Monday, January 10, 2022

(Way More Than Just) One Boomer's Cash-Out Dilemna.


Before we get started, I'm pretty sure just about anyone under fifty, and that includes my own kids, are going to roll their eyes at this one.

With that said, here goes...

We bought our bungalow in the near Eastern Townships of Lotusland in 2005.

And what we paid then, $440,000, gave me the willies at the time.

Since then, the ridiculous explosion in real estate prices means that the little pile of dirt that our littler house sits on not far from Mountain View Cemetary is worth somewhere between three and four times what we paid for it. 

Not surprisingly this ridiculous inflation means that, one-by-one, our neighbours are cashing out and moving to places like Lake Cowichan and Sooke.

Now, let me tell you, it's hard to ignore that siren's song as retirement starts to loom out there just a few years over the horizon.

But then I saw the following from the chart maker, Justin McElroy, buried in the latest version of his local MoCo 'Metro Matters' newsletter:

After humming and hawing and thinking that maybe we could make a decent return if we cashed out and moved to, say, Dease Lake, I smacked myself up the side of the head, and mumbled something like:

"What does 43% matter if you're starting from dirt cheap in the first place?"

Then my eyes wandered down to the following passage in the text under Mr. McElroy's chart:
“...It puts the emphasis on how important it is that we need different housing models even here locally in a small town,” said Mayco Noel, the mayor of Ucluelet, where the typical assessed value went from $494,000 to $705,000 in the last year...


$700,000 to buy a 'typical' house in Ucuelet?

What is our world coming too?


All snark aside, I always thought that, even if they could never buy a place in the Lower Mainland, our kids could move a ways away and be able to get into the market.

Now I'm not so sure.

Which is a real problem that we all need to deal with - not because boomers like me might not get to make out like bandits due to an historical fluke, but rather because everybody else, the rabble that does most of the working and paying and living and dying in this community, needs a decent shot at having a place to call their own.




NVG said...

north shore; 1975 for $51,000; 910 square ft. home;
1982 cra$h; we stayed; many others walked away
north shore; same lot; 2001 built new house @ $172,000;
north shore; same lot; 2022 same (new) house $2.4 assessment;

property to expensive to qualify for home owners grant

4 th year deferring property taxes

Can't imagine how many could walk away today; not old enough to defer; not enough equity;

How much deferrals can the Province support

RossK said...

Ahhh...Another excellent point NVG.



e.a.f. said...

That rules out Greenwood. Historic little town and the prices until recently were reasonable. Great old houses. At least Midway isn't on the list. Of course it doesn't have all the old style houses.

There really isn't anywhere in the province to buy an affordable house. Those days are gone and aren't coming back. If you want reasonable, check Alberta. Might want to wait to move though until Jason is gone.

Not only are houses expensive to purchase, but they aren't cheap to maintain. One of the problems was wages did not keep up with the cost of housing.

Governments haven't been paying attention and really neither have citizens/voters. Now we are faced with not only over loaded hospitals but homelessness, rampant drug addiction, a working people unable to purchase a home or even rent adequate housing.

by the time people/governments notice its too late to play catch up. In the Netherlands the government owns 40% of the housing stock. In Denmark social housing groups own 19% of the housing stock and the government 1%. In Canada we had a great program for coop housing but the federal government, Harper, cancelled that program.

First cities need to re zone, i.e. all these single family house lots need to be changed so that multiple housing can be built in more areas. Apartments for families need to be built, which includes 3 and 4 bedroom units, with in unit storage and a play ground. Town houses, are great but the new designs aren't great with 3 stories and very narrow. Income blended housing is required so there is a mix of incomes, etc. Cities need to stop selling city land to developers. All of this will cost a great deal of money. People will not want to pay more taxes, so it might be a really good time to stop subsidizing oil companies and other corporations.

Given the cost of housing expect to see homeless seniors because they don't have enough money to pay rent. CPP, etc. doesn't pay enough and many people who will be retiring in the next few years will not have employer pensions.

We might also consider banning home ownership in this country, if you're not a citizen or a permanent resident/landed immigrant.

Governments also need to be more flexible about zoning when it comes to what types of houses can be built in their areas. In the U.S.A. there are any number of tiny house developments. They aren't large subdivisions, but may have any where from a few on one lot to a development of 20 or so. Many people want their own piece of dirt but they don't need much.

we had better figure it out soon because people will be moving to this country due to political unrest and climate change.

Keith said...

A by-product of the unreal estate mania is the revenues to the province from the property transfer tax, which is a perfect example of using taxes to (not) slow down the price increases.

Taxes seem like an easy fix and it probbaly are, but soon thereafter gets baked in and back to business usual.

700,00 for a place in Tofino and most anywhere else in booming rural B.C. will be the asking price but will end up selling for closer to 800,000 in some cases and if one blinks it’s gone. Cash in the place in Vancouver or Victoria for a mil. plus, chuck in another 10-20% even more over the asking on a rancher in Pumphandle B.C., presto. Happening here on the md-island daily.

The endless gushing devoted to housing affordability becomes circular after a while but avoids an elephant in the room question of why incomes aren’t able to meet demand for much of our population. Long term if our young talent can’t afford to live and work in Canada, they will find another part of the world that will.

NVG said...

Up until now I didn't know where in the Province the two biggest increases in property assessment are. Port Clements (58%)? Port Edward (41%)? Never been to either. Whereas the other communities on the list I've passed through once or twice or thrice, but not in the last 25 years. Port Clements is on Haida Gwaii; population for the 'city' is 282 which is a far cry from Vancouver's 631,486 or the other large city example of Chilliwack's 94,167. Port Edward is a ten minute drive from Prince Rupert. I'm surprised by Justin McElroy's choice to include those two communities.

B.C. Assessment: Overall Port Clement population is declining at a rate of 3.59% per year over the past 10 years from 2006 to 2016. In the last two census, its populations declined by -96 people, an average decline rate of 5.08% per year from 2011 to 2016.

B.C. Assessment: Ucluelet, BC has a population of 1,717 people. Overall, the population is growing at a rate of 1.55% per year over the past 10 years from 2006 to 2016. In the last two census, its populations grew by 90 people, an average growth rate of 1.11% per year from 2011 to 2016.

McElroy's list: (2016 population):

Port Clements 58% Pop. (282)
Greenwood 53% Pop. (665)
Slocan 51% Pop. (272)
Port Alberni 47% Pop. (18,403)
Hope 45% Pop. (6,181)
Ucluelet 43% Pop. (1,717)
Port McNeil 43% Pop. (2,337)
Powell River 43% Pop. (399)
Canal Flats 43% Pop. (668)
Lake Cowichan 42% Pop. (3,226)
Tofino 42% Pop. (1,932)
Spallumcheen 42% Pop. (5,106)
Port Edward 41% Pop. (1,752)
Chilliwack 40% Pop. (94,167)
Wells 40% Pop. (217)

NVG said...

In light of today's tsunami warning, is Haida Gwaii's Port Clements and the town of Port Edward, and for that matter any low lying buildings along British Columbia's shoreline, really worth having homes there?

Hugh said...

The house where I grew up in Vancouver increased in value by $867,000 in one year.