History Repeats Itself
Thoughts sparked from a recent article in the Tyee.
When I was in my twenties the real estate market was out of reach too. Interest rates were on average 11% and there were very few programs in place (ie 5% down etc) to enable the young to get in. Now we have historically low interest rates and programs to help first timers get in – not necessarily in Shaughnessy but in areas like New West etc.
Many now HAVE to live in Yaletown with rents at $1500+ when this same money could be used to buy a $200k condo in the ‘burbs ($1200 a month + maintenance and taxes for 100% financing) or condos in so-called less desireable areas.
The reality is Vancouver has matured and our economy has attracted attention in the world market and now we are actually cheap in relation to many markets in the world. Our lifestyle offers beautiful scenery, world class resorts of sea, and mountains and a relatively safe place to live and bring up families, hence the tremendous increase in migration here and attention from these far flung economies first from Hong Kong then China, Korea and the Middle East and elsewhere.
I just spoke with someone who is in Monte Carlo. She saw a basic one bedroom advertised with no balcony for $1.6m. The same suite would be $350,000 in Vancouver. For the large suite she is staying in her friends pay $12k per month. On a world scale our prices are not high especially when the quality of life, in a G8 country, plus our location is factored in.
We cannot turn back the clock, the boomers are not to blame, and did not do this on their own. It is a reality of the world economy and situation.
In the late 70’s a home on the West Side was on average starting at $75k – who could afford that on $3 per hour and with banks reluctant to lend and no government programs to assist?
On the news we hear of tsunamis, pirates on the high seas stealing oil tankers, roaring inflation and so forth. The reality is that in most parts of the civilized world it is far more unaffordable to be able to buy anything, yet here in some cases we consider it a birthright without wanting to work and strive for it.
Is it a birthright to live in Vancouver? Are people hoping to take advantage of the earlier hard work of others and want to take it over without sweat and toil? Since the early days of Vancouver, Burnaby, Coquitlam, Surrey and Langley have arrived. With new fast trains and better transportation generally, affordable condos and homes in New Westminster, Surrey, Abbotsford have emerged… all within less than one hour from downtown. As these areas come of age they become centres in themselves and become more and more desireable.
I saw this when I grew up in England. We never grew up thinking we could afford Mayfair or Belgravia, these were the stomping grounds of the super rich, instead we looked to the suburban areas.
I think as always there is still plenty of opportunity. Markets rise and fall but ultimately over history, Vancouver and surrounding areas prices continue to rise at an average 10% per annum (I believe this is documented). There are periods of high inflation and cooling off periods.
I would suggest young people look to emerging markets and save their money. Work hard as I did, to “take a shot” and buy and work 2 jobs and 60+ hours a week to make the payments, and when the markets turn around and rise again they will be profiting from the rise. This is inevitable and their children will be saying the same thing 25 years from now from their acreages in the Fraser Valley or Princeton!
Schadenfreude: “Pleasure derived from the misfortunes of others”. This is rather unfortunate… are these people taking pleasure from those that have mortgaged themselves and strived to achieve when they are losing their fortunes… These are some of my thoughts after reading this opinion piece in the Tyee.
