With Vancouver RE prices now at the edge of the precipice, here are a few “Why throw your money away on rent?” quotes. They come from the comment section of ‘Tenant of green building sees red’ [The Province, 3 Oct 2010], which deals with the structural shortcomings of the Olympic Village. An OV renter is paying $2100 per month for a 888 sqft condo.
Note the mentality: Renting is wasting your money. Anybody who can afford to buy, should buy, no questions asked.
One imagines that, once the prices of units like this one are dropping at a rate of greater than $2100 per month, and keep doing so for years, these commenters will finally be able to do the math. – vreaa
anonymous 3 Oct 2010 – “LMAO!!!!!! wow $2100 a month. so by the standards of living index that shouldn’t be anymore than one third of your monthly income. lady , you’re rich (or your ex is), go buy somewhere….”
anonymous (a different one, I presume -ed.) 3 Oct 2010 – “Oh my gosh…. Miss LEE… you are paying $2,100 a MONTH, sheeeeesssshhhh woman that is a mortgage payment!! Buy something that will be your own for that kind of money.”
Incumbent 3 Oct 2010 9:59 am – “Lee pays $2,100 a month for an 888-square-foot, what a waste of money. Why not invest in another propertry?”
They’ll not be cocky for long. I live in Miami. I moved into my apartment on mid-beach in 2008. My landlord agreed to diminish my rent in 2009 and 2010. She sent me an sms a week back offering a further 100$ off. The vacancy rate is so high that apartments spend months without tenants. This will come to Vancouver as well. Those who bought are stuck with depreciating assets and fixed debt. I just get depreciating rent. I’ve gone from the focus of jokes (you’re throwing money away) to envy (you can move any time you want?).
I hope it isn’t as bad in Canada as it has been in the US. That said, Miami never approached the unaffordable ratios of Vancouver. We have rich immigrants and nice weather too, btw.
Actually I have already seen this happening.
Condos may be advertised at a certain price but some seem to already get a bit nervous and you can negotiate.
I am pretty sure the higher end Condos will be the first to go down in price with Millenium probably holding on for as long as possible, they still have more than just skin under the Guillotine.
While I don’t agree with the sentiment of buying being a better option, you have to admit $2100/month is a lot for <900 sq.ft.
Big E: $100/month is a fair bit of money, but it’s not necessarily bad value.
$2100/month is about what you’ll spend on a 5-year fixed mortgage, property taxes, and strata fees for a $500K property in this city, which doesn’t buy a whole heck of a lot.
For that money, you could probably buy something similar in a 10-20 year old condo around the same area. But it’ll be wood-frame rather than concrete. And you get all the risks of buying into yet another leaker…
Like I said, the renter doesn’t have to buy, maybe find a cheaper place to rent. I consider $2100/month bad value in a ghost town with none of the amenities that are supposed to be there. But they can at least enjoy their granite counters and stainless appliances …
Most of you guys probably know this website already, but for those who don’t, pay a visit to http://www.patrick.net
The buy vs rent debate is well covered.
The best time to buy is when interest rates are high. This is counterintuitive, but true.
If you ever get this comment, simply reply by stating that renting is saving money–do the math:
assuming: $500k mortgage at a low 3% for 30 years – monthly payments approximately $2100
now in today’s falling housing market:
5% drop in value->same house costs $475K and over 30yr mortgage term you save $36,000 (1.5 years rent)
10% drop in value->same house costs $450K and over 30yr mortgage term you save $75,000 (3 years rent)
20% drop in value->same house costs $400K and over 30yr mortgage term you save $152,000 (6 years rent)
30% drop in value->same house costs $350K and over 30yr mortgage term you save $227,520 (9 years rent)
Further if we assume we are paying $2100 a month for a mortgage and there is a:
10% drop in value->you pay off mortgage in 25 years (savings of equivalent of 5 years ($126K) in rent)
20% drop in value->you pay off mortgage in 21 years (savings of equivalent of $227K in rent)
30% drop in value->you pay off mortgage in 18 years (savings of equivalent of $302K in rent)
I could buy tomorrow if I thought it was a good investment and it made financial sense but renting in Vancouver is currently the better option…