Vancouver's Real Estate Market

[Sw0op]

Originally Posted by twdm

I really pity the poor folks who dump their life savings and live paycheck to paycheck trying to pay their mortgages.

I have a colleague (in HK) who breaks $120k cad after tax who literally has to live paycheck to paycheck and work all public holidays just to pay his mortgage and bills. All the meanwhile I'm comfortably paying rent, investing my savings in the stock markets and collecting dividends.

Sometimes I really wonder if people own the homes or do the homes own them.

If you told that to people who bought 3 years ago and still holding on I'm sure they have no regrets buying despite living paycheque to paycheque. Not even the stock markets would have returned this much and we have had a good past few years too with the indices and had u invested in usd
Even the rental market now is stupid some going in to bidding wars...some people want to build a nest egg to retire in to a place they own rather than trying to rent when they're in the 60s..

120k cad net would be able to get you a decent condo in the gvrd depending on how you live your life...if you put your life as a priority than saving or owning a place that's fine...just don't complain about the high market prices if you aren't able to compromise on that luxury BMW

[Mr.Money]

interesting how many are renting.

[westopher]

2 of the matching units to my place in the newest building just sold for a hair under 500k. They both overlook a busy road, where mine overlooks a creek that can never be built on, and my patio is twice the size. I'm glad we stretched ourselves to buy even though it meant living paycheque to paycheque for a few months (and could have potentially been longer.)
We have a place we love that is our own, and theres no way I'd be prepared to pay 500k for it. Theres no way we could rent a place like this for less than our mortgage payments.

[Badhobz]

Our Richmond story.

Bought in 2008 for 500k. Ran a mortgage for 1.5 years. Paid it all off. Now the value is at 1.45 million assessed this year. Only problem is where the hell do you go for 1.45 million when its the same inventory as when we bought in 2008. The house we live in is pretty crappy, 6000sqft lot, 1400 bungalow. Inside is done up but it really doesn't suite our needs anymore. If we want a new build it's back to square one and pay 2.6 million plus in stupid Richmond.

[MrPhreak]

Originally Posted by twdm

Sometimes I really wonder if people own the homes or do the homes own them.

I would say about 5 to 10 years ago I would have disagreed with this statement. I've always been a pretty strong advocate of people buying a home of their own. It gives people a place to build a life around, and equity for their family.

However with property taxes, land transfer taxes, insurance and service costs going up exponentially compared to inflation, home owners are really starting to getting screwed over.

Even if you somehow pay off your mortgage, you still have mortgage sized costs associated with something that is supposed to be yours.

On top of expenditure costs, home ownership is also becoming increasingly restrictive these days. New vacant homes taxes, increasingly expensive seismic and energy saving requirements for any renovations, staged electricity, potentially things like speculation taxes coming down the tube. It is like it isn't even yours anymore.

At the end of the day, home ownership isn't what it used to be. It almost feels like you are just renting your own home from the city.

[Harvey Specter]

Originally Posted by Badhobz

Our Richmond story.

Bought in 2008 for 500k. Ran a mortgage for 1.5 years. Paid it all off. Now the value is at 1.45 million assessed this year. Only problem is where the hell do you go for 1.45 million when its the same inventory as when we bought in 2008. The house we live in is pretty crappy, 6000sqft lot, 1400 bungalow. Inside is done up but it really doesn't suite our needs anymore. If we want a new build it's back to square one and pay 2.6 million plus in stupid Richmond.

Are you using your available equity for investments?

[Badhobz]

Originally Posted by Harvey Specter

Are you using your available equity for investments?

Yes ! 15.5 percent return last year.

[nah]

You don't really own your home. Try not paying property taxes for 3 years. The city takes it and puts it on the auction block. You do however have 1 year from auction date to get it back.

[quasi]

Originally Posted by MrPhreak

I would say about 5 to 10 years ago I would have disagreed with this statement. I've always been a pretty strong advocate of people buying a home of their own. It gives people a place to build a life around, and equity for their family.

However with property taxes, land transfer taxes, insurance and service costs going up exponentially compared to inflation, home owners are really starting to getting screwed over.

Even if you somehow pay off your mortgage, you still have mortgage sized costs associated with something that is supposed to be yours.

I just sold my last house in AB, and just property tax, utilities and insurance had increased to over 1100$ a month... 4 years ago, it was closer to 600$. That is nearly a 50% increase in a very short amount of time. They were just about to roll out a new green cart program, and the NDP just re-regulated power... so I would have faced another round of massive hikes if I hadn't sold it this year. Plus those cock sucking NDP twats there are doing stupid shit like this: Homeowners facing ?outrageous? increase after NDP raises its portion of property tax | Calgary Herald

On top of expenditure costs, home ownership is also becoming increasingly restrictive these days. New vacant homes taxes, increasingly expensive seismic and energy saving requirements for any renovations, staged electricity, potentially things like speculation taxes coming down the tube. It is like it isn't even yours anymore.

At the end of the day, home ownership isn't what it used to be. It almost feels like you are just renting your own home from the city.

I don't doubt it, my mom was telling me her Hydro bill in Sask. has been around $1,000 a month. They're house is probably 3,200sf but it's a newer house supposedly energy efficient whatever that's worth.

[dark0821]

quick question to the renters, just curious, when you do retire eventually, I assume you would've saved enough/invested over the years to live off for the rest of your life? Or are you planning to take a hit on your lifestyle to make things work?

I do come from a more traditional Asian background, where I been taught is that home ownership = security. And to my parents, investment = home ownership, if you are doing well, you buy a second property... you do even better?? A third one and so on... lol, because it will be hard for the housing market to crash? compared to other investment options... lol? (I know I am making a fool out of myself hahaha, I am really uneducated in this crap....)

I guess my heavily influenced mentality will be renting isn't exactly cheaper than a mortgage, more versatile/flexible for sure, but cheaper... not really.... so if you are going to have this expense anyways, might as well put it towards something... (as I see rent just money going down the drain sort to speak).

It doesn't matter if the mortgage is paid off before your retirement, you can choose to sell it when you do not have the income/means to pay for it anymore. And you will find you will get back most of your mortgage payments back at that time...

...where as if you were renting for that many years, you have nothing to show for it at the end of the "day"?

LOL... please teach me masters hahaha....

[twdm]

Originally Posted by dark0821

quick question to the renters, just curious, when you do retire eventually, I assume you would've saved enough/invested over the years to live off for the rest of your life? Or are you planning to take a hit on your lifestyle to make things work?

I do come from a more traditional Asian background, where I been taught is that home ownership = security. And to my parents, investment = home ownership, if you are doing well, you buy a second property... you do even better?? A third one and so on... lol, because it will be hard for the housing market to crash? compared to other investment options... lol? (I know I am making a fool out of myself hahaha, I am really uneducated in this crap....)

I guess my heavily influenced mentality will be renting isn't exactly cheaper than a mortgage, more versatile/flexible for sure, but cheaper... not really.... so if you are going to have this expense anyways, might as well put it towards something... (as I see rent just money going down the drain sort to speak).

It doesn't matter if the mortgage is paid off before your retirement, you can choose to sell it when you do not have the income/means to pay for it anymore. And you will find you will get back most of your mortgage payments back at that time...

...where as if you were renting for that many years, you have nothing to show for it at the end of the "day"?

LOL... please teach me masters hahaha....

Well unfortunately if you have more in-depth knowledge of how finances work other than what mom and dad taught you, you'd understand the principles of risk vs reward and diversification.

Seriously, instead of just ridiculing different methods of achieving the same goal, first do a little research and try to understand why there isn't just one solution to a problem.

There are many reasons as why real estate should not be your sole investment (all eggs in one basket analogy).

Firstly, liquidity. When shit hits the fan and you need cash, how fast can you sell your house? In the stock market where there are billions of potential buyers and where volumes of individual stocks can be in hundreds of millions of shares per day, the bid/ask spread can be very low. In a housing market, the bid/ask spread is very high because there are low numbers of buyers and sellers for similar properties. The same would hold true for stocks with very low transaction volumes.

Secondly, risk. If you were a gambling man, and I said I would give you $1 million to keep on the condition that you have to bet every penny on the roulette table, the smart person would put an equal bet on every single number. The speculator would dump all 1 million on double zero. Ok, let's say that the speculator did a bit a research and double zero came out the past 15 rounds, if it hits double zero again he would attribute it to his investing acumen. However at the end of the day, it is pure speculation and in the long run, the person who spreads his bets equally would win out. I'm not saying real estate is a horrible investment. I'm just saying it should not be your only investment or take up a disproportionally large part of your investment portfolio. In addition, sometimes shit happens, your house burns down, companies go insolvent, this stuff happens all the time. You minimize your exposure to this risk by diversification.

Thirdly, leverage. The benefit of getting a mortgage is some average Joe with a $50k annual salary can borrow way more than what he makes and put that down as an investment. In this way, gains are multiplied but so are losses. Can I do that without a mortgage? Of course I can. I currently have 3x my annual salary in unsecured loans at rates even less than what you guys pay for mortgages. Can someone leverage at the same ratio as a mortgage? Probably not, but that is because the lender can foreclose your home if you default.

Fourthly, carrying costs. Always look at what it costs for you to rent and compare how much in annual interest/maintenance/taxes etc. A $500k mortgage at 2.7% for 5 years, you're looking at $13.5k (roughly) in interest alone. Now if you add in maintenance fees, taxes, etc you're throwing around $16k "down the drain". These are costs you don't have to bear as a renter. You're also looking at the lowest interest rate period we have seen for a long time. You have to plan for eventual rate hikes (if it doesn't happen, then you're lucky, but you still have to plan for it). When you need to sell, there are also selling costs which in a normal market would wipe out your gains. If you can rent the same place at roughly the same "down the drain" costs, then you'll come out even without the risk associated with home ownership.

Lastly, the insane Asian mentality that they have to own physical things to build wealth, or that housing cannot crash. There is a reason the wealthiest people in the world aren't real estate moguls. There is also a reason real estate moguls diversify into other sectors (eg. Li Ka Shing). Would you rather own Apple, Google or their equivalent value in housing or gold? All markets can crash if given that their values do not reflect their fundamentals for prolonged periods of time. All it takes is a trigger.
Someone who owns $1 mil in stocks is just as wealthy as someone who owns $1 mil in housing. In fact I would give preference to the stockholder due to the fact his holdings are more liquid and flexible whereas the homeowner literally can't do shit unless they take a line of credit on their home (thus incurring carrying costs), or in cases where their needs exceed their credit limits, sell their home.

[twdm]

Originally Posted by Sw0op

If you told that to people who bought 3 years ago and still holding on I'm sure they have no regrets buying despite living paycheque to paycheque. Not even the stock markets would have returned this much and we have had a good past few years too with the indices and had u invested in usd
Even the rental market now is stupid some going in to bidding wars...some people want to build a nest egg to retire in to a place they own rather than trying to rent when they're in the 60s..

120k cad net would be able to get you a decent condo in the gvrd depending on how you live your life...if you put your life as a priority than saving or owning a place that's fine...just don't complain about the high market prices if you aren't able to compromise on that luxury BMW

I was quite unaware that I purchased a luxury BMW. Do tell me where I can find it so I can sell it.

I was also quite unaware that I was unable to invest more than half my income while living comfortably. But please do tell my coworker how to make use of his paper gains so that he can live more comfortably.

I was also unaware that the s&p500 returned 30% over the past years not including dividends. I am also unaware that the CEOs of every major bank and the governor of bank of canada essentially is telling us we're in a bubble. But heck, housing is so cheap and going to go up forever so you should already have a 3rd and 4th mortgage with renters. Oh wait.

[Sw0op]

The fundamentals never made any sense in bc for over a decade. In fact when they announced the foreign tax and property values dropped maybe around 20-30% they were saying we were fairly valued but that's not the same drum they were beating before...if you read and believed every report out there you're a fool...there's more negative headlines that make the press than the positive ones....they've been saying Vancouver real estate prices r stupid and over valued for years....remember the Royal LePage one that said our market would crash another 10+% this year?...well there's still another 8 months to go but with my sister in law trying to find a condo to buy..it doesn't seem like it's down at all...

Even if your portfolio returned 50% it still doesn't match the 30% yoy returns that the market did because you can leverage..its true it can't go up in a straight line but the fact that there was a pullback in the last 10months gave the market a breather it needed...

there are pros and cons for renting and buying but you don't need 120k cad cash net to buy in this market...it's all about how you live with your disposable income...my sister in law makes maybe 65k cad net and lookingto buy a place in the 600s...there's a lot of money out there and has been for awhile...for example people have just started putting their money back in to the stock market after the crash

People should make their own budget and spend what they can afford and make a decision based on their risk factors but anyone who "stretched" themselves pre-2016 living paycheque to paycheque obviously made the right decision looking back at the returns. Going forward however, history will not always repeat itself for the future. Buying for speculation is one thing but buying as PR is another thing. You can't time the markets in anything..stock markets...real estate...

Me and my fiancé are in the finance markets everyday. We bought a place right before the market dipped last year but w/e we will need a place to live first and foremost. Looking at the sales prices now in the area, it looks like it's come back. I'd rather have a roof over my head where i don't need to worry about being evicted as the money to invest will come later but not everyone will have the same thought process.

[nah]

Originally Posted by Sw0op

The fundamentals never made any sense in bc for over a decade. In fact when they announced the foreign tax and property values dropped maybe around 20-30% they were saying we were fairly valued but that's not the same drum they were beating before...if you read and believed every report out there you're a fool...there's more negative headlines that make the press than the positive ones....they've been saying Vancouver real estate prices r stupid and over valued for years....remember the Royal LePage one that said our market would crash another 10+% this year?...well there's still another 8 months to go but with my sister in law trying to find a condo to buy..it doesn't seem like it's down at all...

Even if your portfolio returned 50% it still doesn't match the 30% yoy returns that the market did because you can leverage..its true it can't go up in a straight line but the fact that there was a pullback in the last 10months gave the market a breather it needed...

there are pros and cons for renting and buying but you don't need 120k cad cash net to buy in this market...it's all about how you live with your disposable income...my sister in law makes maybe 65k cad net and lookingto buy a place in the 600s...there's a lot of money out there and has been for awhile...for example people have just started putting their money back in to the stock market after the crash

People should make their own budget and spend what they can afford and make a decision based on their risk factors but anyone who "stretched" themselves pre-2016 living paycheque to paycheque obviously made the right decision looking back at the returns. Going forward however, history will not always repeat itself for the future. Buying for speculation is one thing but buying as PR is another thing. You can't time the markets in anything..stock markets...real estate...

Me and my fiancé are in the finance markets everyday. We bought a place right before the market dipped last year but w/e we will need a place to live first and foremost. Looking at the sales prices now in the area, it looks like it's come back. I'd rather have a roof over my head where i don't need to worry about being evicted as the money to invest will come later but not everyone will have the same thought process.

That's because of government intervention that created "free" loans to people that shouldn't be in the market. If the idiots Liberals didn't offer the loan program, guaranteed you would see prices falling still.

The 15% upset Clark's developer buddies so she threw them a bone with the loan program.

[Sw0op]

Originally Posted by nah

That's because of government intervention that created "free" loans to people that shouldn't be in the market. If the idiots Liberals didn't offer the loan program, guaranteed you would see prices falling still.

The 15% upset Clark's developer buddies so she threw them a bone with the loan program.

That's true yea. The spike did coincide with the implementation of this free loan and it is looking kind of scary cuz it fits the definition of subprime loans. But even with the collapse of usa market it's recovered now..

[DragonChi]

Recovery only took 10 years.

[Ludepower]

Nothing wrong with renting aslong as your saving towards your primary residence. At the end of the day you just want a secured roof over your head and a home decorated to your taste.
Been renting for 3 years waiting for my condo to complete. I live in semi-fear knowing at any time my landlord can give me the boot and I'll have to pay a lot more to rent the same unit and the thought of packing and moving scares the shiet out of me haha.

[westopher]

The total fuckery of the rental market is major motivation for people to buy.
Renovictions
Pets not being allowed
Rent hikes
Horribly kept places

So many of my friends and staff have to deal with a lot of bullshit from landlords. Some people have a great setup rent wise as well. I found last summer to be the craziest though. It seemed like 10 people a month would lose their places/need to move that I knew for fairly brutal reasons.

[Tapioca]

Renting to build wealth can work if:
- your life situation never changes (I.e. forever alone)
- you are mobile and have the ability to obtain citizenship or work permits elsewhere in order to maximize your income and minimize your living expenses and housing costs
- you are able to rent housing that is protected from the market (co-op housing, rent controlled, etc)
- you have a plan when you are no longer able to earn an income (seniors housing, the purchase of an annuity, etc)

Otherwise the average renter is worse off than the average home owner because the average renter typically has little to nothing to show for after 25-35 years of work. The thing with renting over a lifetime is that it requires as much or even more discipline to saving and wealth accumulation as home ownership.

The whole point of a 25-30 year mortgage is to secure housing when you are no longer able to earn a regular income. Who wants to be thrown out of subsidized housing or renovicted at age 63 with no savings?

And even in this market, I think it's unfair to assume that every homeowner is leveraged to the max and not saving. Lots of homeowners I know are still maxing out their RRSPs and TFSAs.

[heleu]

Originally Posted by twdm

Thirdly, leverage. The benefit of getting a mortgage is some average Joe with a $50k annual salary can borrow way more than what he makes and put that down as an investment. In this way, gains are multiplied but so are losses. Can I do that without a mortgage? Of course I can. I currently have 3x my annual salary in unsecured loans at rates even less than what you guys pay for mortgages. Can someone leverage at the same ratio as a mortgage? Probably not, but that is because the lender can foreclose your home if you default.

I agree with everything you wrote, except for this. I just renewed my mortgage late last year at 2.1% variable. My HELOC is at 3.2%. I don't understand how your unsecured loans can have a lower rate than a secured one. Also, the bank is much less willing to lend you $500K for stocks than for a mortgage, probably because of a lack of collateral.

The only person I know that can borrow significant amounts for investing (millions) without collateral has his very wealthy parents as a signatory.

[Great68]

Originally Posted by twdm

Fourthly, carrying costs. Always look at what it costs for you to rent and compare how much in annual interest/maintenance/taxes etc. A $500k mortgage at 2.7% for 5 years, you're looking at $13.5k (roughly) in interest alone. Now if you add in maintenance fees, taxes, etc you're throwing around $16k "down the drain". These are costs you don't have to bear as a renter. You're also looking at the lowest interest rate period we have seen for a long time. You have to plan for eventual rate hikes (if it doesn't happen, then you're lucky, but you still have to plan for it). When you need to sell, there are also selling costs which in a normal market would wipe out your gains. If you can rent the same place at roughly the same "down the drain" costs, then you'll come out even without the risk associated with home ownership.

You look at those costs as "down the drain" I look at those costs as the cost of being my own landlord, with the ability to do what I want with my property, knowing that as long as I can continue to pay my mortgage payments I'm secure in my home (no renovictions, fixed term leases etc to worry about).

There's a value on those benefits, and that's how to monetize it.

[Mr.HappySilp]

Originally Posted by Great68

You look at those costs as "down the drain" I look at those costs as the cost of being my own landlord, with the ability to do what I want with my property, knowing that as long as I can continue to pay my mortgage payments I'm secure in my home (no renovictions, fixed term leases etc to worry about).

There's a value on those benefits, and that's how to monetize it.

If you rent it out you don't really need to pay.

Did a rough calculation rent is aorund $1500 to $1600 one a 1bedroom. Mortgage payment around $800 starta fee around $250. So with everything added the rent should cover the everything.

i wanted to sell my unit but with the restriction in place is impossible to sell before it is completed. I am just going to keep it and rent it out since the rent actually covers everything.

Is crazy how high rents are these days.

[ForbiddenX]

Originally Posted by westopher

The total fuckery of the rental market is major motivation for people to buy.
Renovictions
Pets not being allowed
Rent hikes
Horribly kept places

So many of my friends and staff have to deal with a lot of bullshit from landlords. Some people have a great setup rent wise as well. I found last summer to be the craziest though. It seemed like 10 people a month would lose their places/need to move that I knew for fairly brutal reasons.

This was ultimately one of the big reasons why my wife and I decided to buy. We didn't want to have to deal with potentially having to move at the end of a lease.

We moved back to Vancouver to "settle down" and wanted a place of our own. Also tired of moving (not due to being kicked out, but still didn't want to have to deal with moving even if it was in the same city).

We also got a puppy before we moved and it was nearly impossible finding a pet friendly unit that was also in a location that we wanted.

[westopher]

Originally Posted by ForbiddenX

We also got a puppy before we moved and it was nearly impossible finding a pet friendly unit that was also in a location that we wanted.

The dog was a big part of it for us too. For every 10 places we found, 1 was dog friendly. For every 5 dog friendly places we found, 1 would be fine with big dogs. Add a dog that looks like a pit in the mix, and our interest in fostering dogs in the future, it made it nearly impossible. I'm really happy with our decision to have a place of our own. Sounds like you were in a very similar situation to us. Settling down has been just that, and its been awesome.

I won't preach that its the only option though for everyone. Renting and investing is much better if you want to be able to move jobs, cities, or even as you move up the ladder in your career and want to be able to get in nicer places as you climb. Selling, and then moving is a hell of a lot more expensive, and stressful than moving at the end of a lease.
I wouldn't recommend buying just to get in the market. I'd recommend buying somewhere you want to live.

[vantrip]

Originally Posted by Sw0op

The fundamentals never made any sense in bc for over a decade. In fact when they announced the foreign tax and property values dropped maybe around 20-30% they were saying we were fairly valued but that's not the same drum they were beating before...if you read and believed every report out there you're a fool...there's more negative headlines that make the press than the positive ones....they've been saying Vancouver real estate prices r stupid and over valued for years....remember the Royal LePage one that said our market would crash another 10+% this year?...well there's still another 8 months to go but with my sister in law trying to find a condo to buy..it doesn't seem like it's down at all...

The most important thing I've realized after reading news stories and opinions is that these are mere predictions/opinions and no one that can accurately predict the future. If I could I would certainly be a lot richer

Yes you can take a educated guess based on the past nonetheless nothing in life ever goes as planned.

My $0.02