Buy Or Rent In Fort Nelson? – Reader Request For Opinion

t at VREAA 11 December 2010 at 3:48 am
“I am very bearish on Vancouver real estate…I am moving to Fort Nelson in the new year. I have been looking at Vancouver RE for so long that the prices in Fort Nelson appear reasonable to me. I have looked at the cost to rent vs. cost to own…$1100/month to rent, $800/month to own…and I am considering buying a place up there. Your thoughts?”
& t again on 13 December 2010 at 10:01 pm
“I am going to buy in Fort Nelson in the next month. I am a bear, and I am relocating for work. The cost to buy up there is roughly 300k for a nice family home. It would cost more to rent than it does to pay a mortgage. I do think that the prices are still high up there, but the local economy does support those prices because there are lots of high paying jobs. If any of you know anything about the RE up there please let me know. We meet with a local RE agent next week.”

vreaa thoughts:
t – Thanks for the note, and for caring enough to solicit our opinion.
We suspect there will be numerous readers who can give you food for thought regarding this decision; we’ll start with a few thoughts of our own:

You’d likely be taking the following into account:
Various nuts-and-bolts questions about the math (Is the cost of owning REALLY $800 per month? What about transfer costs, taxes, maintenance, etc? etc.).
Your age. Your income. Your degree of job security.
Whether you intend to live in Fort Nelson long term.
If you purchase, would you be buying the kind of residence that you’d like to live in long term?
What is your ‘ownership premium’? (How important is it for you to feel you ‘own’ your house?)
Would the prospect of future higher interest rates alter your decision? (BOC Governor Carney warned us yesterday that rates WILL rise)
Would the prospect of a future distressed economy in Fort Nelson alter your decision? (How secure are all those ‘high paying jobs’?)

We note that you went from “considering buying a place” to “I am going to buy” in just two days. Obviously you are planning your move, and we respect that you have a need to decide one way or the other. But, does the decision to buy merit the urgency that you currently appear to feel?
Perhaps you are confusing two separate decisions:
..(a) where are we going to live when we get to Fort Nelson?, and
..(b) should we rent or buy our accommodation?
These are indeed two separate decisions, but currently they may feel like one. Perhaps you should try to separate them.
Is the prospect of going up and renting for a while too burdensome?
What do you have to lose if you went up, rented for 6 months, and then made your decision?
The benefit, even if you did end up buying, would be that you may get a better idea of the property type and site that would work for you.

All of the above are important considerations, and readers will likely be able to add more.
For us at VREAA, however, the most crucial considerations are the following:
We are bearish on RE. (You, ‘t’, are bearish, too.)
We anticipate a pullback in RE prices in Vancouver in future, a pullback that will also effect all of BC (and, to a lesser extent, all of Canada). We think prices could drop 50%, perhaps more.
We could be wrong (we have been for some years now).
We weigh the probability of ongoing steady price increases as low to very low (5-10% chance of ongoing price strength). We think the chances of an outright crash are far higher than that.
So, if we were trying to make the decision you’re weighing, we’d be asking ourselves the following:
“If I were to purchase, how much would a substantial decrease in housing prices in Fort Nelson effect my overall future financial trajectory?”
The answer to this question would be closely related to income level and net-worth.
If you purchased, what percentage of your entire net-worth would be made up by the purchase price of the property? 20%? 50%? 100%? 500%? 1,000%? – [the 1,000% example is the case where you put 10% down and have no other savings.]
For some individuals, to purchase a property that then drops from 300K to 150K market value, and stays there (in real terms) for 10 years, would not be of much consequence. For them, it may not be worth the hassle of renting to avoid that risk.
For others, the 150K paper loss may be completely devastating; it may result in a financial blow that takes decades from which to recover (and essentially changes their entire life’s financial trajectory for the worse).
Some people can afford to lose 150K, others can’t.
(In Vancouver, the same rent vs buy decision are heightened by the fact that in many cases that statement becomes “Some people can afford to lose $1.5M, others can’t.”)

Needless to say you have to do your ‘own due diligence’ on this.
(Oh, and by the way, I don’t think any of us doubt what the Fort Nelson realtor will advise. You’d best be clear in your own mind about your intentions BEFORE you meet with the local RE agent next week.)

[Probably Fabricated Market Timer Emotional Capitulation Anecdote] – “I sold my westside home for around $950K in 2004. Now I can’t afford to buy back. You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

.
Yes, the markets can be a bitch. Yes, it is demoralizing to get the general picture right yet get the timing wrong. And, yes, to be down a lot on paper can be excruciating, moreso when you’re playing with your own accommodation and are vilified by your family and community for doing so.
Markets can go from ditzy to completely-bigtime-insane before they sober up.
This poster [** see postscript] was correct, the Vancouver market was already overvalued in 2004. It hit the insanity jets in 2006 and then the free-money magic-blow-off after-burners in 2009. It was going to roll over and die in 2008 but star-dust bailed it out. This poster was mentally short in a mother of a virtual-short squeeze. We say ‘mentally’ and ‘virtual’ because he wasn’t really short, but he felt like he was short.
This poster’s current mind-frame represents a form of mental capitulation, but it doesn’t show real capitulation. Real capitulation would involve action, it would involve this poster buying back into the market for $1M+; a far lesser house for far more money. Thus a bear would become the last of the bulls. Students of the markets all know what happens when the last bear who is going to capitulate does so.
We still estimate that it is highly probable that individuals in this poster’s situation will have the opportunity, in future, to buy back the 2004-$940K westside property, now selling at far more than $1.5M, for 2004 prices or less. We also suspect that many prior market participants will be so gun-shy that they will not step up to the plate, and that, once falling, prices will fall well below 2004 levels. Yes, this may seem crazy to many at this point. Insanity is a common ingredient in Vancouver RE market moves. -vreaa

‘Chinese renter’ at vancouvercondo.info December 1st, 2010 at 5:41 pm – “I am Chinese Canadian, not recent immigrant, previous home owner, presently renting. Sold my westside home for around $950K in 2004 after it’s price had recovered from a drop in value in the late 90′s. I haven’t brought since. That same house is now worth minimum 1.5 million. Sure renting is not costing me as much than to buy right now but I loss an asset that is now worth 1.5 million by not re-buying back in 2004,2005 or even 2006.
I was influenced by bloggers like VHB and Garth [Turner] not to buy, thinking it was a bubble. I have lost all confidence Vancouver real estate is a bubble. Not on the westside where the Asians like to buy and the builders and flippers buy so they can resell to the Asians. My invested equity from sold house can no way keep up with price appreciation of Vancouver real estate, not with fixed income interest rates this low. Now just to buy back what I had I can’t afford. I can buy above 1 mil but not 1.5 and above.
The place I am renting now was just brought earlier this year as an investment by a Chinese family for 1.6 million. Sure my rent they receive doesn’t justify the cost per month to own on a monthly bases but it has appreciated $100K already. The landlord can easily sell and there will be a bidding war. Check out the dump V858532, 5069 Ash St, ask was 1.49 million. Sold in 7 day over asking 1.528 million. Why does the sold price have numbers 28 in it. One guess, you are right, Chinese buyers. it was open house Saturday Nov 18, multiple offers Monday, sold Wednesday Nov 22. The house is practically a tear down and that part of Ash St is awful, narrow and full of parked cars.
You have to believe the incredible pressure I get from my family to buy. They are ashamed of me. Seriously they don’t mention to friends and relatives I am renting. Asians, Chinese have to buy, it is low class to rent.
To rent a nicer home on the westside may cost less than buying but eviction is real. Happened three times already to us, not because we are bad renters, we are great renters. But twice after one year lease, landlords claim place back for own use. Not fun having to look for new place and moving after only one year, just settled in. Not fun especially with young children and changing of schools. So I do eventually want to buy for stability, we want to live in a house, not a build for rent condo. At the rate of Vancouver price appreciation I am severely depressed I will never be able to buy what I once had again. The bulls are right, I am priced out for ever.”

**postscript – We are fully aware that this poster may be a fabrication by a bull poster, an emotional sketch making a case against being bearish. The handle, the pat phrases, blaming the bear bloggers, etc.
Regardless, there are likely some individuals in this situation (although very few trade out of primary residences during a bubble expecting to buy back in cheaper later). And the numbers are in the right ballpark. So, we dealt with the anecdote as though it came from an actual individual. ‘Chinese renter’, if you’re reading this and you are an actual individual, apologies for the voiced whiff of doubt. Drop us an e-mail. And keep us informed of your future circumstances. -vreaa

“I have a friend who has a super luxurious place and advertises it as a furnished short term rental continuously while he lives in it. He can’t afford his 5K per month mortgage payments. He will be forced to sell in the next 6 months. He is basically broke.”

Renting at vancouvercondo.info November 27th, 2010 at 4:50 pm– “A lot of high priced rentals are furnished short term rentals. They are competing with hotels. I have a friend who has a super luxurious place and advertises it through an agency continuously while he lives in it. There are several people in the same building doing this. His place has only been rented for two months of the past year. When it rents he goes on vacation or stays with someone else. He does this to make ends meet because he can’t afford his 5K per month mortgage payments. I figure he will be forced to sell in the next 6 months as he hasn’t had anyone rent it since summer and I know he is basically broke.”

35% Of SFHs Have Secondary Suites

From THE ROLE OF SECONDARY SUITES: RENTAL HOUSING STRATEGY – STUDY 4, City of Vancouver, Dec 2009 p17 –
“Based on BC Assessment data, there are at least 24,000 single-family houses with a secondary suite in the City’s single-family zoned areas. Overall, the proportion of properties with suites is around 35%, but this ranges from 18% for the west-side local areas to 46% for local areas on the east-side. The number of suites is more difficult to estimate, but there are probably on the order of 1-2,000 other single-family zoned properties with two or more suites. Including those buildings brings the minimum estimate of properties with suites to 25,000.”

Terry Chen, Actor and RE Speculator – “I have flipped about three properties in the last ten years. I have another large loft space in downtown Vancouver. The goal for me now is to sit on the property I have for as long as I can and not sell.”

Terry Chen is a 35 year old actor with an impressive acting resume, not least of all for having a role in Cameron Crowe’s wonderful ‘Almost Famous’. Less impressive, he bases his future investment strategies on (1) having made money ‘flipping’ in a RE bull-come-bubble market, & (2) avoiding the stock-market after getting burned playing tips from friends. He also has a sense that renting means ‘impermanence’ and that owning means ‘not paying someone else’s mortgage’. Don’t quit your day job, Terry! – vreaa
[hat-tip to Ben at financialinsights.com]

Anecdote extracted from an interview at moneyville.ca [15 Nov 2010], by Emily Mathieu. –

“I moved around quite a bit when I was a kid growing up. My dad was a travelling salesman, I guess is the easiest way to put it. By the time I finished high school in Calgary I had attended about six or seven different schools from grade school all the way up. My father came to this country about 40 years ago with $100 in his pocket and was able to take care of his family and buy a few different properties while we moved. There was always a sense of impermanency. It never seemed like there was a base in terms of a home . . . which I guess later affected my need or my desire to buy property early on.

My first large purchase was a car when I was 19. I was able to afford that through an insurance claim because of a car accident, which was no fault of my own. But then I started working in nightclubs in Alberta when I was 17. I lied about my age to get my first bartending job. During that experience I met somebody who told me, very early on, when I was 18 or 19, not to pay anybody else’s mortgage.

That was the best financial advice I ever received. For some reason that advice stuck with me. The benefit in renting is you have flexibility, but in the long run if you are going to be paying rent you may as well be paying your own mortgage. I was fortunate enough to make some big chunks of money early-on, in my 20s. I bought my first property in Vancouver at the age of 25. It was a smart move and I definitely don’t take any credit for it. But thanks to advice of some good friends I was fortunate to get into the market at an early age.

I have purchased and flipped about three properties in about the last ten years. At this point I have another large loft space in downtown Vancouver. I think the idea or goal for me now is to sit on the property I have for as long as I can and not sell.

I have learned about the stockmarket the hard way. There have been certain times where I got a lead from a friend or source and tried to investigate it. Obviously the stock market, like real estate, is a gamble. I have lost tens of thousands in the stock market . . . I am less and less inclined to throw my money at (the market) these days.

Regarding retirement, I am relying on a lot of my property investments to help me out in the future as well. I would rather live in the moment and the present as much as I can and worry about those things as they come down the line later.”

“Once you get your mind around the fact you may never buy here it feels really liberating.”

McLovin at vancouvercondo.info 14 Nov 2010 10.01am – “I was having a frank conversation with my wife and I told her that we may never own again in Vancouver. This is not to say that we won’t take the savings and put that into investment properties in other places where the numbers make sense. Prices would have to drop 50% here for us to consider buying here and who knows if that is going to happen? Truthfully, I really don’t care, I am living my life and loving it. That being said, once you get your mind around the fact you may never buy here it feels really liberating.
In my opinion the stigma around renting in YVR has started to abate. I no longer get strange looks when I tell people I rent in fact a few say that’s a good idea. This has not been the case for the last four years.”

“I am thick-skinned enough to deal with the social pariah status of being a mere renter. 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.”

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.”

Landlord’s Dilemma – Condo & House, or Two Condos?

There are risks here. There are mortgages on both properties. The carrying cost of the furnished condo is $2400, and the $2700 rent looks vulnerable (30% vacancy rate after Jan 2011 will put it chronically cash flow negative). The house has a headline rent:price ratio of 1:265, and, by the landlord’s own admission, is a ‘moneypit’. We can think of a third alternative here that is not being considered…  -vreaa

xslandlord at RE Talks 3 Nov 2010 10.48am lays out their position and chews over a decision – “I bought a downtown condo (for $500k with all the expense included) few months ago so far everything works out nicely (fully furnished and getting $2700 per month until end of Jan.2011). I also have a rental house in east Van that is worth $750-800k by now with monthly rental income of $2850. My question is since my $500k condo can generate similar income with less market value, is it a good idea to sell the rental house and re-invest to another condo or other opportunities? I understand there is capital gain involved, my wife has lots of RRSP room available so we could minimize the tax payout. On the other hand, this east Van house has always been fully rented to long term tenants, they are just so good.”
And later adds:
“The condo is only 868 sft, and it is practically 100% financed, and with the low interest rate I am getting positive cash flow. The east van house was bought 6 yrs ago and re-mortgaged (to finance the condo purchase) and still produce positive cash flow. I don’t need to sell anything but just have a doubt of untapped potential of this capital appreciation.”
And still later, in response to advice to “make sure you allow for a 30% vacancy allowance for furnished rentals”:
“Yes this will be a big concern when the current lease ended. I don’t have much experience on furnished rental. In addition to the usual Craigslist rental posting, I may have to utilize some leasing agents to find tenant, thus will for sure eat up at least 10% income. Based on my mortgage rate my break-even point is $2400 per month (fully furnished, hydro, cable/internet/telephone included).”
And, in a series of posts thereafter, xslandlord adds the following info:
“Recently the old drain tile got plugged and the the whole basement suite got flooded. I spent more than $4000 on the repair and new laminate flooring. Last month I also replaced new garage door (supposed to be a $150 quick fix but at the end replaced the whole door). 3 years ago I replaced new roof… My point is the house has been money pit.”
“The strength of the house:
1) It is located on 5800 block of Prince Albert, easy comute to everywhere;
2) Directly facing a huge park, even basement bedrooms have park view;
3) Lot is 42′ wide and there is potential to build a lane-way house;
4) Basement suite is “legal suite” approved by city, and all mechanical condition is very good.
The weakness:
1) House is only 2300 sft. So a typical small house on big lot situation;
2) Main floor has only two bedrooms thus make it less appeal for family upgrade from condo;
3) Being an old house, there is alway more maintenance.
If/when Vancouver have real estate correction/crash, I think this house would be slow to sell, but on the other hand, because of such low rent, it will be always easier to rent out too. I am really 50-50 [regarding the decision] now.”
“There are LOTS of condos in downtown, but the whole downtown is almost built up already, also there would be much more broader buyers/renters group for downtown condos: first timers, empty nesters, offshore buyers, secondary resident buyers, ESL student renters, short term vacationeer, temp foreign workers, etc. East van will always be a homogenous market as local wage earner’s home. If economy is bad, people just put off upgrade from condo to house.”
Regarding interest rates on mortgages “both places have fixed rate (below 4%) for another 4 years. I think vacancy rate and rent fluctuation might be bigger factors [than interest rate fluctuation].”

“This guy is no dummy – He fully understands that his decision not to sell is based on emotions regarding his unwillingness to realize the loss.”

We suspect that ‘stealth inventory’ is building. Prospective sellers are waiting in the wings… for various reasons… and precisely when and how and in what number they descend on the market will shape the action over the next year. Here’s the story of a seller who suspects his own hope is irrational. -vreaa

real_professional at vancouvercondo.info November 1st, 2010 at 5:14 pm – “On Friday I met a good friend of mine for a pint. Just to let you know, he is a home owner, really smart, and he and his wife have great jobs.
Approximately three years ago they purchased a condo in a nice area of the lower-mainland. He purchased it for approximately $340k and attempted to first sell it on his own (sans realtor) and reduced the price by approximately 20k as he attempted to attract buyers.
He threw in the towel and hired a realtor who didn’t do much better. Moreover the realtor, walked the price down by another 20k without a sale. Now let me be clear, I have been to his condo and it is nice, the only reason they are moving is because they need more space – no defects in his place what-so-ever.
Well it turns out that the realtor finally said that despite his inability to move it – it could move for around 270k (a 20% reduction from their purchase price). But instead of enduring another $30k of price cuts he decided to take it off the market and rent it out while he lives on rent elsewhere.
As I said earlier this guy is no dummy – he fully understands that his decision not to sell is based on emotions regarding his unwillingness to realize the loss – yet, he clearly doesn’t see any upside in the Vancouver market.
I feel sorry for him, but he is young and well paid so he should be fine. The other idiots with the $500k mortgage, the lower wages, and the inflated egos won’t be able to endure the cash burn.”

“Update on an Olympic Village rental condo, where the asking rent is decreasing.”

El Magnifico at VREAA 31 Oct 2010 1.12pm – “Update on a rental property I posted some time ago. Rents are decreasing as well…
I have been following this 1BR 630 sq.ft. condo in the Olympic village. It has been for rent since at least early August 2 for $1750! (I even sent them an email early September to tell them that there was no way they were going to find a fool that would pay $1750 per month for that). After sitting empty for 3 months, they finally followed my advice and decreased their price to $1,650 which is still very expensive considering the size, location and bad publicity around the OV…
I’m wondering how long it will take them to find a tenant and how much it will have cost them to wait with their overpriced condo sitting empty…”
Here is the link: http://vancouver.en.craigslist.ca/van/apa/2035326065.html

“When we settled into our rented apartment she still seemed upset, and confused about why we were renting.”

C at greaterfool.ca 23 Oct 2010 at 7:30 am – “My wife and I sold our condo back in April 2010. We’ve been renting since. At first it took a ton of effort to convince the wife why we should rent and why buying again at this time would be foolish. She reluctantly agreed. When we settled into our rented apartment she still seemed upset, and confused about why we were renting. I just kept printing off 3rd party info, statistics, graphs, charts, and explained to her what they meant. A lot of times they were/are similar to the US situation 4-5 years ago. Now, when we discuss the renting/buying situation she says no need to explain it, I’m on board with you. It feels good to hear that. So for those guys with girlfriends/fiancees/wives with house lust, just be patient and back it up with BASIC 3rd party info. Anyone can say things will go up or down, but if you back it up with concrete statistics from another party, it should help shape the probabilities of things to come. I know there are husbands out there with house lust too so do the same thing with them, and throw in a 6 pack of beers and that should do the trick.”

“She has a friend in West Van that owns a $5 million house and hasn’t been able to sell it, and she’s getting scared since she “can’t” lower her price.”

Two anecdotes. The second on the stigma of renting.

IT_Pro at vancouvercondo.info 25 Oct 2010 2.17pm – “I was talking to a friend (I guess you could call it a date) last week and the topic of RE came up. I shared my bearish views which prompted her to share a couple stories. She mentioned she has a friend in West Van that own a $5ish million house and hasn’t been able to sell it and she’s getting scared since she “can’t” lower her price…and she hasn’t been able to rent it either. She was forced to rent out her smaller primary residence and move into the West Van place. Apparently she doesn’t think she can hang on much longer. I’ll try to get more details as I’m curious how she got herself into this pickle in the first place.

Also, this same girl I was talking to has a sister moving back to Van with her family (two very young kids). Her husband does very well. They already own a 1bdrm in Van that they want to keep as a rental property (it’s too small for them now). They plan to build their dream home in Point Grey when they move back, but they need a place to live while its being built, so they were planning on buying a townhouse while it’s being built. They worked out the numbers and now they are worried that they can’t afford to buy the townhouse without selling the 1bdrm. So that is when I said, “why don’t they rent while they are building the house, then they could keep the 1bdrm…it’s much cheaper to rent than to own in Vancouver”. Well, you should have seen the look on her face while she processed what I just said. I’m pretty sure she wanted to say “they won’t consider renting because they have a family”, or “they would no longer consider renting at this stage in their life”…but I think she may not have wanted to offend me as she new I was a renter. After quite a few ums and awes she failed to comment. It won’t be long before renting will be back in vogue. Vanity will be the great equalizer.”

Rental Market Softens Further – “I think there may be some people leaving the city, more now than in better times in recent years.”

Headline low residential rental vacancy rates do not reflect reality. The rental market continues to softened. -vreaa

WCLease at RETalks 15 Oct 2010 9.13am – “I had two tenants leave recently in my Burnaby complex. One unit I had to renovate with new flooring and paint. The other one just need a some touch up.
First one sat for a month even though I only increased the rent by $100. Second one is still sitting empty. I might have to drop the rent by $50. This has never happened in the 8 years of owning this complex.”

Johnny Horton at RETalks 24 Oct 2010 7.45am – “I think there may be some people leaving the city, more now than in better times in recent years.”

“I explained to her that I’m happy renting and she reminded me that renting is throwing away money when it could be put towards a mortgage.”

specialfx3000 at vancouvercondo.info 12 Oct 2010 8.19 am – “Over the Turkey weekend, a relative asked me again if I’m still in the market. She reminds me that the rich Asians are taking their wealth out of China and will continue to pump up the Vancouver prices. She said their dirty money needs to be invested in our safe-haven country. I explained to her that I’m happy renting and she reminded me that renting is throwing away money when it could be put towards a mortgage. I told her sales are drying up and she said it’s just the season. I told her local income cannot support the prices and she says that don’t matter. She of course bragged about how much her house is worth now. Thank goodness my baby started crying so I politely ended the conversation.”

“I rent in a building that shares some of the LEED technology that the OV uses – ‘what a hunk a junk’ is all I can say.”

YLTNBoomerang at vancouvercondo.info 4 Oct 2010 9.31 am – “I rent in a building that was completed about two years ago and also shares some of the LEED technology that the OV uses – what a hunk a junk is all I can say. What is interesting is that it seems that the building is significantly occupied by renters and we all discuss how lousy the construction is and that we would never buy here. The lack of owner occupier’s has also led to poor upkeep where it seems that a lot of people who live here just don’t care about the strata rules or taking care of the common areas. I’m not saying renters are slobs or trash the place but the truth is that when you don’t own, you treat the place more like a hotel than a place that eats up 60% of your take-home (myself included). I pay a lot for rent, I’m not going to wear kid-gloves when I interface with the building, if something breaks from shoddy construction or maintenance I am going to complain to the landlord!”

Sentiment Towards Renting Unchanged – “Oh my gosh….. you are paying $2,100 rent a MONTH, sheeeeesssshhhh… that’s a mortgage payment!!”

With Vancouver RE prices now at the edge of the precipice, here are a few “Why throw your money away on rent?” quotes. They come from the comment section of ‘Tenant of green building sees red’ [The Province, 3 Oct 2010], which deals with the structural shortcomings of the Olympic Village. An OV renter is paying $2100 per month for a 888 sqft condo.
Note the mentality: Renting is wasting your money. Anybody who can afford to buy, should buy, no questions asked.
One imagines that, once the prices of units like this one are dropping at a rate of greater than $2100 per month, and keep doing so for years, these commenters will finally be able to do the math. – vreaa

anonymous 3 Oct 2010 – “LMAO!!!!!! wow $2100 a month. so by the standards of living index that shouldn’t be anymore than one third of your monthly income. lady , you’re rich (or your ex is), go buy somewhere….”

anonymous (a different one, I presume -ed.) 3 Oct 2010 – “Oh my gosh…. Miss LEE… you are paying $2,100 a MONTH, sheeeeesssshhhh woman that is a mortgage payment!! Buy something that will be your own for that kind of money.”

Incumbent 3 Oct 2010 9:59 am – “Lee pays $2,100 a month for an 888-square-foot, what a waste of money. Why not invest in another propertry?”

“Here’s the final installment of ‘My Sister is Trying to Sell Her House in Coquitlam.'”

oneangryslav2 at vancouvercondo.info 29 Sep 2010 12:55pm – “Here’s the final installment of ‘My Sister is Trying to Sell Her House in Coquitlam.’
To recap: put it on the market for (now I can be specific) 689K at the end of June, had some looks and a few open houses over the course of about 8 weeks, then lowered the price to 655K in late August. This caused a spike in interest and it was sold about 10 days later for full list.
The new owners? A young, married couple with a newborn, who had sold their old place (townhouse) and had to be out by the end of September, and were in a rush to find a place to buy and move into (like the thought of renting for six months never occurred to them–though, if they purchased the townhouse a few years ago they would have benefited from the rising market and the capital gain upon sale and who wants to be “throwing money away on rent” anyway!).
They will be putting in a kitchen downstairs in order to have a mortgage helper. It’ll be interesting to see what kind of financial shape this young family is in in 2020. As for my sister and her family? Renting, and plan on doing so for about two years.”

When Your Landlord Decides To Sell – “We gave our notice and split. The place is still on the market 4 months later and the building manager says it has been shown maybe 5 times.”

Ralph Kramden at VREAA 16 Sep 2010 9:14 pm – “The place we used to live in is owned by an American. They listed it at a price that was stupidly high, and they had the nerve to say “stay awhile, we have your life upended for tours of eager buyers”. We gave our notice and split. The place is still on the market 4 months later and the building manager says it has been shown maybe 5 times. This is a million dollar condo. Now I noticed that a new agent is listing the place. No reduction in price, but the agent looks like a rookie. Maybe the smart managers are steering sales to guys that can close and the dogs go to the rookies. The whole market is upside down and will be carnage for people who bought in the last few years. I am so glad I sold out two years ago.”

Richmond Rental On craigslist – 900 sqft; Rent $1580 and falling

From craigslist 9 Sept 2010 9:45am PDT –
$1580 / 2br – Air cond. Luxury Hi-rise – “Paloma” 6068 No.3 Road
5th floor, Approx. 901s.f., South facing (not facing to No.3 Road)
Bright 2 bedrooms + 2 bathrooms + kitchen + living room + Hugh Patio [sic … cousin of Huge Grant?]
Granite countertops. Coordinated polished chrome accessories, [etc]

Recent ask price history:

“I am off with my family to Italy for 2 1/2 weeks, this wonderful little trip made possible by my landlord.”

McLovin at vancouvercondo.info 7 Sep 2010 6:23 pm – “I am off with my family to Italy for 2 1/2 weeks, one week in a villa in Umbria and one week in a villa on the Amalfi coast. This wonderful little trip (I hope we will remember for a lifetime) has been made possible by my landlord. We rent a wonderful 3br condo in Yaletown for 31% of the cost of owning it. The money I am “throwing away” on rent has made this trip possible.”

“Vancouver is in our blood. That doesn’t mean we’re incapable of seeing the insanity of pricing our real estate way ABOVE places like Hawaii, NY, etc. The hype is reprehensible. We see the HUGE amount of misallocated effort and money wrapped up in this market, and the hurt that’s coming down the road.”

The “if you complain so much about this place, why don’t you leave?” cries have reached another wave of high intensity on local RE blogs. The couple in this eloquent anecdote demonstrate how it is not inconsistent to both love Vancouver and, at the same time, harbour misgivings about the obscenely overvalued RE market & its deleterious effects on our society. -vreaa

Royce McCutcheon at vancouvercondo.info 20 Aug 2010 12:13 pm –
“My wife and I – both in health research – have decided to have a crack at setting up here because we felt it was somewhat worth taking a professional hit in order to 1) have closeness to people we care about and 2) to stay in Canada and, especially, in an area where we grew up. We’re here because we are Lower Mainlanders. I don’t mean that in the sense that we’re straight out of a leaky-shoebox-lovin’ condo ad, stacking fresh-cut flowers in the front basket of our mint Vespa scooter. I mean it in the sense that we are actually OF this place. For better or worse, this place will always be HOME. I learned how to ride a bike when I lived in family housing at UBC, I grew up listening to Robson & Larscheid call Canucks games, I’ve enjoyed everything from Expo 86 to the celebration of the recent hockey gold, and my heroes are people like Terry Fox and Doug Coupland. My wife has similar bona fides. We’ve spent time in dozens of countries between us and we return here because it is in our blood.
But even with us personally loving it here, we reserve the right to mock the “best place on earth” tag. Just because WE are acclimated to the craggy beaches, hefty rainfall, and lack of cultural and industrial infrastructure, doesn’t mean we’re incapable of seeing the insanity of pricing our real estate way ABOVE places like Hawaii, NY, etc. We know that outsiders who don’t have Vancouver in their blood are unlikely to feel like we do, so we think the hype is reprehensible. And even though we personally are not in the real estate market, we can’t simply ignore real estate in the Lower Mainland. Why? Because it’s clear that this incredibly delusional and out-of-whack market has the ability to impact the majority of people in this region (not just those who invested directly in real estate)! THAT is why we express anger and frustration and why we deride this place. The vitriol you’re witnessing towards Vancouver – and Lower Mainland real estate in particular – is a symptom of the Cassandra complex that’s developed in people in this city who can think rationally. We see the HUGE amount of misallocated effort and money wrapped up in this market and we see the hurt that’s coming down the road, yet we’re pretty much powerless to affect the situation. Some of us may personally benefit from a massive correction and are gleeful, sure. (There’s a very decent chance that my wife and I will benefit hugely in the time ahead – and even if a correction takes a long time, we love where we rent.) But if things get bad enough, many might also have to leave (for us, research funding has already started to be cut BEFORE a massive correction has occurred). And we take no pleasure in seeing people we care about – or the city we love – struggling to move forward.
So, regarding why we stay here even after ‘grass is greener’ comments, it comes down to simple personal math: [(Being ‘of’ the Lower Mainland) – (Poorer work circumstances)] > [Better working circumstances somewhere else]. Some days the equation flips. Once that happens enough times, we’re gone. Till then, most negative comments are just blowing off steam in an obviously frustrating situation.”

“I’ve met several people in their thirties with full time jobs who live in apartments with roomates, because they can’t even afford a one bedroom apartment. I made close to $100K last year and I’m renting a one bedroom.”

Tom at greaterfool.ca 31 Jul 2010 11:07 pm – “I’ve met several people in their thirties with full time jobs who live in apartments with roomates, because they can’t even afford a one bedroom apartment. When houses cost a million a pop, who is going to pour the coffee and schlep the beer? People who live with roomates in a basement in Surrey? I made close to $100K last year and I’m renting a one bedroom, because a two bedroom in a decent neighborhood costs well over 400K, plus you have monthly maintenance fees of $250-350, plus taxes.”

“I’ve just sold my American Home of 19 years, and will rent for the next year or so until we move to BC.”

Contrarians would currently be selling Canada and buying the US. Here’s somebody who is almost doing the reverse (not exactly the reverse, because they’re waiting before they buy BC). – vreaa

Fiendish Thingy at greaterfool.ca 24 Jul 2010 1:18 am –

“I’ve just sold my American Home of 19 years (in Santa Cruz, CA , the 2nd least affordable community in the U.S. – 7.5 times avg. income IIRC), and will rent for the next year or so until we move to BC. We are sick of the corruption of both major parties, and look forward to living in a country where most of our tax dollars aren’t gobbled up by illegal wars (including torture and wiretaps), bank bailouts, and corporate welfare. We know Canada isn’t a Utopia, but it will be Heaven compared to the insanity going on the past 10 years.

We are already landed immigrants, and are just waiting for our daughter to graduate college, and for us to find jobs (in the health professions) before moving and becoming renters in the lower mainland.

In the meantime, our over $300k USD from the sale of our home will remain liquid and available for the day when Canadian RE becomes more reasonably priced. In a few years, we hope to pay cash for a home, and have no mortgage. We are completely debt-free and loving it!

As for those who hope to buy American, there are definitely good deals out there, but more may be on the way. There is a huge backlog of foreclosures, and isn’t there a huge wave of Alt-A (you pick payment/interest only) mortgages about to reset in late 2010? I don’t think we’ve seen the bottom in the U.S. yet…”

“I wonder just how bad things are when realtors start cold calling by knocking on my door during dinner to tell me about what’s going on in our West Vancouver neighbourhood.”

DM at VREAA 24 July 2010 8:09 pm –

“I wonder just how bad things are when realtors start cold calling by knocking on my door during dinner to tell me about what’s going on the neighbourhood (West Vancouver). Her face lit up when we said we said were renters. Almost felt a bit sad for her….didn’t have the heart to tell her we sold all our real estate in 2008 and don’t plan on buying again for quite some time.”

Rent or Buy? – “We pay $1,850 a month to rent a house in North Van, where a so-so home costs $700,000. Forties, two kids, $125,000 saved, no real estate, no debt. We’ve just got notice of a rent increase, to $2,500. Dilemma.”

This anecdote from Chuck headlined by Garth Turner at greaterfool.ca 14 July 2010 –

“We pay $1,850 a month to rent a house in North Van, where a so-so home costs $700,000. Forties, two kids, $125,000 saved, no real estate, no debt. We’ve just got notice of a rent increase, to $2,500. Dilemma. This increase of $650 will seriously affect our ability to save. To complicate things further, $2,500 is still on the low end of rents for houses on the North Shore so moving to another house would not save anything.  We would have to move to an apartment, basement suite or townhouse or a lower rent which is not preferred with our kids being 12 and 10 and needing some yard space.  We work on the North Shore so moving to another part of the city doesn’t make sense as it would only increase transportation costs. So we are thinking about buying. Using a factor of 5.48 (equivalent for a 4.39% fixed mortgage) we could carry almost $500,000 for the equivalent of the rent.  We understand that there would be taxes and maintenance that would increase this monthly cost. But warnings loom large when we think about purchasing. So we feel a bit at a crossroads – just live with the new rent and lose the savings while we wait for some correction in the real estate market, or go ahead and see if we can force something down with lowball offers now to get something for similar monthly costs?”

[We agree with Garth’s conclusions that this couple should continue to rent. – vreaa]

First Time Buyer – “It’s so scary, you just never feel like you know you can do it.”

‘Getting in’ is actually the easier part. Being in, while prices drop, is going to be the tough part. -vreaa

From ‘Getting into a tough market’, burnabynewsleader.com 21 May 2010 –

“For most of her life, 56-year-old Royal City resident Jackie Olds thought owning a home was nothing more than a pipe dream. The market in the Lower Mainland was spinning out of control. There was no way she could ever afford to own, she couldn’t pay for those tricky, hidden costs. Or, so she thought.

“During my last experience trying to rent a place it was just a nightmare,” she said. “Everything was overpriced and filthy. I went to this one apartment and lifted up the bread board and it was covered in bugs. I left in tears.”

Once the tears dried up, Olds decided to sit down and take a long look at her budget and see if she could manage the daunting jump into home ownership. “It’s so scary, you just never feel like you know you can do it,” laughed Olds, now the owner of a condo in New Westminster’s Brow of the Hill neighbourhood. “But, if you do your homework and you don’t rush in, it’s amazing.”

Spot The Speculator #5 – Woodward’s – “Perhaps over 50% of the residents are renters, not owners. On our floor only two out of the ten apartments own their homes.”

Clearly a large percentage of the buyers in this project, as in other downtown condo projects, bought units not for personal use, but as speculative investments under the assumption that prices would continue to rise. -vreaa

Margaritar comments [4 Jul 2010] on Brian Hutchinson’s articles on the Woodwards project 3 July 2010 –

“I’ve been following the Woodwards articles and am quite pleased with them, but as a resident of the Woodward’s W43 building, I think much of the ‘heart of the matter’ has been left out.

The continuous remarks about the residents of this building being “monied”? Not quite accurate considering perhaps over 50% of the residents are renters, not owners. Talking to the people in my building, you will see tons of different opinions, as the demographic of this building is so different. Some people view it as a trailer park, some as a university res, some as a place for their families.

Much of the drinking and carrying on on the top floor has been from young punks and their friends. Hence, I haven’t used the hot tub once. I go up their for the gym and the view (the bbq up there has never worked). The sight of drunk girls and guys wearing no clothing and sitting in a hot tub with them? Kinda grosses me out.

On our quiet floor we have mixed demographics – I have the only child on the floor, there are a couple of older couples, a couple of dogs, a couple of singles, another young couple, and then there are the roommates. The young guy roommates are the only ones who have defaced property on our floor, for no reason other than that they were drunk, even telling me twice that he was the one who wrote swear words on the wall. Awesome. On our floor only two out of the ten apartments own their homes.

I’m not saying I’m against renters, I am a renter and I treat the place as my own – but not everyone does. And the fact that continuously you write about the people who live here as spoiled and rich is kind of an insult as many people in this building have to work hard to make a buck just to pay their rent, and can’t even enjoy the facilities as they are being taken over by young kids getting drunk and throwing parties all the time. Hence the signage. (the signage is also due to the fact that we have a security guard who’s not really around most of the time for whatever reason).”

thinktom (local realtor) at RETalks 7 Jul 2010 3:39pm – “TON of listings in Woodwards right now. Yikes.”

“I got sucked in to an argument on RE. God, I’m so sick of even talking about it. This new homeowner was telling me that it never goes down, it’s never a bad time to buy etc…etc… He sounded like he was reading from a script.”

Vansanity at vancouvercondo.info 6 Jul 2010 7:10 am –

“I got sucked in to an argument on RE. God, I’m so sick of even talking about it. This dude was telling me that it never goes down, it’s never a bad time to buy etc…etc… He sounded like he was reading from a script. I’m not even making up the fact he said “everyone wants to live here”. There were more too. When I talked about interest rates and how they affect prices he said I was thinking too far ahead… WTF??? Unbelievable. It was okay to think 5 years down the road as long as I’m also factoring that prices will be higher, much higher, but not okay to think 5 years ahead about where interest rates are. It was mind boggling. Here’s what I discovered upon some reflection. This dude, a new homeowner, wanted me to buy a place so badly it was a bit disturbing. If I’m wasting my money renting, why does it concern him? It’s my money. The only reason I can think of is that he’s insecure about his new purchase.”

Renting Is Wise And Prudent, But It Can Be Demoralizing – “Moving with young kids is not my idea of fun. Neither is trying to find a decent 3-4 br family-friendly rental house in Vancouver. There’s a lot of crap out there.”

The fundamentals are skewed profoundly in favour of renters. But ownership has the advantage of stability, and, thus, despite the financial disadvantages, still lures many. Patience and inconvenience will be rewarded. -vreaa

BCite at vancouvercondo.info 4 July 2010 1:14 pm – “I’m so discouraged with renting at the moment and I certainly don’t want to buy right now. I do wish this bust would hurry up and happen already. Can anyone else out there identify?”

scoop at vancouvercondo.info 4 July 2010 4:02 pm – “I can identify. Recently received notice requiring us to vacate our current rental home. For a single person, moving from one generic one br condo to another may be no big deal. But moving with young kids is not my idea of fun. Neither is trying to find a decent 3-4 br family-friendly rental house in Vancouver. There’s just a lot of crap out there. Sometimes I wonder, should we just bite the bullet and buy a place, even though the prices make me sick? I’m definitely on the fence at times.”

“He’s a CA who moved here from Winnipeg about 5 years ago, and just loves the city. He’s one of the few people that agree RE here is due for a crash.”

Krazy Kanuck at vancouvercondo.info 29 Jun 2010 12:47 pm –

“I went out with a friend I haven’t seen for years. He moved from Winnipeg here about 5 years ago, and just loves the city. He’s one of the few people that agree Real estate here is due for a crash. He and his girlfriend are renting a really nice 2 br condo with den, right in coal harbour for $2k a month. Condo fees are $600 a month. Anyhow, he is a CA but is striking it out on his own with a few partners. They have their own web based start up company. One thing he said really struck me. He said “you know….because of my partner and I, we have 5 people drawing paychecks. We haven’t paid ourselves for 1 year so far, but it feels great to have created 5 jobs. The thing that sucks though is that there are no government incentives for entrepeneurs”. So there’s plenty of incentives to go buy a house (cheap easy money), but very little to encourage economic growth.”

Bingo! – “I’m sick of the jizzbags who enjoy the benefits of renting instead of buying. I own a place: I’m a quarter-million dollars in the hole; I pay $250 a month to my strata; if I move, it’ll cost me thousands of dollars in realty/transfer/mortgage fees. Renters avoid all of this by living in someone else’s property and letting the landlord assume all the risks that come with ownership.”

As the market turns and then implodes, we expect all players to become acutely aware of the disadvantages of owning and the benefits of renting.  It is somewhat ironic that the Westender titled the following letter ‘You rent, you risk’.  -vreaa

From ‘Frank’ in this week’s edition of the local ‘Westender’ newspaper [24-30 Jun 2010], as quoted by bridgeman at vancouvercondo.info 28 Jun 2010 10:20 am –

“I’m sick of the jizzbags who enjoy the benefits of renting instead of buying a place and then won’t accept the downside- that is, they might have to move out if their landlord needs to renovate the place. I own a place: I’m a quarter-million dollars in the hole; I pay $250 a month to my strata; and if I want to move, it’ll cost me thousands of dollars in realty/transfer/mortgage fees. Renters avoid all of this by living in someone else’s property and letting the landlord assume all the risks that come with ownership. When the tide turns and it’s time to go, they can bitch and moan and call the CBC “Go Public” hotline, or they can do what I did: accept the unpredictability of renting, take their two months’ notice… and buy a place. Or keep renting and stop complaining.”

“Frankly, I’m hoping for ‘Phoenix Style’ price collapse then I can afford a place in the city of my birth.”

Coal Harbour Resident at businessweek.com 25 Jun 2010 12:59 am –

“I live a 5 minute walk from the Classico bldg. It is nice but, like many of these condos, I don’t get the pricing. Even with the rich Chinese – and they have been flooding in for years – and all the drug money in the city…makes no sense. Frankly, I’m hoping for ‘Phoenix Style’ price collapse then I can afford a place in the city of my birth.”

“My wife and I combine to make over $100K/yr. But because we have 2 kids in daycare and minivan payments we cannot afford a condo big enough to fit our whole family. So instead, we rent, for a fraction of the cost.”

south_slope at vancouvercondo.info 24 Jun 2010 9:39 am –

“I’m a journeyman electrician in my mid 20’s. My wage is close to what a nurse makes. My wife and I combine to make over 100K/yr. But because we have 2 kids in daycare and minivan payments we cannot afford a condo big enough to fit our whole family. So instead, we rent, for a fraction of the cost, and save a TON of money. If the market in Vancouver continues to sky rocket forever we will either continue to rent (and retire millionaires) or leave.”

“I personally know 8 people with investment properties that are currently slightly above or slightly below their operating costs. A 10% change in the market would put all of them under. A 20% change or more would force a sale.”

Junius at vancouvercondo.info 22 Jun 2010 12:40 pm –

“I personally know 8 people with investment properties that are currently slightly above or slightly below their operating costs. Even a 10% change in the market would put all of them under. A 20% change or more would force a sale. This is coming. It is only a matter of time now.”

“Today I did a return for someone who owns a house he’s renting out. The mortgage balance is $350k and he’s cash flow-negative by at least $400/month. The house is now for sale, for just a bit over the mortgage amount.”

anonymous456 at vancouvercondo.info 22 Jun 2010 1:01 pm –

“I’m an accountant, I do A LOT of tax returns, self-employed and employed, and I don’t often come across too many young people making over $60k. If I do, they have been in the workforce for at least 10 years, or if they’re lucky, they’re in trades. Today I did a return for someone who owns a house he’s renting out. The mortgage balance is $350k and he’s cash flow-negative by at least $400/month. The house is now for sale, for just a bit over the mortgage amount. His net self-employed income over the past few years has been about $15k. Yes, $15k. Oh and his balance sheet shows an overdraft in the bank nearing $100k. How did he get the mortgage? I have no idea, I guess it’s some fancy “self-employed stated income thingy”. It boggles my mind. And I really wish I could say that this is unusual case, but this year I have more clients who are in that position-drowning in debt, huge mortgage, moderate-to-low reported income (and if he DID have significant unreported income, why would he carry an overdraft balance of $100k, paying tens of thousands in interest?). Now ask me if I think the market won’t fall. People are leveraged to the max. This isn’t going to end well, the numbers say it all.”

“I saw a really great vanity license plate on a convertible Mercedes today down by the beach. The plate said “wy rent” and underneath the plate it said “I sell houses”.

We’d guess that this guy will have a generic plate within 5 years. -vreaa

nonymouse at vancouvercondo.info 19 Jun 2010 4:43 pm –

“I saw a really great vanity license plate on a convertible Mercedes today down by the beach. The plate said “wy rent” and underneath the plate it said “I sell houses”.

“We are not bitter that the sacrifices of home ownership in Vancouver are greater than we wanted to make. For us, the benefits of flexibility outweighed the pride of homeownership. We are moving to a larger rental space in the building we’ve lived in for seven years. We are now the second couple in our circle that have negotiated a similar arrangement.”

A couple diligently does the math and decides to continue renting. -vreaa

generation y at vancouvercondo.info 19 Jun 2010 12:31 am –

“After diligently working to eliminate nearly $70K in student loans, my wife and I are beginning our third debt free year. Demographically we both hold graduate degrees and our household income fluctuates between $140 – 170K per year. We live below our means:

– rent a car when we need one
– remained in a one-bedroom apartment after our daughter was born
– brown bag lunch most days
– follow a simple, cash-only budget
– brew our own coffee in the morning

In the time since eliminating debt, we’ve saved almost $150K. We began looking to buy real estate. We wanted to maintain our faux bohemian lifestyle, and Vancouver West seemed the best option. We began looking, and our finding was that a ready-to-live-in single family home in Vancouver West (North of 16th) began around $1.1M. We looked and crunched and after three months decided that we didn’t want to make the sacrifices required to own a home, including:

– becoming landlords
– sacrificing professional mobility
– staying home during vacation
– paying consumption taxes

We are not bitter that the sacrifices of home ownership in Vancouver are greater than we wanted to make. For us, the benefits of flexibility outweighed the pride of homeownership.

We are moving to a larger rental space in the building we’ve lived in for seven years. It is a professionally managed rental tower downtown. We have a positive relationship with the supers. In negotiating the move, we wanted a number of updates made to the suite. Ownership didn’t want to expend the capital. As such, we offered to pay for the renovations for a reduction in rent. Ownership agreed. The break even works out to ~42 months, and we’ve picked out the styles we wanted.

I write this because we are now the second couple in our circle that have negotiated a similar arrangement. As a business person, I know when dealing with another business (read, not an individual), I am working with known strategies that dictate margin, capital and cash flow. Thus, I was able to negotiate a mutually beneficial arrangement that distributed the risk such that I (the tenant) and the owner were happy. On July 1, we will move into an updated 1050 sq ft, 2 bed, 2 bath, 2 balcony apartment on the 22nd floor with unobstructed views of English Bay. Rent = $1700. I’ve taken a few stabs at comparing the rent to the hypothetical cost if we were to buy. My amateur numbers validate we made a good decision for us.

What I often don’t understand is the venom with which homebuyers / marketers are often attacked on this blog. [vancouvercondo.info] From my perspective, they are making the best decision for them. I realize many of the comments speak out against the onslaught of homeownership messaging. Yet, I heard the messaging, searched and decided that renting was the best option for us. However, the numbers were less of a factor than the soft benefits. I believe the soft benefits trumping the numbers will become more pronounced as more first-time buyers begin choosing what they need over what they can afford.”

“I’m a mortgage broker and I can tell you that almost nobody who owns goes back to renting. Most people perceive that as a total regression.”

Only a very, very small percentage of owners will anticipate a large fall in RE prices, sell their primary residences, and rent. If a larger percentage attempted to do this, the market would collapse by virtue of that supply. Thus, the vast majority of owners will ride paper profits up and down. -vreaa

Dwide_Schrude at theglobeandmail.com 18 Jun 2010 8:33 am –

“I’m a mortgage broker and I can tell you that almost nobody who owns goes back to renting. Most people perceive that as a total regression. My parents have lived in a 2800 SF house for 30 years. Do you honestly think they’re going to rent an apartment because of what a few people think about interest rates? Most people who own a house figure out a way to pay the mortgage somehow. Almost nobody defaults in Canada. There’s a reason CMHC made just under a billion dollars last year.”

Rental Agent – “People are selling $3-million homes and opting to rent.”

From ‘Homeowners sell, start renting instead’, by Steve Ladurantaye, theglobeandmail.com 18 Jun 2010 –

“Diana Mander of Royal LePage Northshore has worked in Vancouver’s rental market since 1989, and said this summer has been among her busiest. Things are usually slowing down this time of year, but a flood of local inquiries has caught her off guard. She’s more accustomed to dealing with families who are moving to Vancouver from other cities, not Vancouverites who are looking for high-end rental homes because they sold their own properties. “The strength of the local market is really quite a surprise,” she said. “People are literally selling $3-million homes and opting to rent. It’s definitely putting pressure on supply.”

“My best friend is a realtor on Vancouver’s Westside. He recently sold all 3 of his houses and moved his family into his parents’ basement.”

ibew-213 at theglobeandmail.com 18 Jun 2010 10:31 am –

“My best friend is a realtor on Vancouver’s westside. He recently sold all 3 of his houses and moved his family into his parents’ basement. 90% of his business comes from rich Chinese investors who mainly buy vancouver real estate just to park their money. And these clients are disappearing fast. So fast in fact he told me to “sell now or be priced out forever.” Those are scary words to hear from a realtor… “

“The rental market is softening. Lots of turn over and the phone is not ringing for empty units. It will be amateur hour for these newbie landlords.”

SethM at RE Talks 17 Jun 2010 7:55 am –

“I have solid evidence that the rental market is softening. Lots of turn over and the phone is not ringing for empty units. Stay tuned. Expect to see a further increase in vacancy rates as condo flippers are forced to rent out their units. It will be amateur hour for these newbie landlords.”

And this related story in the Vancouver Sun 15 Jun 2010 –

“Metro Vancouver’s apartment vacancy rate edged up to 2.2 per cent in the spring. The last time Metro Vancouver saw a vacancy rate higher than two per cent was in 1998/99 when the region’s vacancy hit 2.7 per cent. In the spring of 2008, Metro Vancouver’s apartment vacancy rate was 0.9 per cent. “There’s a lot less calls coming in,” Debbie Johnson, director of marketing for Gateway Property Management, said.

“Every Friday four of us go for lunch together and every Friday I have been heavily pressured for not taking advantage of low rates blah-blah-blah. And now it happened. Today at lunch: politics, schools, hockey, soccer, cars, whatever. Real estate – not a single word.”

Years from now, when we reach the Vancouver RE price trough, the subject of RE will be reviled as a topic of conversation. Are we seeing the very beginnings of that descent? -vreaa

Patsan at vancouvercondo.info 4 Jun 2010 11 p.m. –

“When 6 months ago I sold my 2br townhome and rented a 4br house for less than cost of “ownership”, almost all my friends and colleagues were looking at me as at a leper. God knows what they were talking about me when I did not hear… Every Friday four of us go for lunch together and every Friday since becoming mortgage-free I have been heavily pressured for not taking advantage of low rates blah-blah-blah. I tried to reason my move and educate them, but helplessly. And it happened. Today at lunch, there was a lengthy discussion about BP barbarism, BC politics, schools, hockey, soccer, cars, whatever. Real estate – not a single word. Wow, I said to myself. Coincidence? What do I know?”

The realtor said “You can’t believe but there was not a single call for this house for 30 days”.

Patsan at vancouvercondo.info 4 Jun 2010 11 p.m. –

“My family are renting a house on the West Side and in January my amateur landlord put the house for sale as “financial conditions changed”. My family kindly agreed to show the house once a week to potential buyers. At the beginning showings were active and once we had seven parties to wander around. By the end of April there were one or two viewers per week. In May – zilch – nothing – no showings and no call from the realtor for four weeks. Yesterday I inadvertently bumped into the guy in downtown and asked him what’s going on. The realtor said “you can’t believe but there was not a single call for this house for 30 days”. I told him that there is no reason for dejection because it is different here and maybe all the potential buyers are flocking to Johannesburg to snap some properties during FIFA World Cup and then will be back home. To say that he was stunned is to say nothing.” [haha, cute joke -ed.]

“I am renting half of a Van Special duplex on the east side. The owner also owns their own residence and another “investment” property. Last night we got served notice of foreclosure proceedings on this property.”

A story of speculation ending in foreclosure, even though prices are still near peaks and money is still pretty much free. Foreclosures will obviously spike with coming price drops and rate increases. -vreaa

r_ at vancouvercondo.info 3 Jun 2010 10:09 am –

“I am currently renting half of a Van Special duplex on the east side. The owner also owns their own residence and another “investment” property. Last night we got served notice of foreclosure proceedings on this property. Things are heading downhill…..”

“I just about lost it on her about the “responsible” part since I am a senior executive that rents, and putting 5% down is not “responsible” at all.”

Grumpy Exec at vancouvercondo.info 3 Jun 2010 8:40 am –

“A new mid-20s colleague of mine was talking about her and her husband’s recent condo purchase in the summer in the “New Yaletown” in Surrey (not sure where that is). She is on a temporary contract when she bought, and proudly announced in the logbook that she was off to sign her first mortgage payments. She continuously says that being a homeowner is the “responsible thing to do” and “nothing like being an adult” because you are a homeowners.

She was talking about her condo life, and looking to buy a house in Surrey as well, and maybe keep the condo as an investment because it had gone up 30k. She was looking, in part, to buy a house because condo life is not exactly what they were thinking it was going to be. They have 3am fire alarms being pulled, and a lot of units are “rented” which is undesirable in her mind. Her husband sits on the strata council and they have a tough time trying to approve repairs. Apparently a lot of absentee landowners.

My other colleague, who agrees that prices are unsustainable, questioned her as to how she was liking her condo and how the house hunting was going. He noted that the market was slowly changing and that with the large number of absentee landowners, making repairs is only going to get worse. The best was when he said that when prices drop a lot of them will leave. Then her 5% downpayment would be gone (don’t know if that is all she put down though). She promptly left the room.

This was the day when the FV stats came out and said highest inventory since 1995. I just about lost it on her about the “responsible” part since I am a senior executive that rents, and putting 5% down is not “responsible” at all. But my colleague put her in her place inadvertently by making fun of the fact that a 5% price decline means her 5% would be gone…”

“From a quick Google search I found that they had bought the house in March 2010 for an astounding 859K. The couple is very young (late twenties, early thirties). It didn’t seem like a stable landlord situation to me!”

This anecdote from Kel via e-mail to VREAA 30 May 2010 –

“I’ve been looking to relocate from a condo in Kits to a house on the North Shore (renting that is..). Here are a few stories that help shed light on the reason why I can’t find a decent rental house:

First story: Along my journey, I went to go see this place:

http://vancouver.en.craigslist.ca/van/apa/1748191061.html which was listed for $2200/month in April and then reduced to $2000/month in May.

When I went to see it, the people renting it out were clearly amateur as landlords and I didn’t feel comfortable doing a long term rent from them (and the house was only 200sqft bigger than my current price at a $600/month price increase- no thanks). Just for fun I went home and Googled the address. Turns out the house was also listed on MLS. It was listed on April 7, 2009 for 729K (http://www.realestatevancouvernow.com/mls/north-vancouver-seymour/V812682/) and at the time I viewed it in mid-May was for 699K [price:rent ratio about 350:1 -ed.].

I emailed the landlord to call him out on it and said “you won’t be able to attract good long term tenants with your house listed on MLS”. His response was “A friend of ours is a real estate agent and he convinced us to list the property, but we have decided to keep it.  I’ll let him know that he should just delist the property.  Thanks for pointing it out.”

I was angry as I felt my time was wasted… looked again last night.. the price is now listed at 658K (http://www.realtor.ca/propertyDetails.aspx?propertyId=9567824)

Second story: Went to see a place in Deep Cove. The landlords were going to be living in the basement and fixing the bottom suite while renting out the top. From a quick Google search I found that they had bought the house in March 2010 for an astounding 859K. The couple is very young (late twenties, early thirties). It didn’t seem like a stable landlord situation to me!”

[Thanks to Kel for sending along these stories.]

Overextended Amateur Landlords – “I’ve seen over a dozen places for rent in the last month. In ALL cases the landlord had owned for 1-3 years.”

Amateur speculators buy anticipating ongoing price increases. The properties are all cash flow negative. They will be sold into the market as prices drop and the premise for holding them disappears. -vreaa

Devore at vancouvercondo.info 28 May 2010 10:46 am – “I’ve seen many places for rent in the last month, and one of the first things I ask the landlord is how long you’ve had the place. All the condos I looked at, over a dozen, ALL, the owner had between 1-3 years with the property. Many without even asking offered to drop price for a “good” tenant with 1 year lease. Uhm, thanks but no thanks. I don’t want to be getting a call 6 months from now begging me to break my lease and move out because they have to sell.”

“Professionally managed rental units are taking longer to occupy. This is indicative of a significant oversupply of housing.”

jesse at vancouvercondo.info 28 May 2010 11:06 am – “My relatives and friends who rent out suites get dozens of applicants, even recently. Unfortunately, few of the applicants pass the smell test. That professionally run units are taking longer to occupy is indicative of a significant oversupply of housing.”

“My wife and I pocket over $4,000 per month cash and so far have about $160,000 cash for a down payment but we’ve never felt poorer. All of our friends have bought in the last few months.”

chen at VREAA 28 May 2010 1:50 pm –

“I certainly feel the stigma of being a renter, guessing my wife does too, because she seems depressed about not owning. We have good stable jobs, no debt, we pocket over $4,000 per month cash (not including insurance + rsp’s) and so far have about $160,000 cash for a down payment but we’ve never felt poorer. In hindsight we should have just bought with a 0/40 in 2006 and I’d probably be better off today. All our friends have bought in the last few months and I feel like people pity us or something. I really don’t care, but it’s a weird feeling to say the least, perhaps I’m misreading people.”

“I have a teammate who recently bought a $350K 500sqft 1 bdrm downtown. I didn’t bother giving her my opinion. I’ve sold my house now and am content to watch people make mistakes and crash this market.”

taylor192 at vancouvercondo.info 26 May 2010 8:55 am –

“I have a teammate who recently bought.
She bought a $350K 500sqft 1 bdrm downtown.
She claims prices will continue to go up.
She was unaware that prices from 1994 to 2002 were flat.
She’s young, and all she has ever known is prices going up.
She was unaware of the excess inventory downtown.
She felt lucky to have bought a place that was affordable.
She is stretched into it, having a silent partner help her purchase.
She thinks even if the market goes down, she’s at least paying down equity (sorta true, yet she’s paying a premium to save).
She has a plan B to rent it if she has to hold it for years. Rent would be $1500, yet her mortgage/taxes/fees would be > $1500.
I didn’t bother giving her my opinion. I’ve sold my house now and am content to watch people make mistakes and crash this market. The more mistakes, the merrier.”