Real Estate

Vancouver housing bubble?

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Member
Jun 18, 2015
249 posts
1193 upvotes
Vancouver, BC
choclover wrote: People seem to make smarter decisions with hard-earned money than when it is gifted to them. I think people who make smart decisions usually expose themselves to less risk and are happier in the long run. JMHO.

As an aside, I always wonder how many parents can afford to give their children vast sums of money to buy a home AND what if they have more than one child, do they give each the same amount of money? I would never think of asking or taking money from my parents for such a large purchase. I would adjust my housing plan by either moving elsewhere, scaling down or renting to match what I could afford.
I know a few people have brought up their Asian upbringing and I think the European upbringing might be the same, but of course, that's a very general statement... For me, my parents always taught my bros and I to NEVER, EVER pay rent. It's throwing away your money. So, my parents worked hard for my 2 brothers and I to have a better life. Luckily for me, my brothers are a bit older than me (45, 42 and then me at 32). So, they were starting their lives earlier than me and so it's really just been a trickle effect - they bought a condo/townhome to start off, few years later, sold it, bought something else, few years later, paid my parents back, few years later, bought another property, rented out the last property, and so on... Now, they've paid back almost everything they borrowed from my parents and now it's all come down to me. My parents played this exact strategy when they moved to Canada, so it's paid off for them - paid off their house that they built years and years ago and their pension is great, so they are living very comfortable right now.

So, it's not really about us "asking" our parents for money and screwing them out of their retirement, it stems from them for working so hard to better our lives and they take pride in their name - again, a very european and also asian thing. The last thing they want to tell other family members is, "yeah, so and so is renting". It almost comes across as they failed their children. Trust me, it means so much more to be able to do it on your own and as much as I want to, it's extremely hard to say no to my parents.

To give you another example, my parents aren't too happy about these Vancouver Specials I'm looking at that they are looking for newer-ish homes and saying they will help us with the mortgage by using their pension money to help out! That's absurd, but that's my family for you.
Deal Addict
Jun 7, 2017
1043 posts
836 upvotes
BC
Silver1234 wrote: An old article about how the bank of mom and dad distorted the real estate market. I have a feeling many 2nd generation of immigrants in Vancouver are getting their down payment from their overseas parents.

https://business.financialpost.com/pers ... ers-report
Agreed. It must be so difficult to accumulate enough $$ to afford a house on your own with moderate income, kids, expenses etc. I did it, but it took years, and diff times now.
Deal Addict
Jun 7, 2017
1043 posts
836 upvotes
BC
I think the "never pay rent" mentality is absurd.
Member
Mar 20, 2011
307 posts
219 upvotes
Langley, BC
screenthis wrote: To give you another example, my parents aren't too happy about these Vancouver Specials I'm looking at that they are looking for newer-ish homes and saying they will help us with the mortgage by using their pension money to help out! That's absurd, but that's my family for you.
Probably just because they bought new homes when they were your age. I mean if you're willing to move out to the suburbs there are some really nice new homes in North Langley, such as Westbrooke at Willoughby.
Deal Addict
Jun 14, 2018
1368 posts
1662 upvotes
screenthis wrote: I know a few people have brought up their Asian upbringing and I think the European upbringing might be the same, but of course, that's a very general statement... For me, my parents always taught my bros and I to NEVER, EVER pay rent. It's throwing away your money. So, my parents worked hard for my 2 brothers and I to have a better life. Luckily for me, my brothers are a bit older than me (45, 42 and then me at 32). So, they were starting their lives earlier than me and so it's really just been a trickle effect - they bought a condo/townhome to start off, few years later, sold it, bought something else, few years later, paid my parents back, few years later, bought another property, rented out the last property, and so on... Now, they've paid back almost everything they borrowed from my parents and now it's all come down to me. My parents played this exact strategy when they moved to Canada, so it's paid off for them - paid off their house that they built years and years ago and their pension is great, so they are living very comfortable right now.

So, it's not really about us "asking" our parents for money and screwing them out of their retirement, it stems from them for working so hard to better our lives and they take pride in their name - again, a very european and also asian thing. The last thing they want to tell other family members is, "yeah, so and so is renting". It almost comes across as they failed their children. Trust me, it means so much more to be able to do it on your own and as much as I want to, it's extremely hard to say no to my parents.

To give you another example, my parents aren't too happy about these Vancouver Specials I'm looking at that they are looking for newer-ish homes and saying they will help us with the mortgage by using their pension money to help out! That's absurd, but that's my family for you.
Yep. My parents have been pestering me to upgrade to a newer condo for a few years now and have even offered to help pay for it. I declined their offer as I want them to enjoy their money. Some of that money eventually will be mine when the time comes Winking Face
Member
Jul 17, 2018
317 posts
164 upvotes
You can't take money to the grave. What goes around can come around. There's a difference between asking for and or accepting your parents help and straining them financially and asking for and or accepting your parents help when they have the ability to help. There's nothing wrong with helping out your kids and there's nothing wrong with asking or receiving help. What's important is the relationship. King Lear is a tragedy but it was about more than simply giving your kids your wealth.

Hopefully, you don't want your parents to suffer and your parents don't want you to suffer. It's great to be able to do everything yourself but it doesn't make you a lesser kid to ask for and or accept your parents offer to help.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
choclover wrote: In the U.S. I am hearing of people now considering moving out of places New York and San Francisco to live out in the suburbs as they are now perfectly set up for telecommuting and can save much money that way. Not sure if this will catch on here but in Vancouver where the salaries don't come close to justifying the cost of housing it would seem to make a lot of sense.
That's exactly what I mean... after all, if you don't have to live in the city but want some of the facilities a city has to offer, why would you pay extra to live in the city?

FB recently allowed their employees to work from home on a long term basis but Zuck said that no-one can leave the area where they were hired (ie move from San Fran to someplace in Wyoming where the cost of living is cheap) or they might get a cut in pay since part of the pay is to counter the higher price of living in the urban centres. I can see other employers going to a work from home model not just to lower office cost but lower employee pay.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
Alpine84 wrote: In a city like Vancouver that’s full of multi-millionaire housewives and students, the median household income is the wrong metric to use. What we really need is a median household global wealth metric. The Canadian government is the perfect place to come for satellite families. The government literally hands you $ for having little/no income and being below the poverty line. Taxpayers are literally subsidizing the rich.
Satellite families and rich students only go as far as the money coming into the country will allow them to live. With the Chinese government cracking down on foreign money transfers out of the country, one has to wonder how these households can afford to live here in the longer term once their initial pile of cash starts being used up. Maybe that's why there are so many higher-end cars in the food delivery business...
Deal Expert
User avatar
Oct 26, 2003
39339 posts
6342 upvotes
Winnipeg
craftsman wrote: That's exactly what I mean... after all, if you don't have to live in the city but want some of the facilities a city has to offer, why would you pay extra to live in the city?
FB recently allowed their employees to work from home on a long term basis but Zuck said that no-one can leave the area where they were hired (ie move from San Fran to someplace in Wyoming where the cost of living is cheap) or they might get a cut in pay since part of the pay is to counter the higher price of living in the urban centres. I can see other employers going to a work from home model not just to lower office cost but lower employee pay.
What is stopping FB from just hire in Wyoming for remote work?
Newbie
Apr 29, 2020
94 posts
366 upvotes
divx wrote: What is stopping FB from just hire in Wyoming for remote work?
What is stopping them from going outside the U.S.? Corporations are very clever. Nothing they do will be in their employees best interest, everything they do will be in their best interest, while making it appear that they are doing it for others. Keep that in mind when big companies all of the sudden jump on the work from home bandwagon.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
divx wrote: What is stopping FB from just hire in Wyoming for remote work?
Nothing and I believe that's the master plan for most of these companies - ie it's not the RE cost but the wages that are the problem. After all, RE cost are basically fixed per employee regardless of their position or pay in most companies (ie. NYC's average office space is $15,000 US per year per employee). So, in theory, if you reduce the number of employees working in the office, you reduce the office cost, right? Yep. Absolutely. However, for many of the higher paid employees, $15,000 per year is a very small portion of their salary and in a high demand market, an employer may easily pay MORE than $15,000 per year for an employee in a high demand market than one in a low demand market - ie a programmer might get paid over $120,000 in SFO NYC while in Wyoming, that same employee may get paid $90,000.

SFIX just announced that they are laying off 1400 staff in California only to hire 2,000 people across the US doing the same job since the wages are so much cheaper elsewhere. To me, SFIX is being honest about the situation while the other companies aren't. I expect as people leave many of these high tech WFH firms where the position used to be in high demand markets, the position will be backfilled by someone in cheaper markets.
Deal Expert
User avatar
Oct 26, 2003
39339 posts
6342 upvotes
Winnipeg
RFDealDude wrote: What is stopping them from going outside the U.S.? Corporations are very clever. Nothing they do will be in their employees best interest, everything they do will be in their best interest, while making it appear that they are doing it for others. Keep that in mind when big companies all of the sudden jump on the work from home bandwagon.
Yeah it doesn't make sense that FB allows remote work then cares where their employee lives... is living in San Fran / California written in their job description?
Member
Mar 20, 2011
307 posts
219 upvotes
Langley, BC
I remember a while ago Google had some bare bones offices here full of people working remotely for their California office, because the Canadian work permit system is much more flexible than the US's H1B and has no cap.
Deal Expert
User avatar
Oct 26, 2003
39339 posts
6342 upvotes
Winnipeg
craftsman wrote: Nothing and I believe that's the master plan for most of these companies - ie it's not the RE cost but the wages that are the problem. After all, RE cost are basically fixed per employee regardless of their position or pay in most companies (ie. NYC's average office space is $15,000 US per year per employee). So, in theory, if you reduce the number of employees working in the office, you reduce the office cost, right? Yep. Absolutely. However, for many of the higher paid employees, $15,000 per year is a very small portion of their salary and in a high demand market, an employer may easily pay MORE than $15,000 per year for an employee in a high demand market than one in a low demand market - ie a programmer might get paid over $120,000 in SFO NYC while in Wyoming, that same employee may get paid $90,000.

SFIX just announced that they are laying off 1400 staff in California only to hire 2,000 people across the US doing the same job since the wages are so much cheaper elsewhere. To me, SFIX is being honest about the situation while the other companies aren't. I expect as people leave many of these high tech WFH firms where the position used to be in high demand markets, the position will be backfilled by someone in cheaper markets.
They can easily hire people from other parts of the States and not piss off Trump since all Trump cares is to keep job in the States. There is no need to all concentrate in California and bid up the RE market. Too many people can't afford a roof over their head in California due to the crazy housing costs, it would be helpful if the big corp aren't bidding it up any further.
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Dec 5, 2009
2789 posts
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Furcorn wrote: I think the "never pay rent" mentality is absurd.
Totally, especially in such a low-interest rate environment. But rent is seen as literally throwing money away because you don't own anything at the end. My parents would rather give me money to buy than to see me pay someone else's equity.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
divx wrote: They can easily hire people from other parts of the States and not piss off Trump since all Trump cares is to keep job in the States. There is no need to all concentrate in California and bid up the RE market. Too many people can't afford a roof over their head in California due to the crazy housing costs, it would be helpful if the big corp aren't bidding it up any further.
It's not necessarily the corporations bidding it up but there is a draw to Silicon Valley for many of those with new high-tech degrees (ie programmers out of CompSc programs) who end up bidding things up. I've been mentoring Comp Sc students in university and many of them dream of getting hired by the likes of Google, Amazon, Microsoft... so much that they basically ignore local job postings and only look to apply to those in San Fran. Some move down to San Fran even without a job so that they can look. It's very much like how budding actors move to Hollywood looking for their big break.

I suspect that we see a certain influx of people into centres like Vancouver and Toronto just because they believe the 'sexy' employers are here.
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
strike66 wrote: Stats Canada median household income link

"In 2015, the median total income of households in Vancouver was $72,662, a change of 11.2% from $65,342 in 20051."

Let's just add another 10% to adjust for the last 5 years. Make it an even 80k.

Stats Can median single income link

Even using a higher age group (35-44) where they usually have more earning power, the median individual income is 51k.

I'm quoting numbers from Stats Canada and you are throwing out anecdotal evidence based on your own personal circle. You are assuming the average Vancouverite is making at least 62k a year, is IN a couple, AND that spouse is earning the same if not more. If that were the case, why is the Stats Can median household much lower? Just because your personal bubble of 0.0001% is comprised of couples in this situation, it doesn't mean the 99.999% of Vancouver is. Also just because you are are in a couple, is it really prudent to buy a place together if you are not common law/married?

You are conveniently forgetting about the service and retail sector workers that make up a major chunk of the working population in Vancouver who do not average 62k a year. If we are going to use anectodal evidence, I have worked at many head offices in Vancouver with access to salaries and the majority of them make less than 62k a year. I also know administrative assistants that are pulling 100k a year, does that mean everyone else in the rest of Vancouver in more prestigious positions are making more? This is flawed logic to go by.

Yes there are high earning tech workers moving to Vancouver and buying houses. However how many are there out there? Legit question, it would be interesting to know.

I am not denying housing prices are high, that is a known fact. I am just baffled that so many millennial couples are buying houses with salaries that do not match the housing price. As stated in my previous post, my assumption is that they have massive down payments, whether it is from selling a current place or from parents.

My grief with this situation is that I earn well over 200k, well over the median, yet without stretching myself thin, I am not able to buy a 1.5mill fixer upper house in Vancouver. I thought I would be in a advantageous situation based on my income, competing with other buyers that are earning much lower. However these buyers are still able to outbid me.... It seems backwards that lower earning people are able to pay more... Maybe I am just a bitter millennial Face With Tears Of Joy

PS a couple making 120K will NOT qualify for a 1 million dollar mortgage, they won't even pass the stress test.
Love your analysis. For Canadian data, I trust Statistics Canada more than most other sources so I agree with your basis for your argument.

I agree with the points you make and I think your curiosity about the things you have no data for are interesting as I have wondered about the same. There are some information gaps in any analysis of the buying activity of Vancouver real estate that just don't make sense but I am sure if we keep studying them, the missing data points will come clear at some point.
Sr. Member
Mar 28, 2017
616 posts
495 upvotes
CanadaJimmy wrote: I remember a while ago Google had some bare bones offices here full of people working remotely for their California office, because the Canadian work permit system is much more flexible than the US's H1B and has no cap.
Yah they have a few office floors downtown. But I did notice that their floors were never full compare to other office floors
Sr. Member
May 29, 2020
903 posts
1711 upvotes
Vancouver
strike66 wrote: Stats Canada median household income link

"In 2015, the median total income of households in Vancouver was $72,662, a change of 11.2% from $65,342 in 20051."

Let's just add another 10% to adjust for the last 5 years. Make it an even 80k.

Stats Can median single income link

Even using a higher age group (35-44) where they usually have more earning power, the median individual income is 51k.

I'm quoting numbers from Stats Canada and you are throwing out anecdotal evidence based on your own personal circle. You are assuming the average Vancouverite is making at least 62k a year, is IN a couple, AND that spouse is earning the same if not more. If that were the case, why is the Stats Can median household much lower? Just because your personal bubble of 0.0001% is comprised of couples in this situation, it doesn't mean the 99.999% of Vancouver is. Also just because you are are in a couple, is it really prudent to buy a place together if you are not common law/married?

You are conveniently forgetting about the service and retail sector workers that make up a major chunk of the working population in Vancouver who do not average 62k a year. If we are going to use anectodal evidence, I have worked at many head offices in Vancouver with access to salaries and the majority of them make less than 62k a year. I also know administrative assistants that are pulling 100k a year, does that mean everyone else in the rest of Vancouver in more prestigious positions are making more? This is flawed logic to go by.

Yes there are high earning tech workers moving to Vancouver and buying houses. However how many are there out there? Legit question, it would be interesting to know.

I am not denying housing prices are high, that is a known fact. I am just baffled that so many millennial couples are buying houses with salaries that do not match the housing price. As stated in my previous post, my assumption is that they have massive down payments, whether it is from selling a current place or from parents.

My grief with this situation is that I earn well over 200k, well over the median, yet without stretching myself thin, I am not able to buy a 1.5mill fixer upper house in Vancouver. I thought I would be in a advantageous situation based on my income, competing with other buyers that are earning much lower. However these buyers are still able to outbid me.... It seems backwards that lower earning people are able to pay more... Maybe I am just a bitter millennial Face With Tears Of Joy

PS a couple making 120K will NOT qualify for a 1 million dollar mortgage, they won't even pass the stress test.
Are you sure you're being outbid by millennial couples looking for a home, though?

These fixer uppers are often bought by investors and developers. Rent/airbnb, renovate and flip, tear down and rebuild, etc...
Member
User avatar
Oct 31, 2019
438 posts
564 upvotes
TheSpaceMonkey wrote: Are you sure you're being outbid by millennial couples looking for a home, though?

These fixer uppers are often bought by investors and developers. Rent/airbnb, renovate and flip, tear down and rebuild, etc...
If this is true then it implies that there are virtually 0 new local entrants to the market - only investors looking to sell to investors or otherwise wealthy purchasers. If someone with a $200k income (that has to be top ~2% in Vancouver) is struggling to break in then then how can those levels really be justified? I find it hard to imagine an economy that can sustain itself unless productive members of society can expect to be rewarded with ownership and stability.

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