“What if you bought a home many years ago and had the opportunity to lock in a great profit while the market is still buoyant? A Vancouver woman and her husband answered this question recently by selling the family home and signing a one-year lease on a rental.
“We bailed,” said Ms. Bold. She and her husband have been having annual talks about whether to sell since 2008, when the housing market briefly plunged. This year, they agreed it’s time.
“When you look at all the statistics, it just doesn’t make sense,” Ms. Bold said of the Vancouver market. “Who’s kidding who? The cost of living here is so outrageously expensive and incomes are not keeping pace.”
Ms. Bold and her spouse have been thinking. They’re in their mid-40s, she a professional coach and her husband an entrepreneur. They have two kids, aged 12 and 7. They bought a $275,000 home in 2003 and sold three years later for $375,000. Purchased for $445,000, their most recent North Vancouver home sold in March for over $1-million after attracting three bids from interested buyers. Time on the market: Less than a week.
“Let me put this in perspective – this is a 100-year-old home, 2,400 square feet on a 50-foot lot,” Ms. Bold said of her just-sold home. “We do not even have a bathroom upstairs with our bedroom.”
More than a million for a non-monster home? “That’s nothing,” she said. “This same home on the west side of Vancouver would sell at $1.5-million.”
The Vancouver housing market looked a little shaky in March. While average prices moved higher, sales fell sharply. Ms. Bold’s sense is that some parts of the city are holding up, but her confidence level in the market is near zero right now.
At first, she and her husband thought about selling in the traditionally strong spring market, and then buying another home during the traditional summer slowdown. Now, they see no rush to buy back in. Instead, they will rent a four-bedroom house for a one-year period in which they’ll look at their options.
One option is to continue renting in Canada, at least for a few years, and buy a house in the United States. …
For now, Ms. Bold and her husband are content to enjoy their debt-free status and the extra cash flow that comes from renting. In fact, their monthly rental costs are only a little less than their mortgage payments, which were set at a high level to speed up the repayment process. But they estimate they’ll save thousands by not paying property taxes and home maintenance costs.
It’s not an easy emotional transition to go from owning a home to renting, but there are compensations.
“The part I’m struggling with is the idea of living in a house that doesn’t look and feel the way I want it to,” Ms. Bold said. “My husband just keeps saying, wait until you see our bank account balance. We’re going to be debt-free with a big wad of cash.”
- from ‘Ready to be bold? Sell the house and rent’, Rob Carrick, Globe and Mail, 30 Apr 2012 who also comments:
“After a long rally in housing prices, concern about a correction of some sort is growing. For a majority of people, the idea of selling now to preserve their gain in the housing market will seem crazy. They like their homes, they like the homeowner’s lifestyle and they abhor renting. Let the housing market rise and fall – they plan to own for the duration. Still, there’s a case to be made for getting your money out of a house now if you’ve done very well over the years.”
From the comment section of the same article:
“Just listed my Vancouver home this week to do the exact same thing. Made huge gains over the past 10 years but never felt like the money really belonged to me, when it sells and the money is in the bank it will, because it is. I will be renting for a quarter of the price of owning with a huge smile on my face waiting for the correction.” – mootumbo
“My husband and I did exactly the same thing, and are really glad we did. I do think the Vancouver market is really overpriced. When and if we buy back in, we will downsize considerably, and will end up owning a condo/townhouse outright with enough savings to help to continue building for our retirement, which is still 15+ years away. In the meantime, even with very low returns, we are making enough to make it worthwhile to wait and see for at least another year or two.” – Just my opinion in BC
These individuals will, in years to come, be viewed as ‘the Fortunate Few’, those who cashed out in the vague vicinity of the top of the ‘Great Vancouver RE Mania of the early 2000s’.
In a speculative mania, only a surprisingly small percentage of participants end up profiting.
Another thing: we fully believe that even those who sell, and who now think that they are planning to buy on a pull-back, will largely sit on their hands when the time comes.. “Why buy an asset whose price is falling?” (they will reason).