Vancouver's Real Estate Market

[Hehe]

Originally Posted by blkgsr

so wife wants to move. our neighborhood in coqutilam is prime for land assemblies and there's already a bunch of development starting that's going to make the area a nightmare in the coming years.

i've always liked the como lake area.

my current house is worth around the 1.5M+ but i think that might be low looking at realtor.ca. it's been nicely reno'd, new roof and hot water etc. so i think it'll be able to fetch quite a bit more. current mortgage left is maybe $150K

i want a house that will need work as I'm in construction and have the skills and contacts to build the sweat equity again and this time around design it how i want it with my connections to help with the work

say i buy a place that's $1.8M+, do you think it would be best to sell my current house and put all the money right into the new house or to keep the house, pull the equity and to rent it out.

i personally want to keep the house for a couple reasons. 1) we have somewhere to leave while i gut and reno the new one. we have a young child so i don't want her in a house getting heavily reno'd nor do i want a massively tight schedule. 2) i can rent my house for $4000 montly to help with the new mortage. 3) i want to have a house to give to my daughter as we all know price increases aren't slowing down and our kids are all screwed.

the new house will need to have a basement suite or one will be added in depending on the house. then that will help with the mortage.

thoughts?

what are the capital gains tax implications if any that i maybe need to consider?

thanks guys

YVR's property return (by renting) has been shit the last decade or two. It makes 0 sense to keep it for rental purposes. The idea of potential developmental opportunities... either you wait until an offer comes for land assembly or forget about it. The pricing in your area, if land assembly is getting momentum, then most of the profit to be made are priced in. You aren't missing much unless someone really comes knocking with a land assembly deal.

My suggestion would be, assuming you have no problem servicing the debt of 1.8M, sell the existing place, use a good chunk (say 800k) of that money to buy some US T-bill or whatever. You can do 5% return without almost 0 risk, highly liquid (if whatever opportunity comes around) and if BoC drops the rate before FED does, expect CAD goes poop in short term. And the remaining goes as the fat downpayment to your new place.

[blkgsr]

Originally Posted by Traum

If you decide to keep your current house and turn it into an investment property, you'd want to retain some sort of proof as the market value of your house at the time it changed from being your primary residence to your investment property. Since your property's value is not subjected to capital gain during the years when it is used as your primary residence, the proof of (property) value would come in useful should you eventually sell (or transfer home ownership title).

The most obivous, but not most accurate, proof of your property value is your BC assessment papers.

Originally Posted by donk.

Also, if im not mistaken, you can get a realtor to do an evaluation on your house. Ex: BC assesment is 1.4mil, realtor is 1.6mil.
That way when you "deem disposition" your sold value is 1.6 instead of automatic 1.4

Might save you thousands of dollars when tax time comes. On 200k difference thats probably 20-50k in tax for most people.

great info, thanks very much

i'd just get my realtor to do one as part of all the money they'll make on the new one if i go that route

[blkgsr]

Originally Posted by lowside67

There are a couple things to consider.

If we figure your current house is worth $1.5M and your new house is going to be purchased (and we assume will appraise) for $1.8M, then the total value of both homes will be $3.3M. You'll need your existing $150k mortgage plus $1.8M for the new house, so a total loan required of $1.95M. $1.95M versus $3.3M is a loan to value of approx 60% which is totally achievable, and you can push this a bit higher, easily 65%.

However, the bigger question, is can you actually qualify to keep your house and buy the new one, without rental income while you are living in your old house and renovating your new?

Qualifying rate on a $1.95M mortgage is approx 7% right now for a fixed mortgage, though the actual rate will be lower when you buy the place. $1.95M mortgage, 7%, 30-year am = approx $13,000 monthly payment or $156,000 annually.

If you have no other debts, you will need to prove and declare approximately $350k in annual income on your and your wife's tax return to be conventionally approved on this.

If you meet this hurdle, I'd say this is a totally doable plan to keep your current place while you renovate the new one (as long as you can actually swing this payment).

The next question is once the new place is done and you move in, do you keep and rent or sell the current house? If you figure that you can only get $4,000 per month for your house or sell it and get $1.5M+, that's an EASY decision, you sell it. Receiving rent of $48k per year is the equivalent of a 3% rate of return on your $1.5M tied up. You could literally go buy GICs with 0 risk and get more like 5%, and options go up from there. But frankly there are a lot more components to consider than you can cover on one post here, and you might want to have a conversation with your advisor on this one.

-Mark

ya i was running some numbers yesterday and they are brutal for sure. i'd save over $2000/month if could get this all at my current 2.39% but the low 5% numbers are scary for sure.

I/we can make the numbers to get approve, but do we want to is the real question.

what really pisses me off when running the $2M mortgage calculations is the almost 50/50 split of principal and interest. roughly $250K each. that's brutal.

Originally Posted by Hehe

YVR's property return (by renting) has been shit the last decade or two. It makes 0 sense to keep it for rental purposes. The idea of potential developmental opportunities... either you wait until an offer comes for land assembly or forget about it. The pricing in your area, if land assembly is getting momentum, then most of the profit to be made are priced in. You aren't missing much unless someone really comes knocking with a land assembly deal.

My suggestion would be, assuming you have no problem servicing the debt of 1.8M, sell the existing place, use a good chunk (say 800k) of that money to buy some US T-bill or whatever. You can do 5% return without almost 0 risk, highly liquid (if whatever opportunity comes around) and if BoC drops the rate before FED does, expect CAD goes poop in short term. And the remaining goes as the fat downpayment to your new place.

financially you are correct, this makes way more sense.

wouldn't you say if i sell the house to just use it all (minus say $200K for reno or slush) and throw it all on the new house?

unless i can get a higher return on a sperate investment wouldn't it make sense to just pay more on the house?

also would i not then have to pay capital gains on the new investment (unless it's TFSA which is maxed out) or put in RRSP and leave it?


the real problem here is the emotional connection with the house. first one, spent more time and effort than i can recall fixing it up, been there 14 years. started family etc etc. guess i really just need to put my big boy pants on and move on from it.

[noclue]

Originally Posted by blkgsr

ya i was running some numbers yesterday and they are brutal for sure. i'd save over $2000/month if could get this all at my current 2.39% but the low 5% numbers are scary for sure.

I/we can make the numbers to get approve, but do we want to is the real question.

what really pisses me off when running the $2M mortgage calculations is the almost 50/50 split of principal and interest. roughly $250K each. that's brutal.



financially you are correct, this makes way more sense.

wouldn't you say if i sell the house to just use it all (minus say $200K for reno or slush) and throw it all on the new house?

unless i can get a higher return on a sperate investment wouldn't it make sense to just pay more on the house?

also would i not then have to pay capital gains on the new investment (unless it's TFSA which is maxed out) or put in RRSP and leave it?


the real problem here is the emotional connection with the house. first one, spent more time and effort than i can recall fixing it up, been there 14 years. started family etc etc. guess i really just need to put my big boy pants on and move on from it.

If your current home is zoned for land assembly shouldn't you cling onto it till the end? you can get 2x assessment for townhouse/lowrise and 3x+ for high rise.

[Hehe]

Originally Posted by blkgsr

y

financially you are correct, this makes way more sense.

wouldn't you say if i sell the house to just use it all (minus say $200K for reno or slush) and throw it all on the new house?

unless i can get a higher return on a sperate investment wouldn't it make sense to just pay more on the house?

also would i not then have to pay capital gains on the new investment (unless it's TFSA which is maxed out) or put in RRSP and leave it?


the real problem here is the emotional connection with the house. first one, spent more time and effort than i can recall fixing it up, been there 14 years. started family etc etc. guess i really just need to put my big boy pants on and move on from it.

No. Real estate isn't very liquid. Even things like HELOC or whatever strategy you'd employee to take equity out of your house can take some time to get the cash out. And often they carry a much higher rate than your mortgage rate. Thus, the cost of liquidity is too high.

With the economy in the state it is now, there could be a lot of opportunities say commercial RE, stock, or whatever that comes around in the next 2yrs or so. I'd definitely recommend keep some liquidity. A US treasury bill is as riskless as it comes. And at ~5% yield, you aren't doing that bad. Plus the fact that I don't have a favorable view on CAD in the short term. Thus, you might get some extra from the currency exchange as well. But that is assuming if you do this today. God knows what's going to happen in June's BoC decision.

[Hehe]

Originally Posted by noclue

If your current home is zoned for land assembly shouldn't you cling onto it till the end? you can get 2x assessment for townhouse/lowrise and 3x+ for high rise.

If the area is already allowing rezoning into highrises, the price should already been factored into. Say your land was originally 1M at 1.0 FSR, when it can be adjusted to say even 2.0 FSR, the price would adjust accordingly since there's little doubt for a developer to come to buy it, the question is when.

But the reality is that developers/land-assemblers work their way down. They would start with the largest parcels and offer the most premium. Unless your property is among the largest on your block, your chance of getting super high offers is unlikely.

[noclue]

Originally Posted by Hehe

If the area is already allowing rezoning into highrises, the price should already been factored into. Say your land was originally 1M at 1.0 FSR, when it can be adjusted to say even 2.0 FSR, the price would adjust accordingly since there's little doubt for a developer to come to buy it, the question is when.

But the reality is that developers/land-assemblers work their way down. They would start with the largest parcels and offer the most premium. Unless your property is among the largest on your block, your chance of getting super high offers is unlikely.

That's true, if you look at the developments in burquitlam or metrotown there are some greedy/stubborn mfers that either asked too much or refused to sell and the developer said fuck you and built around them. Now their land is worthless and they are surrounded by towers with zero privacy.

[6thGear.]

Originally Posted by blkgsr

great info, thanks very much

i'd just get my realtor to do one as part of all the money they'll make on the new one if i go that route

I'd highly suggest having more than 1 realtor giving you an assessment as you'd want to see if you are getting similar numbers across the board. As for your maximum borrowing amount , easy rule of thumb is household income × 4 (not including DP). Anything over $1m is automatic 20% DP (roughly $360k on 1.8m). If you don't have that and still want to move forward with your plan, then your mortgage can switch to LOC vs conventional mortgage, if you qualify.

Originally Posted by Hehe

If the area is already allowing rezoning into highrises, the price should already been factored into. Say your land was originally 1M at 1.0 FSR, when it can be adjusted to say even 2.0 FSR, the price would adjust accordingly since there's little doubt for a developer to come to buy it, the question is when.

But the reality is that developers/land-assemblers work their way down. They would start with the largest parcels and offer the most premium. Unless your property is among the largest on your block, your chance of getting super high offers is unlikely.

To add to this, if your fsr starts with 1, it's townhouses. 2 is low to midrise. 3 is highrises. Homeowners also fail to realize it's minimum 5 yrs if a developer chooses to purchase and build on your assembly and developers can still cancel at the end and not payout. Lastly, when you see a land assembly potential sign up, it's already been passed around and overpriced.

[blkgsr]

it's slowly sinking in that i'm going to need to sell

just talked with my wife and we're going to start meeting with our realtor to get our house appraised and see what is coming up on the market that we'd be interested in buying

oh well here comes the fun!

[donk.]

Dont forget to leave out 100k for a supercar. Dont forget to post pics!

[westopher]

Had an accepted offer today with subjects. Pretty much the realistic dream home. Still sharing a wall, but 4 patios, mountain views, good neighbourhood where we want to be. Wish me luck, or tell me to fuck off. Whichever.
Feeling pretty thankful to work and live in this "shithole" we call Canada.

[lowside67]

Originally Posted by westopher

Had an accepted offer today with subjects. Pretty much the realistic dream home. Still sharing a wall, but 4 patios, mountain views, good neighbourhood where we want to be. Wish me luck, or tell me to fuck off. Whichever.
Feeling pretty thankful to work and live in this "shithole" we call Canada.

Congrats!!

-Mark

[Hondaracer]

Originally Posted by westopher

Had an accepted offer today with subjects. Pretty much the realistic dream home. Still sharing a wall, but 4 patios, mountain views, good neighbourhood where we want to be. Wish me luck, or tell me to fuck off. Whichever.
Feeling pretty thankful to work and live in this "shithole" we call Canada.

Teach me how to ball papi

[westopher]

Just ask the bank man. They'll give money to anyone as long as you pay the interest.
I'm finally approaching my goal of (negative) millionaire!

[EvoFire]

Originally Posted by westopher

Had an accepted offer today with subjects. Pretty much the realistic dream home. Still sharing a wall, but 4 patios, mountain views, good neighbourhood where we want to be. Wish me luck, or tell me to fuck off. Whichever.
Feeling pretty thankful to work and live in this "shithole" we call Canada.

A sizable townhouse I'm guessing, front porch, back patio, master bedroom balcony, and a roof top?

Knowing you, probably North Van. Shits not cheap, congrats man. No subjects?

[westopher]

Originally Posted by EvoFire

A sizable townhouse I'm guessing, front porch, back patio, master bedroom balcony, and a roof top?

Knowing you, probably North Van. Shits not cheap, congrats man. No subjects?

On the dot. Subjects are to be removed next Friday, just inspection and going over strata minutes to make sure doom isn't looming. Ball is in our court and we are feeling good.
Rooftop patio is absurd. Views everywhere, huge, perfect for some beers and bbqs. Honestly over the moon. We never thought we'd be able to get anywhere beyond a box condo.
Only real thing we were looking for when we started is a window for my daughter lol.

[EvoFire]

Originally Posted by westopher

On the dot. Subjects are to be removed next Friday, just inspection and going over strata minutes to make sure doom isn't looming. Ball is in our court and we are feeling good.
Rooftop patio is absurd. Views everywhere, huge, perfect for some beers and bbqs. Honestly over the moon. We never thought we'd be able to get anywhere beyond a box condo.
Only real thing we were looking for when we started is a window for my daughter lol.

When we were buying we were really really really really really in love with a house on Capitol Hill with a roof top patio, on top of the hill. Stand on the patio and you are literally the tallest thing in the general vicinity. I'd compare it to backing into a parking spot in a Miata for the first time. It was such an amazing feeling.

Alas, we were 200k short

Please tell me you got 3 parking spots.

[sonick]

Originally Posted by westopher

On the dot. Subjects are to be removed next Friday, just inspection and going over strata minutes to make sure doom isn't looming. Ball is in our court and we are feeling good.
Rooftop patio is absurd. Views everywhere, huge, perfect for some beers and bbqs. Honestly over the moon. We never thought we'd be able to get anywhere beyond a box condo.
Only real thing we were looking for when we started is a window for my daughter lol.

Congratulations sounds amazing. Too bad it's in this shit hole of Vancouver.

[Traum]

Congrats on getting more than just a window for your little person, Westopher!

(Last I heard though, N.Van is still as much a shxthole as Vancouver is lol~)

[RabidRat]

Congrats westopher, great find. Sounds amazing dude!

Originally Posted by EvoFire

When we were buying we were really really really really really in love with a house on Capitol Hill with a roof top patio, on top of the hill. Stand on the patio and you are literally the tallest thing in the general vicinity. I'd compare it to backing into a parking spot in a Miata for the first time. It was such an amazing feeling.

Alas, we were 200k short

Please tell me you got 3 parking spots.

That 200k-short feel .

We have a 1.5-car garage . There was another nearly identical house nearby with a 1.8-car garage I think we could've squeezed 2 cars into if we squinted. 200k more to garage two cars, and get a block closer to the subway though? Just couldn't do it.

Toronto and its lack of back lanes...!!

[blkgsr]

Originally Posted by donk.

Dont forget to leave out 100k for a supercar. Dont forget to post pics!

a bigger SUV or maybe truck is on the list for sure.

a Q5 and CX5 just isn't big enough for a single kid. CX5 is going to go

[underscore]

Originally Posted by EvoFire

Please tell me you got 3 parking spots.

Just crane one of the M3's onto the roof like that apartment guy did.

[SSM_DC5]

Originally Posted by blkgsr

a bigger SUV or maybe truck is on the list for sure.

a Q5 and CX5 just isn't big enough for a single kid. CX5 is going to go

How much is the cx5 going to go for?

[EvoFire]

Originally Posted by blkgsr

a bigger SUV or maybe truck is on the list for sure.

a Q5 and CX5 just isn't big enough for a single kid. CX5 is going to go

The Q5 is ok, the CX5 is a challenge. The sliding rear seats on the Q5 really helps I think.

[westopher]

Honestly the e30 might be on the chopping block. Gonna see how this new payment feels. Its not like selling it will make the biggest difference, but I don't think I'll really anytime in the near future be able to dump the money into it that I really want to make it up to the e36 standard. We will see.