Vancouver's Real Estate Market

[TOS'd]

Originally Posted by JSALES

Under the new mortgage stress test, do you basically need a 100k salary to afford a 500k condo? Is that the rough estimate?

Went through this whole process recently. You need approximately $90k salary for roughly a $400k mortgage over 25/30yrs, assuming good credit and no outstanding debts. Plus your $100k(20%) downpayment for a $500k condo.

[JDMDreams]

You could technically still get by with 5% min down it's just that you will be hit with cmhc insurance, 25y amortization limit. If the income is high enough it will still work.

[blkgsr]

Originally Posted by GS8

When I lived in Richmond...

see above

[Gerbs]

Originally Posted by TOS'd

Went through this whole process recently. You need approximately $90k salary for roughly a $400k mortgage over 25/30yrs, assuming good credit and no outstanding debts. Plus your $100k(20%) downpayment for a $500k condo.

Problem with this is you'll be making about $5,600 monthly and close to half your income will be towards your housing expense.

$2,104 Mortgage 4%, interest at 7% $2,802
$270 strata
$100 Utilities
$80 Internet
$20 Condo Insurance
?? Maintenance
===============
$2570



How much do you guys spend on stuff other than housing per month? Like cars, entertainment, etc. Around $1,500/month?

[TOS'd]

Originally Posted by Gerbs

Problem with this is you'll be making about $5,600 monthly and close to half your income will be towards your housing expense.

$2,104 Mortgage 4%, interest at 7% $2,802
$270 strata
$100 Utilities
$80 Internet
$20 Condo Insurance
?? Maintenance
===============
$2570



How much do you guys spend on stuff other than housing per month? Like cars, entertainment, etc. Around $1,500/month?

I totally understand, and purposely did not factor any of those things into my calculations as there are too many variables. The question was regarding the new mortgage stress tests in relation to salary. And so to even consider a $500k condo, with a downpayment of 20%, they would need a $400k mortgage. To get that much for a mortgage given the current rules, you would need a salary of $90k roughly.

[westopher]

Originally Posted by Gerbs

Problem with this is you'll be making about $5,600 monthly and close to half your income will be towards your housing expense.

$20 Condo Insurance


How much do you guys spend on stuff other than housing per month? Like cars, entertainment, etc. Around $1,500/month

Please show me who I need to blow for that insurance cost. Mine is $650 a year!

Also, as far as fun/month cost, I'd say if you include vacations in there, broken down over the year, we need 3-4k a month for sure.

[B!tch]

I dont think I will line up behind Westy to blow someone for annual insurance of $240 but will agree that insurance will cost you over $500 a year.

Property taxes needs to be added to the list.

You have to consider all the extra expenses that come with buying a condo. Not budgeting for total costs even if they are "variable" is what causes problems. What happens if an appliance needs replacing? Additional transportation costs if your commute is longer.

[jing]

Originally Posted by Euro7r

Got a letter in the mail from Colliers about if teamed up with a few of my neighbours that we sold our houses, could give rise to new low rise apartments rezoned. Mentioned how the high end of my house being sold would yield around $300K gain. Just want to email back the VP to tell him to fuck right off. After all the expenses, not really any gain because essentially selling the house to get another house of similar value.

Do you guys get those kinds of letters in the mail?

$300k may seem like a drop in the bucket, but the developer is taking on all the risk especially if there is no OCP to have your property rezoned.

My parents' house is under contract to a developer who also happens to be our long time neighbour of 20 years plus so he's willing to share a bit of info with us that he wouldn't normally share with others. To put things into perspective, our neighbour started this project nearly two years ago now and still hasn't broken ground (or even completed the rezoning for that matter), what with all the back and forths with the city who is constantly changing their mind with things. While that is going on, he is stuck footing the bill for several properties that are teardowns and not worth renting out, while he is hesistant to rent out the properties that are rentable due to the likely possibility of being unable to evict when it's time for the demo. In another one of his projects, there are a handful of tenants who refuse to move out, even after he has offered to cover any moving expenses, six months of paid rent, and another month's worth of rent in cash.

[Gerbs]

^ Add property tax and $650 insurance a year and we are almost over $3k/month for a $500k place, lets hope you don't have 2 cars and a 300 - 400hp car as well.

[Acurapinoy]

Yea.. unless you have a high paying job or a big help to lower the mortgage... owning with 1 income for a 500k condo will be an eye opener as sacrifices will have to be made.. im sure you can get a nice condo for 350-400k, probably just at a different area than originally desired

[Tapioca]

Originally Posted by Gerbs

Problem with this is you'll be making about $5,600 monthly and close to half your income will be towards your housing expense.

$2,104 Mortgage 4%, interest at 7% $2,802
$270 strata
$100 Utilities
$80 Internet
$20 Condo Insurance
?? Maintenance
===============
$2570



How much do you guys spend on stuff other than housing per month? Like cars, entertainment, etc. Around $1,500/month?

I'm not sure what the issue is if you're making $5600 net and putting $2600 into housing. The equivalent condo on the rental market is probably going to cost you at least $2000/month today.

If your making $3000 a month and putting 50% of that income into housing, then under that scenario, it can be problematic because it's challenging to live on $1500 per month. There's a big difference between $3000 net of housing costs vs $1500 in terms of quality of life.

Owning property does require some sort of sacrifice - this has always been the case.

[twitchyzero]

lol sacrifice, it's for a shoebox, not because his kids are cold/hungry, can't afford the dentist bill or join team sports

i'd rather rent a basement suite than to put over 50% of take home into condo living that in itself already comes with compromises

id say the majority that rental condo are students/workers relatively temporary/new to the city...they sure don't make a lot of sense for someone longer term

that calculation doesn't even include property tax...the 't' in PITI...and seems like Mr. Gerbs is a car enthusiast so he'll at least need one parking spot

Originally Posted by jing

n another one of his projects, there are a handful of tenants who refuse to move out, even after he has offered to cover any moving expenses, six months of paid rent, and another month's worth of rent in cash.

and there's probably a very good reason for tenants reluctant to move...they can't find an equivalent rental once demovicted

euro7r if i remember correctly lives in one of the easternmost parts of the city proper...i sure as heck would not give up for 300k gain and jokingly reply back if they forgot to add a 0 at the end of that figure

[Tapioca]

Originally Posted by twitchyzero

lol sacrifice, it's for a shoebox, not because his kids are cold/hungry, can't afford the dentist bill or join team sports

i'd rather rent a basement suite than to put over 50% of take home into an already compromised housing

id say the majority that rental condo are students/workers relatively temporary/new to the city...they sure don't make a lot of sense for someone longer term

that calculation doesn't even include property tax...the 't' in PITI...and seems like Mr. Gerbs is a car enthusiast so he'll at least need one parking spot



and there's probably a very good reason for tenants reluctant to move...they can't find an equivalent rental once demovicted

euro7r if i remember correctly lives in one of the easternmost parts of the city proper...i sure as heck would not give up for 300k gain and jokingly reply back if they forgot to add a 0 at the end of that figure

The reality is that the shoebox in Burnaby is going to be the starter home for the middle class going forward. No money laundering inquiry nor immigration moratorium is going to take the market back to where it was 15 years ago.

If I had 500K and I was a car enthusiast looking for a starter home, I would look for a townhouse with a garage in Surrey, not a condo in Burnaby or New West. Or I would leave the Lower Mainland altogether and move to Nelson or Prince George and buy land.

[twitchyzero]

agreed with everything, minus the nelson/pg part...that could really limit career options, more snow, less asian food, and leaving aging parents behind

[Gerbs]

@Tapioca
The problem with spending 30 - 50% of your income on housing is that you'll also need to save for retirement. But I guess how much you need for retirement depends on the type of lifestyle you want. Best thing to do is to increase your income, which could be hard depending on the type of career path you chose.

[Tapioca]

Originally Posted by twitchyzero

agreed with everything, minus the nelson/pg part...that could really limit career options, more snow, less asian food, and leaving aging parents behind

There are higher paying jobs in the Lower Mainland, but in the end, there are always trade-offs. It all depends what you want out of the life - a piece of land and a slower lifestyle, or career mobility and big-city amenities.

Originally Posted by Gerbs

@Tapioca
The problem with spending 30 - 50% of your income on housing is that you'll also need to save for retirement. But I guess how much you need for retirement depends on the type of lifestyle you want. Best thing to do is to increase your income, which could be hard depending on the type of career path you chose.

I would argue that real estate should be part of any long-term financial plan. Home ownership is a grind, but is is tantamount to a prepayment of rent in retirement, and if you're lucky, some appreciation also which can then be leveraged. Do you want to be a senior citizen that relies on subsidized housing? Rent almost never goes down in the long-term.

I've seen a few people in my parents' circle drop dead from cancer in their 50s and 60s recently. You can save diligently your entire life and have the big-C take your life away in short order. Lots of financial planners seem to advocate saving with a life expectancy of 90 in mind. In my view, quality of life goes down pretty quickly once you hit your late 70s - mobility issues and decreases in mental capacity will get you if cancer doesn't first. That's why security of housing tenure is probably the most important thing to plan for and given where we live in the world, home ownership is the best way to achieve this.

[twitchyzero]

millennials are expected to live 100+

the 1M figure tossed around seems to be designed with boomer's life expectancy...even then centenarians are one of the fastest growing age groups

if you don't start on a retirement gameplan by 30...it's gonna be an uphill battle...and honestly i'm not expecting full retirement before 70

i'm thinking there must be better balance than putting 50%+ of take home on housing, working 6 days, rarely eating out or traveling while still youthful

[Gerbs]

Originally Posted by twitchyzero

i'm thinking there must be better balance than putting 50%+ of take home on housing, working 6 days, rarely eating out or traveling while still youthful

^

I agree that home ownership is important. But I think that people should also focus on saving for retirement as well. If your home is your only nest egg, is the goal to sell it off and live off the funds when you retire? If you can start setting aside some money in your 20's or early 30's for retirement you'll likely be fine. I guess we should just focus on making more money and spending less

[Acurapinoy]

For me..id rather own a home and start building equity,etc now and just save for vacations rather than save for retirement.

When we get older we can all downsize, etc and make that equity as part of the retirement plan.

But that is just for me and might not work for others. But id take owning my own property vs renting any day and adjust accordingly

[EvoFire]

Originally Posted by Acurapinoy

For me..id rather own a home and start building equity,etc now and just save for vacations rather than save for retirement.

When we get older we can all downsize, etc and make that equity as part of the retirement plan.

But that is just for me and might not work for others. But id take owning my own property vs renting any day and adjust accordingly

I'm not sure how downsizing would work when people our age wouldn't be living in a house. You aren't saving much going from a 3 bedroom to a 2 bedroom or even a 1 bedroom and den.

[twitchyzero]

downsize into my kid's closet

[westopher]

Yeah we’ve really been considering getting out of the one bedroom and den to a den only unit. This 641 sq/ft is just a waste for only two of us.

[Acurapinoy]

Originally Posted by EvoFire

I'm not sure how downsizing would work when people our age wouldn't be living in a house. You aren't saving much going from a 3 bedroom to a 2 bedroom or even a 1 bedroom and den.

Sorry. I was thinking more of downsizing from detached to a condo for example.

But for condo wise...buy now for 500 somewhere. Pay it off as much as u can then sell it and buy a condo surrey/langley haha.

[westopher]

Long term if you can really make a run in the market it works. But as it stands now. Upsizing longterm even for successful people is kind of far fetched. At 1.2 million for a house, we will honestly never own one unless we leave the GVRD.

[Tapioca]

Originally Posted by Gerbs

^

I agree that home ownership is important. But I think that people should also focus on saving for retirement as well. If your home is your only nest egg, is the goal to sell it off and live off the funds when you retire? If you can start setting aside some money in your 20's or early 30's for retirement you'll likely be fine. I guess we should just focus on making more money and spending less

Lots of boomers are using their homes as their retirement fund. It's not right, but no politician is going to seriously consider making decisions that will hurt this group of homeowners.

Until we move to a housing market model where the majority of residents live in publicly funded housing, governments will make decisions that protect the interests of homeowners. Even in Vancouver, which has the highest percentage of renters west of Montreal, is having a hard time getting purpose-built rental built (whether subsidized or market rental) because homeowners remain the majority and vote in overwhelming numbers.

The form of home ownership largely sucks today - no one really wants to share walls with someone else. However, I know which side I'd rather be on should I be fortunate to make it to 65 years of age and to the twilight of my professional life.