ams at VREAA 1 July 2011 10:34pm-
“Vancouver was the place I wanted to move to from Toronto. I moved here in 2007, by accident, to do a project for a few months. I met the right woman and got married. What was a temporary assignment became home. Now that I have been here almost 5 years I am planning the family exit out of Vancouver. Vancouver will always be a very nice place to visit. As a place to raise a family and grow a high tech IT business it is not a good spot.
Based on detailed spreadsheets of our current family expenses we live a very modest lifestyle (we don’t own anything fancy). You need a family income of at least $250,000 per year to be able to afford a house, save for retirement, save for kids education. Unfortunately on a family income of $140,000 we can only do two of the above, so bye bye Vancouver hello Toronto. The issue with Vancouver is far deeper than just the housing bubble the economy is not diverse enough there are hardly any world class companies here and I don’t see why any major company would setup shop here than say Toronto, or Calgary.
April of 2012 we will leave, sell all our stuff move out of the rented place and head to Germany with the kids for the summer we will come back to Canada in September 2012 to Toronto, or who knows maybe we will stay in Germany till 2013.”
—
Note that ‘ams’ is not claiming that a family can’t ‘get by’ on $140K p.a. in this town. They are comparing the lifestyle and future security that their skills can earn them in Vancouver with what they can earn them elsewhere. It is not good for our community that those comparisons are leading to people leaving. The speculative mania in housing is resulting in loss of human capital. – vreaa
We should remember Vancouver’s baseline, though, where it was never a city to move to to get rich or live an affluent lifestyle unless you are earning big money as upper middle class. That was true in the ’80s, ’90s, and 2000s too. Perhaps now it is more acute but that vibe has always been there.
I don’t know, ams; I agree Vancouver has an anaemic business climate but Toronto has the same wealth disparity and high prices in some areas. There is no limit to how much one spends on real estate and there are those earning $140k/year living as if they earn $250k in T. too.
@jesse When I got to Vancouver for the first the people I was working with said that Vancouver was a place where you had to come with money otherwise it is very tough, yes I agree with you that the baseline is different in Vancouver.
I am not bothered by Wealth disparity in anyway I am very happy for people who have a lot of money. I don’t expect to live in T.O. at 250K lifestyle on $140K a year but what I do expect are more options for housing at every price level, which i think is truer in Toronto than in Vancouver. I also expect a more diverse economy that is stronger than Vancouver. I am hopping that my move to Toronto will pay off in improving my family’s quality of life.
“I am hopping that my move to Toronto will pay off in improving my family’s quality of life”
In the mid-’80s there was significant migration to BC from Ontario, partly because the ON economy was bad and many work environments became caustic after years of high inflation and downsizings. Many who moved to BC took pay cuts but did it for lifestyle reasons, but at the same time could afford SFHs for their families, the most part, in most near-burbs of Vancouver. The west side of Vancouver was considered expensive even back then, to the point where I remember conversations with family members wondering how middle-class families could afford living in Dunbar. That was 25 years ago.
Now we have the same conversations, the difference being prime rates are in the 2-3% range where they were at least double that, if not more, a few decades ago. So there is no surprise, really, how people can afford the prices — there are obviously ways of affording them — just that the downside these days seems way bigger.
“You need a family income of at least $250,000 per year to be able to afford a house, save for retirement, save for kids education”
you need 250k/year if you want to go from renting to owning a detached home, yes. But not too many people are stupid enough to try to sidestep so many rungs on the property ladder. Try smaller bites – it’ll help prevent choking.
@Rusty The numbers don’t make sense on buying anything in Vancouver, if I bought the place we are renting right now our monthly costs would go up by $1000 per month I have done the math. So if I stay in Vancouver I am better off renting than buying.
Also I have a personal aversion to massive amount of debt as I like my debt free life style. So I won’t put myself into a giant financial hole where the factors that can destroy me financially are all things that I can’t control interest rates, the economy … etc
Regarding the property ladder that is all well if you have a typical life but my life and circumstances have never been typical or conducive to getting on your beloved property ladder.
My strategy to get ahead in life is to bet on my skills in creating entrepreneurial wealth via my business which I am working on growing into something bigger than what it is right now. For me housing is just shelter I don’t want to be a property investor, I don’t want to be a land lord, what I want is just a place to live that is big enough for my family. I would be okay with a 3 bedroom condo but I have never seen them in Vancouver. All those shiny new towers don’t have 3 bedroom condos in them because developers can make more money selling 1 & 2 bedroom Condo’s.
For me the over all value equation offer by Vancouver is not worth it, but I am sure it is worth it for other people like rusty. I am doing what is best for me and my family, I just happen to be posting my reasoning on this anecdotes blog comments section.
I guess “Property ladder” is a Vancouverism — sort of like the license plate?
This idea of the “property ladder” assumes increases in house equity beyond normal inflation.
Vancouver property ladder? Look at the condo and SFH price charts – the spread has been moving out at an increasing rate for the past decade to the point that there’s no rungs left. Not to mention – significant special assessments for water damage means that renting iremains a better way to build wealth in Vancouver; however, most people will quickly realize that SFH price increases are far greater than what a family can save even with a combined family income of $250K. That leaves one option for a SFH – buy elsewhere. Benefits include 5% cap rates and much better employment income when you move too! And no constant rain! Best place on earth – what a joke.
the dirigible has left the pad! the ladder is out of reach!
are we not entertained??
http://i51.tinypic.com/33onol0.jpg
…you and EyesTheBye are one and the same.
I’ve been saying that for months… it’s so obvious.
There are many similarities in their arguments, but, if you take what they say at face value, they are not the same person: ‘eyesthebye’ bought a SFH on the eastside in early 2009; ‘rusty’ owns more than one property and has apparently owned for longer.
Our preference is to always take posters at face value unless it becomes obvious that they are fabricating. It’s always a bit beyond us as to why anybody would spend time doing that, but, it does happen.
Some people don’t have the luxury of picking when to get into the property market. Suddenly, you can find yourself with two children in a two bedroom apartment and in need of more space. Frustrating! Life doesn’t always move in a linear fashion (age 20 buy first condo, age 25 upgrade to townhouse with equity, age 30 upgrade to SFH with equity in time for 2 children). Sometimes you’re too busy living your life to think of the property ladder (career, travel etc) and it all sneaks away on you. Because really, there’s more to life than “trying to get onto the property ladder” in one particular city. And I look at families who, ten or fifteen years ago, didn’t have such problems. They bought a SFH right away and had a couple kids, no problem. Now it’s a real dilemma to try to figure out how a third child will fit into the 2 bed apartment (hint-it won’t). Bad timing, I guess. Too late now, I’m screwed (and it I’m screwed at age 30, others ten years younger than me are as well). As far as I can tell, the prices for condos in my area have barely budged in the last few years-so there goes the “move up on equity” theory.
An off topic Olympic Village anecdote…
Recently visted a friend who moved into a 600+ sq foot condo at OV about 8 months ago after divorcing her husband and winning the house lottery in Van East (bought $200K, sold 10 years later for $800K). She had been thinking to buy at OV and I suggested she rent for a while given our overpriced market. She told me yesterday that she is moving when he lease is up, she is so happy she didn’t buy there. 600sq feet is too small, no kitchen storage, “den” doesn’t actually fit a desk and is her only real storage, she hears everything that happens in the hall and her neighbours patio which is seperated from her by a glass partition borders her bedroom and she hears the neighbours conversations perfectly if they are out there. After looking around, I might be able to make it work but it would be a challenge for 2 people. And she pays $1600 for it! I see there a ton of OV places on Craigs for rent, similiar sizes asking ridiculous rents. I think those landlords are going to get a reality check.
The landlords will be getting a “reality check” instead of a “rent check”
time to get your troll on
I didn’t mean that I could make it work at $1600, just to clarify. I could live in 600 sq feet but wouldn’t pay more than $1100 max.
Paying less for a smaller appartment. How logical.
It seems that it works the other way in practice, the tiny condos cost more. I don’t get it.
this is the market that defies logic
because the people participating in it are deluded
and someone feeds their uncritical little minds the delusions the love
and someone gets paid $100k a year to design these delusions
they went to school for this.
Finally a post which recognizes how irrelevant are affordability calculations that use average incomes against Vancouver houses. $300k per year barely cuts it on Vancouver’s Westside unless you have a serious (50%) downpayment.
Yeah Jim I think you’re right… but… I do know a few families who bought on the west side with lower than $300K incomes and without large DPs to boot. They afforded it by saving like ants and embarrassing the neighbours with their run-down cars and shabbily-dressed children.
The entrance fee used to be guarded by higher interest rates, now it’s higher prices. Danger, Will Robinson, Danger.
..but look at all the pretty things we have!
Not that I’m saying Vancouver isn’t over-priced or anything, but seriously? $140K/yr and you are only living a “modest” lifestyle and can’t save for retirement, children’s education, and a house? Sorry but I think ams definition of modest is very different from the average person’s modest lifestyle.
Well I agree Vancovuer housing price is beyond ridiculous but to say that one needs $250K/year family income to live a good life is also in the same league. You might not want to buy an over priced cardboard box but $140K/year, a family can live very well and personally I think it can do all three: house, children education, retirement saving if you manage money and “modest” lifestyle properly. Maybe not Vancouver West mansions but a regular house is definitely possible on $140K/year once price gets reasonable.
ams,
taking on a mortgage is taking on a massive amount of debt for a long long time. Some people are risk averse and choose never to engage in such risk-taking. Fair enough – having a mortgage isn’t for everyone. And at least you admit that your situation is not typical. Going from renting to owning a detached home is basically suicide in this town (very very rare).
As far as 3 bedroom units go, you can get nice large but older townhouse in Champlain Heights for less than 500K. Nice area, lots of parks, big shady trees, etc. See MLS #V896127 for example. Good luck to you.
pump your warez, buddy
With the continuing advances in health care and human life span, it’s very possible to outlive the years remaining on a leasehold in Vancouver.
A townhouse for half a mil? The public schools better be excellent to make up for that nonsense.
out of morbid curiosity, how many 30 year old detached houses on freehold land could you buy for that where you are in the states? you can look up the local schools using the (ugh) fraser institute’s school database..
Derp Derp,
For fun you might want to check out zillo – you can see current prices listed in US residential real estate and can check it out by map:
http://www.zillow.com/
Currently I’m an ex-pat in Canada, enjoying the country and the people very much. For bubblelicious reasons, I’m concerned about buying — especially as I might not be in town for more then 5 years. [I'm not in Vancouver -- prices are just mildly insane in the prarie city where I live. I've got friends in Vancouver, and I'm sort of horrified, entranced, and baffled by the situation.]
Until recently I was living in the medical and university center in a rural midwestern state. My small city had the most expensive housing in the state: 5000 square foot mansions were going for 400 – 500K. A large 2 story was going for 200-300K. Townhouses with 2story attached garages, 1400 square feet, not including the finished basements, new construction were selling for 150K.
About a year ago friends bought a detached house in a nice area near Greenlake (Seattle) for 350K. You can get a good house in the nicest suburbs of Chicago, with the best public schools in the nation for half a mil. (Northbrook, Glenview, Willmette, Evanston). I’ve also seen nice two stories in those suburbs for as low at 350K.
Half a mil is a lot of money. This bubble just baffles me. Canada has land. Canada has trees. WTF?
very informative..
i’ve used zillo, mostly for comparing bellingham/wa state prices to van..
canada also has historically low interest rates,
and a taxpayer backed mortgage insurer,
and HAM,
and enormous numbers of television viewers.
“canada also has historically low interest rates,
and a taxpayer backed mortgage insurer,
and HAM,
and enormous numbers of television viewers.”
yeah – it’s like I’m watching a re-run. Only without the derivative problem and slightly more prudent bankers.
ah the myth of our prudent lending
you can take a $20,000 LOC from scotia bank and plunk it down as a downpayment at another bank or lender, maybe through a less than scrupulous mortgage broker or your 2nd cousin at the bank, and presto.
sub prime, anyone?
The “myth” that because there was no subprime in Canada (and Canada does not have subprime like parts of the US had; it just doesn’t) high price-rent and price-income ratios are justified. That people are dipping into their own savings instead of someone else’s is sorta moot now. High prices are high prices regardless the means by which they were achieved.
yeah – I agree. Much looser lending in the US during the boom, no doubt. But things got pretty fast and loose here for a while. The subprime aspect of the mess has been over emphasized and the flat out over-leveraged middle and upper-middle class households de-emphasized.
In the end, over-leveraged is over-leveraged. What really killed it were the over-leveraged people in teaser rates ARMs & consequent higher interest rates. And, of course, all the people who used their houses as ATMs.
On the question of what can you get for a single detached in the states: Here’s a link to to a freehold priced at 599K in Coto De Caza, CA. 4 bedroom, 3 bath, 2,700 square feet. (Coto is the gated community where they film “Real Housewives of Orange County.)
http://www.zillow.com/homedetails/5-Cornell-Ct-Coto-De-Caza-CA-92679/25601611_zpid/#{scid=hdp-site-map-bubble-address}
Yes poor Rusty is correct. There are 3 bedroom places in Vancouver that are available to buy at sub-500K prices, though in that area it’s not exactly as “convenient” as living off the Cambie corridor… oh and it’s leasehold… and schools? Yes.
And Rusty is correct too that taking on a large mortgage is not for everyone. LOL
I am hopeful the City starts zoning more realistic lots to allow families to move back. (The school-age population has dropped significantly where other cities have had it increase.) That means adjusting zoning by laws in the precious low-density RS* areas, allowing lot splitting, and coming to terms with illegal suites being a major problem. I know it’s sacrilege but many families don’t want to be amateur landlords and rent rooms to students. I know. I’m crazy.
Oh and try applying to cooperatives. I was seeing more than a few vacancies advertised recently which is somewhat rare in the past few years. It’s not for everyone and some aren’t as well-run as others but I saw a few openings in cooperatives that people tell me are well-run. They have 3 and 4 bedroom places. Sure, it’s not the path to riches through real estate speculation but people can and do get accepted to these places and enjoy them. They offer stability of tenure, as long as you pay the rent and don’t beat up your neighbour lol.
I’m trying to resolve a longstanding issue people seem to be having with finding 3+ bedroom accommodation in the City. I know they aren’t bountiful but I know many people who have, eventually, found stable 3br+ accommodation.
rusty we looked at town homes in Champlain heights and they are leaseholds I don’t see a difference between renting and buying a leasehold property same thing.
he doesn’t care about you,
he just wants to pump.
nay, he must pump.
he pumps, therefore he is.
the difference is that you’re building equity, and you never have to move your family. There are good schools close by as it’s next to well-to-do Fraserview district. The example I showed is a 3 br, 3 bath place at 1300sqft for 335K. Big enough for a family of 4 for about 10 years until your kids are older. Yes, it’s probably a bit cheaper to rent one but this won’t help you gain some equity so you can upgrade later.
but it’s leasehold… it’s crap
rusty, i found your song..
Don’t be ridiculous. Income doesn’t matter in Vancouver.
All you need to do is leverage up, buy some houses and flip them in a few years. Instant multi-millionaire….
Isn’t that right? I mean, RE never goes down here. Vancouver is different! Don’t worry about income and actually savings…
That is absolutely ridiculous… I don’t know too many people who make that kind of money… Most people don’t make more than 40K a year, maybe 80K on a duel income… How is anyone supposed to live these days? It won’t be long before there will be more homeless people than people with houses.
Someone who does not “own” a house is not necessarily homeless.
T.O. Switzer-guy agents -> Have you seen this yet?
Qualifying Income By Area, Greater Vancouver
crazy, huh?