Some Nice Logic For You – “The realtor told me “It’s a great time to buy right now, people are looking around and realizing that prices are going down and interest rates are still low!”

“We checked out two condo open houses at the H&H building (1133 Homer) today. We liked one that was 950 sq ft, 2 bed, 2 bath, storage room, decent little patio, great kitchen with high-end appliances, in-suite washer/dryer (a very big selling point for the better half). The building’s new and has some nice amenities. Price was $620K. The realtor told me “It’s a great time to buy right now, people are looking around and realizing that prices are going down and interest rates are still low!”
So that’s some nice logic for you. Massive price decrease risk, with higher interest rates at renewal time a near certainty (assuming locked in as long as possible). It’s interesting that a realtor is acknowledging prices have gone down, I wasn’t aware that was the case with Yaletown condos. I didn’t mention a thing, she was the one who brought it up, and I didn’t bother arguing with her. I like the place, might have bought it if it was $250K cheaper.”

Kermodei at VREAA 27 May 2012 5;20pm

10 responses to “Some Nice Logic For You – “The realtor told me “It’s a great time to buy right now, people are looking around and realizing that prices are going down and interest rates are still low!”

  1. it has never been a good time to buy, unless, it is free!

    • Speaking of logic…

      1. Vancouver RE Bears want free homes.
      2. This is a ridiculous request.
      -therefore-
      3. Everything that Vancouver RE Bears say is ridiculous.

      4. Vancouver RE Bears say that Vancouver housing is overvalued.
      -therefore-
      5. It is ridiculous to say that Vancouver housing is overvalued.
      -therefore-
      6. Vancouver housing is not overvalued.

  2. I’d love to rent this place from you for $1600/mo if you decide to buy it as an investment. LOL. six hundred twenty thousand dollars are they nuts?

  3. “Realtalk”
    -Rates are low, prices go up–> “Profit! It’s a great time to buy”
    -Rates are low, prices go stagnant–> “Stability! It’s a great time to buy”
    -Rates are low, prices go down–> “Affordability! It’s a great time to buy”
    -Rates are low, price too high–> “5/30 with affordable monthly payments. It’s a great time to buy”
    -Rates are low, price to low–> “Rental Property! It’s a great time to buy”
    -Rates go down–> “Rates will never be this low again! It’s a great time to buy”
    -Rates go up–> “Rates will only go up from now. Buy now before they’re too high!”

    …yeah…

  4. Good God. $620 large for a box in the sky?

    • But it’s only 652 dollars a square foot Liggsie. Cheap compared to so many others. If you only made one principal payment of 652 bucks (with no interest included) each and every month you could acquire 12 square feet per year. You would own it all in 79 years flat. I don’t see any problem here.

      See, real estate really does make people crazy!

  5. She ran the numbers for us without being asked. Said with 30-year amortization and 5% down (of course that’s what realtors assume these days) the payments would be $1100 biweekly. I said “I don’t get paid biweekly, I get paid twice a month”. So she ran the monthly and said payments would be $2400.

    We’re not the sorts of people who consider only the size of the payments.

    • I was just playing around in the earlier post, Kermodei. I hope you realize that I do in fact think there is a BIG problem with condo space costing 650 bucks a square foot.

      This is about as bloated as a bubble gets and so you should think twice if you are not giving full consideration to the cost. But maybe I am misunderstanding your last line above.

      I believe we are heading for some tough times in this country. As the Federal Government has undertaken sweeping changes to the EI act you can rest assured that they too see troubles coming and that in the future unemployment will be rising. Perhaps sharply.

      That should not come as a surprise to anyone who follows real estate blogs and knows what carnage follows as the economy slows and prices drop. Consumption in particular is going to be affected and that will weigh on the numbers working in retail and services. The added burden of a slowdown in mining activities as Asia and Europe both slow adds a little toxicity to the brew and so there will be a flow through effect on most other areas of employment.

      So it is much more than just construction and trades jobs that are impacted by housing going off the rails. This means a multitude of jobs will be at risk as housing deflates and so many of the assumptions people are making with regards to employment security are not valid. Nor are their assumptions about how much debt is safe to take on in a riskier environment.

      I really worry about anyone making “the big move” and buying into a house now in a place like Vancouver. It is truly a foolish mistake to make with all the mounting evidence warning against it.

  6. Yeah, I’m in full agreement. We were just walking by and curious about the building. We can’t afford $620K and if we could it wouldn’t be for a smallish condo. What I meant about not considering only the size of payments is that we would be considering our ability to purchase under all the potential circumstances and would factor in possibility of interest rate hikes, job loss and so on. It’s just a little window-shopping for us. Definitely not buying in 2012, the value’s just not there.

  7. I don’t know much about your building but condos might be the hardest hit.
    Lower income will be most effected by interest rate hikes.
    600,000 is a bit nuts for only 950 square feet. Don’t be fooled by appliances etc. Developers putting bows on pigs all over the place.

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