“We ended up stretching. We went a bit beyond our means.” – ‘Mortgage helpers’ mainstream in Vancouver

“When Caitlin Dowling and her husband Dave Knight bought their house at Fraser and 10th about a year ago, they wound up going over budget — like just about every purchaser these days in the city’s red hot real estate market.They had to choose between a house that offered rental opportunities or a smaller townhouse, and chose the former.“We ended up stretching,” Dowling said in an interview. “We went a bit beyond our means.” To cover the gap, they hopped on what seems to be a growing bandwagon: they rented the top floor of their house through the short-term online rental site Airbnb.Since starting to take in visitors around the beginning of March, she estimates they have pulled in roughly $2,000 a month to help cover $2,500-a-month mortgage payments.The couple is not alone. A poll conducted by an insurance company found that 43 per cent of Vancouverites who own houses are renting basement suites, laneway homes or other parts of their residences.”

– Vancouver Sun, 25 August 2015,
via Mortgage helpers go mainstream in Vancouver.

21 responses to ““We ended up stretching. We went a bit beyond our means.” – ‘Mortgage helpers’ mainstream in Vancouver

  1. Ya gotta wonder how much of that income is undeclared.

    If everyone in Vancouver is willing to live with strangers, thus distorting income / price numbers, maybe traditional valuation benchmarks don’t apply to the city after all.

    • This is what I’ve been arguing for years, I don’t think Vancouver is so much in a bubble in the extreme manner like some claim as it is in a class where the rules are very different from most of the rest of Canada. This isn’t a “well it’s different here” argument claim there will be no market correction but the degree to which people claim real estate is unsustainably over valued isn’t as large as calculations taking in to account “normal” market behaviour accounts for.

    • Not to invalidate your point, but whether or not income is declared won’t make a significant difference in terms of tax receipts, which is probably why the federal government DGAF.

      • Define “significant”.

      • I think there is enough reason to believe that there would be a significant increase in tax receipts if we actually took into account their foreign income. To think that we have neighbourhoods whereby the average detached house price is about 2.5 million and the average income is 25K is kind of hilarious, something is missing obviously. What does that mean? Huge tax evasion coming from foreign income out of places like China. But good luck tracking this since our two governments don’t seem to cooperate with each other.

  2. I don’t get how is this news. This has been going on for years. In south Vancouver, there are many houses with two rental suites, each pulling in 1200 a month. Secondary suite can add anywhere from 10K to 30K of income to a typical owner. Also, very few of this is reported as income. This is illegal both in tax evasion and the suite itself. However, city turns a blind eye to it and as long as you declare a little bit CRA won’t bother as the business case of going after you isn’t great.

  3. Living in the moldy basement, so that you can afford a house.

  4. So many people living in illegal suites.
    I don’t think the census is counting them.
    That’s why the official immigration number are probably much higher than reported.

  5. Give you some background from my limited knowledge of secondary suites in Vancouver. I believe back in the 60’s or 70’s this was a very rare phenonmenon. Looking at the way that those bungalows were built, secondary suite really wasn’t much of a consideration. However, the wave really started in the 80’s with the Vancouver specials for the new immigrants from Asia who could not afford the houses they lived in. The wave of secondary suites also coincided with the mass asian immigration (not sure if there really is a correlation, but pointing it out that they seem to have happened simultaneously). Now, it is a regular occurence and many of the older bungalows have been retrofitted with secondary suites.

  6. I’m so happy to see even a trickle from VREAA – hated the hiatus. I’ve been reading about real estate over thirty years and this site rocks – Froogle Scott in particular should be read and reread.
    There’s much more that I’d like to see talked about – like why there is so much quacking about the influence of the Chinese in Vancouver, and not a peep about the Punjabi’s that are building 95% of the execrable building stock.
    I’d like to hear about people’s experiences with basements, whether living in them like prarie dogs, or suffering leakage issues. Leakage is going to be such a huge issue – I suspect on par with the leaky condo crisis (an engineer’s report called this the second biggest man-made disaster in dollar terms after the atomic bombing of Japan).
    I’d like to hear peoples’ thoughts on the visual blight of billboards in this city. Cities as ugly as Sao Paulo have banned them, but not beautiful Vancouver – tyrants put up statues of themselves – Vancouver’s economic dictator Pattison has his name everywhere. It’s repulsive. And you can’t talk about real estate without mentioning this octopus.
    I’d like to see anecdotes about neighbour issues – a hush hush major issue why people sell. My own neighbour problems were horrible.

    • Criticisng Punjabs? That would be racists!!! Only calling Chinese locusts and blaming them for everything is not.

      • Leaving soon

        The acceptable face of racism 🙂

        And if anyone gets really critical, just point out east to Alberta and claim “well at least we’re not like that.”

  7. Secondary suites, rooming house rooms for students, and others are a way of turning a costly building into something that earns back some money for your. A house is not an asset unless it brings in money, otherwise it is an expense. Even if you don’t have to pay a mortgage, why should owners not maximize their income however they can? The rent money with no mortgage is your business profits. Having a material and money abundant lifestyle feels a lot better than being simplistic and poor. The people who say they purposefully enjoy the simple and poor lifestyle with no “stuff” are just in denial and covering up.

  8. Remember this:
    1. Everybody has to live somewhere.
    2. Not everybody who applies for a rental ad will be short-listed.

  9. Renters complain about lack of protection for fixed lease rentals:

    But have rental control impose on fixed term lease wouldn’t help the renters since the landlord will simply choose to not renew the lease if they can get higher rents from other renters. So then renters will ask for guaranteed renewal rights. However, that’s likely to mean higher rents and/or longer lease terms which may not be a net positive for the renter either.

  10. Hold on, if they are getting $2K from rent and the mortgage is only $2.5K then they are basically only paying $500/month + insurances + property tax to live in a suite. Most basement suites in my area of Vancouver goes for $1500+/month for a tiny 2 br 700 sq ft or less. So don’t sounds like a bad deal or being stretched.

    • Hey Space, finally found out about what you were talking about on VCI. There are some royally bitter people there. I find it hilarious that some of what you say which actually makes sense gets down voted to obscurity. Who is the BPOM that you were talking about.

      To your point, the issue isn’t so much the valuation, it is a life choice. I think part of the public’s problem is that other cultures are willing to accept a much lower quality of life. So even if we are all on even terms in terms of actual employment income, the other cultures are more likely to live in basement suites to support a house because it is better than what they have had in other places in the world.

      • Space is the person that posters on VCI are determined to bully no matter what he/she posts.
        I guess that’s just the nature of blogs.
        Personally, I find his/ her posts on China very informative.
        Obviously, he/she has first hand knowledge.

      • BPOM – Best Place on Meth

        VCI used to be a pretty good blog but since BPOM gotten kicked off RET (a defunct RE Van forum) before Johnny Horton for posting nothing but hate and vitrol adn showed up at VCI unchecked, it’s gone downhill ever since. There are still some good posters on there but it’s look to be taken over more and more by the haters.

        So yeah, sometimes I do be a prick there as well, especially the anti-Chinese, hate filled posts. No one likes those rich bastards from China, but then that’s what? <0.01% of the population? Plus, it's easy to act all high and mighty when you are living in the land of plenty, unlike most of developing world population.

        heck, to me, a lot of griping and bitching about Van RE also shows that the loudest complainers are actually much worse than the people they are complaining. If the fact that they can't buy a single family house gets them this worked up, gosh I wonder what kind of things they would do if they have to live the life of an average peasant.

  11. space you live in Shaughnessy ….EastVan rent is way cheaper , at least around Graveley & Mclean ,

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