This is a friendly, interactive exchange of information on all Real Estate related subjects. Follow on Twitter: @RETALKS


Moderator: admin

 
Jere
Newbie
Posts: 3
Joined: Wed Feb 22, 2017 11:21 am
Contact:

Re: Vancouver indvidual property sales details

Sun Feb 26, 2017 6:20 pm

It is interesting to see how people can still try to jump in the train after so long, and when mathematically it is not possible for the middle class to buy anymore.
This is a sign of an anomaly in the system, and all anomalies end u^being corrected over time. Some people out there will be very surprised sometime. The more the elastic will be pulled, the harder it will get back into people's face.

Vancouver is incomparable to New York or London. The demographic pressure, economy, geographical position and populations have really nothing to do with those metropoles. Easy money doesn't exist (in time at least), and even if some could manage to fatten during some years, the check will be steep...

Interesting opinion : http://feelvancouver.com/realestate.html
That's because you try to rationalize the market as A + B = C. Mathematically impossible. Your equation is:
60,000 annual income / 1,000,000 mortgage = not possible.
However your logic has a fallacy, there is a X  which are unknown tangibles. Wealth transfers from the most prosperous generation in history of time the baby boomers. All of the fiat money, quantitative easing, deficit spending has benefited to baby boomers directly. All borrowing money and creating a deficit dose is borrow the wealth from future generations. To make a long story short, baby boomers accumulated (the smart ones) crap loads of money, property ect ect ect. When they pass all of this wealth onto their kids that's the X factor.
Now unfortunately Hairy, Dick and Tom who did not have such fortunate parents. Real estate is expensive because of many factors, massive devaluation of money is a big factor. The way the stock market is propped up, how much money is being injected into the system is insane.
A renter 20 years ago, who made $10/hour can maybe put away few hundred a month if lucky. Few thousand a year x 20 years doesn't amount to much. A guy making $10 a hour 20 years ago who bought property and just scraped by. He can transfer real wealth to his kids. A property will in the long run be the best bet against inflation, you need to have the balls to ride out the cycles and also buy what you can afford. If the market turns you need to understand its better long run.

BACK ON POINT, people buying now have the X factor, inheritance money! Especially with so many Asians around, its a fact.

Like ETB stated. Who the heck says average Joe should be able to afford a Vancouver detached house. People who can afford these are the ones who have multi generational investments. The rich will stay rich, and poor will stay poor. The days of level playing field are over.
Stop thinking short term. Buy a apartment now, leave it for your kids. Maybe your kids or grand kids can get into a detached house someday through the accumulation of wealth.
It's sad how people are so short sighted.
If I think Vancouver deserves my rent, I'll keep paying an "ok rent" for now, and invest elsewhere. There are anough healthy market around or abroad. How would you convince me to poor 2 million (or more) in some sexagenarians' pockets who'll enjoy good restaurants and travelling for the 20 next years without having done anything or having contributed to the system in a way to deserve it ? And then what, myself get the downturn of the market in the face ?
 
yzfr1
Real Estate Talker
Posts: 286
Joined: Tue Mar 19, 2013 8:35 pm
Contact:

Re: Vancouver indvidual property sales details

Sun Feb 26, 2017 7:43 pm

I think the people who are taking out huge loans to try and time this market are going to get owned the hardest.

Buy what you can afford, if you get a $450,000 apartment with a easy $1,500 mortgage, so what if it drops 20-30% when you buy something its meant to be lived in. Ride out the down turn.

I don't believe in investing in multi million dollar homes. Not the way people in Vancouver do it anyways. If you were to put $1,000,000 in a stock you would read every last income statement and know the company from A-Z. People in Vancouver are investing without even knowing the basics of what they are buying.

I believe in buying to live. Vancouver is not a good market to invest in, the downside is much greater then the upshot.
 
eyesthebye2
Real Estate Talker
Posts: 1207
Joined: Sun Jul 27, 2014 6:41 am
Contact:

Re: Vancouver indvidual property sales details

Sun Feb 26, 2017 7:57 pm

It is interesting to see how people can still try to jump in the train after so long, and when mathematically it is not possible for the middle class to buy anymore.
This is a sign of an anomaly in the system, and all anomalies end u^being corrected over time. Some people out there will be very surprised sometime. The more the elastic will be pulled, the harder it will get back into people's face.

Vancouver is incomparable to New York or London. The demographic pressure, economy, geographical position and populations have really nothing to do with those metropoles. Easy money doesn't exist (in time at least), and even if some could manage to fatten during some years, the check will be steep...

Interesting opinion : http://feelvancouver.com/realestate.html
A median property in Vancouver is a condo. Why should you try to fit median income into upper tier property? Square peg...round hole
Sure, and how do you explain that : "The average rent for a one-bedroom apartment in Vancouver is the highest in the country. In February 2017, Vancouverites are on average paying CAD 1,900 for a one-bedroom condo" (http://feelvancouver.com/realestate.htm ... citaverage).

And buying a condo is almost equally as hard. Let's be serious for a bit : a median property, in a country of prosperity, should be more than a miserable chicken coop (sorry, condo). A sane and healthy economy should be ABLE to give to the middle working class access to a decent dwelling. I'm not saying it should be taken for granted, I'm saying that the economy and the market has that X factor in it (if you like to see it that way) that is distorting the big picture. Chinese money. Because BC (or Canada) has been selling its passports to foreigners.
Usually, again, the elastic ends up not feeling well... and things are being bought back to reality.

I'm no savant, but one thing is sure : BECAUSE there is that X, I will never be the buyer of either a villa for 2 million or an appartment for 1 million. I won't be the one fattening people who were just lucky to be in the market 10 or more years ago. It's casino to buy here now, and sure you can still be winning, but the X out there is way too imposing to be ignored. And he's the culprit of a market that is not sustainable as is.

The other common mistake that's made is only collecting buyers in the data when discussing owning vs renting. Across all adults, renters and owners, the median property is just barely a condo. That's every income. When you see data on the affordability scale it collects every income and attempts to match a property to it, ignoring that 35% of all residents are renters.
 
eyesthebye2
Real Estate Talker
Posts: 1207
Joined: Sun Jul 27, 2014 6:41 am
Contact:

Re: Vancouver indvidual property sales details

Sun Feb 26, 2017 8:01 pm

I think the people who are taking out huge loans to try and time this market are going to get owned the hardest.

Buy what you can afford, if you get a $450,000 apartment with a easy $1,500 mortgage, so what if it drops 20-30% when you buy something its meant to be lived in. Ride out the down turn.

I don't believe in investing in multi million dollar homes. Not the way people in Vancouver do it anyways. If you were to put $1,000,000 in a stock you would read every last income statement and know the company from A-Z. People in Vancouver are investing without even knowing the basics of what they are buying.

I believe in buying to live. Vancouver is not a good market to invest in, the downside is much greater then the upshot.
Buying is a horrible pure investment. Upkeep, taxes, special assessments, strata fees etc.
Still, owning your own home has intrinsic benefits that the investor can never seem to wrap their heads around.
 
VanLord
Real Estate Talker
Posts: 320
Joined: Fri Aug 24, 2007 3:52 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 7:10 am

I think the people who are taking out huge loans to try and time this market are going to get owned the hardest.

Buy what you can afford, if you get a $450,000 apartment with a easy $1,500 mortgage, so what if it drops 20-30% when you buy something its meant to be lived in. Ride out the down turn.

I don't believe in investing in multi million dollar homes. Not the way people in Vancouver do it anyways. If you were to put $1,000,000 in a stock you would read every last income statement and know the company from A-Z. People in Vancouver are investing without even knowing the basics of what they are buying.

I believe in buying to live. Vancouver is not a good market to invest in, the downside is much greater then the upshot.
You might be right and in the current situation buying is a big risk.  However, a decade ago this forum was full of bears, jumping up and down telling everyone not to buy and the market was going to tank, many predicted 50% haircuts.  It looked pretty certain that a correction was coming, especially once the subprime crisis hit the US market.  There were more than a few people that decided not to buy and probably made the biggest mistake of their lives.
 
yzfr1
Real Estate Talker
Posts: 286
Joined: Tue Mar 19, 2013 8:35 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 8:27 am

I don't feel bad for the investors who missed out, no harm done. I feel bad for the people 10 years ago who wanted to buy to live.

If you buy to live there is no wrong time to buy, if you can afford a condo, you like it and its a place to live so what if the market corrects 30%. You were ok with the payments before the crash. Nothing should change, its all paper gains or loss.

However if you buy a place and squeak by and relying only on a huge appreciation, you did not buy properly.

People who mention Vancouver will experience what the US did in 2008 have no idea what they are talking about.

Collateralized debt obgligations and Credit default swaps crashed the housing market. The bears should watch the "big short" it dumbs is down allot for the average joe to understand.
 
rofina
Real Estate Talker
Posts: 1552
Joined: Fri Feb 06, 2009 6:39 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 10:59 am

I don't feel bad for the investors who missed out, no harm done. I feel bad for the people 10 years ago who wanted to buy to live.

If you buy to live there is no wrong time to buy, if you can afford a condo, you like it and its a place to live so what if the market corrects 30%. You were ok with the payments before the crash. Nothing should change, its all paper gains or loss.

However if you buy a place and squeak by and relying only on a huge appreciation, you did not buy properly.

People who mention Vancouver will experience what the US did in 2008 have no idea what they are talking about.

Collateralized debt obgligations and Credit default swaps crashed the housing market. The bears should watch the "big short" it dumbs is down allot for the average joe to understand.
Its curious how many people expect to have a mortgage for the duration of the amortization. 
Do most of you expect to take 25 years to pay off your mortgages? 
I think this is where my thinking has always diverged from that of most Vancouverites, in that the monthly payment is secondary to the total debt load. 
I'm not so much interested in ability to make a $2000 payment, as I am in my ability to pay off the original loan.
I think if more people need to look a their annual mortgage statement, particularly in the first few years, particularly where you see how much higher the interest line is than the principal line. 
Most buyers are throwing away a good $1000.00 a month, many much, much more, on cost of renting money. 
 
VanBullBear
Real Estate Talker
Posts: 90
Joined: Tue Dec 22, 2015 2:21 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 1:29 pm

I think the people who are taking out huge loans to try and time this market are going to get owned the hardest.

Buy what you can afford, if you get a $450,000 apartment with a easy $1,500 mortgage, so what if it drops 20-30% when you buy something its meant to be lived in. Ride out the down turn.

I don't believe in investing in multi million dollar homes. Not the way people in Vancouver do it anyways. If you were to put $1,000,000 in a stock you would read every last income statement and know the company from A-Z. People in Vancouver are investing without even knowing the basics of what they are buying.

I believe in buying to live. Vancouver is not a good market to invest in, the downside is much greater then the upshot.
You might be right and in the current situation buying is a big risk.  However, a decade ago this forum was full of bears, jumping up and down telling everyone not to buy and the market was going to tank, many predicted 50% haircuts.  It looked pretty certain that a correction was coming, especially once the subprime crisis hit the US market.  There were more than a few people that decided not to buy and probably made the biggest mistake of their lives.
Risk is exactly why people should be extremely cautious of buying in the current market.

It's easy to say blanket statements like "a house is not for investing, it's for living" or "if you hold y our home long enough you will be fine" . But if you really think about the current market conditions, you will realize that those statements only work for 90% of the housing markets around the world. But guess what - Vancouver is currently not a normal market. The truth is everyone in this site is looking at real-estate as an investment, don't be fooled by the people who say otherwise.

This way of thinking is oversimplified and does not look into the risk involved going into a 25 -30 year mortgage. An old colleague of mine wanted to purchase a house for his family and was scared of being priced out. He ended up asking his parents for a large sum of money for a down-payment and ended up buying a house in surrey for 910K (150K over ask due to bid wars) June of last year. Two months ago, his neighbor with a nearly identical house sold for 750k, and it's likely even lower now.

Basically he is down nearly 200k in less than half a year. He will still be fine since he is able to afford his mortgage, but is regretting he bought out of FOMO. That extra 200k mortgage is an extra 800/month that he could have avoided if he waited is going to affect not only him but his family's quality of life for the next 25 years. He took on a position where the cards are against him and luck wasn't by his side.

There is a big difference between being lucky and having skills to analyze market conditions. If you don't factor in risk or do not have the skills to valuate the risk, be careful giving advise to those who are seeking. These sayings are general and they work for real-estate markets that are within the norm - Vancouver is not one of them. Once you starting having to introduce variables like X-factor to justify unexplainable market forces, you're now in the world of speculation. The last thing you want is to be speculating on a 25 year mortgage.

 Market has changed, strategy has to change or you will get burned. Remember, if markets can go up by 30 to 40% in a time-frame of two years, it can go the other way as well. If you're okay with this risk and chose to purchase in an environment where there is upward pressure on the interest rates, then all the power to you.
 
yzfr1
Real Estate Talker
Posts: 286
Joined: Tue Mar 19, 2013 8:35 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 2:01 pm

I think the people who are taking out huge loans to try and time this market are going to get owned the hardest.

Buy what you can afford, if you get a $450,000 apartment with a easy $1,500 mortgage, so what if it drops 20-30% when you buy something its meant to be lived in. Ride out the down turn.

I don't believe in investing in multi million dollar homes. Not the way people in Vancouver do it anyways. If you were to put $1,000,000 in a stock you would read every last income statement and know the company from A-Z. People in Vancouver are investing without even knowing the basics of what they are buying.

I believe in buying to live. Vancouver is not a good market to invest in, the downside is much greater then the upshot.
You might be right and in the current situation buying is a big risk.  However, a decade ago this forum was full of bears, jumping up and down telling everyone not to buy and the market was going to tank, many predicted 50% haircuts.  It looked pretty certain that a correction was coming, especially once the subprime crisis hit the US market.  There were more than a few people that decided not to buy and probably made the biggest mistake of their lives.
Risk is exactly why people should be extremely cautious of buying in the current market.

It's easy to say blanket statements like "a house is not for investing, it's for living" or "if you hold y our home long enough you will be fine" . But if you really think about the current market conditions, you will realize that those statements only work for 90% of the housing markets around the world. But guess what - Vancouver is currently not a normal market. The truth is everyone in this site is looking at real-estate as an investment, don't be fooled by the people who say otherwise.

This way of thinking is oversimplified and does not look into the risk involved going into a 25 -30 year mortgage. An old colleague of mine wanted to purchase a house for his family and was scared of being priced out. He ended up asking his parents for a large sum of money for a down-payment and ended up buying a house in surrey for 910K (150K over ask due to bid wars) June of last year. Two months ago, his neighbor with a nearly identical house sold for 750k, and it's likely even lower now.

Basically he is down nearly 200k in less than half a year. He will still be fine since he is able to afford his mortgage, but is regretting he bought out of FOMO. That extra 200k mortgage is an extra 800/month that he could have avoided if he waited is going to affect not only him but his family's quality of life for the next 25 years. He took on a position where the cards are against him and luck wasn't by his side.

There is a big difference between being lucky and having skills to analyze market conditions. If you don't factor in risk or do not have the skills to valuate the risk, be careful giving advise to those who are seeking. These sayings are general and they work for real-estate markets that are within the norm - Vancouver is not one of them. Once you starting having to introduce variables like X-factor to justify unexplainable market forces, you're now in the world of speculation. The last thing you want is to be speculating on a 25 year mortgage.

 Market has changed, strategy has to change or you will get burned. Remember, if markets can go up by 30 to 40% in a time-frame of two years, it can go the other way as well. If you're okay with this risk and chose to purchase in an environment where there is upward pressure on the interest rates, then all the power to you.

I agree with most of it... my question is why do people hang around here if the risk is to high. Why not move somewhere else instead of throwing money at rent here waiting for something to happen.

Burning years of their life waiting to time the market to enter.

Ps. I advised people to buy something they can afford. I always cautioned away from the expensive stuff. What's wrong with a decent $400,000 Condo.
 
VanBullBear
Real Estate Talker
Posts: 90
Joined: Tue Dec 22, 2015 2:21 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 3:30 pm

You might be right and in the current situation buying is a big risk.  However, a decade ago this forum was full of bears, jumping up and down telling everyone not to buy and the market was going to tank, many predicted 50% haircuts.  It looked pretty certain that a correction was coming, especially once the subprime crisis hit the US market.  There were more than a few people that decided not to buy and probably made the biggest mistake of their lives.
Risk is exactly why people should be extremely cautious of buying in the current market.

It's easy to say blanket statements like "a house is not for investing, it's for living" or "if you hold y our home long enough you will be fine" . But if you really think about the current market conditions, you will realize that those statements only work for 90% of the housing markets around the world. But guess what - Vancouver is currently not a normal market. The truth is everyone in this site is looking at real-estate as an investment, don't be fooled by the people who say otherwise.

This way of thinking is oversimplified and does not look into the risk involved going into a 25 -30 year mortgage. An old colleague of mine wanted to purchase a house for his family and was scared of being priced out. He ended up asking his parents for a large sum of money for a down-payment and ended up buying a house in surrey for 910K (150K over ask due to bid wars) June of last year. Two months ago, his neighbor with a nearly identical house sold for 750k, and it's likely even lower now.

Basically he is down nearly 200k in less than half a year. He will still be fine since he is able to afford his mortgage, but is regretting he bought out of FOMO. That extra 200k mortgage is an extra 800/month that he could have avoided if he waited is going to affect not only him but his family's quality of life for the next 25 years. He took on a position where the cards are against him and luck wasn't by his side.

There is a big difference between being lucky and having skills to analyze market conditions. If you don't factor in risk or do not have the skills to valuate the risk, be careful giving advise to those who are seeking. These sayings are general and they work for real-estate markets that are within the norm - Vancouver is not one of them. Once you starting having to introduce variables like X-factor to justify unexplainable market forces, you're now in the world of speculation. The last thing you want is to be speculating on a 25 year mortgage.

 Market has changed, strategy has to change or you will get burned. Remember, if markets can go up by 30 to 40% in a time-frame of two years, it can go the other way as well. If you're okay with this risk and chose to purchase in an environment where there is upward pressure on the interest rates, then all the power to you.

I agree with most of it... my question is why do people hang around here if the risk is to high. Why not move somewhere else instead of throwing money at rent here waiting for something to happen.

Burning years of their life waiting to time the market to enter.

Ps. I advised people to buy something they can afford. I always cautioned away from the expensive stuff. What's wrong with a decent $400,000 Condo.
Good question about why people stay, I can only answer for myself.

My main reason is I love my current job, It pays well and the projects are extremely cool (think NAVY Warships). 
Second reason is I have family here. Them too got very lucky when they purchased a Vancouver house back in 2000 now it's worth millions.

I don't mind renting, but obviously would prefer owning but not having a monster debt. I almost purchased at the winter of 2015 (I had a bit of FOMO as well), the pre-approval papers were done, but I decided to opt out of buying after a month of seeing all the hysteria in open houses and bidding wars.

I'm glad I did not buy then. I'm on the side-lines saving up and looking to pull the trigger once the market volatility subsides. The risk I'm taking is for the prices to keep rising and I never get in "position", but I like that risk profile a lot more than buying and taking a 20 to 30% hit in a 25 year mortgage.

Nothing wrong with a 400k condo, as long as you can afford the monthly payments with interest rates fluctuating +/-5%, since the stress test is there it should be safe. By afford, I mean between 30 to 35% of your after tax money should pay for the mortgage and strata. So for a 350k mortgage, your household income should be around 80k (around median, I suppose that's where you got the number from). This is if you don't have kids and can stomach a 30 to 40% downturn if it happens. If you're planning on having kids, you're better off moving.
 
VanLord
Real Estate Talker
Posts: 320
Joined: Fri Aug 24, 2007 3:52 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 4:38 pm

Risk is exactly why people should be extremely cautious of buying in the current market.

It's easy to say blanket statements like "a house is not for investing, it's for living" or "if you hold y our home long enough you will be fine" . But if you really think about the current market conditions, you will realize that those statements only work for 90% of the housing markets around the world. But guess what - Vancouver is currently not a normal market. The truth is everyone in this site is looking at real-estate as an investment, don't be fooled by the people who say otherwise.

This way of thinking is oversimplified and does not look into the risk involved going into a 25 -30 year mortgage. An old colleague of mine wanted to purchase a house for his family and was scared of being priced out. He ended up asking his parents for a large sum of money for a down-payment and ended up buying a house in surrey for 910K (150K over ask due to bid wars) June of last year. Two months ago, his neighbor with a nearly identical house sold for 750k, and it's likely even lower now.

Basically he is down nearly 200k in less than half a year. He will still be fine since he is able to afford his mortgage, but is regretting he bought out of FOMO. That extra 200k mortgage is an extra 800/month that he could have avoided if he waited is going to affect not only him but his family's quality of life for the next 25 years. He took on a position where the cards are against him and luck wasn't by his side.

There is a big difference between being lucky and having skills to analyze market conditions. If you don't factor in risk or do not have the skills to valuate the risk, be careful giving advise to those who are seeking. These sayings are general and they work for real-estate markets that are within the norm - Vancouver is not one of them. Once you starting having to introduce variables like X-factor to justify unexplainable market forces, you're now in the world of speculation. The last thing you want is to be speculating on a 25 year mortgage.

 Market has changed, strategy has to change or you will get burned. Remember, if markets can go up by 30 to 40% in a time-frame of two years, it can go the other way as well. If you're okay with this risk and chose to purchase in an environment where there is upward pressure on the interest rates, then all the power to you.

I agree with most of it... my question is why do people hang around here if the risk is to high. Why not move somewhere else instead of throwing money at rent here waiting for something to happen.

Burning years of their life waiting to time the market to enter.

Ps. I advised people to buy something they can afford. I always cautioned away from the expensive stuff. What's wrong with a decent $400,000 Condo.
Good question about why people stay, I can only answer for myself.

My main reason is I love my current job, It pays well and the projects are extremely cool (think NAVY Warships). 
Second reason is I have family here. Them too got very lucky when they purchased a Vancouver house back in 2000 now it's worth millions.

I don't mind renting, but obviously would prefer owning but not having a monster debt. I almost purchased at the winter of 2015 (I had a bit of FOMO as well), the pre-approval papers were done, but I decided to opt out of buying after a month of seeing all the hysteria in open houses and bidding wars.

I'm glad I did not buy then. I'm on the side-lines saving up and looking to pull the trigger once the market volatility subsides. The risk I'm taking is for the prices to keep rising and I never get in "position", but I like that risk profile a lot more than buying and taking a 20 to 30% hit in a 25 year mortgage.

Nothing wrong with a 400k condo, as long as you can afford the monthly payments with interest rates fluctuating +/-5%, since the stress test is there it should be safe. By afford, I mean between 30 to 35% of your after tax money should pay for the mortgage and strata. So for a 350k mortgage, your household income should be around 80k (around median, I suppose that's where you got the number from). This is if you don't have kids and can stomach a 30 to 40% downturn if it happens. If you're planning on having kids, you're better off moving.
Where are you going to move?  If you have family in Vancouver and you are planning to have kids, that is precisely the reason you would stay.  That would offer both emotional and financial support that you wouldn't get from moving elsewhere.  If you are a Canadian citizen there really isn't a better place to move to, and its certainly doable to carve out a good life here, even if there is a premium to live here...which always was the case.
There is nothing wrong with renting, but holding off waiting for the perfect time to buy could mean you are stuck renting forever, and miss out on potentially large tax-free gains that come with the pleasure of owning your own home.  On the flip side now is the best time to start paying off a mortgage, you will be that much better off when it comes time to retire, and with such low interest rates you can actually put a good dent in the principle in the earlier years to be free and clear much earlier.  I just took a new 30 year mortgage out last year and am paying over 50% towards the principle.  Of course my tenant is paying the mortgage for me and the interest is a tax write-off, but hey the more equity I can build up the better, right!.
My point was that a lot of people in Vancouver are perma-bears and have been hoping for a crash for over a decade, and it hasn't happened.  Their advice has been consistently wrong, and they are the loudest ones yelling out to tell people not to buy (not that anyone on this current thread is doing that).  In the meantime, those that bought have been able to take advantage of historically low interest rates, exceptional returns, and market forces that have worked in the favour of property owners.  These last 10 years have been far better than the stock market (although that has been good too) or any other investment, with the exception of maybe getting lucky with a new business that takes off with exponential growth.  I don't see interest rates fluctuating by 5% in the next 5 years, either.  Looks like Canada will hover near the bottom for a while longer and I can't see the rates rising by more than a 1-2%, although if it does that will be great news, because it will mean the economy is flying high. 
I'm not sure its all doom and gloom from here, a healthy breather and cooling off period is needed and even if we tread water for the next few years or a small dip, will set us up for another bull run in the not so distant future.  Even the colleague in Surrey will be feeling better, although bidding up that high is a recipe for losing money if you ask me.  I personally have walked away from countless deals when others were bidding up the price, I got lucky on all my purchases and was able to avoid multiple bid scenarios.  I would always council buyers not to let emotions get involved when it comes to real estate.
 
VanBullBear
Real Estate Talker
Posts: 90
Joined: Tue Dec 22, 2015 2:21 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 6:14 pm



I agree with most of it... my question is why do people hang around here if the risk is to high. Why not move somewhere else instead of throwing money at rent here waiting for something to happen.

Burning years of their life waiting to time the market to enter.

Ps. I advised people to buy something they can afford. I always cautioned away from the expensive stuff. What's wrong with a decent $400,000 Condo.
Good question about why people stay, I can only answer for myself.

My main reason is I love my current job, It pays well and the projects are extremely cool (think NAVY Warships). 
Second reason is I have family here. Them too got very lucky when they purchased a Vancouver house back in 2000 now it's worth millions.

I don't mind renting, but obviously would prefer owning but not having a monster debt. I almost purchased at the winter of 2015 (I had a bit of FOMO as well), the pre-approval papers were done, but I decided to opt out of buying after a month of seeing all the hysteria in open houses and bidding wars.

I'm glad I did not buy then. I'm on the side-lines saving up and looking to pull the trigger once the market volatility subsides. The risk I'm taking is for the prices to keep rising and I never get in "position", but I like that risk profile a lot more than buying and taking a 20 to 30% hit in a 25 year mortgage.

Nothing wrong with a 400k condo, as long as you can afford the monthly payments with interest rates fluctuating +/-5%, since the stress test is there it should be safe. By afford, I mean between 30 to 35% of your after tax money should pay for the mortgage and strata. So for a 350k mortgage, your household income should be around 80k (around median, I suppose that's where you got the number from). This is if you don't have kids and can stomach a 30 to 40% downturn if it happens. If you're planning on having kids, you're better off moving.
Where are you going to move?  If you have family in Vancouver and you are planning to have kids, that is precisely the reason you would stay.  That would offer both emotional and financial support that you wouldn't get from moving elsewhere.  If you are a Canadian citizen there really isn't a better place to move to, and its certainly doable to carve out a good life here, even if there is a premium to live here...which always was the case.
There is nothing wrong with renting, but holding off waiting for the perfect time to buy could mean you are stuck renting forever, and miss out on potentially large tax-free gains that come with the pleasure of owning your own home.  On the flip side now is the best time to start paying off a mortgage, you will be that much better off when it comes time to retire, and with such low interest rates you can actually put a good dent in the principle in the earlier years to be free and clear much earlier.  I just took a new 30 year mortgage out last year and am paying over 50% towards the principle.  Of course my tenant is paying the mortgage for me and the interest is a tax write-off, but hey the more equity I can build up the better, right!.
My point was that a lot of people in Vancouver are perma-bears and have been hoping for a crash for over a decade, and it hasn't happened.  Their advice has been consistently wrong, and they are the loudest ones yelling out to tell people not to buy (not that anyone on this current thread is doing that).  In the meantime, those that bought have been able to take advantage of historically low interest rates, exceptional returns, and market forces that have worked in the favour of property owners.  These last 10 years have been far better than the stock market (although that has been good too) or any other investment, with the exception of maybe getting lucky with a new business that takes off with exponential growth.  I don't see interest rates fluctuating by 5% in the next 5 years, either.  Looks like Canada will hover near the bottom for a while longer and I can't see the rates rising by more than a 1-2%, although if it does that will be great news, because it will mean the economy is flying high. 
I'm not sure its all doom and gloom from here, a healthy breather and cooling off period is needed and even if we tread water for the next few years or a small dip, will set us up for another bull run in the not so distant future.  Even the colleague in Surrey will be feeling better, although bidding up that high is a recipe for losing money if you ask me.  I personally have walked away from countless deals when others were bidding up the price, I got lucky on all my purchases and was able to avoid multiple bid scenarios.  I would always council buyers not to let emotions get involved when it comes to real estate.
Hey VanLord - thanks for the good response (you as well YZFR). It's rare to see any meaningful post around here these days. 
My response is below.
Where are you going to move?  If you have family in Vancouver and you are planning to have kids, that is precisely the reason you would stay.  That would offer both emotional and financial support that you wouldn't get from moving elsewhere.  If you are a Canadian citizen there really isn't a better place to move to, and its certainly doable to carve out a good life here, even if there is a premium to live here...which always was the case.
I would likely still stay unless there is a big job opportunity elsewhere that's kids friendly.
There is nothing wrong with renting, but holding off waiting for the perfect time to buy could mean you are stuck renting forever, and miss out on potentially large tax-free gains that come with the pleasure of owning your own home.  On the flip side now is the best time to start paying off a mortgage, you will be that much better off when it comes time to retire, and with such low interest rates you can actually put a good dent in the principle in the earlier years to be free and clear much earlier.  I just took a new 30 year mortgage out last year and am paying over 50% towards the principle.  Of course my tenant is paying the mortgage for me and the interest is a tax write-off, but hey the more equity I can build up the better, right!.
All good points which is why the goal is to eventually own a home, but there is also the other side of the trade. I am not exposed to a modest 20-30 percent correction which could cost hundreds of thousands of dollars just as in the case of my colleague. I'm also free of the stress of a mortgage during these uncertain times with high volatility.
You're right that low interest rates mean that you can pay principal fast, but it also one of the fundamental drivers for these extreme prices. You are in a good position because you purchased prior to prices exploding (pre-2015 levels), in which you have a mortgage that is reasonable. But for me however, It's too risky to get in. One of my investment rules is to never chase the price, 9/10 times it comes out bad. In my case, I have already avoided a 15-20% decline on a detached I would be kicking myself if I let my FOMO get the best of me. 
My point was that a lot of people in Vancouver are perma-bears and have been hoping for a crash for over a decade, and it hasn't happened.  Their advice has been consistently wrong, and they are the loudest ones yelling out to tell people not to buy (not that anyone on this current thread is doing that).  In the meantime, those that bought have been able to take advantage of historically low interest rates, exceptional returns, and market forces that have worked in the favour of property owners.  These last 10 years have been far better than the stock market (although that has been good too) or any other investment, with the exception of maybe getting lucky with a new business that takes off with exponential growth.  I don't see interest rates fluctuating by 5% in the next 5 years, either.  Looks like Canada will hover near the bottom for a while longer and I can't see the rates rising by more than a 1-2%, although if it does that will be great news, because it will mean the economy is flying high. 
It has been an amazing bull market for the Vancouver real-estate. Those old school bears were proven wrong (I was not around then) it does not necessarily mean that a correction is less likely this time around. These are all probability based because nobody can tell you what the future holds, they are lying to themselves if they think that way. The truth is there is a probability for each case where the prices will keep going up, down or stay the same. Currently, looking at the underlying forces, the probability of going down is more likely than up. This is from my personal analysis, I'm sure others can come up with a different outcome where prices are more likely to go down, but each to their own. Because the probability of correction is higher in my analysis, I have to leave my emotions out of the equation and wait it out.
I'm not sure its all doom and gloom from here, a healthy breather and cooling off period is needed and even if we tread water for the next few years or a small dip, will set us up for another bull run in the not so distant future.  Even the colleague in Surrey will be feeling better, although bidding up that high is a recipe for losing money if you ask me.  I personally have walked away from countless deals when others were bidding up the price, I got lucky on all my purchases and was able to avoid multiple bid scenarios.  I would always council buyers not to let emotions get involved when it comes to real estate.
He bought near the peak, during that time there were 7 other offers - bidding up another 10 to 15% was not out of the ordinary during the tail end of 2015. While there is a very good possibility that another bull run will come (we are all bullish in Vancouver in the long run), 100% of the time corrections happen inside bull markets - the argument is now the size of the correction. 
As for me, I know very well the risk of being priced out forever, but I'm confident in taking that risk vs risking a big correction through a mortgage. If I never end up buying, I end up with a ton of money in my RRSP/TFSA. I ran the math, if prices stay where they are (flat), equity goes up faster if you rent vs buying. 
 
yzfr1
Real Estate Talker
Posts: 286
Joined: Tue Mar 19, 2013 8:35 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 7:21 pm

The crash of 2008 in America was because of sub prime loans and the derivative market.

Stronger regulations and lending practices in Canada such as service/debt ratios, minimum down payment verification of income really prevents a catastrophic melt down in that way. Markets were over leveraged where plumbers owned multiple homes. The opposite I find in Vancouver, I don't know anyone who owns several multi-million dollar homes levered up to the eyeballs in debt. Also the banks here don't have a large exposure to housing going bust because of CHMC and we don't have CDO / CDS instruments here.

I often pondered what will be the catalyst to send this market into correction?

higher interest rates / UN-employment /  cut off of foreign money?

Personally I think it would take a outright ban of Chinese immigrants to crash the market. Financial controls in China and Canada don't work. Where there is money there is a way.. it would be naive to think the money laundering could be turned off so fast, just like its naive to think you can stop drugs entering the country.

I feel like this market will continue (not to the moon) either sideways or slow growth. I can't see capitulation without any "large trigger" the market will continue in its previous direction unless a greater forces acts against it. My $0.02
 
eyesthebye2
Real Estate Talker
Posts: 1207
Joined: Sun Jul 27, 2014 6:41 am
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 7:58 pm

Ban immigration and the market will seriously hurt. Over time at 50% correction.

So long as you agree that:
A. More people will come to live here than leave.
B. Land is no longer available.
C. Inadequate zoning will limit housing options.
Then
D. Prices will rise

Its pretty simple really
 
VanLord
Real Estate Talker
Posts: 320
Joined: Fri Aug 24, 2007 3:52 pm
Contact:

Re: Vancouver indvidual property sales details

Mon Feb 27, 2017 11:15 pm

As for me, I know very well the risk of being priced out forever, but I'm confident in taking that risk vs risking a big correction through a mortgage. If I never end up buying, I end up with a ton of money in my RRSP/TFSA. I ran the math, if prices stay where they are (flat), equity goes up faster if you rent vs buying. 
This quote was getting really long so shortened up !!  
Honestly I can't argue with any of your points, You have thought this through and by the sounds of it are doing all the right things by saving and investing, so you will be ready when the time comes to buy.  Waiting for the current situation to resolve itself is the right thing. 
In terms of being down after a purchase is not the worst thing in the world, but can be frustrating.  I was down quite significantly on my Whistler condo for quite a few years.  Things have changed drastically in the last 2 years in Whistler.  At the end of the day keeping a level head is important, I ultimately bought the place for both income through short term rentals and the ability to enjoy the place and use it when its not rented out.  It has always had good balance of income and ability to enjoy time in Whistler, even when it was down 25% from purchase price.  Lately the market has exploded in terms of both real estate price and occupancy, so its been great to now have very good gains, and a huge uptick in revenue, but not as much use of the place.  In Hindsight my only regret is passing on the opportunity to buy the condo next door, as well as commercial property in the complex when the majority owner in the building cashed out a few years back, Averaging down would have really paid off now, but I also made the decisions not to buy based on the effort required to manage more than 1 condo in Whistler, same can be said about not buying in the US while the Cdn dollar was high and the market was so low.  Hopefully we all make good decisions most of the time and have some of those decision work for us, then we'll be in good shape! 

Who is online

Users browsing this forum: Bing [Bot] and 28 guests