so its people in Langley dropping $4000 on an LV bag?

Read this thread in the am and I think there is some validity. I'll bring in my personal experiences as a kid who grew up in East Van and now lives downtown, right smack in the middle.

1. You can't deny the immigrant factor. My parents are immigrants and they for the first few years stayed with family to save money, bought a home in East Van in the late 80's and refused to follow the rest of our extended family in the flee to the suburbs aka Surrey. In my opinion its the smartest decision they made as our other family members now routinely complain about lack of this and lack of that. And hail about Red Robins as a great time out! Point is, lots of people that live in Vancouver now have been here for a while. At least for single family detached homes. So if prices have gone up, they sit on increased equity and if they sell, they are able to buy new in Vancouver, or downsize in Vancouver.

2. Most new homeowners look into condos or if they have some money a townhouse or detached home in East Van. The west side is out of the question for most.

3. Drugs $$. growing up in EV I've noticed my fair share of dealers with lots of money. You'll be surprised who deals and who doesn't. Further many of them are also gamefully employed. Just look at the docks and there workers and well u have your answers. The long shore easily make 80k and up if they get in full time. Many live in East Van and some even on the west side. Again this is from experience, I don't have any hard numbers.

4. Chinese money. There is some, especially in Richmond and in the downtown Condo market. At least that is what I hear from realtors i've spoken too. Heck the place i bought was owned by someone from overseas who now wanted to use the proceeds from the sale to purchase a few more properties downtown and rent them out. Hence his mortgage is paid for by renters. As a percentage I don't know, but I don't think anyone really knows.

5. New homeowners. Believe it or not there are a lot of young professionals gamefully employed in the city. I know people like to bash Vancouver as not having any industry. I'll say we have a pretty diverse economy and it's only going to get more diverse. Hopefully the green city thing pans out. I consider myself to be a young professional and make a modest income in the 50k range. With that I am able to afford a down payment. I also borrowed some cash from my parents. Which, many others are as well... and can comfortably make my payments with my income alone and still have money to buy an LV bag if I choose too.

All these factors contribute to the sustainability in real estate price. Don't get me wrong prices will eventually correct. But not to the point many are wishing. Because as soon as they dip say, 10 to 15% people will again think of buying.

Hopefully what I wrote makes sense and gives people a street level view of how to get things done.

Save money, invest wisely. The people who do can easily afford this city with a little sacrifice, ie. space, not eating every day etc... Those that want it all, end up wasting there money and never saving and get left of the real estate train.

Good points.

And lol I assume you mean "not eating OUT every day", not "Live in Vancouver, just don't eat *every* day."

So much in life comes down to personal choices and what you choose to do with your money.

Spend it on marijuana and art supplies for your tasteful protest signs, or save it, and put it towards something~

At least, if the media is to believed, your drug dealer invests his money wisely.

LOL yeah I meant not eating out everyday. haha

That pretty much backs up what I've seen. My parents moved to East Van in the early 70's bought a tiny house. Had it knocked down and had their current house built 6 year later. Which eventually made them asset rich. Something that a lot of people who have lived and owned in Vancouver have become.

About 12 years ago house next door went on sale and as a group my parents, me, brother and brother's girlfriend split the mortgage amongst us. I could never have afford the house on my own.

In your case your parents gave you some money. Which is the same really. Although my parents own a good part of the house I live in.

I think a lot of people under estimate that people are getting help from other people (relatives) in purchasing real estate.

Maybe it was chicken little after all. Although August sales dropped over last year, prices climbed as listings declined. Media now heralding an end of the buyers market as fewer properties are listed!:shrug:

“...August home sales posted the first month-to-month increase since March of this year,” said BCREA chief economist Cameron Muir in a statement. “Lower mortgage interest rates and an improving labour market are inducing additional consumer demand.”

“The number of new residential listings in the province has fallen 30 per cent since April,” added Muir. “With fewer new listings, total active listings are now on the decline, signaling that an end to the buyer’s market may be on the horizon....”

Read more: http://www.vancouversun.com/sports/H...#ixzz0zZrCvKO9

why doesn't the media point out the olympic village to buyers

With the Prime Rate rising another .25% last week, it will take a few months to see if the rising monthly payments, plus the increased approval requirements, and the hated HST are changing the market.

I lived through the time when rates rose form 10% to 15% to over 20%, and remember friends trying to convince me that "just get a mortgage on ANYTHING before the rates rise again!!" Cooler heads in the family prevailed and I watched as friends with 20% (and higher) rates were crushed by the debt burden and were screwed when housing prices and interest rates came back to normal.

It wasn't the horror story I've been seeing in the US today, but I was thankful during those years that I had a decent job and the landlord only jacked up the rent $5 or $10 annually. Fortunately for me he built the apartments in the 60s, so by the time I was a tenant his mortgage on the building was paid off & he only had to increase rents to cover the increased taxes & common area utilities.

The prime rate went up last week, but 5 year fixed rates came down, again! 3.59%

If people don't need to sell. They will just pull their house off the market and wait until a more favourable time to sell.

My parents seriously lucked out during those high interest rate times. They renewed their mortgage at 13% for 3 years. Then watched as the rates shot up to 20% shortly after. Then when it was 3 years later and time to renew again the rates had come back down to 13%. So they skipped those higher rates.

WOW! I hadn't been paying attention for the last while, but that's getting closer and closer to my variable rate what will be, starting in Oct, 2.85%. Also keep in mind often times you can negotiate slightly better than the posted rates, especially if you do other business with the institution.

3.59 isn't the posted rate but what you can expect to be able to negotiate based on good credit etc. Posted is 1.8 points higher I believe.

Ya, ING has 3.79 posted and TD has 3.99 posted in their special rates that fit most people looking for a mortgage.

What's with all the pretentious twats on this forum? :yuck:

I''ll stick with my variable prime minus .8 for now.:)

i can't borrow money from my parents so i'm left out

Yea, even though I'm not as certain. I've found there are a lot more deeper questions that people forgo when they do "analysis" on Real Estate.

First off, Foreclosure rate is a lagging indicator. As prices fall before they get foreclosed on, heck if you can't afford the payments, you'd just sell it if you're still in positive equity.

Interest rates, what's more dangerous? Higher interest rates that trends downwards, which usually means lower starting RE prices in general or Lower rates that have very little room to go down with a higher rate. What puts more pressure in the future to RE prices?

Demographics, what is the age composition of the current population? Spending as well as housing patterns of the population changes with age. What happens when boomers draw their equity, by downsizing?

Wage growth, how long can RE prices outpace wage growth in Greater Vancouver? The wage multiple can only go so far.

Credit Expansion, how much more credit can one afford? It's no secret since the 50s that people gained more and more credit, either in the form of lower downpayments to revolving credit.

Not a entirely tangible variable is psychology, probably the weakest of my arguments. Consumer attitudes matter a lot in Real Estate Cycles.

A crash is definitely much harder here as walking away isn't as easy, but in my view there's a lot more pressure in RE or risk than it's worth.

FYI quite a few friends and family are heavily in RE and they've been downsizing their investments. I'm obviously a bear who believes anything from a 10% - 30% or even just stagnant prices can occur. It takes a multitude of storms to cause a crash - High unemployment, credit stress, interest rates. Which makes a stagnant or a grind downwards a more likely scenario.

I have yet to read anything that makes sense to me to give RE a decent return compared to a lot of other opportunities out there.

I'm strictly speaking from a investment point of view, buying to live changes the circumstances somewhat but in my opinion it still makes more sense to rent.

Demographia made a study that typically land constrained cities usually have higher "bubble potential" attributed mostly to the psychological factor.

Yea I noticed that too!
I'm only in my 20s and I have no idea how I will afford to be a home owner
one day If I want to stay on the North Shore.

I think this topic needs to be revisited. I'm seeing a lot more talk of a bubble now than I have in a while. I'm also seeing a lot of properties sit on MLS for quite a while in my neighbourhood. I think a lot of it is speculation as to why the 2.99% 5yr fixed mortgages got pulled so quickly from the market.

Does anyone have any good reading regarding a potential bubble?

Business Insider List of Overpriced Markets
The Economist says bubble likely
BMO Says mild overvaluation, worst in BC
Bloomberg on Toronto Condo Boom
2.99% 5yr Fixed Mortgages End