A discussion regarding buying versus renting at vancouvercondo.info this week included interesting anecdotes and opinion, and we have archived many comments below. The stigma attached to renting persists. It’ll only change after prices plummet and enough people have been burnt to make renting look respectable and even wise again. See the ‘Renters’ sidebar for past discussion and links. -vreaa
Anonymous November 11th, 2010 at 11:25 am–
“I started looking in 2007 and in the area I want to buy, prices haven’t moved much at all (not Vancouver or Richmond). Since 2007 I’ve saved over $150k. As long as price growth doesn’t outpace my rate of savings I’m doing well. If I had bought in 2007 it would have been with 5% down, as I was fresh out of school, so imo I’m better off having waited. I’m going to buy something soon, were just waiting for the exact house we want to hit the market; probably by spring. It’s tempting however to keep renting because if keep my current pace of savings, I’d have about $800K cash in 10 years, and there is no way I’d have $800k in equity after 10 years if I buy. My wife however, sees more value in family memories than a fat bank account and I agree.” and later adds “My situation probably isn’t very common. Yes we live cheap. I drive a $2,500 car; we don’t travel or eat out. We save about $4k per month on average, less currently but more when my wife is at work, so at 3% that works out to about $800K in 10yrs. We rent a home that our family owns so this helps a lot because our rent is very low, enough to cover taxes/services and maintenance. My mother in law lives 2 blocks away so she looks after the kids while we are at work, which is a huge savings.” [Arguably favourable situation, but ‘renting a home that my family owns’ makes this a non-representative example. -ed.]
Ted November 11th, 2010 at 11:33 am–
“Here is my story: Bought in Calgary in early 2005, sold for an almost 100% gain 18 months later. Moved to Vancouver and held on to our now large down payment and rented. Passed up 1000 square foot units for around 500K which now go for about 650K.
Gave up and bought in early 2009 and now contracted to sell 100K higher (-35K of renos – low net but free accommodation at least!)
I don’t think I should buy right now but don’t have the conviction all of the bears seem to have. Who knew the interest rates would drop to nothing? Who knew amortizations would be extended? Who knew qualifying would become so easy? Who knew Canadians would lever themselves up to the levels they have? Could something else come out of left field to keep this game going? TD’s new mortgages? Maybe… There is no way investment real estate makes any sense right now but if you’re looking at a primary residence I’m not so sure.”
patriotz November 11th, 2010 at 1:29 pm–
“I do not aspire to own in Vancouver again as I have no plans to live in the city long term. Elsewhere in BC perhaps, and as we know the bust is already well under way outside the Lower Mainland. If I did want to buy I would wait for price/rent of about 150x, that would be the figure for a house with suite income, a house without a suite would be higher as the potential suite income would have to be factored into the price. Any higher than that and you are throwing away money. I’ve found that having my name on a deed does not make life more enjoyable. I also think that Canada’s support for retirees will be stressed in the future and I think throwing away money at a stage in your life where you don’t have a great deal of time to earn it back is not very smart. I’d rather keep my money in the stocks and bonds where I can get a reliable 6% yield. As far as condos go, they have so many downsides that I can’t understand why anyone would pay more than 100x rent. If you rent one you do have the risk of having to move but so what – they’re all the same anyway.”
Lilypad November 11th, 2010 at 1:31 pm –
“Prices would have to fall at least 50-70% for me to buy a house or condo in Vancouver. It is just too easy to rent a luxury condo for half the price of a mortgage, strata fees, taxes and other maintenance costs, even at these low mortgage rates. Plus I don’t need to deal with the costs and anticipation of building leaks, irritating strata councils and disrespectful neighbours. If I have any problems I just pick up and move. To me this lifestyle represents FREEDOM. I can always move with my nest egg to a nice place that is 1/7th the price of Vancouver if I ever feel the need to own a house and take on the headaches and added expenses associated with it.”
Absinthe November 11th, 2010 at 1:47 pm –
“I’ve had, since 2005, a bigger place at a lower price in a better location than I could have had buying, with money left over for RRSP and RESP. I am more diversified than I would be if I owned my primary residence. I have more room, which with two small kids, is no small thing. I have a yard, which with two small kids, is no small thing. And, I don’t have to lose a second of sleep worrying I don’t have enough set aside for the roof, or the furnace, or whatever else might go. Seriously: I became a bear because owning would require an unholy amount of “lifestyle” and location sacrifice for the excitement of property taxes and strata meetings (because I wouldn’t have been able to afford a SFH) and there was simply no way it was worth it. I live in a bigger house a lot closer to work than those of my group that own.
If housing rises forever, then they’ll be house rich and I’ll have investments and be more liquid and live closer to work and deal with less stress. I will buy, if and when the lifestyle sacrifice required isn’t so heinous as to make my every day a sweet hell of 3 hour commutes (and the car/gas payments that go with), or conversely, 4 people in 750 square feet with no room for projects, etc.”
metalhead November 11th, 2010 at 1:48 pm –
“I have a paid for house in Abbotsford and I’m 50 years old with a decent bit of cash put away. I’m looking at rec. property in the Okanagan area. Some specific deals are getting close for me. In general though I think the area has a ways to drop and it’s really just starting. We’ll see how it looks in Feb. or March? I should be able to buy something outright or maybe tap a small amount of HELOC to take care of the balance. I won’t need a mortgage.”
Renting November 11th, 2010 at 1:57 pm –
“At what price point would I actually buy? When it is cheaper than renting when all costs are factored in. I think we need about a 50% reduction to make buying cheaper than renting if interest rates stay low. Is 60% to 70% realistic? Yes, you are caught in a bubble which clouds your vision. Look at the examples posted in this thread for Prime NYC at 80% off and Kelowna water front at 50% off. This is just the start of the decline in both places. A million dollar home in Vancouver is a piece of shit. At 60% to 70% off it will still be a POS and will still be priced higher than buying a POS anywhere else in the world. It would have to drop 85% to be priced at levels we see in Phoenix for example. So yes 60% to 70% is not just realistic but probable. 300k to 400K for a POS house in the less desirable part of Vancouver would still be expensive IMO but that is 60% to 70% off!”
cgh November 11th, 2010 at 1:01 pm –
“My rent is $820 per month and I’ll gross around $120,000 this year (hard to say exactly yet, as I’m a contractor). If my girlfriend and I end up moving in together, I’ll save even more.
I have other friends in the same position. Unlike them though, I am not even thinking of buying anytime soon – why bother? The value just isn’t there, and I am thick-skinned enough to deal with the social pariah status of being a mere renter.”
paul November 11th, 2010 at 3:20 pm –
“I’ve never experienced any negativity about renting yet I read about it all the time on forums like this. I think this is an Internet thing as in real life it would be very surprising to have someone criticise you to your face for choosing not to buy a house. I mean, your living arrangements are hardly likely to come up in conversation with someone you hardly know and why would the people you do know care whether or not you own your own home?”
cgh November 11th, 2010 at 3:53 pm –
“Actually, I find living arrangements come up [in conversation] all the time. At dinners with friends, some of whom are acquaintances (particularly their spouses), talk often turns to real estate, what’s going on with whose house, etc., and when I eventually reveal I’m renting, it’s assumed by some (not all) that there’s “something wrong” in my life. Those were the words used by a very good friend’s spouse not long ago, in fact. She has basically classified me as someone who “needs to get their life together”.
I bought a vehicle over the summer, and the financial person at the dealership took my cheque (I paid cash) and said, “Bet that’s the biggest cheque you’ve written in a while – well, except for the down-payment on your house!” I said I’d never made a down-payment before, and it went from there.
Maybe it’s just our social circles, I don’t know. I think that once you’re 35+, a lot of people here believe that responsible adulthood includes home ownership, so if you don’t own, you somehow don’t make the cut.”
rp1 November 11th, 2010 at 5:57 pm –
[Regarding whether one experiences “negativity about renting”.] “Try being 30 with a young family. If you haven’t got a million in cash or a million in debt (either way, as that’s what gets you a SFH) then you’re the worst parent ever.”
Anonymous November 11th, 2010 at 6:35 pm –
“My wife mentioned to another mom at our kid’s preschool that we rent a house nearby and the other mother responded like my wife had cancer, with a tone of pity.”
McLovin November 11th, 2010 at 6:47 pm –
“It feels different out there. I am meeting a lot of people who think the market is overpriced. Recently I met a person who sold his house made a huge amount and said “I won the lottery.. I am taking my money and renting maybe for the rest of my life.” This was refreshing to hear. I know the sales and prices don’t really back this up but it appears to me that the winds are changing.”
jesse November 11th, 2010 at 8:28 pm –
“Overpaying will, in net, leave someone with less capital in the future. For whatever reason some people’s personal situations warrant them being willing to pay a premium for certain products at certain times. From a strict value investment point of view investing in property any time in the past decade — even at a small discount vis a vis the market trough in 2008-09 — was not a wise move. But in many specific situations it’s not always about maximizing future capital.”
Renting November 11th, 2010 at 9:34 pm –
“Although I have seen people offer good intentioned advice to renters I have never seen someone get any type of pity or disrespect. If someone was to show my wife that disrespect I would simply give her some advice on how to reply. For example: Oh do you own? When did you buy? Oh geese right at the peak of the bubble. You must be worried? No. Well then your husband must have a really good high paying job. Oh that is all he does, so sorry to hear that. We will keep our fingers crossed for you that things work out. I mean I am sure what happened in the US will not happen here with the price collapse. And if interest rates do go up as everyone predicts you can get always get a second job on weekends. I can watch the kids for you. I don’t have to work.”
NO – LYMPICS November 12th, 2010 at 10:53 am–
“A friend of mine lives near the 41st and Oak. For about 16 years he rented a nice 50 year old rancher from a Chinese landlord. The Landlord has now given him notice…wants to sell for approx. $1 million but no takers. Was paying about $1400 month.”