Tag Archives: buyers

“Things have changed, we are not doing that type of mortgage. We are not interested at all.”

“I am currently interested in a piece of property in the burbs; a unique property which is why I would be willing to move on purchasing now at today’s prices. This is land, no house. I am eminently mortgagable… credit scores at almost 900, dual income, large amount of assets. Approached M-Cap, BMO, Enbridge, People Trust, CIBC, TD, and a couple of others for financing. Still waiting for 1 or 2 answers to come in.. but.. 5 institutions say “things have changed, we are not doing that type of mortgage, we are not interested at all” (without even inquiry into our situation). 3 institutions say “we would only consider a higher interest builders mortgage”. And by higher they really mean higher… Wow. Remains to be seen if financing can be had.”
- Burbs Boy at VCI 24 May 2013 4:51pm

Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”

“I am currently renting in West Van. It has been difficult to find decent, “affordable” rental accommodation on the North Shore. For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted.
Went for 23% below the list price. Owner been in the place for 11 years, and over that time, the value of the property increased on average 5% a year. I negotiated hard, walked away twice, and eventually the seller caved, just like I knew he would.
I’ve been renting for 5 years now, ever since a health crisis with one of my young children moved me back here. I was the bear amongst all my peers who are all “owning”. I still think there will be a crash in the Lower Mainland – but I think it will be an uneven crash. Certain areas will crash worse than others. I don’t think the entry level house market in West Van will crash. I think it will take a 10-15% drop and then move sideways or at inflation for a generation.
There is some value in staying in one place.”

- chumpy le chump at VREAA, 2 Jun 2013 4:36pm

All the best with your purchase, chumpy.
Does the “few hundred more per month” include all expenses (and assume no downpayment?). Share the math if you care to.
Further:
That’s 70% increase over 11 years (5% p.a. compounded)? Is that representative of the price increases on similar properties?
As we’ve said before, we expect all property types to revert to long term means; we don’t expect any to somehow be exempt.
- vreaa

Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets

“The Greater Vancouver Home Builders’ Association presented its 19th annual free seminar for first-time homebuyers in Surrey on March 19. This event is the largest of its kind in North America, drawing aspiring homeowners from virtually all Metro Vancouver municipalities – and beyond.
Attendance over the years has averaged 800. One year, registrations were cut off three weeks before the event, as 900 eager people had already signed up. Last year, attendance dipped to a tad under 600.
This year, despite significant promotion and a top-notch panel of speakers, about 500 prospective first-time buyers registered. Moreover, an audience head count revealed less than 300 attendees.
Mind you, I believe a number of external factors contributed to the attendance drop – March break, heavy rain, traffic and a Canucks game. Also, it appears the wealth of information available at folks’ fingertips kept some of the registrants at home that night.”

- from ‘A world of advice’, Peter Simpson, The Vancouver Sun, 6 Apr 2013

Thanks to RG, who sent the above link to VREAA by e-mail, and who adds:
“The interesting bit is Mr. Simpson’s rationalization that the marked drop in attendance may be attributable to, “March break, heavy rain, traffic and a Canucks game” …
Seriously? … “rain” and “traffic” resulted in far less than half of the typical numbers of potential first-timers from seeking critical purchasing information? Wow.”

Mom and Pop Get It Wrong In All Markets, Time And Again

“Villa and White felt “sucker punched” when stocks collapsed in 2008, he reports. The crash “wiped out half their savings.” They sold out of stocks, put their money in the bank, and “swore off stocks,” presumably forever.
Last month, as the Standard & Poor’s 500 index surged to new highs, they hired a new financial adviser and plunged into the stock market again.
The problem with Villa and White isn’t that they are unusual but that they are absolutely the typical American investor. Both of them are doctors, meaning they are presumably intelligent and educated. And yet they insist on investing like absolute fools.”

“They buy high, sell low, and the ending is predictable.”
“Share prices fall because there are more sellers than buyers. They rise because of the reverse. So mom and pop investors like the Villa-Whites rush to dump their stocks because they see the market plummeting, oblivious to the fact that the only reason it’s falling is because people like them are rushing to dump their stocks.”
- from ‘Mom and pop: The world’s worst investors’, WSJ Marketwatch, 4 Apr 2013

And so it is with all markets.
Regular folks (in the case of RE, the vast, vast majority of market participants) fell in love with Vancouver RE when prices started running up, became more and more adoring as they ran up more, and were most infatuated at the frothy peak (at the very time they should have been most wary). It is this crescendo of infatuation that drives speculative manias to their ridiculous heights.
As prices fall folks will become less enamoured, then discouraged, then disgusted by local RE, and when the most people are the most disgusted, it’ll be a sensible time to buy.
It’s not rocket-science, but it is emotionally very, very difficult to be a contrarian, and to take a position that is the opposite of that of the crowd.
- vreaa

“My buddy was looking to upgrade to a house in the Coquitlam area. With 200k extra for a home, that’s half of lifetime saving between him and his wife.”

“My buddy was looking to upgrade to a house in the Coquitlam area. Currently they own a apartment. Not sure if they even have than 10% down payment for a “used” single family home. The other day we were chatting and he mentioned how he wants to upgrade to all new appliances and do a bunch of renos when he buys a place. He said that I bought a house without a mortgage so I could upgrade all the fancy appliances at my place. Here is my thought: my place is in Surrey, which is 500k, for a single house. He wants to buy a house for 700k. His household income is not more than mine. If he is not overextending himself, he could easily do the upgrades. With 200k extra for a home, that’s half of lifetime saving between him and his wife. I guess no more trips and fancy toys.”
- from klin1022 at VREAA 18 Mar 2013 9:41am

Remember the good ol’ days when people used to think about an amount of money in terms of how long it would take to earn or save it?
- vreaa

2013 West Vancouver Sale At 2007 Prices

“Interesting data point out of West Vancouver. 4820 Headland Dr. sold last month [January 2013] for $1.17M. It sold in July 2007 for $1.2M. Poor location, corner of a 3-way stop, either way, they’ve done ‘well’ to have lost money over the past 5.5 yrs in Van RE. A few more of these coming I reckon….”
- NoBid at VCI February 26th, 2013 at 6:00 pm

Vancouver Sun Profiles A First Time Buyer – “I just wanted to build equity and not pay rent.”

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“Myles Wilcott, a single, 31-year-old general manager at Canadian Linen & Uniform Service, is among those who have met new financial requirements in order to buy a condo. He paid $412,000 for 705-square feet two-level loft in a 16-year old building in the Gastown district of Vancouver.

Wilcott had been looking at condos throughout the winter, waiting to find what he was looking for at a price he could afford.

By this spring, he had almost enough in his registered retirement savings plan to meet the minimum down payment set by the federal government. He had sufficient income to cover the monthly payments, even though new federal regulations meant he would be paying hundreds of dollars more each month than he would have been required to pay before the rule changes.

He was not concerned about reports of record high prices and talk of a possible crash in the real estate market. “A lot of people talk about getting into the market to make a quick buck,“ Wilcott said. “I just wanted to build equity and not pay rent.” …

Mr. Wilcott, who graduated from Simon Fraser University in business and human resources, said in an interview he had thought about buying a home a few years ago but did not qualify for a mortgage that was big enough to buy what he wanted.

He turned his attention to improving his credit rating, pursuing his career and putting aside some savings. “I was able to climb the ladder enough to the point where I qualified for a [25-year] mortgage.”

Mr. Wilcott started the home-buying process in December. The first step was to arrange for pre-approval for a mortgage. He had an agent to help him search in earnest for what he wanted – a loft-style condo in the downtown area. He looked at 12 different condos before finding what he was looking for.

He put down the minimum five per cent, which was about what he had saved in his tax-free registered retirement savings plan. A federal program called the homebuyers plan allows purchasers to use their RRSP as long as the money is paid back within 15 years.

His mortgage payments of $1,900 will be considerably higher than the rent of $1,200 he was paying before he bought the condo.

However it was his outstanding debts — not the monthly payments — that almost tripped up his mortgage application. Arrangements were finally confirmed at an acceptable rate with Vancity Savings Credit Union.

The whole process was a bit more stressful than he anticipated. The most difficult aspect of the purchase was evaluating the conflicting points of view he received on home buying. “I got too many people involved … there was such a wide array of opinions — buy now, don’t buy now; wait five years, don’t wait; don’t go into that neighbourhood, go over there.”

But once he met the qualifications and found what he wanted, he was ready to close the deal.”

- image and text from ‘First-time homebuyers adjust to federal changes; For those who can afford it, home ownership still a viable option’, Robert Matas, Vancouver Sun, 15 March 2013 [hat-tip OH YAH]

“$700 per month more outlay for accomodation plus condo fees, taxes, legals, move etcetera, etcetera (you all know the drill) and no mention that all his savings were wiped out during the purchase. Live and learn. Got to get on that ladder even if it only leads to a periscope.”
- Farmer, commenting on the above story, at VREAA 16 Mar 2013 3:22am

Agreed, we don’t think Myles really did the math on this.
He says “I just wanted to build equity and not pay rent”.
Even if he’s not fully conscious of it, he’s speculating on future RE price strength.
We’d bet the math shows that he wouldn’t “build equity” without that.
- vreaa