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The Decline of Vancouver.

March 21, 2015, 8:58 p.m.
Posts: 815
Joined: March 13, 2004

The stock markets have long term average gain of around 7-8% per year, which means a doubling of market indices in about 9-10 years. So by the measure of the markets, a doubling of property value in 15 years means it's a fairly poor investment.

That scenario is a little simplistic. Most investors in real estate don't put 100% down and let the home sit for 15 years. If I put 10% down and my investment doubles in 15 years. And assuming during that 15 year period I rented the place out and paid off the mortgage, Then I've made a little under 2000% return given there are costs associated with selling and buying the home.

March 23, 2015, 12:52 p.m.
Posts: 7707
Joined: Sept. 11, 2003

That scenario is a little simplistic. Most investors in real estate don't put 100% down and let the home sit for 15 years. If I put 10% down and my investment doubles in 15 years. And assuming during that 15 year period I rented the place out and paid off the mortgage, Then I've made a little under 2000% return given there are costs associated with selling and buying the home.

True … you can think of rental income or mortgage payment portions in lieu of rent as a dividend on top of appreciation (or depreciation depending on circumstances).

People seem to think Vancouver is an isolated case. It is probably not. 40% of Swedish mortgage holders pay off interest only (really no different than going nuts on a HELOC):

http://www.cnbc.com/id/101942770

What about Geneva, Oslo, Stockholm, Paris, Milan, Vienna? 40% of homes in the high-end market of Austria are purchased by non-Austrians (I just quickly picked out that nugget from the stats from the first country "Austria"):

http://www.globalpropertyguide.com/Europe/Austria/Price-History

March 23, 2015, 10:49 p.m.
Posts: 788
Joined: July 4, 2004

Broker talks about first time home buyer http://youtu.be/wcAMtvNfp78

March 23, 2015, 11:16 p.m.
Posts: 11
Joined: Nov. 20, 2005

People seem to think Vancouver is an isolated case. It is probably not. 40% of Swedish mortgage holders pay off interest only (really no different than going nuts on a HELOC):

http://www.cnbc.com/id/101942770

I love how stockholm == Sweden.

This is really a Stockholm problem, but the main difference being is that you can actually live outside of Stockholm and train into town for work… and we're not talking the west coast express that runs a couple of times a day from a few locations.

71 km center of town to center of town (Uppsala - Stockholm). less than 40 min on the train…. and its not the only city with a train station.

edit: same as living in abbotsford and commuting into downtown…. abbotsford being not not nearly as nice (no offense) and it would take you a little more than 35 min or so during rush hour.

March 24, 2015, 9:57 a.m.
Posts: 7707
Joined: Sept. 11, 2003

I love how stockholm == Sweden.

This is really a Stockholm problem, but the main difference being is that you can actually live outside of Stockholm and train into town for work… and we're not talking the west coast express that runs a couple of times a day from a few locations.

71 km center of town to center of town (Uppsala - Stockholm). less than 40 min on the train…. and its not the only city with a train station.

edit: same as living in abbotsford and commuting into downtown…. abbotsford being not not nearly as nice (no offense) and it would take you a little more than 35 min or so during rush hour.

The data is for Sweden as a whole, not just Stockholm (it may be skewed by the Stockholm market, but it doesn't change the numbers reported). Interest-only mortgages are so popular that the government is changing mortgage legislation. 40% of mortgages in Sweden that do pay back interest are on a schedule to pay off the loan in more than 50 years. The time to pay off the mortgage has been estimated at 100-140 years. Swedes may live long, but even the lenders must be worried about this. Among the many articles:

http://www.wsj.com/articles/sweden-mulls-encouraging-mortgage-repayment-1404916596

and more here

https://www.google.ca/search?q=sweden+mortgage

March 24, 2015, 10:28 a.m.
Posts: 3
Joined: July 4, 2003

The data is for Sweden as a whole, not just Stockholm (it may be skewed by the Stockholm market, but it doesn't change the numbers reported). Interest-only mortgages are so popular that the government is changing mortgage legislation. 40% of mortgages in Sweden that do pay back interest are on a schedule to pay off the loan in more than 50 years. Swedes may live long, but even the lenders must be worried about this. The time to pay off the mortgage has been estimated at 100-140 years. Among the many articles:

http://www.wsj.com/articles/sweden-mulls-encouraging-mortgage-repayment-1404916596

and more here

https://www.google.ca/search?q=sweden+mortgage

Respectfully, whats your broader point?

That people in certain parts of the world are okay with being in debt for the entirety of their lives?
I'm not sure thats an enviable goal to strive for.

We certainly aren't the only desirable city in the world thats facing housing challenges. But I think we definitely are one of the most punished cities.

We can't compare our affordability issue with cities like London, NY, Geneva, Stockholm, etc. We aren't on the same level economically, historically, or socially. Which is part of the problem itself - in those cities you are paying a certain amount for access to a hub of political, social and economic influence. The upward mobility in those cities economies is unparalleled to what we have to offer here.

All this if fine - you can't compare a city like ours with those that have had centuries, or even millennia of growth before us.

But if we are not afforded access to those big city privileges, nor the wages, why are we paying the price for it?

Cactus Club/Keg/Earls have great food, and no problem filling seats. But that doesn't mean they charge customers Michelin Star prices.

March 24, 2015, 11:46 a.m.
Posts: 7707
Joined: Sept. 11, 2003

But if we are not afforded access to those big city privileges, nor the wages, why are we paying the price for it?

You need to ask yourself this, not me.

March 24, 2015, 12:45 p.m.
Posts: 0
Joined: Dec. 27, 2002

^ we have mountains and clean air so we're different. ;)

March 24, 2015, 12:50 p.m.
Posts: 3
Joined: July 4, 2003

You need to ask yourself this, not me.

Its an open question, not specifically directed at you. Though, I welcome you're thoughts.

Obviously a lot of people are not tolerating this, emigration/migration stats support this.

This is an issue of a brain drain, these problems are driving away the most valuable demographic in the world. Its not a "maybe" issue, its a "now" issue.

Hopefully, by asking this question we can gather some thoughts on possible solutions.

March 24, 2015, 1:19 p.m.
Posts: 11
Joined: Nov. 20, 2005

The data is for Sweden as a whole, not just Stockholm (it may be skewed by the Stockholm market, but it doesn't change the numbers reported). Interest-only mortgages are so popular that the government is changing mortgage legislation. 40% of mortgages in Sweden that do pay back interest are on a schedule to pay off the loan in more than 50 years. The time to pay off the mortgage has been estimated at 100-140 years. Swedes may live long, but even the lenders must be worried about this. Among the many articles:

http://www.wsj.com/articles/sweden-mulls-encouraging-mortgage-repayment-1404916596

and more here

https://www.google.ca/search?q=sweden+mortgage

Seems seriously skewed remember the country is only 9 million, and greater stockholm area makes up about 2 million

Point being is that, sure tons of other cities have high housing prices, but Vancouver seems unique in its geographical layout, shitty transit, etc

I was born/raised in Vancouver, and have since left and now live in the southern part of sweden. More money in the bank, more vacation, housing is exponentially cheaper, and school is free. Sure there are some cons to living here as well, but ultimately Vancouver has a serious problem that won't simply get fixed with time.

March 24, 2015, 2:19 p.m.
Posts: 7707
Joined: Sept. 11, 2003

Its an open question, not specifically directed at you. Though, I welcome you're thoughts.

Go to virtually any city in the world - rich or poor - and you will find people living there who hate it, and those who love it and a lot of those in-between. I have family in Australia, UK, the Arab Emirates, Singapore … they all constantly bitch about how expensive everything is, how impersonal everything has become, how everything has changed, usually for the worse and how much better everything used to be. The only outlier is my 20-something nephew, a white dude from Ottawa who loves Japan so much he goes from temporary work visa to temporary work visa working for peanuts and busting his ass to get a permanent job just so he can live in Tokyo (pretty hard gig for a Gaijin or any other foreigner).

March 24, 2015, 2:22 p.m.
Posts: 4297
Joined: June 1, 2009

Go to virtually any city in the world - rich or poor - and you will find people living there who hate it, and those who love it and a lot of those in-between. I have family in Australia, UK, the Arab Emirates, Singapore … they constantly bitch about how expensive everything is, how impersonal everyone is, how everything has changed, usually for the worse. The only outlier is my 20-something nephew, a white dude from Ottawa who loves Japan so much he goes from temporary work visa to temporary work visa working for peanuts and busting his ass to get a permanent job so he can live in Tokyo (pretty hard for a Gaijin or any other foreigner).

I think the point you're missing is the underlying value of the city?

It is a worldwide finanical centre? Nope.
A hub for natural resource dollars? No.
A major cultural/arts player? No.
A tech centre? No.

So what is it? (Aside from overly inflated and close to the mountains)

March 24, 2015, 2:31 p.m.
Posts: 11576
Joined: June 4, 2008

I think the point you're missing is the underlying value of the city?

It is a worldwide finanical centre? Nope.
A hub for natural resource dollars? No.
A major cultural/arts player? No.
A tech centre? No.

So what is it? (Aside from overly inflated and close to the mountains)

A fertile dumping ground for dirty money.

March 24, 2015, 2:33 p.m.
Posts: 9747
Joined: Nov. 20, 2002

I think the point you're missing is the underlying value of the city?

It is a worldwide finanical centre? Nope.
A hub for natural resource dollars? No.
A major cultural/arts player? No.
A tech centre? No.

So what is it? (Aside from overly inflated and close to the mountains)

A pretty kick ass place to live IMO

March 24, 2015, 2:42 p.m.
Posts: 4297
Joined: June 1, 2009

A pretty kick ass place to live IMO

Fully agree.
But its none of those things.
Its not NY, San Fran, Chicago, HK, etc.
The cost is based on speculation, foreign ownership, non-existent regulation, relative currency prices, and it being a cool place to live.

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