
Anon, those are very kind words... thank you.
If you were to ask my better half about this, she would suggest that the only time we agree on these types of financial decisions is regarding housing... she's the real rock.
HHV,
Behind every successful man is a woman.....Yours is a keeper. She knows that good things come to those who wait, and is not dizzy-headed like some of those folks who only care about impressing others.
BTW, I have the auto-realtor system. I just got an email about those lots I last discussed. Back on the market, EVEN-HIGHER priced at $389k to $419k EACH. I messed up the address. It is A, B, C, D of 5110 Lochside.
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