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Vancouver Condo market going up up up...

12K views 48 replies 21 participants last post by  james4beach 
#1 ·
Vancouver and it's surrounding areas are going up and up month by month, selling in a week and getting bidding wars.

A condo I saw 4 months ago sold for 430k and today is up for sale for 600k.

I personally went to a open house for a condo listed at 400k, the average sqft sold in the area/building for similar units sold for $407 per sqft, owners listed it at $428 per sqft and unit got sold in 4 days for $455 per sqft. While in the open house the realtor told mine the owner wouldnt take anything else than $455 per sqft. Markets are insane, people are crazy paying this prices, it-s not even close to the city, almost 1.5 hous away from Vancouver and still people overpaying. This madness has to stop.

Sorry for the rant, it's just very frustrating.
 
#3 · (Edited)
I thought the real estate market was going to crash this year? For sure, this time. No... they really mean it.

I was being facecious.

I remember in 1979 when a neighbor moved away and told us their house sold for $40K. My parents freaked out. They were horrified. They said they were fortunate to buy when they did because they could never have afforded another house.

When I was a teenager, someone took me under their wing and showed me a bit about investing. I come from a poor family so the whole thing was a revelation to me. About 2 seconds after being shown the effects of inflation, I realized I would rather have a hard asset than cash.

That knowledge has served me well, all these years. We've always put our savings into down payments with the agreement that, "This will be our last house... no, really...".

A good friend of mine talks frequently about buying a rental house. He has been talking about it for as long as I've known him and that is over 20 years. He's waiting for prices to "correct" back to the level he bought his first house at. This man is 58 years old.

Real estate divides people into two categories: People who follow the market and see the gains and people who are living in the past.
 
#4 ·
That's an overly simplistic way to look at it. The Canadian RE market is very much like the NASDAQ was in the late 90's WAAAAY over valued -- BUT -- it managed to inflate well beyond any rational person's dreams before popping. Timing tops is near impossible. One can only make the best decisions that one has with the information at the time. In hindsight was NOT buying a house 3 years ago the correct decision? Yes, based on the information then it was and therefore I have no real regrets (and converting my RRSP to all USD and putting it into the s&P500 instead was a pretty great move).
 
#6 ·
The Canadian RE market is very much like the NASDAQ was in the late 90's WAAAAY over valued -- BUT -- it managed to inflate well beyond any rational person's dreams before popping.
Is it?

... because the market continues to go up and has done so forever. That puts you in the camp that is incorrect and yet your camp continues to throw down statements like this, even though you have been proven wrong every year for my rather long lifetime.

I'm not saying the market isn't pumped up. I'm not saying the market can't go down or even have a major correction. It most certainly can.

The idea I wish to convey is that people such as yourself and the endless YouTube posters who record their visions of real estate doom are doing a disservice to new home buyers by endlessly explaining about impending bubble. It's clear you don't understand the market.

In 1994, when I was looking at my first rental property, the market was about to crash so I held off. In 1995, it was definitely, for sure, we aren't making it up this time, going to crash so I held off. When I finally purchased in 1996, a friend who owned a couple of rental houses told me I would lose my shirt because it isn't possible to make money at these prices. Between then and now, my market has not corrected. It has had a few flat years and a few explosive years but mostly it's been surprisingly stable.

tavogl, It could be a great idea to wait or it could be an expensive mistake. My advice to you is this: Look at it like people trying to figure out what is going to happen in the stock market in the short term. They might buy and the market goes up, proving they are smart. They might buy and the market goes down, proving they are unlucky. The reality is, very few people know what is going to happen on the short term. Certainly, you and I do not know. What you can know is that 20 years from now, your condo will be worth significantly more than it is today regardless of any market corrections or booms.

I'm not suggesting that you stop trying to time the market. I attempt to time the market.

I'm just saying that you're the one who has to put your money on the table and throw the dice. It's a crap shoot. The most important thing is that you are able to live with whatever decision you make.
 
#5 ·
I am just putting my cash in Tfsa and tangerine HISA at 2.4% while waiting to buy a condo... should i start investing my money and forget about a condo anytime soon? should i just jump into the market with this crazy prices? all my friends bought at insane prices and their properties have gone up up and up... it seemed crazy when they bought but its making more sene now... difficult decision.
 
#7 · (Edited)
That's a very Canadian centric view. I lived in the states during their massive market correction. A LOT of people were financially destroyed. Same here in Toronto in the late 80's.

Time will tell. I'm happy enough living effectively rent free b/c of the money my investments spin off. It's kind of like I own a house \.

You're a victim of recent history. For example, in the late 80's early 90's being invested in the stock market was WWAAAAAY more profitable than owning a house. Now cue the conflicting 'house is not an investment but a home' rhetoric...
 
#8 ·
Obviously, it's legit for someone to present a point of view that the market is at unsustainable heights. My question to you is this: how many years in a row have you been presenting this theory?

When I arrived in Toronto in 1991, the R-E market was on fire. Your "destroyed" market of the late 1980s was a minor correction that re-gained the losses and more in a couple of years, from my point of view.

If every year since 1980, I were to declare the stock market as being in a bubble position, I would have been correct three times. I could declare myself a market expert. ... but I would not be.
 
#10 ·
[/QUOTE]
tavogl, It could be a great idea to wait or it could be an expensive mistake. My advice to you is this: Look at it like people trying to figure out what is going to happen in the stock market in the short term. They might buy and the market goes up, proving they are smart. They might buy and the market goes down, proving they are unlucky. The reality is, very few people know what is going to happen on the short term. Certainly, you and I do not know. What you can know is that 20 years from now, your condo will be worth significantly more than it is today regardless of any market corrections or booms.

I'm not suggesting that you stop trying to time the market. I attempt to time the market.

I'm just saying that you're the one who has to put your money on the table and throw the dice. It's a crap shoot. The most important thing is that you are able to live with whatever decision you make.[/QUOTE]

Thanks for your reply Tomb,

I see what you are saying, the problem I see is that we would not keep the condo for 20+ years, I can tell you that for sure, 400k which is what we can currently afford doesnt get u much around here. It would be fine if we have one child but it would be too tight for the second. We would have to sell and get something bigger for sure.

I feel we are throwing away our "rent money", even it's only 1100 a month. Our mortgage including all costs would be around 2k a month, almost double, but one day it would be ours. I dont really care how much value it gains over the years, just keep up wih inflation and serve the porpuse it should, be a home.

Maybe all my friends have been right this whole time, get in huge debt and hope for the best
 
#11 ·
It sounds like you see the fulcrum of the decision.

Just be sure you subtract the principal portion of the payment from the cost of owning your own condo, when comparing to rent. Paying back principle gains equity, which is exactly like money in the bank from a net worth perspective.
 
#17 ·
But make sure you tack on extra for maintenance over and above the condo fee. Condo fees only cover operating expenses for the building and a relatively small reserve fund which is almost never enough to cover building maintenance. Additionally, condos require interior maintenance (ie: carpets, etc.) or else they will be hopelessly outdated -- another expense which needs to be accounted for in addition to condo fees.

1-2% of the condo unit's present market value is a good starting point for such.
 
#14 ·
I followed the R-E crisis in California through the 2008-2009 pretty closely and there may be some value in the lessons learned from that market event.

We've wanted to retire to an ocean view condo for over 10 years. I thought about picking one up and renting it until we are ready so we've viewed a few and I occasionally browse listings in Vancouver, San Francisco, and SoCal.

Back to SoCal... What I find interesting is that, during the height of the crisis, they were literally bull-dozing entire neighbourhoods of brand new homes in the Inland Empire. Banks didn't want to carry the liabilities and pay the taxes so they knocked them down. That's how low their value was estimated, during the worst of it.

... but properties on the coast hardly changed. I had a fantasy that we could find an ocean front place for $1M but nothing even came close. Prices hardly budged.

As best I can tell, the crash was almost exclusively in non-prime properties. The closer to the ocean, the less affected by the crash to the point that ocean front was unaffected.

... so if you're trying to time the market in inner Burnaby, that is likely to be a different game than timing a condo with a nice view of English Bay.
 
#15 ·
Yup- it's crazy out here. I bought two years ago in Port Moody for 220K; another condo in the same development is on the market right now for 375K. I have 125sqft more square footage but they have a den, although my layout is nicer. Comparable view. If I hadn't jumped when I had the chance, I'd be renting for the rest of my life.

Average rent for a one bedroom in Vancouver is now $1900; for a two bedroom it's $3200. People subdivide their living rooms to make extra bedrooms and rent out to strangers to be able to afford anything- you'll get three people sharing a one bedroom downtown, it's just a ridiculous rat race.
 
#21 ·
#19 ·
I sold my condo outside of Vancouver last year for more than double what I paid for it in 2003. Everyone said I did well and sold at the right time. Now it's back on the market for 140K more than what I sold it for. I'm not sure what they're smoking because similar units are listed for about 100K less. I think some sellers are putting up these absurd prices and just crossing their fingers and hoping that the mania continues.
 
#20 ·
Similar stuff is happening around here, Coquitlam, Port Coquitlam and Port Moody. Condos were selling for 370k 5 months ago 2br 2 wasrhooms 900 sqft. now they are going for 425k MINIMUM, even they list it for 400k they fully expect more than listing.
 
#25 ·
"This is particularly true for two-bedroom apartments. The average Vancouver rent for this home type remained unchanged in March at $3,130 — the highest in the country. In second place was Toronto at $2,160, making the average two-bedroom rent 45 per cent higher in Vancouver than in Canada’s largest city. - See more at: http://www.vancourier.com/news/vancouver-still-has-the-highest-average-rent-in-canada-1.11983914#sthash.VDZolLiT.dpuf"

Geez.

I would be sooooo happy to sell my place in Vancouver right now and move somewhere else. Heck, go to Kelowna.

Vancouver, great city, I get it, but man o' man there are other nice places to live that don't sacrifice your financial future.

Living where I do, in Ottawa, a nice home, that's is certainly not worth what it would be in Vancouver only 20-min. from the downtown...I can't imagine this place worth $2 M+ like it would be in that city. I would sell and be done with work for good and then do things on my own terms.
 
#27 ·
I've never thought Vancouver would really be negatively affected. There is too much demand and too much big foreign money on the west coast for the RE market to really be hit.
 
#35 ·
Not only condo rents are going up but commercial! a friend of mine rents a 200sqft space for his shawarma/donair fast food restaurant, he pays 8k a month! it's a great location but 8k a month for 200sqft!! you can barely move inside! No wonder all restaurants are more expensive here in Vancouver than anywhere else in Canada, rent prices are insane compared to the rest of Canada.
 
#36 ·
Pretty anecdotal but during our walks around downtown Vancouver and False Creek we're constantly seeing help wanted signs in the windows of restaurants.
It sure seems there are jobs to be had. But whether they pay a wage to support living in Vancouver and whether people can hack working in the restaurant industry is another matter.
 
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