What is the right price to pay for a condo?
With the current real-estate market here most people seem to agree that property is getting too expensive in Vancouver, particularly for first-time buyers. Opinions differ on what that means for the future, most people who earn their living through real estate seem to be of the opinion that prices will stay the same for a while (plateau), increase very moderately for the next few years (about the same as inflation) or dip slightly. Others take a more negative view, pointing to Vancouvers history of manic depressive real-estate price swings, including a one year 40% drop in house prices in the early eighties.
With the current build-up of houses and condos for sale and months of dropping sales its starting to look like we’ve hit the market peak – so how many are waiting on the sidelines to buy? If prices start to drop who will jump in to make sure they don’t drop too much?
If you’re looking to buy in Vancouver, but are currently ‘priced out’ or have found better places to invest your hard-earned money, what would convince you to buy in Vancouver? What do you feel is a reasonable price to pay for a house or condo in Vancouver? What about specific areas: the downtown core, kerrisdale, grandview, collingwood, etc.
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September 21st, 2007 at 4:46 am
“It would be 17 times more expansive” Hmmm, that would make it 27200 sq ft?
June 27th, 2007 at 1:57 am
just bought a nice 1600 sqft house in the interior for $42,000 – It would be 17 times more expansive in Vancouver!”
Where!!!
June 27th, 2007 at 1:56 am
There ain’t no chance that a guy making annual income btw 35000 to 50000 can afford a match-size apt.
However,can you tell me how many ppls btw the age 18 to 25 making that kind of money in Vancouver which many claim having the best economic environment in the whole North America.
October 20th, 2006 at 8:28 pm
“I just bought a nice 1600 sqft house in the interior for $42,000 – It would be 17 times more expansive in Vancouver!”
Congrats! That’s an eviable investment.
What we are seeing here these last few years are coercion from MSM and manipulative financio-politico-vested-demigods telling the herd of cows to keep slaving for the grass will soon be priced out.
October 19th, 2006 at 10:08 pm
I would not pay more than $250,000 for a 2 bedroom condo in Van West. I just bought a nice 1600 sqft house in the interior for $42,000 – It would be 17 times more expansive in Vancouver!
October 19th, 2006 at 8:39 pm
Anonymous said…
Final Answer.
You do realize that this isn’t even a sentence, right? I guess the fact that you didn’t capatalize the begining of the next sentence was suppose to make up for that?
Reads like kingiii has been brushing up on his pidgen Engrish.
artbag
October 17th, 2006 at 8:22 pm
Anonymous said…
Final Answer.
You do realize that this isn’t even a sentence, right? I guess the fact that you didn’t capatalize the begining of the next sentence was suppose to make up for that?
it is always late when ever we buy real estate from history to present price always goes up if that goes down for while its not smartness to sell your property hold it tight there are always sorruonding environment that knock down real estate for while but there is great hope because from past to present world is witness of more pupolation thats what makes real estate expensive desire to live in best place dollar to thousands are things of the past millions are comming because we witness most people through cents in water we hardly have space for loneies and toneies in our pockets thats because of world of millions and billions forthcoming ..for first time buyers if you can’t afford 4kcondo now how can you buy million dollar same condo tomorrow.Tomorrow never die if we don’t hold any estate in hand we will die so something is better than nothing counts most of than far Real Deal is better then spending money on lottery and smoke our heart die when we see not a winner.If you buy real estate you are not a loser Thank you walk with wind that can take you to hell or haven
My head hurts from reading this, but I’m not sure if it is the huge run-on sentence, lack of a proper punctuation, or truly convoluted logic that makes it that way. Seeing as I’m a humanitarian, I’m going to offer you some advice that will save you a lot of embarassment; don’t post when you smoke pot. It may sound like pure genius when you write it, but I assure you it isn’t.
Have a nice life.
October 17th, 2006 at 3:39 pm
Final Answer.it is always late when ever we buy real estate from history to present price always goes up if that goes down for while its not smartness to sell your property hold it tight there are always sorruonding environment that knock down real estate for while but there is great hope because from past to present world is witness of more pupolation thats what makes real estate expensive desire to live in best place dollar to thousands are things of the past millions are comming because we witness most people through cents in water we hardly have space for loneies and toneies in our pockets thats because of world of millions and billions forthcoming ..for first time buyers if you can’t afford 4kcondo now how can you buy million dollar same condo tomorrow.Tomorrow never die if we don’t hold any estate in hand we will die so something is better than nothing counts most of than far Real Deal is better then spending money on lottery and smoke our heart die when we see not a winner.If you buy real estate you are not a loser Thank you walk with wind that can take you to hell or haven
October 17th, 2006 at 12:00 pm
the pope said…
BC_Cele: Thanks for crunching the numbers – It’s good to see some figures based on the traditional 35% of gross with 25% down payment. Apparently this can still be done in some cities?
In most of the country it can be done, with the caveat that most people won’t have the 25% unless they are purchasing up. Take a look at some listings in London ON, where the median income is about 8K higher than Vancouver’s
http://tinyurl.com/ymbw9l
Here is some in the Montreal area.
http://tinyurl.com/y2eat8
October 17th, 2006 at 10:24 am
Our economy is booming and who knows, in a few years you could be making four times what you’re earning today
Yah, and monkeys might fly out of my butt.
Even accepting a premium for living in Vancouver, median condo prices should be no more than 3x median household incomes. So condo prices would have to drop 40-50%? That’s a big drop, but not impossible nor without precedent.
October 17th, 2006 at 10:05 am
BC_Cele: Thanks for crunching the numbers – It’s good to see some figures based on the traditional 35% of gross with 25% down payment. Apparently this can still be done in some cities?
October 17th, 2006 at 9:50 am
Your total housing costs (PITI and utils) should be about 35% of your gross income. If you use a mortgage calculator that shows you what you can afford you would see that the median income of 65K would be able to afford a mortgage of ~237K. If you assume everyone who bought a house was using 25% down (yeah, I know that’s a dream) then the average home would be around $307K (79K in a downpayment and accounting for 3% closing costs).
A quick check shows that the median price of a condo is actually below this in GV. So guess the bears are wrong. We can all go home now and shut the blog down. Of course, the problem is that condos are suppose to be in the starter market. Incomes will be much lower and down payments are slim to none. Also, the mortage amounts calculated are the maximum – in other words assume no other debts such as those pesky credit cards, or car payments that most of us have. Tweaking the numbers a bit to account for a 5% downpayment (adding the 2.5% on to the loan for ins) decreasing income and then adding some monthly payments lowers the amount to around 50-75% of the maximum for this market. Which would be around 160K-237K. Quite a bit lower than the median around Vancouver.
October 17th, 2006 at 9:33 am
Jayb said…
“I think that you can still make some money in real estate in the short term – prices will keep going up until after the olympics. There are still some places you can get in surrey and port coquitlam for not too much, if you paint them and decorate them nice you can still sell for a profit.
if you buy an assignment you dont even need to pay a morgage. you just have to hold it for a while and sell it before th building is finished construction. Easy way to make money!”
You could be right. Let’s hope the greater fools here don’t look south for wisdom.
http://tinyurl.com/yyp84p
House By Owner 90% Of Appraised Value
Date: 2006-10-16, 3:29PM PDT
Buyer must qualify for a new loan; House is over 3000 square feet and valued at $599,000 but I will sacrifice for $539,000. I can’t afford my payments any longer, my loss is your gain. This house is not listed on the MLS so you won’t have any competition. Call 951-205-2774 for more information today!
October 16th, 2006 at 8:32 pm
I’m not talking about housing as a short-term investment, but buying a house to live in for 10 years or more
Yep, this is the problem with vancouver.. I can’t imagine living in anything I can afford for 10 years. I want to have kids some day, but I put my wife and my income together and we can afford a 700 square foot condo. I can’t imagine raising a family in that amount of space.
Maybe I’m just being picky, I know some people do it. Maybe its just not worth it for me to live in vancouver. I can make the same or more money in places where housing costs twenty percent of what it does here. I guess moving would be a big drag, but so would living a tiny condo for next 10 years.
October 16th, 2006 at 7:36 pm
What IS the right price for a house? Isn’t it what you can comfortably afford? I suppose there must be some complex economical formula for this that applies to the population of buyers in general, but when it comes to an individual, seems to me that if the mortgage payment is easy on your budget, and you can tolerate moderate increases in interest, then it’s the “right price”. Right? (btw, I’m not talking about housing as a short-term investment, but buying a house to live in for 10 years or more).
October 16th, 2006 at 7:28 pm
I think that you can still make some money in real estate in the short term – prices will keep going up until after the olympics. There are still some places you can get in surrey and port coquitlam for not too much, if you paint them and decorate them nice you can still sell for a profit.
if you buy an assignment you dont even need to pay a morgage. you just have to hold it for a while and sell it before th building is finished construction. Easy way to make money!
October 16th, 2006 at 3:56 pm
“Our economy is booming and who knows, in a few years you could be making four times what you’re earning today, but you’d still be paying a mortgage that may seem expensive now, but could be a bargain then!”
Like you said our economy is booming. Tomorrow BOC will cut rate to 1% and we all are going shopping for that million$ houses.
October 16th, 2006 at 2:28 pm
There is no way I am buying in this market. I am happy to buy outside of Vancouver when the prices decrease.
October 16th, 2006 at 12:51 pm
d_oush wrote “You can’t only look at your situation today when you’re buying real-estate, its a long-term investment.”
For investors, it’s an investment. For everyone else, it’s a place to live. “It’s an investment”, “get on the RE ladder before it’s too late” and all the buzz phrases aren’t going to work much longer. Soon the “ladder” will be full of broken rungs with people falling off all over the place.
October 16th, 2006 at 12:46 pm
Roll back prices four years on everything. Back to the pre-hype, buy-before-you’re-priced-out-forever, everyone-will-want-to-move-here days.
Alternatively, pick a price that makes it affordable for the average wage-earner paying 7% to 9% mortgages.
October 16th, 2006 at 12:44 pm
i will buy when a million dollar home is a million dollar home.
October 16th, 2006 at 12:18 pm
d_oush: Not to be too pessimistic, but doesn’t your argument cut both ways? You might be earning four times what you’re earning today, or you might be out of work.
A four hundred percent raise sounds great, but perhaps a bit overly optomistic?
October 16th, 2006 at 12:02 pm
You can’t only look at your situation today when you’re buying real-estate, its a long-term investment. Our economy is booming and who knows, in a few years you could be making four times what you’re earning today, but you’d still be paying a mortgage that may seem expensive now, but could be a bargain then! Buying real-estate is all about the future. Sales always go down in the fall, its a temporary thing – its probably the best time to buy.
October 16th, 2006 at 11:58 am
How about 35% of your pre-tax income instead of the current 72 percent? Also, as long as I’m dreaming I’d like to see it stop raining and for builders to start building decent non-leaking buildings here.
October 16th, 2006 at 11:38 am
I’m no expert, but I think that with 25% down your mortgage cost should not exceed a properties rent value. You’ll have to pay extra for repairs, taxes, etc. so it would still end up costing more than renting, but 25% down on a 400k place is $100k.
I can put $100k into a savings account and make a garaunteed 4% with no carrying costs. With a bit of risk I can potentially make a lot more than that. I’d rather save my cash betting that values wont keep going up.
I’m not so in love with this city that I wouldn’t move on the off-chance that prices keep going up, but looking at the effect the olympics have had on realestate values of their host cities I’d say we’re in for a bit of a crash – just look at Salt Lake City and Sydney Australia, they both had a dive in house prices after the olympics around 20% or so, and we’ve had a much faster run-up of prices than they ever did.