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May 10, 2016 | Unfair & cruel

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Michael and Martina now hate me.

The property-lusting couple took to their Facebook page days ago and published a smiley photo with their three kids, two of whom look happy about it. The dog is pissed.

Below they said to the world: “A family photo we just made to include with our ‘pleading’ offers on houses in North Vancouver.” The guy added, “We’re probably going to make a video for an offer tomorrow. It’s pretty crazy and only might make a difference if our offer is equal to a competing offer.”

Michael and Martina Gyori obviously wanted attention when they made and posted that pic and comments, suggesting they’re being victimized by a nutso housing market. So I gave them some. “Have M&M ever considered moving?” I asked here on this pathetic blog. “Or staying renters and building their wealth instead of walking into a market so distorted you have to beg someone to take your money? Obviously conditions are unsustainable. And it’s not Chinese guys, but delusional, desperate people like these who are moving the market. It’s the hallmark of a coming asset collapse, after all, when everyone thinks it’s impossible.”

My point was simple. In a rapidly rising market, human nature makes people think things will go up forever. That they’ll be priced out, or (worse) miss windfall gains. Fear & greed.  They become infected with popular sentiment and join the game. As I have written here: higher prices breed higher prices. Until it all tumbles. The greater fool is always the fool who follows.

So a couple with four dependents so desperate to buy into a price storm that they (a) shoot a family photo for potential vendors, (b) write a ‘pleading’ letter with their offers to purchase, (c) create a video to accompany an offer and (d) publish it all in an open, online forum should tell ya something. Like, they’re as insane as the market they call crazy. This is exactly how asset values become unsustainably inflated. Because everyone’s chasing them. Until it all ends badly.

As it turned out, M&M did take my advice. They fled, diving capriciously to Kelowna (another overbought market) where they made an instant offer. But they also found time to dis me as a worn-out, doomy, aggrandized, irresponsible Internet hack who should have known when they took to social media and made themselves look like hormonal house-horny dipsticks, they really didn’t mean it.

But they manage to help infect the Okanagan.

In the name of fairness, here’s their response and justification. I’ve emailed the pooch, and will bring you his reply. He definitely knows something.

1BEGGING

“Yes, I realize that what we post online is ‘out there” for anyone (I guess you’re a friend of a friend of a friend), but the light you placed my family in is less than endearing… and is certainly not appreciated. The self-righteous glee with which you detail our story is unfair and cruel at best.  And quite uninformed with no effort to actually find out anything beyond our post on Facebook.

“Yes, the market here is crazy, and that is why, after only 8 days of trying (with 3 unsuccessful offers), we changed our focus to Kelowna… drove there on Tuesday, made an offer on a 3400 sqft house on 1.3 acre of land with a great view on Thursday (for asking price), and had the offer accepted on Friday.  I guess you missed that Facebook post.

“See…. we’re not quite the insane idiots that you paint us to be.  We’re merely a family trying to live where we want to live.  The only reason we even had a chance in North Van was that I’ve done well financially in the past.  Yes, we were trying to rationalize the increased risk of borrowing more money… Certainly stretching ourselves more, but we were certainly not throwing all of our financial eggs into one basket.  But perhaps you assumed that because we were trying to gain a slight edge with letters/pictures/videos to sellers, you assumed that we were financially extending ourselves beyond any rational thought.  Yes, I guess you did assume that.  Not very sound journalism… but maybe you can’t consider blogging journalism.

“We had certainly considered many other areas before making an effort in North Van.  Port Moody (not really that much cheaper), Maple Ridge… yes, a 35 minute drive from Vancouver in non-rush hour now…. but certainly not so speedy in 10 years with the insane development going on there.   In the end, a warmer, dryer climate won out.  And this was only possible because I’m mobile with my work.  Many people are not so fortunate.

“The only reason North Van was considered during this insane market was because most of our friends are here, and some of the best public schools in the province are here.  But perhaps you are not married, nor have children… so you couldn’t understand the intense desire to give your children the best possible education you can afford.  And your comments about renting making so much more sense isn’t entirely accurate… certainly not in the last 2 years (nor 15 years really).  Many people can either own their house or pay rent for nearly the same monthly cost.  Yes, with a down payment and property taxes and maintenance.  But add a $10k WEEKLY(!) appreciation in house value, and maybe you can see why people are still buying.  Any person who rented the last 10 years, but had their savings in the market in 2008 are certainly NOT better off than those that bought a house in Vancouver.

“Yes, we realize that this insane appreciation cannot continue for ever.  But when you’re losing $42k of buying power per month in North Van, one feels like you need to get on-board now, or forget about owning in North Vancouver.  It is VERY possible that prices will continue to appreciate considerably for another 12 to 24 months.  They’ve certainly continued appreciating longer than most of your doomsayer buddies. And remember the last correction in Vancouver in late 2008?  I bought a duplex in Dec 2008 for a nice discount.  The market was right back up there in 6 months.  You and others were probably disappointed that more people didn’t lose their shirts then.  But don’t worry, I’m sure you can bask in schadenfreude during the next correction or crash.

“There are plenty of housing markets in the world that are expensive and stay expensive.  Vancouver is now one of those markets and even after a crash or correction will remain one of those cities.  Or perhaps you’re now wanting to buy a place in Manhattan or San Francisco?  Or maybe you think those markets will suddenly become affordable?!?  Good luck.

“People like yourself will gloat about how smart they were when the crash happens… predicting the obvious oncoming bubble for the last decade…  Just being completely wrong about it being imminent. Many people with your opinion have been standing on the sidelines for 15 years, while others have successfully grown their net worth quite nicely with real estate here.  It doesn’t take a PHD to realize this bubble will burst.  The only question is when and how badly.  All it takes is 12 months of another 30% appreciation to make buying now still make sense.

“Perhaps it might be a bit of responsible journalism to update your ‘beggar’ blog with details about how we moved our focus to Kelowna very quickly and bought there.  But then again, that might make it look like you don’t know what you’re talking about.

“Best,
Michael and Martina”

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May 10th, 2016

Posted In: The Greater Fool

One Comment

  • Avatar Fred Roberts says:

    Hilarious. ” I’ve emailed the pooch, and will bring you his reply. He definitely knows something.”

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