Sunday, September 9, 2012

Has the Boomer Trigger now been pulled in Vancouver?

Faithful readers know we have often talked about the Boomer Trigger.

The majority of the self-indulgent Boomer generation have failed to prepare for their senior years.

Seven out of 10 Boomers do not have enough money set aside for retirement. And since 2011 marked the beginning of the great Boomer transition into retirement, this financial planning statistic is significant.

Starting in 1946, the demographic Post-World War II baby boom began. And the Boomers at the front of this wave have benefitted most from seemingly everything.

After having been raised in the post-war affluence of the 1950s and 1960s, the first wave of boomers entered their mid 20's starting in 1971. As they settled down between 1971 and 1976, these first Boomers bought homes which sold for between $40,000 and $60,000 in suburb communities like Richmond.

Now, as these Boomers head into retirement without adequate funding to carry them through their golden years, the vast majority have a very simple retirement plan: sell their bubble inflated asset of a house, downsize and live off the proceeds.

A average house on a large lot bought in 1971-1976 in for between $40,000 - $60,000 is now 'worth' between $1.5 - $2.5 million dollars.

Thus the Boomer Trigger... trigger the sale of the one significant asset they have to fund their retirement. At the same time, if the market slows, Boomers can use their original purchase price advantage to under cut other sellers in a collapsing market - a maneuver which has the potential to crash the market if done by a large number of Boomers at the same time.

Have we seen another example of this trend in the Vancouver neighbourhood of Quilchena?

This is 2681 McBain (hat tip to ZRH2YVR): 

This 3 bedroom bungalow (advertised as having 4 bedrooms and 2 bathrooms) near Prince of Wales School has had the same owner since it was purchased in 1955.

I shudder to think what they paid for it then.

It has been languishing on the market and the desperate Boomer has cut the asking price to $1,599,000.  Here is a screenshot of the listing:

The key element is in the listings description:
Priced $566,300 under assessed value.
Word is 2681 McBain has now sold... and for less than the most recent asking price.

Now you should know that on the r/e chat boards, Real Estate bulls have been quick to point out that it wasn't a massive amount of inventory on the west side combined with a dearth of sales that resulted in a sale so dramatically below assessed value.

The neighbourhood speculative builders and many Asians wouldn’t purchase it because it was at the end of a T-steet. Apparently this is a big no-no for the all important Asian 'Feng Shui'.

According to VCI contributor 'West Coast Woman'
About two weeks ago I was viewing a new build in the area and started talking to a Caucasian couple at the open house. I told them about the McBain house and their first reaction was “yeah, but it’s at the end of a T-street so it has little resale potential”. I was shocked at that comment and replied that it was a much superior location with much less traffic (probably less than 20 cars a day drive down that street) than the one we were viewing. Regardless of whether the T-street thing makes any sense, it WAS the reason for the reduced price as the long-time older owner simply couldn’t take care of the house anymore and was motivated to sell.

Two houses in the 2400 block McBain sold a couple of months ago in a crazy bidding war. One was purchased as an “investment” by an Asian man living across the street. It is the one now being rented out. The one next door to it (which wasn’t even listed) was purchased by someone who “lost” the bidding war; it is now back on the market for about $2,670,000 – about 150,000 more than they paid for it. Another house across the street at 2408 McBain is another slightly renovated flip – purchased last year for about $2.2 million, it’s now back on the market for about $2.6 million!
Any truth to this? Perhaps.

The one part I do agree with is that the reduced price was because the long-time older owner simply couldn’t take care of the house anymore and was motivated to sell... which is the whole essence of the Boomer Trigger. She had the ability to move significantly on the price, she wanted to sell the property, and she pulled the Trigger.

So now we have a Vancouver west side property that has sold for about $600,000 BELOW assessed value as a result.

The Boomer Trigger at work. I expect to see more like this if sales continue to stagnate.


Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.


  1. Baby boomers did not purchase houses in 1955. This example would be their parents, who are now very old. Truthfully, I expect boomers will not sell. It will be a long, drawn out descent, just like politics.

    1. I suspect the owner is in their Eighties with the sale being driven by her Boomer children who are in their early to mid 60's.

    2. As for Boomers, 70% of whom don't have funds set aside for retirement, there will be no choice but to sell and attempt to get something out of their inflated asset.

    3. A disappointing write-up in a blog that I felt had more quality than most. Misleading to use the term 'boomer' where it doesn't apply. This older Canadian will have enough money based on the sale of their home to fund their remaining years. Boomers, as you indicate is a broad age group and many have pension plans that reduce the need to have additional funds set aside. Sources need to be cited when statistics such as 70% are quoted.

    4. The 70% figure is widely reported by various banks who have analyzed Boomer savings in preparation for retirement.

      The fact is, as this sale demonstrates, those who have the room to move dramatically on price - will move to make the sale in a stagnating market.

      The majority of them will be Boomers who have the ability to invoke this advantage.

      This is something that will become more and more commonplace the longer the market stagnates.

    5. When you scratch away at the surface of those figures, it gest worse.

      A recent Canadian Payroll Association (CPA) study found that 45% of aged 50+ participants had saved 1/4 of their ultimate retirement goal. With 3/4 of their working years behind them and less than 1/4 saved towards retirement, the math isn’t good.

    6. These are market surveys by the banks, albeit with reliable survey companies, but still not comprehensive in any way. Go into the academic research and you'll see the numbers are not nearly so dire. When quoting ideas such as 'their ultimate retirement goal' be clear that 'ultimate' is not what I 'need' but what I 'want'. The boomers are in the prime earning years.

  2. When I still read of bidding wars and "investment" buying with HAM in mind it illustrates that market perceptions have not changed amongst the unwashed masses. It will have to be in the MSM for quite some time before a shift occurs.

  3. It's also interesting that when the possibility of HAM isn't there (like in this case) the price is significantly less. Just goes to show the influence of HAM over the last few years.

  4. The "bad-luckness" of T-section can be reasoned: occasionally we see news of some crazy drunk driving his car into someone's house. Obviously, with a T-section, the chance and severity of that happening are relatively greater. That's why such properties are considered to have bad feng shui.

    1. That's one aspect, another is having car lights aiming directly at your house throughout the night

  5. Kitchen remodeled 15 years ago? What's the point of even mentioning that? The kitchen is ready for another makeover. RE agents really grasp at anything.