The Vancouver Real Estate Market – A Special Type of Beast

I’m not a realtor. I’m not a mortgage broker, I don’t work for a bank and I do not have any substantial background in finance. I’m also not a real estate developer or investor. I’m just a regular guy who lives in Vancouver.

Part of living in Vancouver is having the eternal debate about the real estate market. If you are at a certain age group, there is literally no escaping it. Lately I’ve been hearing an increasing number of predictions of an upcoming bubble burst and a major drop in housing prices. The most common reasoning behind these predictions are the historically low interest rate, which will eventually go up and the low affordability of houses in Vancouver.

While these are valid points, I disagree with the predictions. I think that in the long run housing prices in Vancouver will only increase.

First of all, Vancouver is unique in several aspects:

1. Land is limited. We have the ocean in the west, border in the south, snow in the north and a relatively small stretch to the east until hitting snow again.

2. In typical metropolitans the suburbs are positioned around the city. Vancouver, on the other hand, is located at the west edge. Thus the suburbs are on average farther from the city compared to other metropolitans. This makes the city and its closest suburbs even more desirable than they typically are in other areas.

3. Vancouver has a steady stream of immigration. It is also one of the most desirable destinations among Chinese immigrants (at least compared to other destinations that legally accept immigration). An increasing number of people in China are becoming wealthier, as money from all over the world flows to China.

4. Like it or not, Vancouver is quickly becoming one of those cities where rich people "have" to own a property (which they might hardly use).

The first points mean limited supply, while the other points mean steady demand. We all know what that yields.

Now about those interest rates, as far as I know the most common mortgage product is a 5 years fixed. Therefore, if housing prices go down significantly as a result of interest rate increase it should happen around 2015, when those mortgages are up for renewal at a higher interest rate. Now let’s not forget that this is going to become an issue only for those who undertook a mortgage they won't be able to afford with higher rates AND maxed out the amortization period. Is that a significant enough portion of the market to push prices down? I don’t know. Moreover, even if prices go down 5 years from now, by how much could they increase by until then? Is it more or less than the possible reduction? Hard to tell.

Will the low affordability eventually stop the prices? Affordability is typically calculated as the ratio between the median residential house price and the median gross household income. But this factor fails to take into account wealthy people who do not rely on steady income, but rather on accumulated wealth. Also, what about those who live somewhere else most of the year, do not report their income here and are therefore not included in the local income statistics? This really proved itself already, because if Vancouver is unaffordable as it is, where did the buyers who made it unaffordable come from in the first place? The only conclusion is that the city is affordable for some while unaffordable for others. In other words, the way affordability is calculated is misleading. Perhaps Vancouver is becoming a city for the rich, a city that the working class cannot afford. This is definitely sad, but sadness does not reduce prices in a free market environment.

To summarize, there may be ups and downs along the way but in the long run I believe that housing prices in Metro Vancouver can only go up. Of course nothing is guaranteed, but I think that at least one of the parameters specified above will have to substantially change for the housing market to crash.

Now those of you who predict a bubble burst, be honest. How many of you already predicted a housing crash before? Are prices today higher or lower than then?

I also can’t help thinking that for some (not all) of those predicting an apocalypse, this is merely wishful thinking, which is completely understandable.

What do you think?

Please Take Off Your Underwear

After standing in line for two hours it was finally my turn to enter the small box-like room.

"Please lock the door" said a soft female voice.

"Please take off your underwear" she added. If only the circumstances were different and you weren't just a recording, I thought to myself.

"Place the underwear in the provided plastic bag", she said.

"Now take a blanket from the shelf in front of you; please keep the blanket around you at all times", the voice commanded.

It was finally time to board the airplane. It didn't take long to reach my seat. Ever since carry-on luggage has been banned, boarding the airplane has become faster as passengers didn't stand and block the aisles.The flight attendant's voice sounded from the PA system.

Photo: Tim Beach

"All passengers are now on board the aircraft and we will be ready for takeoff shortly. I remind you that for security reasons you must remain seated throughout the 6 hours flight. You may use the provided catheter located underneath the personal entertainment system."

"I remember times when air travel was pleasant and exciting", said the elderly man sitting next to me. "But what can you do, security comes first. Don't like it? You can take the train. For now".

The Prophecy

OK, back to reality. None of the above happened (yet).

Unless you were under a rock, surely you've heard about the attempted attack on the flight from Amsterdam to Detroid on Christmas day, in which the terrorist hid the bomb in his underwear.

The following is a real story.

Six weeks ago I flew out of Vancouver International Airport. The passenger in front of me in line to security was asked to remove his belt.

"You still have to do that?" he asked.

"What do you mean STILL?", the security attendant replied, "these thing never get better, they only get worse".

"I hope no one ever attempts terrorism with underwear" he replied. We all laughed.

This was funny only six weeks ago. In retrospect it sounds more like a prophecy.

BTW, this really happened. I even have a tweet to prove it...

Thanks For Making Things Simple, Apple!

Last night I spent an hour reinstalling my Windows computer and several more hours fixing the side effects on my iPhone.

My good old PC had a hardware failure - the hard drive passed away. Instead of restoring from backup I decided to reinstall Windows. Fresh start for the new year, I thought. It took me just about an hour to have my PC up and running. Sweet.

I then installed iTunes and configured it to sync apps and music with the iPhone. iTunes then warned me that my exiting apps, their data and my music will be erased from the iPhone. Wait, I don't want to replace or erase anything! I just have a new (or renewed) computer. That's perfectly normal, isn't it?

OK, I didn't care about re-syncing my music (I still have it all as it was on a separate drive), but I definitely didn't want to erase all the apps AND their data. So I decided to configure iTunes not to sync the apps, knowing that I wouldn't be able download apps to the iPhone through iTunes. I can live with that.



After some 15 minutes of syncing, during which iTunes erased all my music just so it can copy the exact same files back to the device (efficiency at its best), the sync completed.

I then saw that an update to the iPhone operating system was available and decided to go for it. Immediately iTunes was hard at work preparing my iPhone for the update for another 10 minutes. Then it suddenly notified me that an unexpected error had occurred. This left me with a non operational iPhone. Fun stuff.

So my next step was restoring the iPhone to defaults and then from backup. I waited (impatiently I must admit) for some 15 more painful minutes, but was relieved when the restore succeeded. I guess I was relieved too soon. Although the iPhone was operational again, It immediately transpired that all my apps and music were gone. If that's success, I don't want to imagine failure.

This time I had nothing to lose. I went back to iTunes and asked it to sync the apps. I was no longer concerned about the threatening message saying that all currently installed apps and their data were going capote. After some 20 more minutes of syncing, during which iTunes installed the apps and copied my poor music tracks yet another time, the sync was finally over.

I checked the iPhone and to my surprise the app data was still there. I wasn't sure whether I was supposed to be happy that it wasn't erased or unhappy that the message said it would be erased. Whatever.

Now what's still left for me to do is to rearrange all the app icons, because they lost their positioning. No big deal I suppose.

This wasn't the first occurrence where the iPhone sync was part of the problem rather than part of the solution. Two months ago I was away for a couple of weeks and took a laptop with me. I usually sync the iPhone with my desktop, since I use it more often than the laptop. While away, I received a music CD which I wanted to load onto my iPhone. I had all the ingredients for a successful sync: an iPhone, a computer with iTunes installed and a shining white Apple issue USB cable. Was I able to load my music to my iPhone? Of course! When I got back home.

I know that there are workarounds, 3rd party tools and hacks to allow for this scenario. But is that the way it should be? What happened to good old music file dragging to a USB device? Where is that simplicity everyone is raving about, Apple? It definitely isn't present in your syncing solution.

I believe I read somewhere that this restriction was put in place due to music copyright concerns. Even if it's true, I did nothing illegal. It was all my music, my phone, my computers. Is it so out of the ordinary for someone to get a new computer, or to use both a desktop and a laptop?

A simple web search yielded endless complaints from iPhone / iPod users with a similar experience. So this is a common complaint (and a pretty old one actually), but it doesn't seem to be addressed by Apple.

I really like my iPhone, but the iTunes syncing solution is a real fiasco.

Calling the Bank on Christmas

My credit card got blocked by my bank due to what they believed was a suspicious activity. So I called the customer service line:

Bank: Please select from the following options...
Me: [selected]

Bank: Please enter your credit card number.
Me: [entered]

Bank: Please enter personal information for security purposes.
Me: [entered]

Bank: Please select from the following options...
Me: [selected]

Bank: Our office is now closed, please call again during normal business hours.
Me: Doh!!!

Why Can't I Sleep?

It's 4 AM and I still can't sleep. Why?

Someone once told me that if your brain keeps active thinking and contemplating then you can't drift into sleep. I'm not sure if there's any science behind this, though it sounds reasonable. But wait, isn't it possible that the exact opposite is true? What if you can't sleep for another, unknown reason and in order to fight boredom your brain fills with thoughts? What if you keep thinking because you can't sleep, rather than can't sleep because you keep thinking?

If you are also trying to sleep right now, maybe reading this boring theory of a tired man will make you more sleepy. Hold on, is it possible that this blog post is the ultimate cure to insomnia?! Have I finally managed to solve one of the oldest problems ever suffered by mankind? Maybe I should get a Nobel Prize for that. Hey wipe out that smile, this is not completely far fetched. Obama got a Nobel Prize for less than that.

OK, going back to bed. I might not be able to sleep, but it's at least warmer there. Good night. Morning. Whatever.

Know Your Audience

I'm sure you're familiar with the concept: a service provider sends you an email regarding the status of your account and takes the opportunity to try and sell you another service. These emails are typically customized, they greet you using your first name and specify some of your account details. I suppose companies have come to realize that the more personalized the email gets, the more likely it is to succeed. Makes sense.

A few days ago I received such email from Fido, my cell phone carrier. The email was clearly tailored to me as it mentioned my name, account number, etc. It also told me that I had accumulated 24.89 Fido Dollars.



For those of you who aren't familiar with Fido Dollars, it's a reward program akin to miles on your credit card. You accumulate Fido Dollars as you spend money on your phone bill, which you can later utilize to purchase products and services.

What I found rather amusing about this email was that it suggested I spend these Fido Dollars to get 200 text messages. OK Fido, since clearly you know who I am and what my account number is, aren't you aware that my plan already includes unlimited text messages? Wouldn't it be more effective to try to sell me something I don't already have?

I guess that while these emails are somewhat personalized, they do not always employ targeted marketing techniques. At least not yet. We all learned from Google how lucrative targeted marketing can be, so I'm sure it's just a matter of time until every marketing material becomes as targeted as possible. I'm not sure if it's good or bad, but no one really asks me anyway...

Am I a Blogger?

Since I am now the proud owner of a blog that carries my name I guess the technical answer to the above question is yes. But I think that considering myself a blogger (at least at this point) is an insult to bloggers worldwide. I'm also not sure that my writing skills are overly developed. So why am I doing this? Why now?

1. Are you out of shape? Start working out! Didn't I just say that my writing skills need some work? You get the point.

2. Everyone keeps saying that I'm (too?) opinionated. Maybe I should put my crazy thoughts in writing instead of bugging my poor family and few (getting fewer?) friends.

3. To be honest, I've been intrigued by the blogging phenomena for quite some time. Maybe being part of it will help me get the insider's perspective.

4. I don't want my resume to say "blogging since 2010" and it's already December.

5. Maybe one of the insulted bloggers will pay me to stop calling myself a blogger.

So what should you expect of this blog? I promise to write short, medium or long posts, every undetermined period of time. And I'm going to keep this promise.

Oh, almost forgot about the EULA: by continuing to read my blog you hereby declare that you are capable of reading a couple of paragraphs without freaking out due to the occasional grammar error. I'll pull my not-a-native-english-speaker card as an excuse. It's lame, I know.

Bye for now. Come visit if you wish.