# Buy or rent in Vancouver



## Ebin (Feb 9, 2013)

Hi,

Looking for a sanity check on my current situation. My fiancée and I are Victoria residents who want to move back to Vancouver in the next 1-3 years for family reasons and we have a few options in front of us for our housing situation when we return to Vancouver.

Some basics:
- We own an apartment in Vancouver that's rented out for $1125/mo. It's set up to be revenue neutral and, at current prices, there's about $140-150K of equity in it.
- She's saved up $125K over the years with plans to buy a home.
- We would likely have jobs in downtown Vancouver and commute time matters a great deal to us (would also allow us to be a 1 car family)
- Our combined income in Vancouver would be around 140-180K/yr (unless she's on mat leave).
- She's got a public sector pension and as long as I'm in Victoria, I am able to put $25-35K/yr into my RRSP/TFSA.

Options as I understand it:

Option A: Rent in Vancouver and keep the apartment as a rental. Rent would run around $2000-2200/mo for a place that meets our needs. We would continue to save $8-10K/yr towards a home. (A variant of Option A would be to also sell the apartment).
Option B: Use her $125K as a downpayment for a $600-650K home. Total monthly costs would be $3200-3600/mo (mortgage, tax, utilities, strata). We'd keep renting out the apartment in this case and could change the amortization so that it's revenue positive (+$300-400/mo)
Option C: Sell the apartment and combine that equity with her savings to make a $265K downpayment on a $600-650K home. Total monthly cost would be around $2600-3000/mo.

It seems the consensus is that Vancouver should expect a correction of 10-20% in the short/medium term and considering the prices it seems to me that Option A is the best bet but I'm not knowledgeable enough to say that's the right choice so I'd welcome any questions, ideas and comments to this.

Considering the pricing in Vancouver, is there a point where buying beats out renting? 

thanks in advance for your questions and comments.


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## Just a Guy (Mar 27, 2012)

What about moving into the apartment?


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## Ebin (Feb 9, 2013)

Unfortunately it's too small for our needs as it's a 1 bedroom and we are hoping to be a small family (or heading that way) by the time we return to Vancouver.


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## wendi1 (Oct 2, 2013)

Given the crazy prices in Vancouver, I would sell the apartment and rent. 10-20% reduction seems a little optimistic under these circumstances. 

There should be some good pickings after the correction.


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## Just a Guy (Mar 27, 2012)

Funny, some of our grandparents probably raised upwards of 13 kids in a 1 bedroom farm house, but today we can't imagine living in one with a baby, heck half my single tenants want a two bedroom just for an office, yet we then complain we can't get ahead.


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## Butters (Apr 20, 2012)

I'm with wendi1


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## indexxx (Oct 31, 2011)

Well I see your point, but then back in the day, people weren't usually running businesses or creative endeavours out of their homes, which almost everyone I know these days does- either out of interest or as a necessary second income to afford to live in a city like Van.

-edit- Whoops; I forgot to quote Just A Guy who this was a response to!


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## the-royal-mail (Dec 11, 2009)

Well, we need to know more about your living requirements. Do you expect kids in the next little while? If so, you would want a house with a yard and a safe neighborhood for them wouldn't you? That would be very expensive.

Your post implies without saying directly that you are considering paying $600K for a condo. Is that right? That seems like a waste of time and money to me. In addition to allowing no room for kids to play the market is oversupplied (IMO) and they are overpriced at the same time. If you're going to live that, why not simply move into an apt instead? The structure is much the same.

Personally, I wouldn't move there. These sorts of costs are just way too high for me, but then again I do not have your income. Is family so important that you have to fork out this kind of money to live in such a congested and expensive city?


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## kcowan (Jul 1, 2010)

Starter homes in east Vancouver run $1 million (2 blocks east of Commercial Drive). We know a young family who bought there a couple of years ago. It cost them $950k and they have put $200k into it. Their first child in one year old. But they get free baby sitting from MIL.

Do you rent in Victoria?

Can you wife get a transfer to Vancouver? Is she intent on returning to work?

What are your job prospects in Vancouver?

For an emotional perspective, I would sell the apartment and buy a fixer in east Vancouver that will last you for at least five years (and 2 kids).

From a financial perspective, I would sell the apartment and rent a house. After 3 or 4 years, I would consider buying after a correction.

Bus service is good into downtown and the cost of parking a car makes driving prohibitive.


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## Just a Guy (Mar 27, 2012)

indexxx said:


> Well I see your point, but then back in the day, people weren't usually running businesses or creative endeavours out of their homes, which almost everyone I know these days does- either out of interest or as a necessary second income to afford to live in a city like Van.


Those families would run a farm, no electricity, no modern conveniences... I very much doubt we have it harder today...


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## marina628 (Dec 14, 2010)

A business associate of mine sent me a photo of his home he just paid $950,000 for , I noticed it had two front doors so I being blond thought how different then he told me that only one side was his ,It was not even the size of a typical semi-detached we are use to seeing here in GTA area , it looked like a small single family home maybe on a 30 ft lot that they managed to squeeze two 30 inch doors with a thin piece of wood down the middle.I would rent forever with these prices and keep in mind I have many properties and generally love real estate.


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## Ebin (Feb 9, 2013)

Hi,

Thanks for the feedback. To answer some of the additional questions:

- We rent in Victoria right now as the move to Victoria was for my work and we weren't sure how long we'd stay (the market in Victoria has also been very sketchy these past 4 years). 
- My fiancee would be able to transfer to Vancouver and, being in Vancouver, would likely need to work after we start a family. We have flexibility here as both of our parents are in Vancouver (the reason for returning to Vancouver) and are spry enough at the moment to help with childcare. Both sets of parents also live in Vancouver which is another reason we don't want to be far in the suburbs.
- Job prospects for me are good although not as lucrative in Vancouver as it is for me in Victoria, I'd likely take a $40-60K pay cut upon returning to Vancouver. From a standard of living perspective Victoria is far superior but we value being close to family more than money - both of us are the children who will eventually be the ones who care for our parents (and they ain't moving to Victoria).

In terms of housing requirements - I think we're pretty open-minded right now. Would love a yard and a house but we recognize that might not be possible. I've seen duplexes for ~$600K within reasonable commuting time (~30-45mins) to downtown Vancouver while there are some 3 bedroom condos/townhomes in East Vancouver for $475-550K. A 20% correction in the next 2-3 years along with a $200K down payment would make these very manageable for us or it make push a house that has a mortgage helper into our range.

From the sounds of it, the common thread is that I should sell the apartment I own now to cash in on the equity before the correction arrives and presumably hold that money in safe places (GICs, bonds etc) till the correction completes. At that point, I can pick and choose a home at a much lower price.

thanks again for the sanity check and a Merry Xmas to everyone.


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## Berubeland (Sep 6, 2009)

I would say that the most correct answer for you is hidden in the first sentence of your post where you say 1-3 years. That's too temporary to buy real estate for. I'd say rent where you plan to live and bank the difference.


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## Chris L (Nov 16, 2011)

Rent and save for 1-2 years and see what happens. The landscape will either appear much different, or it won't - and then who cares. Things certainly won't get that much more expensive and quite likely will reverse 25% or so. Just guessing though.

Babies don't need their own room. You could put them in an open drawer and they'd be just fine. I would recommend a crib though. Seriously, until they are 1.5 years old, they need very, very little. They won't play outside until around 2, if that. Most new parents don't have a clue....they repaint and decorate and buy a house with a yard. Fine, but they won't really use that stuff until 3-5 years old.


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## blin10 (Jun 27, 2011)

Ebin said:


> From the sounds of it, the common thread is that I should sell the apartment I own now to cash in on the equity *before the correction arrives *and presumably hold that money in safe places (GICs, bonds etc) till the correction completes. At that point, I can pick and choose a home at a much lower price.


that's a BIG if... just ask people who are waiting on that correction for the past 5-10 years what they think


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## Chris L (Nov 16, 2011)

blin10 said:


> that's a BIG if... just ask people who are waiting on that correction for the past 5-10 years what they think


Does it matter? 

If it was overpriced then, it's even worse today.

I'll buy value, RE has lots all it's value bit by bit.


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## indexxx (Oct 31, 2011)

Just a Guy said:


> Those families would run a farm, no electricity, no modern conveniences... I very much doubt we have it harder today...


Oh, definitely not saying we have anything harder! I used to visit my grandma's farm in Alberta where my mom grew up- tiny place that raised nine kids, outhouse, well for water, wood stove for heat etc etc. All I'm saying is that people's use of space have changed and most need more than in the past. 

Besides, where is everyone going to store all their broken-down Windows machines?!


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## MoreMiles (Apr 20, 2011)

wendi1 said:


> Given the crazy prices in Vancouver, I would sell the apartment and rent. 10-20% reduction seems a little optimistic under these circumstances.
> 
> There should be some good pickings after the correction.


Sure. If you are right, you should work for Jim Cramer. Many people have tried to advise others on which direction to bet, be a bull or bear. It's useless to predict the market as no one can offer a guarantee. I always laugh when I read about how one poster is trying to be a clairvoyant and tell others what future would be. Would you advise someone to short the current stock markets? So it's the same with real estate markets. Lots of people have been saying the same correction thing since 2005 or so. Those who waited are still waiting except the price has doubled.


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## Hawkdog (Oct 26, 2012)

http://www.theglobeandmail.com/repo...orningBusinessBriefing&utm_campaign=112483419


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