Back on November 5th, 2011 there was a great little discussion on the Vancouver Real Estate Ancedote Archive (VREAA).
“You lazy spendthrifts have no one to blame but yourselves... I got on the “property ladder” 14 years ago using my RRSP savings to buy a 500 sq.ft. condo, then I moved up to a 2 bedroom, then a townhouse, then a 1/2 duplex, and now am the proud owner of my dream 4 bedroom westside home for my family. Hard work and saving money, keeping my head down and saving and investing like previous generations. It worked then, it still works now. It is doable. Great condos are available in Gastown right now starting at $200k, not that much different than the $165,000 I paid for my first place Downtown in 1997. But everybody wants the easy life, no one wants to work for it!”
And the escalation of the housing bubble these past 14 years is what has given it validity.
The author of this ancedote tells you that he took $165,000 in 1997 and has parlayed it into the ability to buy a $2 - 3 million home today. And while we aren't told how much of that $2-3 million is a mortgage, his point is that he has been able to leverage up (via the property ladder) to the point that he can assume a mortgage for such a high valued property.
The G&M hilights the selling history of a condo in South Vancouver and you can easily see the midas touch has not necessarily graced every property you buy.
In 2001 r_dub71 probably made the first of his four sales on the way up the 'property ladder'.
Each month he would have paid half as much on rent as on his mortage. He could have used that extra money to enrich their lives, taken them on numerous vacations, or simply invested the extra money.
Today r_dub71's investment would be worth almost 3 million dollars ($2,887,500 to be exact assuming Silver at $35/ounce) not to mention another $1 million if he had invested the money he had saved over the years by renting.
But why do that when you could toil for a decade and a half on the 'property ladder' and still be a debt serf?
Climbing the 'property ladder' is not all that it's cracked up to be. There are many, far more effective means of wealth creation.
But pursuing those won't feed into the property bubble. And that's what the 'property ladder' is all about.
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