“I live on the west side of Vancouver and rent a 700sqr ft apartment for $1050 a month. For it to make sense for me to buy a condo, with ever increasing monthly fees, property taxes, random special assessments, and a good possibility that it will leak (like so many others), prices would have to drop a lot more than 15%.”
- Tim at greaterfool.ca 18 Dec 2011 at 9:40 pm
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- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
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15% is nothing after the 10 year bull run on RE in this city.
That is the mistake that renters always make. When I bought my first house, the jump from rent to mortgage payment was huge. Almost double. Did it pay off. Absolutely.
the OP didn’t indicate house, they indicated condo, for which there can be additional costs and risks of ownership IMO. If my choices were rent or buy a condo right now, I too would choose to rent.
Yes, because real estate prices always go up and regular mathemathics does not apply once you ‘own’.
here’s some math…
in a magical world where rent and own cost is the same/month, in 20-25 years your mortgage is paid and your housing costs are negligible – your rent will persist until you die.
And how much premium is there for home ownership? 2x? In a different market where it’s relatively easy to find a quality affordable rental it might be better to rent than own, but not in this city.
Drivel.
Most home “owners” I talk to ignore any variables beyond mortgage when they are doing their calculations. A guy I know bought a place and was bragging that his mortgage is only a little bit higher than his rent would be in a similar place. He gave me the whole lecture about how I am throwing money on rent etc. It took only a month until he started complaining about the high condo fees (which he did not account for), taxes (which he did not account for), higher insurance cost (which he did not account for) and a possible “assessment” (not even in his dreams when he was doing his “calculations”).
Oh, one thing I forgot – he has a variable rate mortgage and is paying just over 2% interest. That’s how his mortgage payments came relatively close to rental cost. Every 0.5% increase would add another $200+ to his cost.
+Another cost that is almost never accounted for – closing costs.
“your rent will persist until you die”
Rent comes in funny forms. CCAs are not just tax deductions.
tell you what…
You find me a rental of a detached home in Vancouver (same cost as my mortgage) where I am guaranteed to live for 25 years and my monthly housing cost goes down every 5 years and I’ll bite
“You find me a rental of a detached home in Vancouver (same cost as my mortgage) where I am guaranteed to live for 25 years and my monthly housing cost goes down every 5 years and I’ll bite”
Monthly housing costs that go down every 5 years. I cannot guarantee that… even for owners…
One thing I can state, though, is that a prudent renter will have more liquid savings than a prudent homeowner over the past 6 years. I freely admit it might never come to pass but said liquid savings may end up being auspicious.
“One thing I can state, though, is that a prudent renter will have more liquid savings than a prudent homeowner over the past 6 years”
Depends how you define “prudent”, and depends where those “savings” went. I would argue that the “prudent homeowner” is not the speculating lunatic that took out a 95% LTV mortgage worth 5-8x income, and is probably doing OK – especially given the increase in housing values over the past 6 years.
“Depends how you define “prudent”, and depends where those “savings” went”
At 5% down with a price-rent of 200 on a median property, investing all net proceeds in short-term paper, using 3% VRM, the renter is still ahead in terms of cash position after 6 years. If the downpayment is more, the renter obviously has more cash on hand because the renter did not use it to buy property. After year 7 the owner is in a slightly better cash position.
Over 6 years, if values go up and the owner sells the owner will likely be in a better cash position after fees. If values stay flat the renter does slightly better. If values drop the renter will be in a much better cash position. In the latter scenario the owner could even be in negative equity position or simply illiquid which is an added and potentially costly constraint. I haven’t accounted for risks of major repairs or other assessments, let alone interest rates increasing.
supply of condo is virtually unending. I wouldn’t be too quick to jump onto that ship either.
But unending too is the supply of foreign capital. Infinity divided by infinity.