Visualize the basement
“$2400 / 3br – 1400ft² – Lovely quiet home in great neighborhood Available December 1st (Mount Pleasant / Cedar Cottage)
Date: 2012-11-11, 1:44PM PST
Our charming turn of century East Vancouver home is for rent.
Newly (as in will be finished in a week!) renovated kitchen with white shaker cabinets, dove grey quartz countertops, breakfast peninsula, mini office / computer area, dishwasher.
Hardwood floors throughout most of the house, living / dining rooms with big picture windows.
Three bedrooms upstairs: master bedroom with two large closets (one walk-in with a window for natural light), two smaller bedrooms with one closet each and big windows looking out to back yard.
One bathroom with soaker tub and skylight.
Back deck for bbqing and entertaining, big nicely kept back yard.
Front porch ready for your rocking chair.
Basement has shared laundry (and a suite where we, your prospective landlords, reside).
One year lease.”
- craigslist ad, 11 Nov 2012 [hat-tip Chem guy at VCI]
You can imagine the ‘math’.
Upside: “In 25 years, our tenants will have paid off our mortgage!”
Downside: “We live in a smallish, dampish, darkish box, with people stomping on our heads.”
…
Another example of Vancouver homeowners as speculators: decisions to buy/hold property based almost solely on expected future price strength.
When these homes were first designed and built, was there ever any intention for people to be living in the basements?
- vreaa
Gawd. Buy a car and move to Surrey.
Yeah, but that would mean living in Surrey.
Compare:
http://vancouver.en.craigslist.ca/rds/apa/3360566531.html
but you’re just throwing money away on bridge tolls!
with all the money you’re throwing away on bridge tolls, you could have had a good down payment – come on, jump in the game! man up, live in a basement for 20 years.
Shared laundry? Oh, the shame. No Bosch? No SubZero? No Wolf? No private cinemas?…
“We’ve seen, over a number of years, growing disparities in wealth, in income, and I think what’s happened is accelerating and exacerbating the situation,” said Spencer Cowan, vice president of research at Woodstock Institute, a Chicago-based nonprofit group that researches fair lending, foreclosures and wealth creation.
[Bloomberg] – Chicago Luxury Homes Rebound as Foreclosures Plague South Side
…”Single-family house prices in Cook County were at a similar level in the second quarter of 2012 as in the second half of 2000, and are down 37 percent from their peak, according to a Sept. 24 report from the DePaul housing institute.
Condo values in the county also are down, DePaul data show. After reaching a record in the first quarter of 2007, condo prices are 51 percent below their peak. They fell 11 percent in the second quarter from a year earlier, declining to a pre-1997 level.
“The for-sale market is still uncertain,” Smith said. “You don’t know if the market has really hit a bottom yet.”…
http://tinyurl.com/b3vhlxq
[NoteToEd: Chicago - the 'PosterBoy' for bifurcated markets/outcomes]
Part of the problem is that when people are willing to subject themselves to this sort of thing just to be able to buy you either have to be far wealthier than them or else do the same thing if you want to buy yourself. This sort of cultural “house madness” is far from the only thing driving prices up in Vancouver but it is certainly one piece in the puzzle.
Two side notes:
When I say “cultural” I don’t mean it in the ethnic sense – the whole city is effected (infected?)
I am pretty sure that to qualify for a mortgage in this neighbourhood these people are far from poor (though at this point they must feel that way).
Affected (You’re welcome)
BTW, I agree with what you wrote.
MarKoz -> Agree completely. It is precisely this kind of willingness to overextend that has caused our mania. And, yes, it’s ‘cultural’ even though not ethnically so… it’s based on beliefs shared by the vast majority of humans in this part of the world, 2000-2012.
It is partly ethnical.
Very few Chinese man will find a woman if they don’t own a home.
ethnical?
what a horrible scenario you’ve painted – materialistic women and men willing to pay for it.
well, i stand corrected – ‘ethnical’ has been in use since the 15th century, according to Merriam-Webster’s Dictionary. “Totes!”
@Real Estate Tsunami
China is *that* way across the ocean.
Ethnical?:
http://kotaku.com/5953684/womans-husband-apparently-wont-buy-her-an-iphone-5-so-she-protests
“cultural ‘house madness’ is far from the only thing driving prices up in Vancouver”
Culture meeting debt; it writes itself.
Seems kinda pricey to me (as someone who’s looking for a new rental in East Van). $2400/month for a 3 bed, 1 bath house (upper suite, really), where you don’t even get your own laundry? Oh please! I wish these people luck!
My good neighbor, who was a relatively new immigrant from Portugal did this ~35 years ago while he was a single young man. He had 2 sets of tenants living above him while he lived in the basement suite. Eventually the tenants paid off his mortgage and he now owns the house clear title. (Paid off ~20 years ago). He moved into the main floor suite when he got married about 5 years after buying the house and now occupies the entire house with his wife and daughter.
I think some people still do this in order to get on to the property ladder. My parents did this as well 40 years ago to buy their first house. They borrowed almost the entire down payment from friends and family at the time. (Paid off the home within 5 years) The mantra,” Sacrifice now in order to have a better future”. Unfortunately, it may be a sacrifice which may not lead to a better future for some given where our market may be headed.
this time, it really is different!
there is no way this house is getting paid off in 5 years, man.
that was when income to price ratio was still 3.5:1 – now we are talking about 12:1 ratios.
carlk -> Yes, there are many older stories like this.
But at what point in the RE cycle did these people buy? Being successful with such a plan is very dependent on buying at reasonable value. For instance, the man you mention paid off his mortgage in 15 years, your parents in just 5 years. As Naked Official implies, nowadays?
–
For extreme examples, recall that in the 1930s one could buy a home in Vancouver for the equivalent of 3 years’ rent!!
Naked Official.. implies a lot of things!
i wish i got 50 cents per post..
Actually, this time you didn’t imply anything, you said it!
coffee is taking hold, look out
“I think some people still do this in order to get on to the property ladder”
Ah well this is all fine and dandy if the business case works out. There is no difference from renting out the property and living in the basement or living in someone else’s basement and renting out the entire house. Unless he’s not “paying himself first”… nah!
Usually these situations are to live in the basement for a few years until incomes increase to afford the upstairs, then rent out the basement.
If all you need is the basement, why live upstairs?
I’ve found myself in kind of the same situation. I bought in the last trough and rented out the basement, with the intent of taking it back when the mortage was paid down. Now its like, I’ve lived in this part of the house for 11 years and don’t really need the downstairs space!
It’s become as much about having the house occupied when I travel and someone to collect the mail, rather than the income.
And yeah, the ad’s phrasing about those who “reside in the basement” is kind of creepy.
Sounds allright to me, actually in some ways it sounds like you have a groundskeeper/groundstender, except THEY PAY YOU
Creepy situation!
Never know when the landlord will emerge from the basement.
goddamn basement dwellers
“Never know when the landlord will emerge from the basement” …looking pasty, and covered in mould.
“honey, i think the landlord’s lung infection is acting up again.”
I hear Mr. Spielberg and Mr. King have required the filming rights.
Will be called The Landlord, who came out from the Basement.
Will premiere next Halloween.
Real estate tsunami: wu mao dang?
I would have gone with a Chud clip…..
$2400 wtf? based on what? approx cost to carry? … curious jonsson
ROFL !!………”breakfast peninsula”…………that’s a new one.
Yeah. It’s almost an island but it isn’t.
What a dump. Buy the same thing in Rossland for $50k and sell ski wax to tourists—live a way happier life. This should be filed under ‘psychosis’.
The rent they want is way too high. You can get a very nice 3 bed house for about $1800 without anyone below you.
What a charmer! And only 2500 per mo to rent! Now that’s desperate. Classy Vancouver! Living life large on the east side!
They’ve updated the ad on Craigslist now:
Great House In Great Neighborhood
They’re going to be cellar dwellers because they travel a lot:
Basement has shared laundry (and a suite where we, your prospective landlords, reside. We are moving downstairs because we travel a lot.).
I don’t get how travel equates to subterranean living, I am on the road 50% of the time so when I finally get “home” I like a nice place to return to, not a basement. This brings up another issue, who would want a landlord that travels a lot; who do you call when something goes wrong if they are always out of town???