buying condo downtown

[johny]

Originally Posted by 1.8tradoman

wow... never heard of opportunity cost? look it up. Also have you actually looked at an amortization chart? Guess what? At the end of 25 years on your 40 year mortgage, you still owe more than 50% of the original principal (i.e. you own half a house). If your looking for a number to use try the Benchmark Price that Realtor quoted ie. $771,321. And the kicker? you've paid over million dollars in interest after your mortgage is finished. Let's start there. After that we can talk about the rest of your post.

using the OP's numbers. for now we'll assume prices won't change, but of course they will $2400 / month rent all in. x 12 x 70 years = 2.01 million. take his buying costs. $5600 all in for 30 years = oddly enough. 2.01 mill. so you've paid the same. but the buyer has a 900k house and the renter has nothing. now factor in increaseing prices. the renter will have paid alot more then 2.01 as rent prices will increase. the buyer will not pay more, as cost is set the day he buys it. ignoring interest changes which might even help rather then not. and the buyer will be sitting on a house worth alot more then a million, after spending less money over his lifetime then a renter.

[Realtor]

1.8tradoman or anyone else I have an article on the benchmark price, but it's in pdf format and I don't know how to post it here. (it's huge)

I still don't know which article states that the average price fell 4% but I would love to be able to see the entire article. I also made contact with the REBGV and they cautioned me about that statistic because a few big sales can really affect this statistic and they said that they knew there was a 17 million sale last month as well as a few other big ones, so that can throw the average up last month, causing it to drop this month.

Inventory is higher (higher than previous years when nothing good was lasting too long on the market), but that doesn't mean that the market is crashing. Like I stated before, the market seems like it's still going up, but it's not as hot as it was in previous years.

I could be wrong, but it seems like you have some sort of bias and you are absolutely sure that the market is going to crash. The market is based on so many different factors and fluctuates constantly - how can you be so sure? Do you have godly powers or a crystal ball? I'm not saying that you are wrong or right, I just don't like how you think you are so right.

Originally Posted by 1.8tradoman

PS: Realtor, I'm serious about the bench mark price calculation...

Oh No, he's serious.... what am I supposed to do now?

[RayBot]

You know, this whole INVESTING in Real Estate is very superficial in my opinion.


Lots of people are talking about renting because the real estate market is going to crash soon....blah blah blah.



What about the concept of buying real estate to own real estate?

The only reason for me to justify renting till the day i retire is that I have no life whatsoever. And it doesn't take statistics and numbers to justify that I would rather buy a property as opposed to renting.


In 40 years when i retire, i expect to own my own property.
When i need money in the future, its easier to use the equity gained from my own property.
When i expect to downsize after my kids move out of the house, i will have a good amount of money leftover to travel around the world.
When I die, i will have something of significant monetary value that I can pass down to my kids or grandkids.



Can any of that be achieved by renting all your life? I didn't think so.

I think the most regretful thing to do is restrain from moving forward in real estate because you read a publication saying that the market is unstable. Fact of the matter is publications gets more readers with controversial news rather than good news, no matter what peice of article you read.

Very stupid....after penny pinching on such a strict criteria, i found my client a condo that fit what he needed, but it was a few thousand dollars over what he wanted to pay. He didn't want to go that high, he didn't get the property, and less than a year later, the market value is up 50G!!

A few months ago, hes on the move again to look for a property, and the exact same wage which he was making this year can't afford the same thing he was looking for last year. Now he says wait till the real estate market crashes. Oh the money he could have made.

Kind of another funny statistic to point out too....which is growing faster, job wages or real estate prices?

Just in case, wouldn't want to be on the shit end of the ramrod if real estate prices still increase

[goo3]

Originally Posted by justsomeguy604

Sure we don't have the same level of sub-prime exposure that the US had but we have a huge oversupply of condos especially in Vancouver.

Oversupply of condos - We can all see a ton of condos have been going up the past 6-7 yrs, and there's also hard numbers you can get from the Real Estate boards, etc. But how do you know this is an oversupply?

I know if you want to buy a house, on avg, the amt of income needed for your mortgage is at 70% whereas for a condo it's closer to the normal 30%. Could some of this supply have been at the expense of SFH because that's what ppl could afford? Then if you add up SFH + townhouses + condos, will there still be an oversupply of housing?

How about investment condos replacing traditional rental apartments? This is something I've read about. No one's been building apartments because builders can make more money selling condos. But some ppl who buy the condos also rent them out so this has been picking up the slack for the lack of rental apartments. When talking about oversupply, how would you take that into account?

I'm not disagreeing with you. Since I don't own, I actually hope you're right . I just want to see things from both sides. But I'm really interested in hearing why you think there is an oversupply.

[SlySi]

Originally Posted by justsomeguy604

Talk about a bunch of total noobs.



I rent in Coal Harbour for about $2400 a month. This is my total monthly cost (includes all utilities).
.

Thanks for paying for my mortgage.
Greatly appreciated...

[RayBot]

See one of the reasons why i don't read these controversial statistics is because the facts they provide lack certain variables....So, real estate sales went down a good 4+%

But here's a variable.....

Between last year and this year, how many less 'Assignment of Contract' sales have their been??

This can actually be a very big statistic because every time you assign a contract, you have just doubled the dollar value and added to the Real Estate statistic. Many people don't buy assignment of contracts because of legal issues....thats a fact that doesn't require numbers.


Heres another factor....how many pre-sale buildings actually completed?

Yep...another issue. You can toss those numbers away and add them to the decrease of real estate sales too.

Heres another one....Of all real estate sales, how much did condo sales go up/down versus how much did single family housing go up/down?

Well, if single family housing is still climbing, then thats not sign of a crash. Total statistics are giving real estate sales as an overall whole, but yet its only condos that are decreasing in sales.

That could have easily been a good 5% of all real estate activity...maybee even more. But hey...as i said, controversial news sells more than good news.

Too much missing information.

[1.8tradoman]

This is the original post :

"thinking of buying a condo downtown as an investment, i know no one has the answer but what is everyones opinion on what condos will be worth around 2010? Do you guys think the condos will drop in price or go up?"

I think we all agree here that buying a CONDO for investments purposes is not a great idea right now. Condo's are cash-flow negative. Period.

Have a quick look at a few vancouver real estate blogs. I have yet to find a sound argument that suggests we will avoid a market correction (20%+) of all real estate in the GVRD, condo, townhome and SFH.

http://robchipman.net/blog/?p=73

http://vancouvercondo.info/

And have a look at this site if you like graphs and stats:

http://langley-financial-planning.blogspot.com/

Nobody can predict the market but you can do the research.

[1.8tradoman]

oh and here's a real estate agent who's decided to give an opinion about the state of the market.

http://paul-northvancouverhomes.blogspot.com/

[Realtor]

Originally Posted by 1.8tradoman

This is the original post :

"thinking of buying a condo downtown as an investment, i know no one has the answer but what is everyones opinion on what condos will be worth around 2010? Do you guys think the condos will drop in price or go up?"

I think we all agree here that buying a CONDO for investments purposes is not a great idea right now. Condo's are cash-flow negative. Period.

Have a quick look at a few vancouver real estate blogs. I have yet to find a sound argument that suggests we will avoid a market correction (20%+) of all real estate in the GVRD, condo, townhome and SFH.

http://robchipman.net/blog/?p=73

http://vancouvercondo.info/

And have a look at this site if you like graphs and stats:

http://langley-financial-planning.blogspot.com/

Nobody can predict the market but you can do the research.

Once again, the key thing here is to analyze the guys sitaution and then you can see if it's worth it for him to invest in the market or not. Let's say he decides to buy a condo and then flip it out by 2010. If prices only increase by 7% each year and he bought the place for $400,000, then he would make $57,960 in 2 years minus costs. The things he has to weigh in are what kind of costs to him there will be for investing and see if it's worth it for him to do so.

As for a negative cash flow property, MOST properties in Vancouver and any other city are negative cash flow properties. How many idiots out there are willing to pay more for rent than a mortgage?

There are plenty of opinions for both sides of the coin. I didn't take the time to go through all your links, but certain realtors have their opinions and they are entitled to them, but other realtors have different opinions. People should get ALL the information and then act accordingly.

You speak like you KNOW that the market will crash by 20% in the near future. It may or it may not. Some people even think that the market will continue to rise for the next 10 years. As for arguments, I stated my reasons for both sides of the coin in an above post. I also wish I could post pdf. files here, because I have an interesting article from the Vancouver Sun (April 26, 2008) about the myths of Real Estate and they don't feel the the market is coming down any time soon.

[1.8tradoman]

here's that article you are looking for:

http://www.canada.com/vancouversun/s...f343804&k=5982

sorry about the long link... anyways take note of the readers comments. ouch.

This may be a bit juvenile but lets make a small wager, I'll bet you $100 by the end of the year, gvrd CONDO/APT bench mark prices (i'll even use the phantom numbers that the real estate board uses) will be down 20% from April 2008 CONDO/APT bench mark prices. I await your responses.

[Realtor]

That is the article, but my version has the charts and more details to it. As for the readers comments, everyone is entitled to their opinions, but think of it this way, usually only people that disagree strongly with an article are going to post. Most of the people that agree or see good points will not bother.

As for your bet, are you talking about the end of 2008? The market is usually the hottest in the spring summer and coolest in winter, and prices reflect that, so there may be a slight dip in the market by the end of the year due to seasonal factors which is very common. However, I highly doubt the benchmark price in April 2009 will be 20% lower than the benchmark price of April 2008.

On a side note, I'm not taking the bet because I personally don't care for it.

[1.8tradoman]

"As for a negative cash flow property, MOST properties in Vancouver and any other city are negative cash flow properties. How many idiots out there are willing to pay more for rent than a mortgage?"

"Once again, the key thing here is to analyze the guys sitaution and then you can see if it's worth it for him to invest in the market or not. Let's say he decides to buy a condo and then flip it out by 2010. If prices only increase by 7% each year and he bought the place for $400,000, then he would make $57,960 in 2 years minus costs. The things he has to weigh in are what kind of costs to him there will be for investing and see if it's worth it for him to do so."


So pretty much Realtor your saying buy a downtown condo, eventhough it is cash flow negative and hope that we have double digit appreciation year over year to cover the costs associated with the investment.

Lets go buy ten condos and make $579,600 in 2 years minus costs! Guess what happens if there is no appreciation? It goes both ways.

Realtor, Real estate bubbles around the world are crashing, Why is Vancouver different?

Look at this gem: http://paul.kedrosky.com/archives/20..._trends_v.html

"However, I highly doubt the benchmark price in April 2009 will be 20% lower than the benchmark price of April 2008."

Looks like you also seem to KNOW the market? Take my bet, April 2009 (condos) will be 20% lower than the benchmark price of April 2008! Doesn't even have to be $100. Loser has to post a pic of him/herself and his/her ride!?

[1.8tradoman]

link is down

[Realtor]

Originally Posted by 1.8tradoman

So pretty much Realtor your saying buy a downtown condo, eventhough it is cash flow negative and hope that we have double digit appreciation year over year to cover the costs associated with the investment.

Lets go buy ten condos and make $579,600 in 2 years minus costs! Guess what happens if there is no appreciation? It goes both ways.

Realtor, Real estate bubbles around the world are crashing, Why is Vancouver different?

Look at this gem: http://paul.kedrosky.com/archives/20..._trends_v.html

"However, I highly doubt the benchmark price in April 2009 will be 20% lower than the benchmark price of April 2008."

Looks like you also seem to KNOW the market? Take my bet, April 2009 (condos) will be 20% lower than the benchmark price of April 2008! Doesn't even have to be $100. Loser has to post a pic of him/herself and his/her ride!?

1. I never stated that we are going to have double digit appreciation year after year.
2. I merely gave a different scenario than the one that you "know" is going to happen, and I only used 6 or 7% increase in that scenario.
3. I gave my reasons for both sides of the coin.
4. Don't really care for your link.
5. I never stated that I know the market, I am just giving my opinion on what I "think" the market will be like.
6. Don't care for betting as no one can predict the market. I have clearly stated what my opinion will be and I have also stated that numerous factors will affect the market and it's impossible to "know."
7. I find arguing with you here is a waste of time so i'm done. If you think that you have won, good for you.

[SlySi]

Originally Posted by Realtor

1. I never stated that we are going to have double digit appreciation year after year.
2. I merely gave a different scenario than the one that you "know" is going to happen, and I only used 6 or 7% increase in that scenario.
3. I gave my reasons for both sides of the coin.
4. Don't really care for your link.
5. I never stated that I know the market, I am just giving my opinion on what I "think" the market will be like.
6. Don't care for betting as no one can predict the market. I have clearly stated what my opinion will be and I have also stated that numerous factors will affect the market and it's impossible to "know."
7. I find arguing with you here is a waste of time so i'm done. If you think that you have won, good for you.

Im actually surprised you would even take the effort to reply to someone like this?

[1.8tradoman]

Originally Posted by SlySi

Im actually surprised you would even take the effort to reply to someone like this?

I never intended to insult or offend anyone here, just wanted help answer the question that was posted on this thread. Its quite obvious real estate agents on this site will tell you to buy real estate since they depend on the commission. I just wanted to give another point of view ( although unpopular).

Vancouver is a boom bust town. Speculators will be the first to exit and hard working families will be left to hold the bag, don't be one of them.

Look at the inventories of the GVRD: http://vancouvercondo.info/

Simple supply and demand laws apply to Vancouver. As inventory continues to rise and sales slow, price will DECLINE, and thats not a PREDICTION!

[revin-Rx]

As a potential first time buyer i really want to believe what you're saying 1.8tradoman, but what i've seen since i've been looking in the market is contrary to what you've been saying. In order to give you an idea, let me give you an example. In metrotown, near Pattison skytrain station, there is a new pre-construction development called "The Jewel". I had been waiting on this development because it had what i was looking for: close to central park, close to transportation, decent sq footages, and concrete building. For this i had anticipated the price to be around maybe 350,000 w/ tax etc....i mean how much could a 1 bedroom in Burnaby possibly go for??? So get this, it's selling for 369,000 w/out tax! w/ tax it's nearly 392,00!!! I thought who.....WHO would pay nearly 400,000 for the worst 1 bedroom in the building, i'm sure units above this cost at least 5 G's to go up a floor. Anyways, i'll get to the point - last saturday was the first offering for sale........people were lining up in lawn chairs thursday night to buy!!! that's right, thursday night. So my question is this, if you can afford to spend 400 + G's on a one bedroom, why wouldn't you invest in an East side house, actual LAND instead of airspace (a condo)? How could this be a good investment? Why are people paying these prices, isn't that part of the problem?

[goo3]

you should have asked the lawnchair ppl that

[Realtor]

Originally Posted by 1.8tradoman

I never intended to insult or offend anyone here, just wanted help answer the question that was posted on this thread. Its quite obvious real estate agents on this site will tell you to buy real estate since they depend on the commission. I just wanted to give another point of view ( although unpopular).

Vancouver is a boom bust town. Speculators will be the first to exit and hard working families will be left to hold the bag, don't be one of them.

Look at the inventories of the GVRD: http://vancouvercondo.info/

Simple supply and demand laws apply to Vancouver. As inventory continues to rise and sales slow, price will DECLINE, and thats not a PREDICTION!

Your comment about realtors seems quite insulting and offensive to me.... Guess what, realtors can also tell people that the market is crashing and realtors can make money SELLING properties rather than helping people buy them.

Vancouver has it's ups and downs, but what makes you think that Vancouver is a boom bust town?

Your line about the supply and demand laws apply to anything......... but once again, you are making assumptions about the market..........

[RayBot]

Originally Posted by revin-Rx

As a potential first time buyer i really want to believe what you're saying 1.8tradoman, but what i've seen since i've been looking in the market is contrary to what you've been saying. In order to give you an idea, let me give you an example. In metrotown, near Pattison skytrain station, there is a new pre-construction development called "The Jewel". I had been waiting on this development because it had what i was looking for: close to central park, close to transportation, decent sq footages, and concrete building. For this i had anticipated the price to be around maybe 350,000 w/ tax etc....i mean how much could a 1 bedroom in Burnaby possibly go for??? So get this, it's selling for 369,000 w/out tax! w/ tax it's nearly 392,00!!! I thought who.....WHO would pay nearly 400,000 for the worst 1 bedroom in the building, i'm sure units above this cost at least 5 G's to go up a floor. Anyways, i'll get to the point - last saturday was the first offering for sale........people were lining up in lawn chairs thursday night to buy!!! that's right, thursday night. So my question is this, if you can afford to spend 400 + G's on a one bedroom, why wouldn't you invest in an East side house, actual LAND instead of airspace (a condo)? How could this be a good investment? Why are people paying these prices, isn't that part of the problem?

Exactly...land = way to go...said that in the second post.

Lex Luthor said it best:
" You can print money, manufacture diamonds, and people are a dime a dozen, but they'll always need land. It's the one thing they're not making anymore of. "

[revin-Rx]

Originally Posted by goo3

you should have asked the lawnchair ppl that

I was actually thinking of that, but most of those people are not the owners, they are people the owners have paid to sit in the chairs for 2+ days.

[1.8tradoman]

"Your line about the supply and demand laws apply to anything......... but once again, you are making assumptions about the market.........."

That is exactly my point, supply and demand applies to real estate! What do you think is going to happen as the inventory ballons and sales decline? The stats are in plain view, you can get them from the real estate board yourself.

"Your comment about realtors seems quite insulting and offensive to me.... Guess what, realtors can also tell people that the market is crashing and realtors can make money SELLING properties rather than helping people buy them."

How did I offend you when you agree that you can make money by both sellling and buying real estate for people? Thats your job! your obviously going to tell me to buy and sell real estate instead of cars for instance, your not a car salesmen!

If the original poster had asked us if it was a good idea to SELL real estate, your going to tell him what? not sell?

Raybot: I somewhat agree with you about land and how you can't create more of it... but please have a look at this chart and tell me if they are creating more land in the cities on the graph because the housing prices seem to be DEPRECIATING. New York, San Diego, San Fransico, etc....

http://bp3.blogger.com/_rt16FZ_z1N8/...eak_200802.bmp

I also thought that buying real estate was the ticket to early retirement but it just doesn't seem to be the case right now... on a personal note, I owned a SFH in East Van and put a second mortgage on it to buy a condo at the Fraserview. It was a good idea in 2001 but i would not recommend doing this today.

[1.8tradoman]

Originally Posted by revin-Rx

I was actually thinking of that, but most of those people are not the owners, they are people the owners have paid to sit in the chairs for 2+ days.

Some of those people in the line up are real estate agents, and also people who have been paid to make it look like there's alot of interest in that building. There will be lots of units available for sale in a week at that development. Unless you think paying $400,000 for a 700sqft condo in Burnaby makes sense than you should buy ten of them now and you can sell them 5 years from now and become a millionaire.

[1.8tradoman]

Sorry last post today... remember the big line up that stretched all the way to the king george highway at the INIFINITY Tower Development? Remember people camped out for a week? Do a little research and what do you find .....42 LISTINGS........!

How many units in that tower? 180?

Or better yet why not buy ten units and sell in 5 years and become a millionaire! (i couldn't help myself sorry)

[RayBot]

Originally Posted by 1.8tradoman

Raybot: I somewhat agree with you about land and how you can't create more of it... but please have a look at this chart and tell me if they are creating more land in the cities on the graph because the housing prices seem to be DEPRECIATING. New York, San Diego, San Fransico, etc....

http://bp3.blogger.com/_rt16FZ_z1N8/...eak_200802.bmp

I also thought that buying real estate was the ticket to early retirement but it just doesn't seem to be the case right now... on a personal note, I owned a SFH in East Van and put a second mortgage on it to buy a condo at the Fraserview. It was a good idea in 2001 but i would not recommend doing this today.

See...again, way too much missing information. And thats american economics. Thats what happens when lenders become careless to lend anyone with a first and last name a mortgage. Me and my mortgage broker buddy were laughing at that the other night during coffee.