A Veterinarian’s Dilemma – “Living in a 300-square-foot closet, moving to northern B.C. or renting for life.”

“My veterinarian, owner of a successful west-side practice, emailed recently to say young professionals like him “are left with a choice between living in a 300-square-foot closet, moving to northern B.C. or renting for life.”
– from ‘Here in B.C., we’re richer than we think — on paper’, Barbara Yaffe, 24 Mar 2014

[Posts are, as you can see, very sporadic. No change in our outlook for Vanc RE market. -ed.]

“We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”

“Here’s a true story. I’ll call it 20 REASONS THIS COOL SPRING MARKET SUCKS FOR BULLS–Or how I learned to stop worrying and love the bomb!

1. We sold at the last peak.

2. You know what happened after that…housing skyrocketed.

3. We missed that.

4. Our half-house is now worth 165K more than when we sold. Ouch!

5. It was in a neighbourhood we hated. We decided to move every 2 years to try out neighbourhoods before we bought again.

6.. We moved. First into a crazy-expensive dream apt (condo) for a year. Unbelievable view.

7. We wanted to treat ourselves. We did.

8. We loved it but the drug dealers started moving in.

9. So it was more than OK to move out.

10. Got another condo rental. It was unbelievably unique.

11. Patio was under review when we moved in.

12. Patio repair was estimated at 6K and 6 weeks.

13. Patio repair cost landlord 11K and took 8 months. Our rent was reduced. It was one of two patios so no biggie.

14. Landlord had just paid 6K for last year’s repair.

15. We moved out on 2nd year, windows were leaking. Est. repair for building 11K-17K each unit. Plus front walkways were put on hold by 3 years of repair. Majority owner in building refused all repairs. Lawyers might have been needed. We moved.

16. Now in City managed building in OV. Great apartment.

17. Remember #4 above? “Our half-house is now worth 165K more than when we sold. Ouch!” Well, our money is now worth 433K more than when we sold.

18. We now know: no condos for us. We will get a 1/4, 1/3 or 1/2 house on the westside.

19. We know the neighbourhoods we like.

20. We are noticing this type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”

– mac at VCI 24 May 2013 11:31am

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

A Bed in the Bathroom, Why Not? [Let Us Count The Reasons…]

“Here is another great Vancouver rental listed on Craigslist [link no longer active]. A bed in the bathroom..”

“Rental information:
Newly finished 1 bedroom with own ensuite. Furnished.
Access to dining room, living room and kitchen on main floor.
$500/month includes utilities, washer and dryer, and wireless internet.
Close to transit and shops.
No smoking. No pets.
Perfect for international students and short term renters.”

– from ‘Vancouver rentals: A Bed in the Bathroom, Why Not?’, vancitybuzz.com, 28 May 2013 [hat-tip space889]

Outrageous!
The underlying message, of course, is that we are Tokyo.
Again, consider this idea in relation to Canada’s vast expanse of land.
The bubble continues to grossly distort our thinking.
– vreaa

“My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”

“My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. My husband is especially happy with the nest egg we’ve put away, and some day, my kids will be happy with their RESPs. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.
I have been priced out forever, according to any sane financial management strategy, for pretty much the whole time I’ve had a down payment. When the choice became “house poverty for family of four in a purchased 2 bedroom in Port Moody” vs. “responsible savings and a family of four in rental house with yard in Vancouver”, I thought something smelled funny in real estate. Still stinks, and will continue to stink, until prices adjust.”
– Absinthe at VCI May 24th, 2013 at 9:06 am

Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”

“..reading this blog I’m glad to see there are many others like me who eschew real estate and prefer to rent. My wife and I are in that camp. We moved from TO to Vancouver about a year ago, so our perceptions of the Vancouver rental market are pretty uninformed. Currently, we are looking to upgrade our rental from a small 1-bedroom, downtown apartment to something larger (a detached or 2+den apartment >1,000 sf) and within good distance of rapid transit (or at least what qualifies as transit in the rainforest). Unfortunately, the Vancouver rental stock is absolutely atrocious (at least compared to what I was used to in Toronto). Just browsing Craigslist or Kijiji becomes depressing – a large number of “garden” (re: basement) suites, or just places in serious need of some TLC. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income (so much for their faith in real estate appreciation, eh?). Another challenge for us is finding a place that will except our small dog – our own doing, but she’s part of our family. Love to hear how others are fairing in their rental hunt.
Where do you guys look to find good rentals in the city? Do you use an agent? Any blogs you can recommend for people like us to share our thoughts on the rental market?”
– rent_vancouver at VREAA 11 April 2013 11:01pm and on

Vancouver Secretary’s Urgency To Buy Condo At 7.7x Annual Pre-Tax Income – “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up.”

[photo Rafal Gerszak, The Globe and Mail]

“Alice Soo is developing a case of spring fever for real estate.
In 2011, five years after graduating from university, she made a final payment to erase $25,000 in student loans. At the same time, she has been a disciplined saver, with $30,000 now socked away. Ms. Soo, a clinical secretary at Vancouver General Hospital, is eager to use it for a down payment on a condominium in the suburb of Burnaby, and soon.
Why the urgency? Condo prices in Greater Vancouver have slipped 3 per cent over the past year, but Ms. Soo believes the softness in the market won’t last. “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up. That is my main concern.”
Such is the psychology of the first-time buyer in Vancouver, the country’s most expensive property market. Prices here have soared 24 per cent since the summer of 2009, according to the Teranet-National Bank house price index, and the price of a typical detached home is still about $900,000. But prices have cooled and sales activity is way down – there were nearly 30 per cent fewer transactions this February than a year earlier – so Ms. Soo’s concern about missing out may be unwarranted….
“For every first-time buyer, there’s an owner who`s looking to sell and trade up, and for every upgrade, there`s a retiree looking to cash out. The “trickle-up” effect can make the difference between hot and cold in the market.
This year, the big question is: Will the first-timers come back?”
For Ms. Soo, who is now renting the basement of her sister’s home, the first choice is to buy a Burnaby condo priced at roughly $300,000, preferably close to a SkyTrain rapid transit station. Given her modest annual pretax salary of $39,000, Ms. Soo is excited by the prospect of moving into her own place by the time she turns 30 this summer. But price remains the sticking point for buying a condo this spring. She and her agent, Eddy Shan of Homeland Realty, are finding that sellers aren’t budging much from their asking prices.”
– this anecdote from ‘Will nervous first-time buyers make this spring housing market bloom?’, Tara Perkins and Brent Jang, Globe and Mail, 9 Mar 2013 [hat-tip OH YAH]

We agree that this FTB’s “concern about missing out may be unwarranted”. She is still living in the not too distant past, and continues to suffer from the “buy now or be priced out forever” fever. It’d be interesting to know more about her knowledge of current market conditions, and to understand her sources of information.
The current market action is precisely what one would expect through a topping process: sales declining, prices sticky but beginning to give, buyers waiting and watching. Sales volumes always lead prices.
And there will always be some buyers, at any point in the descent, thinking they have “bought the dip”.
The most vulnerable owners in the coming downturn will be the over-leveraged, the latecomers, and the retirees with far too much RE for their life-stage. If Ms. Soo buys, she’d be both over-leveraged and a latecomer.
– vreaa
————————-

Some further excerpts of interest from the same article:

“Will McKitka, a real estate agent with Macdonald Realty, said the spotlight has turned on the slump in property sales in February, but prices haven’t collapsed. “People use the B-word, in terms of a housing bubble. Vancouver isn’t in one,” Mr. McKitka said. Monthly sales volumes are being crimped by stalemates over pricing, he noted.
Two of his clients watched negotiations fall apart last month, even though the asking and offering prices were tantalizingly close. “Not close enough,” he said. But Mr. McKitka insists that buying into the Vancouver area’s cooled-off housing market makes sense. Gone are the days of huge jumps in home values, but for those able to save for a down payment in 2013, it will be a better financial decision to own than rent, he argues.”
…
“It still seems that the much greater risk is that sales weaken further, not that they surprise to the high side,” BMO Nesbitt Burns economist Douglas Porter said in a research note this week.
Prices remain stubbornly high in most urban markets. Fitch, a ratings agency, said this week that prices nationally are about 20 per cent too high. Such headlines add to the fear among first-time buyers that, even if they can afford to get into the market, now might not be the time.”
…
“Large marketing campaigns and incentives on the part of mortgage lenders are likely to play a significant role in driving the market this spring. “People buy payments, they don’t buy house prices,” says Toronto-based mortgage planner Calum Ross. “There is a huge psychological impact of five-year mortgage rates dropping below three per cent.” Mr. Ross adds that he’s now seeing “massive” amounts of marketing by mortgage lenders.”
…
“Phil Soper, CEO of real estate agency Royal LePage, said the slowdown is a good thing, because the market was too hot, but he thinks that the changes that Mr. Flaherty made in July went too far. “It pushed things for young people, for first-time buyers, to a place it didn’t need to be,” he said.
Now, he says, the impact of the change has largely been felt. “Young people have had eight months to either save up a larger down payment or look farther afield for a home,” he says. “As long as the cost of mortgage financing remains very low, we’re going to attract financially stable young people, first-time buyers, into the housing market. The desire to own one’s home hasn’t changed one bit.”
…

Will McKitka’s comment added to the ‘What Bubble?’ sidebar collection of bubble denier quotes.
We agree with Doug Porter’s observation that “surprises” are more likely to be to the downside.
– vreaa