Priced out forever!

The guys behind seattlebubble.com and socalbubble.com have put together a new site that addresses housing market issues, particularly the fear-inducing ‘Priced Out Forever!‘ myth.

have you ever thought through what it would really mean if across the country, hundreds of thousands of people just like you really were being priced out forever? Who would buy homes? What would happen to the housing market as a whole? These are questions that are frequently ignored.

The absolute worst reason to buy a home is “I’m afraid that if I don’t buy now I’ll be priced out forever! The biggest financial decision in your life should be based on reason, logic, and sound financial planning, not fear.

Check it out at the easy to remember URL: pricedoutforever.com

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Akhen
Akhen
13 years ago

Brenda, if rent increases:Rental market is more susceptible to real supply and demand fundamentals. By “real” I referring to a demand profile where those that wants it will use it.For rent increases to create a demand for real property at the current situation, the rise would have to be significant. The exact measure is hard to calculate but essentially, you would calculate an average mortgage payment (for an entry level condo) based on your situation of a 5% down with a current average market mortgage rate, and a current condo unit. Add to that an average rate of periodic property maintenance/repair cost (owners are responsible for). If the average rent in the area increases and/or supersedes that rate, then you will start to see a shift to buying rather.Further, if rental rates increase to a level where the average annual… Read more »

ReductiMat
ReductiMat
13 years ago

Brenda, my rent would need to rise by 300% to get to a break even point (mortgage/taxes/strata).300%.So, in my scenario (which is not an aberration; I moved to this suite two years ago), a 10% increase in rent means the owners recent tax increase will be offset by some percentage.Good luck with that.Again, I think the more apropos question to ask is, "What is the required rent increase to yield a neutral cash flow on property x in area y?"If you start to think in these terms, you'll realize why people think a bubble exists.

patiently waiting
patiently waiting
13 years ago

I suspect there may be some rent increases in the short-term but they'll stop and then get eaten up by inflation. We may even see rent decreases for small units at some point as they seem to be oversupplied in new construction.Here's a tiny sign of inflation: The pack of gum I often buy at the convenience store near my work went from $1.09 to $1.16. That's a 6.4% increase.

hibernating bull
hibernating bull
13 years ago

brenda, why do you think rents will increase?

Brenda
Brenda
13 years ago

I would have never been able to get my foot in the real estate door without low interest rates. For years, I paid a huge proportion of my income for rent and didn't have any left over to put into savings. Low interest rates and a 5% down payment made it possible for me to buy.I never intended to make money on real estate. I just wanted a place where my shelter costs were within my control. I'm paying down the mortgage faster than I anticipated and could still make my payments if interest rates doubled. But I'm not sure today's buyers could. Yes, I could probably make a bit more by selling in this crazy market and investing the equity.On the other hand, even with a short amortization period, my mortgage, taxes and strata fees are still less than… Read more »

digi
digi
13 years ago

after they see it on tv in 2010Yes, because Vancouver always looks oh-so-desireable in February.

satv
satv
13 years ago

NO WHERE TO RUNThis site looks like doing their on promo.They does not stop buying/rentingjust asking people to do with confidence,or run campain to knock down side's,This site is another milestone as other likewise.Nothing new you can find that same info on othersite's too.NO WHERE TO RUN comes up with nothing but depression for renter/buyerbuyer run to ignore all.tenent run to ignore all.Our attempt to keep up things on finger tips makes us buyer or renter.

tulip-Mania2
tulip-Mania2
13 years ago

If being priced out for ever is not compelling enough, then perhaps because we are running out land, might work, or how about: Vancouver is the best place in the world,and everyone will more here (after they see it on tv in 2010) because as you know, rich people would have had no way of discovering Vancouver,had it not been for the Olympics.Tick Tock, Tick Tock

mold
mold
13 years ago

It doesn't matter if you're just getting into the market or not because if you sold your house now, put the money in solid investments and rented you'd be much farther ahead in the long run.I wonder if people 'moving up' have a tendency to extrapolate past gains when buying a house during a boom? How many people bite of more than they can chew counting on continued appreciation?

Drachen
Drachen
13 years ago

BrendaWhat do YOU consider decent? My family has a 2 bedroom nice suite with storage, yard, fireplace, insuite laundry and we pay $1,500.When looking at interest rates the most important factor most people overlook is inflation. The 21% interest in the '80s may look insane untill you realize inflation was in the teens. You have to subtract inflation from the interest rate to come up with the "real" cost of financing.And to answer your question, yes it is far cheaper to rent anywhere in vancouver than it is to buy right now unless you get some incredibly sweet deal. Generally people who buy now will pay over twice the amount over their 25 year mortgage.It doesn't matter if you're just getting into the market or not because if you sold your house now, put the money in solid investments and… Read more »

Brenda
Brenda
13 years ago

A very well done site. I too, thought I was priced out forever. It took 20 years, but I rented until interest rates and prices were both near the low point of the cycle. If I'd bought 20 years ago I could have got my place for a third of the price I paid for it, but would have been paying too much in interest. Interest rates in Canada are lower right now. If they go up, I assume prices will go down as homes will become more unaffordable, but this would still keep many out of the market.Also, is it really possible to rent cheaper than you can own, or is this true only for people just getting into the market? Rents for a decent one bedroom apartment are now around $1200 a month. What if rents go up… Read more »

mold
mold
13 years ago

Nice site – they've done a great job of making the issue clear and very understandable. The whole 'priced out' thing is ridiculous – I have yet to see anyone give a reasonable argument for how a housing market could continue to appreciate with all FTB's priced out.