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VanLord
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Re: Vancouver's housing market crash hits home.

Wed Aug 31, 2016 8:56 pm

Its not do-able Vanlord.
Detached values since I purchased are increasing at a rate of more then 200% of my income.
So if I had put away 20% of my income every year I fall further behind by 150k or so every year.
Thats why we bought when we did. If prices went down our mortgage was locked in and we could afford it. If prices went up we would have risked being shut out like many now are.

So give me the remedy on affordability with detached values increasing at 150k every year

If you put money away your still saving that money, doesn't mean you have to buy a detached Van special. You could start with a modest condo, or buy in the burbs, or maybe just hold tight and wait for the big crash and if that never comes you are still better off to have saved the money than not. Although I will admit that we were lucky to get in when we did, and it's tough to be in your twenties and trying to make it, but hey it's never been easy for young people. I suffered through a lot of dry spells with no money, and I also did a tour in Surrey to live cheaper and it helped me be able to sock some money away when I did start making a bit more money.
 
eyesthebye2
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Re: Vancouver's housing market crash hits home.

Wed Aug 31, 2016 9:12 pm

Can't do it starting at condo either. The gap between property classes gets larger every year.
You got lucky and I got lucky...but both instances are many years ago. I wonder how smart you'd look today trying to buy a 1.5 million $ home with 160k...that's a 1.34M mortgage.
We both got lucky, so enough with the smug attitude and the financial planning lessons.
Last edited by eyesthebye2 on Thu Sep 01, 2016 11:26 am, edited 1 time in total.
 
Demonizer
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 7:09 am

Agreed 100%. 

Unless you are born with a silver spoon in your mouth, buying your first home is likely to be a big struggle for at least the first few years.

I bought my first modest (2 bedroom townhouse) home in a middle class neighborhood in a secondary city in the early 1970's.  Like most recently married folks we borrowed as much as we could in order to get the nicest place we could afford in the market. Prices and incomes were much, much lower but interest rates were much higher. The net result was the same as these days, house rich and lifestyle poor for several years. 

When we eventually upgraded we once again borrowed as much as we could and added it to our existing equity. Once again we were at the very upper limit of our now much higher incomes would allow to borrow. It worked for us because it was a time of rising home prices and rising incomes, hence inflation made even bad choices seem smart over the long term. We were fortunate enough to not have to face a mortgage renewal when the rates spiked to 22%. We lost some sleep for a while until the mortgage rates fell again but we had dodged the bullet.  Taking chances like that in today's market is a lot riskier.

I have seen many young people following a similar pattern here. Start with a scruffy old house, then when a few years have passed, use the increased equity to upgrade to something nicer in a better location. In the first decade or two it's not unusual to have to scrimp and save to meet the mortgage. I've even seen seniors who retire with mortgages because of a lifetime of serial upgrading. Not the smartest behavior in my mind, but each to their own.
similar path i took. cobbled together as much money i could to buy in 2003 downturn. A scruffy but nice sized big rancher with basement (2400sq/ft), but had some land (10,000sq/ft) . Sold it and bought a new home built in 2008 (again i bought during the downturn). Now in 2017 i will be building a home to sell after construction is complete around beginning of 2018
I wish you good luck, you've been rewarded for riding a (mostly) bull market since 2003, but I do wonder if your entry into spec building is a smart move in such a mature, fragile and wobbly market. A lot can happen before early 2018.  If you can be financially comfortable renting it out instead of selling it you should be fine.
Once again, good luck.
i may even stay in it for a while and avoid capital gains. it will be a bit higher end. it is not in metro vancouver which is subject to the 15% tax. it is just outside. I will put rough in for elevator if i don't install the elevator. It is marketed a 55+ high end recreational lake type property 12,000sq/ft land. 3 level rear deck with views. price is not going to be outrageous. for what it is. i will probably put it on the market for $1.39M
Last edited by Demonizer on Thu Sep 01, 2016 7:14 am, edited 1 time in total.
 
Demonizer
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 7:10 am

Agreed 100%. 

Unless you are born with a silver spoon in your mouth, buying your first home is likely to be a big struggle for at least the first few years.

I bought my first modest (2 bedroom townhouse) home in a middle class neighborhood in a secondary city in the early 1970's.  Like most recently married folks we borrowed as much as we could in order to get the nicest place we could afford in the market. Prices and incomes were much, much lower but interest rates were much higher. The net result was the same as these days, house rich and lifestyle poor for several years. 

When we eventually upgraded we once again borrowed as much as we could and added it to our existing equity. Once again we were at the very upper limit of our now much higher incomes would allow to borrow. It worked for us because it was a time of rising home prices and rising incomes, hence inflation made even bad choices seem smart over the long term. We were fortunate enough to not have to face a mortgage renewal when the rates spiked to 22%. We lost some sleep for a while until the mortgage rates fell again but we had dodged the bullet.  Taking chances like that in today's market is a lot riskier.

I have seen many young people following a similar pattern here. Start with a scruffy old house, then when a few years have passed, use the increased equity to upgrade to something nicer in a better location. In the first decade or two it's not unusual to have to scrimp and save to meet the mortgage. I've even seen seniors who retire with mortgages because of a lifetime of serial upgrading. Not the smartest behavior in my mind, but each to their own.
similar path i took. cobbled together as much money i could to buy in 2003 downturn. A scruffy but nice sized big rancher with basement (2400sq/ft), but had some land (10,000sq/ft) . Sold it and bought a new home built in 2008 (again i bought during the downturn). Now in 2017 i will be building a home to sell after construction is complete around beginning of 2018
All in all people have to temper their entitlements. In the short term of less than 2 years not much can occur.  You don't need to be an upperclassperson to live in Vancouver if you aren't greedy and spend within your ability.
yes you just have to live a bit frugally at first... and eventually things get a lot better.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 9:05 am

Can't do it starting at condo either. The gap between property classes gets larger every year.
You got lucky and I got lucky...but both instances are many years ago. I wonder how smart you'd look today trying to buy a 1.5 million $ home with 160k...that's a 1.34M mortgage.
We both got lucky, so enough with smug attitude and the financial planning lessons.
Ha Smug attitude, pot calling the kettle black.
Hmm you can't buy a condo anymore, this seems like a perfectly reasonable starter home for a young couple, less than 50k down and a very reasonable mortgage payment, all they would have had to do is max out their TFSA for the last 4-5 years and they would have enough to get into this place - https://www.realtor.ca/Residential/Sing ... bia-V3B1A8
I'm not being smug, I just tried to show some examples, and I'm also saying its not impossible for people to save money and still get in the market without help from mom and dad.  When I bought my East Van house, most of the people on this board were jumping up and down screaming about how the market was so overvalued and couldn't sustain the outrageous valuations, etc.  To bad they got rid of all those old posts, lots of similar thinking to these current posts, with more drama of course.  That was 2006, in hindsight I was lucky to get in when I did.  
While I would never advise anyone to put a 10% downpayment when buying real estate, but certainly that would be dangerous for most people to carry a 6k per month mortgage.  However if you had 800k in equity and wanted to move up to this place it could be doable for a couple with good incomes to make that type of investment.  Time will tell if its a good or bad investment.
 
tdma800
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 10:08 am

similar path i took. cobbled together as much money i could to buy in 2003 downturn. A scruffy but nice sized big rancher with basement (2400sq/ft), but had some land (10,000sq/ft) . Sold it and bought a new home built in 2008 (again i bought during the downturn). Now in 2017 i will be building a home to sell after construction is complete around beginning of 2018
All in all people have to temper their entitlements. In the short term of less than 2 years not much can occur.  You don't need to be an upperclassperson to live in Vancouver if you aren't greedy and spend within your ability.
yes you just have to live a bit frugally at first... and eventually things get a lot better.
Exactly. you and others have the correct thinking. It is proper and reasonable to tell someone to put a down payment on a home of less than 20%   Some people still dont know that if you're worried about your job you can buy mortgage insurance for that(not life).
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 10:28 am

Can't do it starting at condo either. The gap between property classes gets larger every year.
You got lucky and I got lucky...but both instances are many years ago. I wonder how smart you'd look today trying to buy a 1.5 million $ home with 160k...that's a 1.34M mortgage.
We both got lucky, so enough with smug attitude and the financial planning lessons.
I'll take the financial planning lessons: I made a lot more money than $32k to $60k / year before I was 29 and I didn't come close to amassing that amount of savings for a downpayment. Frankly, I don't know how you could support yourself and what investment vehicles were available for a small investor to get those type of returns...
I did a very simple spreadsheet to try and figure it out:
Over a 10 year period, starting a $32k / year and getting a $3,100 / year raise every year to get up to $60k by year 10.
Assumed 15% income tax bracket
Assumed saving 20% of your take home pay
Assumed a 10% compounded return on your savings / investment
Result: less than $80k after 10 years.
While I'm able to save way more than 20% of my take home pay at this point of my life, I'd love to get a 10% average return on my investments over a 10 year period.
 
Demonizer
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 10:30 am

it will be interesting to see what happens to Abbotsford, Mission and Chilliwack being just outside of Metro Vancouver boundaries.

This tax imposed by the government may just be what these areas need to increase in value. 

which is what the government likely knew would happen so they went ahead with it. they wanted to increase values to a greater area than just red hot Metro Vancouver.

they want some of that heat to spill over and spread out more and further. money spread/sprawl you could call it. rather than just concentrated to metro van. 
 
eyesthebye2
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 11:44 am

Can't do it starting at condo either. The gap between property classes gets larger every year.
You got lucky and I got lucky...but both instances are many years ago. I wonder how smart you'd look today trying to buy a 1.5 million $ home with 160k...that's a 1.34M mortgage.
We both got lucky, so enough with smug attitude and the financial planning lessons.
Ha Smug attitude, pot calling the kettle black.
Hmm you can't buy a condo anymore, this seems like a perfectly reasonable starter home for a young couple, less than 50k down and a very reasonable mortgage payment, all they would have had to do is max out their TFSA for the last 4-5 years and they would have enough to get into this place - https://www.realtor.ca/Residential/Sing ... bia-V3B1A8
I'm not being smug, I just tried to show some examples, and I'm also saying its not impossible for people to save money and still get in the market without help from mom and dad.  When I bought my East Van house, most of the people on this board were jumping up and down screaming about how the market was so overvalued and couldn't sustain the outrageous valuations, etc.  To bad they got rid of all those old posts, lots of similar thinking to these current posts, with more drama of course.  That was 2006, in hindsight I was lucky to get in when I did.  
While I would never advise anyone to put a 10% downpayment when buying real estate, but certainly that would be dangerous for most people to carry a 6k per month mortgage.  However if you had 800k in equity and wanted to move up to this place it could be doable for a couple with good incomes to make that type of investment.  Time will tell if its a good or bad investment.
I was defensive - you are smug.
The only thing that I have that non house owners don't is the blessing of timing and good luck. Same with you. All the financial planning in the world isn't getting you a detached property with land on 160k.
You need to have "family money" to afford this city now. The working couple is priced out of ever owning a house with land now. The sooner we call it like we see it, the sooner we can start talking about what the solution is to bringing affordability back to Vancouver. Pinching pennies and saving 15% of your income every month is going to land you in Chilliwack.
STEP 1
rezone ALL RS1 lots that sit on lots 5,000sq or greater to RT. Use the same forumla for development that produced 1600sqft infills in Kits, Main and Grandview areas.
So instead of one 1.8M detached home sitting on a large property, have 2 x 900K detached properties of 1600-1800sqft on the same lot. It really grinds me when the city responds to the affordability issue by talking about adding rental units. THAT'S NOT THE ISSUE!
 
yzfr1
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 1:12 pm

Even $900 K is crazy, family has combined income of $140 K and I don't feel comfortable going over $350 K mortgage.

$100k down + 400 mortgage / $500 k seems to be the limit, hence why more first timers are heading into the condo space. Maybe better transit to Maple Ridge / Langley is the way to go. Invest in really really good transit. Someone mentioned fast above ground rail like skytrain running along highway 1 and then light rail going north to south feeding off of that skytrain. That way the whole Fraser valley is opened up. 
 
eyesthebye2
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Re: Vancouver's housing market crash hits home.

Thu Sep 01, 2016 4:19 pm

Im okay with 350k or higher. A nice suite can cover 250k of that.
Depends on your age though. You dont want to be at retirement age with 300k plus in mortgage debt...but if you're selling a house you can downside to eliminate the debt.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Fri Sep 02, 2016 11:24 am

Seems like the crash tax is already starting to bite ... the liberals in the arse.  Some of what Geyser said maybe coming true

http://www.cbc.ca/news/canada/british-c ... -1.3743219
 
Geyser
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Re: Vancouver's housing market crash hits home.

Fri Sep 02, 2016 1:23 pm

Im okay with 350k or higher. A nice suite can cover 250k of that.
Depends on your age though. You dont want to be at retirement age with 300k plus in mortgage debt...but if you're selling a house you can downside to eliminate the debt.
Having strangers living in your basement might be unavoidable if you are struggling with a huge mortgage, but is that what most people really want?  There are also some very significant tax and insurance issues to consider when accommodating renters. Not only is the rental income taxable, you can also expect the taxman to calculate any rented portion of your home to be subject to tax if you eventually sell your home for a profit.
Of course, you can always do things under the table and risk a financially devastating audit one day. Not a strategy I would recommend, particularly now Revenue Canada has noticed the Vancouver anomaly.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
Geyser
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Re: Vancouver's housing market crash hits home.

Fri Sep 02, 2016 1:26 pm

Seems like the crash tax is already starting to bite ... the liberals in the arse.  Some of what Geyser said maybe coming true

http://www.cbc.ca/news/canada/british-c ... -1.3743219
I don't know if this is the beginning of the big crash or not, but I continue to subscribe to the notion that the bigger a bubble becomes, the bigger the eventual crash. According to many respected sources, the Vancouver bubble is already huge.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Fri Sep 02, 2016 2:55 pm

you can also expect the taxman to calculate any rented portion of your home to be subject to tax if you eventually sell your home for a profit.

That's actually not true the rented portion is not taxable when you sell, ask any accountant

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