Two anecdotes. The second on the stigma of renting.
IT_Pro at vancouvercondo.info 25 Oct 2010 2.17pm – “I was talking to a friend (I guess you could call it a date) last week and the topic of RE came up. I shared my bearish views which prompted her to share a couple stories. She mentioned she has a friend in West Van that own a $5ish million house and hasn’t been able to sell it and she’s getting scared since she “can’t” lower her price…and she hasn’t been able to rent it either. She was forced to rent out her smaller primary residence and move into the West Van place. Apparently she doesn’t think she can hang on much longer. I’ll try to get more details as I’m curious how she got herself into this pickle in the first place.
Also, this same girl I was talking to has a sister moving back to Van with her family (two very young kids). Her husband does very well. They already own a 1bdrm in Van that they want to keep as a rental property (it’s too small for them now). They plan to build their dream home in Point Grey when they move back, but they need a place to live while its being built, so they were planning on buying a townhouse while it’s being built. They worked out the numbers and now they are worried that they can’t afford to buy the townhouse without selling the 1bdrm. So that is when I said, “why don’t they rent while they are building the house, then they could keep the 1bdrm…it’s much cheaper to rent than to own in Vancouver”. Well, you should have seen the look on her face while she processed what I just said. I’m pretty sure she wanted to say “they won’t consider renting because they have a family”, or “they would no longer consider renting at this stage in their life”…but I think she may not have wanted to offend me as she new I was a renter. After quite a few ums and awes she failed to comment. It won’t be long before renting will be back in vogue. Vanity will be the great equalizer.”
I’m a Canadian living in California. Four years ago, people were telling me to buy, buy, buy. Now, my friends are stuck, and suddenly I’m the smart renter, free to move if I want to.
A couple I know bought in late 2009, “after the bubble popped”, and their house has lost value since. They are freaking out because the husband lost his job and is now working freelance. They have a massive mortgage, and are now think about renting out a room in the house. Not exactly the master plan they had just a few months ago… They can’t/won’t sell because they’re underwater. Moral of the story : don’t try to catch a falling knife. After four years, real estate is still falling, even in desirable neighborhoods with very little foreclosure in CA.
Funny how people turn into Instant Lords of the Manor, when they mortgage their life away. Mort – Gage = French for DEATH CONTRACT.
New TD rules, turning all Mortgages into collateral loans, will devastate a lot of fools out there.
I sold out all my RE (*multi unit and a few condos) and I am renting and watching the coming storm, just off shore.
If you want to be a snob, because you are in debt – be my guest.
Can you spell H O O P E D.
The lady in this above piece is BUST.
For the couple wanting to build their home in Point Grey, renting temporarily would seem to be a no-brainer. Too bad hubris prevents them from making the smart financial decision… By the time they pay land transfer tax, lawyers’ fees, capital gains taxes and real estate agents fees, selling the condo to buy a townhouse will be a real dumb financial move.
Only in Vancouver is renting only slightly more socially acceptable as shooting heroine in your veins…
Actually that’s pretty much true for all of Canada. The only ones renting (in the general perception) are students and losers.
I came to Canada a decade ago, I rented a nice Condo in downtown Toronto. Co-workers etc. where all trying to get me to buy as renting is just throwing money away etc.
I had these debates (albeit less heated as most people’s skin wasn’t in that deep) then and they exist now. It didn’t make financial sense for me back then, I could rent something for way less than the mortgage would have cost me (when you factor in all the costs including taxes, repairs, strate fees etc.).
The problem is most people don’t make these calculations, the only thing they look at is:
a.) The Principal
b.) The Monthly payment.
The first one I find the most puzzling. I had one guy who REALLY tried to get me into the market and harked on and on and on about it. He was talking about how he was “owning” so many things (house, car etc.). It finally got to the point where I sat down with him and set: Fine, let’s do the numbers here.
In his mind he was way ahead of me, he did not understand that the car loan he has, the mortgage he has etc. is actually negative equity. We did the math and I came out ahead to the tune of almost 600K, he told me I was doing it wrong.
This isn’t just a housing crisis, this is a general lack of understanding basic financial reality crisis which is why this will REALLY hurt people and the economy as a whole.
It is extremely common to rent while you are building or renovating a house on the westside.
“Vanity will be the great equalizer”
Word.
Why isn’t everyone building their own homes in BC? Seems homes are selling for well above replacement cost….