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.