Saturday, July 30, 2005

The RE Bubble is a Crime Being Committed Against Our Kids

The real estate bubble is a crime being committed against our children and maybe even our grandchildren. The kids who grew up in Marin during the late 70's and 80's cannot afford to return home and live in a house that they can call their own and that they purchased with the money that they earned for themselves; they cannot afford to raise their children in a house in the town they themselves grew up in. For shame! This is not the normal way of things. We house owners here are all to blame for our greed. But Marin is not alone in this crime.

Personally, I think doing right by our kids is way more important than being able to finance trips to Bora Bora or where ever during our retirement, buying a flat-screen TV or a big luxury SUV or whatever it is that giving-the-appearance-of-wealth demands.

Some choice quotes:
"Remember how we used to laugh when our parents told us how much they paid for their first home? You know, $25,000 with a $2,000 down payment. That's us now. We purchased our first home in Victoria in 1986 for $90,000 and $10,000 down. One day, not that far away, our kids won't find our story very funny as they try to scrape together a down payment for their first -- a three-bedroom rancher for $600,000."

"We're already reading stories of parents refinancing their homes to help a child come up with a 25-per-cent down payment on a $250,000, 550-square-foot condo in downtown Vancouver. Or grandparents being tapped to help grandkids who want to get a place in Abbotsford, a suburb 60 minutes east of Vancouver (100 minutes-plus during rush hour), where the average price of a single-family home is more than $300,000."

"There is hope for B.C.'s house buyers of tomorrow -- a massive correction."

"Yale economist Robert Shiller, the man who predicted the bubble would burst, is saying the same thing is about to happen in real estate. He was quoted in a local paper as saying that so-called "glamour cities" like Vancouver -- where prices have accelerated most rapidly -- will be hardest hit when the day of reckoning arrives."

"The New York Times also recently waded into this subject, profiling the real-estate collapse in Denver. There have been stories, too, about the house price crash in Sydney, Australia. So, there is hope."

"Those of us who are 10, 15 years away from retirement are of mixed minds about a massive correction. Yes, it might be good for our kids, but many of us have been banking on that big real-estate cash-out at the end. Many people I know have factored it into their retirement plans -- you know, sell the house for $900,000, buy a smaller town home for $500,000, and then spend the rest on travel."

"If real-estate prices go down the toilet, so will a lot of cruises and dreamed-about ventures to Bora Bora."

""Look at this," I told my son the other day, cornering him in the den. "You can get a home just outside Saskatoon on 10 acres that also has a barn, a milk house and a storage shed for $159,000. How cool would that be?""


Anonymous Anonymous said...

we are also giving the children and grand children a warmer planet...
which pales in comparison to inflated real estate

a sort of SUV legacy

Jul 30, 2005, 3:56:00 PM  

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