Thank you for all your post and I appreciate all the constructive comments and will be putting them into consideration.
Just to add more information, If I purchase I will be keeping it for at least 5 to 7 years until I can upgrade. I would like to purchase in richmond because vancouver is out of reach. I need the space and good schools/neighborhood - richmond townhomes give all of that at a more "reasonable" price. It is easy to go east (to surrey langley through HWY91) and there is the Canada Line towards vancouver and downtown. Another huge plus is daycare is cheap in richmond for the same quality. I would say you can easily save 1000 to 1200 per month on daycare in compared to vancouver/downtown with two kids.
I am also willing to wait another 4 to 5 years - I don't think saving up and investing while renting is a bad idea, in fact I am leaning towards this currently.
futureporscheowner4 - Surrey is not an option. The neighborhoods are a few steps below BBY and richmond, I personally wouldn't feel safe for my family. Call it prejudice but it's a common stigma amongst vancouverites- it's just not a great neighborhood in my eyes. I see something trashy happening whenever I go for a drive there. I worked there for 5 years, and I agree there are some nice neighborhoods, but a bad area is just around the corner. As for langley, as Roffina kindly pointed out - I don't want to drive 2 to 3 hours a day to get in and out of work. If you put into account travel time in your salary, an 8 hour/day job becomes a 10 to 11 hour/day including travel. That's like a 25 to 38% decrease in the efficieny of how much money you make per hours travel+work. This is a huge hit in your quality of life for me and my family, not to mention that I will have to find a daycare that's willing to keep the kids overtime which will cost more. I do thank you for your suggestions however - the more known options the better.
Westar99 - You are correct that I am cautious about buying, these prices are no joke. Purchasing real-estate, in general, is the biggest purchase a person will make in their lifetime. I will take my time to analyze it from every angle because I want to make an informed and sound decision. A 10% decrease in prices on a 650k townhome can set me back 2 to 3 years of saving up just to break even, however to be fair, a 10% increase in prices is a setback as well if I decide to purchase after the increase. You mentioned that you think market will go 6 to 8% higher in the next year and another 5% after - please elaborate on these figures. Is it due to the CAD dropping more? Thanks.
My cautiousness comes from market volatility, mainly because in 2015 the pricese increased between 20 to 25%. tdma800 mentioned earlier that there is nothing wrong with a 20% gain, while I would normally agree with this if the market was closer to the average income, the fact is it was already out of reach by the majority of the population here in vancouver - pre 2015. Homes are being treated as stocks - I do believe there is a bit of a snowball effect happening that people believe that prices are always going to keep going up (because thats what they have been seeing all these years) therefore you should always buy because you will always make money. This in itself is flawed and an unstable model but quite human.
Looking back at the fundamentals - I believe we are in agreement about the forces thats driving the market. The question for me now is - are these forces here to stay for the next 4 to 5 years? I don't believe so - please convince me otherwise.
1. CAD will eventually climb back above 0.8 when oil recovers and as infrasturcture is created in the LNG sector. Oil and Gas WILL recover, maybe not as strong as it used to, but certainly not below 50. The world still runs on oil, its infrastructure is designed to run off oil. It's going to take a generation to build infrastructure that is independant of oil and that generation will not be ours. Oil and Gas prices cycle just as the same as the CAD, it's just a matter of when, I'm guessing within the next 3 to 4 years as oil and gas recover. It will probably get worse before it gets better since the looney seems to be on its way down.
2. Interest rates will eventually rise. This is something I'm not as sure of as to WHEN it will rise. Bank of Canada was suppose to rise interest rates with the US, but it did not happen because our economy is doing bad. I'm guessing this will happen when our economy is more stable - which ties in to the CAD and ultimately oil and gas prices.
3. Recession. Canada is not doing so hot right now - thanks whattodo for bringing this up. I do agree that this is currently the closest thing to bring the prices down.
4. Chinas economy will cool off. - The effects of this variable in our market is one I'm not so sure about. As chinas economy declines, they want to get their money out of the country put it into our real estate. But is this process reversible ? If chinas economy booms again and CAD raises - will the chinese that live here liquify their assets? This I really don't know, if someone can elaborate on this It would be greatly appreciated.
5. Tightening up of Canadian Laws. There are two elements here:
A - Foreign ownership. I think it's highly unlikely that something will get done to this because our government has no backbone. As a proud Canadian, It's degrading that we have no laws to protect the quality of life of our tax paying citizens from these crazy prices. Other countries have implemented laws that require citizenship to own land - but our politicians are spineless and is too scared to do anything so like I said, I'm not holding my breath.
B - Taxation loopholes and Dirty laundered money. This is more likely to happen and sooner rather than later. Astronaut families that own 3mil + houses that are registered as housewives and pay no taxes is completely unacceptable in our society. They get the full benefit of our healthcare, roads, parks, safe neighborhoods etc... and they pay no taxes. The money they do not pay comes from working and honest Canadians, I don't think the governement can dodge this and it's in their best interest to fix it. The laundered money needs to go as well... The effects of this is pale in comparison to regulating foreign ownership and with that said point # 5 will have minimal effect but something that needs to get done.
With my humble opinions above, it SEEMS that RE is to stay high the next couple of years (2 to 3 years) but who knows what will happen after - as you can read from my analysis above I think it will go down but nobody truly knows.
Please point out flaws or missing points in my reasoning because it's the basis of my strategy. Again, I'm new to this and I'm looking for well thought out sound advice. When I have more time, I will do a more numerical analysis of renting VS buying using the numbers that some of you have suggested.
Thanks again in advance.