Vancouver Housing
After doing some random internet surfing one day, I stumbled across this blog about Vancouver Housing. The author takes a bearish position on real estate but he offers many facts and data to support his arguments. Reading his blog resurrected my idea of getting into the real estate market. However, after talking with some people who are in a position that I would realistically be in I have found the following data (which is by no means comprehensive):
If I were to spend $250K for a condo in either kits or downtown, I would end up paying roughly $1500/month to live. That number is based on 25% down and includes mortage payments, strata fees, and property taxes. However, if I were to rent a place in either of those two areas, I could find a place anywhere between $800 - $1000.
Given those numbers, I am going to choose to rent at this point in time. My reason is primarily a lifestyle choice. I am very aware of my monthly cash flow and paying $1500/month to live would make me working poor. I would not have much money left for savings and I would not be able to afford to travel. Also, as a single income earner having a mortgage puts me in a slighly precarious situation. Should interest rates go up (which it looks like it will continue to do), or should strata fees go up (which they almost invariable do), or should the economy start moving downwards (possible since it's normally cyclic), it would significantly affect my cash flow. Finally, my final reason for choosing to rent is mobility. Having a mortgage effectively ties me down in Vancouver. It would be hard for me to rent my place for a price high enough to cover my payments. Why rent for $1500 when you can rent for $1000? Unfortunately, I do not have enough money to make a larger down payment to bring down my monthly payments and I can't afford to take a loss. Renting, however, allows me to live with fewer strings attached and I am free to move around the world which is something I would like to do because I feel gaining a global perspective is a valuable educational experience.
I do not know if there is a housing bubble in Vancouver. Even though the 'experts' say there is no bubble, the irrational behavior of some people in Vancouver (like who waits in line for the privilige of making an offer of over $250K for condo that borders the Vancouver East side - see Woodwards development) reminds of the greed of the Dot Com Era and leads me to believe there is a bubble. I will not try and predict the market and my inaction of not buying a place could very well price me out of the market. I also do not mean to sound pro-rent since I'd rather own and build equity. However, the numbers that I have crunched and the lifestyle I want to live tell me that renting is the way to go for me so renting is the option I will choose for now.
If I were to spend $250K for a condo in either kits or downtown, I would end up paying roughly $1500/month to live. That number is based on 25% down and includes mortage payments, strata fees, and property taxes. However, if I were to rent a place in either of those two areas, I could find a place anywhere between $800 - $1000.
Given those numbers, I am going to choose to rent at this point in time. My reason is primarily a lifestyle choice. I am very aware of my monthly cash flow and paying $1500/month to live would make me working poor. I would not have much money left for savings and I would not be able to afford to travel. Also, as a single income earner having a mortgage puts me in a slighly precarious situation. Should interest rates go up (which it looks like it will continue to do), or should strata fees go up (which they almost invariable do), or should the economy start moving downwards (possible since it's normally cyclic), it would significantly affect my cash flow. Finally, my final reason for choosing to rent is mobility. Having a mortgage effectively ties me down in Vancouver. It would be hard for me to rent my place for a price high enough to cover my payments. Why rent for $1500 when you can rent for $1000? Unfortunately, I do not have enough money to make a larger down payment to bring down my monthly payments and I can't afford to take a loss. Renting, however, allows me to live with fewer strings attached and I am free to move around the world which is something I would like to do because I feel gaining a global perspective is a valuable educational experience.
I do not know if there is a housing bubble in Vancouver. Even though the 'experts' say there is no bubble, the irrational behavior of some people in Vancouver (like who waits in line for the privilige of making an offer of over $250K for condo that borders the Vancouver East side - see Woodwards development) reminds of the greed of the Dot Com Era and leads me to believe there is a bubble. I will not try and predict the market and my inaction of not buying a place could very well price me out of the market. I also do not mean to sound pro-rent since I'd rather own and build equity. However, the numbers that I have crunched and the lifestyle I want to live tell me that renting is the way to go for me so renting is the option I will choose for now.
posted by Allan at 3:02 PM
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