“Would I buy again? Sure, but only if prices drop severely – as in 50%. And if that doesn’t happen, I simply do not care anymore.”

Posted on 6 August 2011 | 16 Comments

gordholio at vancouvercondo.info August 4th, 2011 at 8:39 am –
“My girlfriend and I have now completed our move. $1650/month rent for a very likable house in south Surrey (right on the border actually), just a ten-minute bike ride from the beaches of White Rock and a five-minute drive to cheap gas/groceries in Blaine.
Hmmm…$500,000 for some blah, mouldy 70s-era box in rainy, blah Mission at a time when prices are dropping hard, or mortgage-free, reno-free, repair-free, property tax-free, purchase tax-free living in sunny, desireable south Surrey? Yeah, it was a REAL HARD choice.
The toughest thing for me when we sold our house in Delta last October was getting used to not owning. I’d owned that thing for a dozen years, and the idea of not being total master of my domain was a bit unsettling at first. But I gotta say, now that I’ve had a few months away from it, I don’t miss it nearly as much as I thought I would. In fact, I look at the untold costs of ownership – the way it would slowly eat away at my disposable income with trips to Home Depot, nurseries, lumber yards, etc, etc – and I can honestly say I now prefer renting.
Would I buy again? Sure, but only if prices drop *severely* – as in 50%. And if that doesn’t happen, I simply do not care anymore. For us, in a situation where we have a lot of up front money and couldn’t really take advantage of low interest rates, buying anywhere near the top just makes no freaking sense whatsoever.
In the meantime, I’m truly happy to be practicing what I preach. For us, renting in the midst of insanity truly is the far, FAR better option.”

16 responses to ““Would I buy again? Sure, but only if prices drop severely – as in 50%. And if that doesn’t happen, I simply do not care anymore.””

rusty | 6 August 2011 at 9:35 am | Reply

oops. you forgot to post an important follow up post to this comment.

@Gordholio
We sold our place in Delta in 2007 which was owned free and clear for 15 years and have been renting ever since. I can tell you we much prefer owning over renting. We have had 3 different landlords in the interim and we have had issues with all of them and we are now currently looking to move yet again after being jerked around by our current LL. While renting is at first novel and made me feel free of responsibilities, realistically we are living in someone else’s premises and they can call the shots. I do believe we are in a bubble that will correct at some point, but it’s getting very hard to wait this out. It’s very frustrating.

[Thanks for posting the further info, rusty.
See below: ‘Yes, renting can be a headache..’ -ed.]
- blammo | 6 August 2011 at 11:15 am | Reply
  
  Not to mention the 10% this person would have paid against their mortgage after four years ($400,000 mortgage w/ payments of $2,007.65/month = $42,870.54 of equity), irrespective of price increases:
  
  http://www.canequity.com/mortgage-calculator/
  
  If this person had put 10% down they would have doubled their equity by now, again irrespective of price increases.
  
  The problem is, money is so-o cheap right now, they are forcing you to take risks. Its not just the cost of housing that you have to calculate, but the cost of money. I’m not a raging bull but there are still situations where (IMO) it makes sense to buy even in the crazy Vancouver market.
  - vreaa | 6 August 2011 at 11:55 am |
    
    The one example of where buying still makes sense, as we have always maintained, is where a individual/household can purchased a desired/appropriate home for a percentage of their net-worth, such that a 50% drop in prices would not severely effect their financial future.
    Very few buyers/prospective buyers in Vancouver fall into this category. Most buyers still have the lions share of their net-worth in RE (some have far greater than 100% of their net-worth in RE), and a price collapse would, for them, have dire consequences.
pricedoutfornow | 6 August 2011 at 9:51 am | Reply

Sure, renting can be a hassle. You have to pick your landlords well. Make sure to ask if they have plans to sell anytime soon (I ALWAYS do this, if they hem and haw, I might write them off). Ask how long they’ve owned the place-the longer the better. I too, once lived in a place where we had a new owner every 6 months! Due diligence is required in renting too, not just owning.
I don’t even try to compare renting to owning. Buying right now is just not realistic. Life is full of hassles, dealing with bad landlords is just one of many. You can’t write off renting because of one bad landlord. If you owned, you could be faced with a whole lot of other problems as well-unexpected repairs, bad neighbours etc. It’s just life. I sympathize, but try to find a better landlord for your next rental. They ARE out there!
- Aldus Huxtable | 6 August 2011 at 7:12 pm | Reply
  
  There are plenty of apartment buildings which are controlled by management companies. These have been the best rental experiences I have had in the city, renting from individual landlords or living underneath your landlords can be difficult.
  
  However in one case of living in a suite beneath the landlords, they were the most attentive, friendly and kind couple I have ever had the fortune of renting from who addressed any issues immediately and very easy going. That experience was not one duplicated in any other landlord inhabited rental.
  - nobody you know | 7 August 2011 at 8:39 am |
    
    I’ve noticed this myself. I work in construction and property management and most of the nightmare stories you hear from tenants involve accidental amateur landlords who only rented out their properties because they were flat broke to begin with. Needless to say, they don’t make the best landlords!
    
    Renting from a professional management company will usually be a much better experience.
  - alter | 7 August 2011 at 10:01 am |
    
    My experience renting from a management company was actually pretty terrible. In my two years in the place, we had no less than 5 different property managers and 3 different management companies cycle through. Getting stuff fixed was always a nightmare (took 6 months to get our dishwasher fixed). Not saying they are all like that, but check them out just as carefully as you would any other LL.
vreaa | 6 August 2011 at 11:47 am | Reply

Yes, it can be a very big headache to be a renter, perhaps the most important consideration being the possibility of being asked to move.
Rental ‘instability’ is one of the many, many deleterious consequences of this bubble. In normal markets, landlords are rightfully reassured by the investment math, and are happy to hold cash-flow positive properties for the very long term. With the speculative mania in prices, there is less stability: more people are tempted to sell buildings for accrued capital gains; there are more amateur landlords in the market; etc. Further, when the price bubble pops, we anticipate that there will be a period where things get even more disorderly in the rental market, with precipitous sales and strung out landlords.
So, nobody is claiming that it is all sunshine for the renters. A speculative bubble in housing has detrimental effects for all members of a society.

For those of you who may have missed the recent excellent article on renting by Joanna Pachter, in ‘Canadian Business’ [‘Rental Complex’, 14 July 2011], we strongly recommend it (not only because VREAA gets a mention).
Yank | 6 August 2011 at 12:47 pm | Reply

I think renting vs. buying depends on tolerance for risk. I’m not comfortable with buying more then 3x annual income. And my policy is to pay no more then 33% to all housing costs, including utilities.

However, if I can understand not selling for people who possess equity and don’t want to move for family reasons. (Who wants to move with children?)

In my opinion it is a pain to rent, but it’s a bigger pain to not be able to sell when you need to do so.
pricedoutfornow | 6 August 2011 at 3:28 pm | Reply

“In my opinion it is a pain to rent, but it’s a bigger pain to not be able to sell when you need to do so.”

Exactly. Owning comes with headaches as well as renting. My brother in Calgary is chuckling away because his friend just bought one of those “affordable homes” there (with $2000 down-nah, no subprime in Canada!). It’s been less than a month and the friend is already facing some serious repair bills. My brother teases “Hey, just call the landlord-teehee!” Plus the friend is currently unemployed and the wife’s just heard that she probably won’t get called back to her contract position when her mat leave is over in a few months. Great time to buy!
- Sterling | 6 August 2011 at 8:09 pm | Reply
  
  “My brother teases “Hey, just call the landlord-teehee!” Plus the friend is currently unemployed and the wife’s just heard that she probably won’t get called back to her contract position when her mat leave is over in a few months.”
  
  Wow your brother sounds like a real prick.
JCH | 6 August 2011 at 9:12 pm | Reply

Hi vreaa, can you please check whether the above comment is really from ‘the’ rusty? Not only does it lack his usual arrogance and rudeness, but it is inconsistent with his other posts. There’s no way the rusty we know is a renter:) I’m guessing it’s a forgery. Thanks.
JCH | 6 August 2011 at 9:18 pm | Reply

Oops, misread rusty’s post and didn’t realize he was quoting someone else. Never mind, all’s normal 🙂
jesse | 7 August 2011 at 4:10 am | Reply

There is no cut and dry rule that finding a good place to rent should be any easier than hunting for a house to buy. One could argue it is actually more difficult, perhaps, because you need to evaluate not only the dwelling and surrounds but also the management.
Bailing in BC | 7 August 2011 at 8:56 am | Reply

The real difference between finding a good place to own and a good place to rent is the consquences of getting it wrong. Selecting a poor rental is just hassle, upheaval and a small expence. Whereas making a bad decision when buying a home can be a finacial disaster from which you may not recover.
- jesse | 7 August 2011 at 2:48 pm | Reply
  
  For the last decade, there has been no disaster. Every remorseful homeowner has a safe exit. We have a half generation and counting in which owning is equivalent to renting in term of financial risk.