Secondary suites the way to affordability
No longer looking shared a link to this story in the Vancouver Sun over the weekend – The Bank of Montreal has just discovered the secret to affordable real estate in Vancouver: secondary suites. Simply rent out parts of your home to others to help cover the mortgage. You may have to wait to use the bathroom, but you’ll have enough money left over at the end of the month to buy some groceries!
Heaney said that on a $580,000 mortgage, which is fairly typical for Vancouver, a buyer would need a family income of around $100,000 a year to carry the payments.
However, throw in rental income of about $1,500 for a suite, and Heaney said the employment income a family would need to support that mortgage would drop below $60,000.
Ulsterman asks the obvious question:
RSS 2.0 comments feed. Both comments and pings are currently closed.BOM will lend almost 6 times family income? Is this normal?
October 29th, 2009 at 11:08 am
@space889
Nice rant.
also thanks for clearing up that bit about the ownership %. I too was confused.
October 16th, 2009 at 9:01 am
In my area which is Fairview, not really posh west side like Dunbar, Point Grey, Kits. The average asking price around my current place is $1.3M to $1.5M. So even with 1/3 downpayment you would be looking at $800K+ mortgages. When I ask the realtor at opening houses, all of them said 1 bedroom rental suite would be $1100 to $1200/month while 2 bedrooms are $1500 to $1800/month. Most of the basements are newly renovated but even the lousy ones realtors are saying $1K/month for 1 bedroom. So $1500/month is not out of the question here. However for me personally, if I’m going to be spending $1200/month on rent I would rather go above ground in an apartment or condo building like say Langara Gardens on Cambie & 57th and get the swimming pool, whirlpool, gym, library, rec area, etc. Basements just not really my thing.
@88 Steevee – let me use an example.
For the $150K+ household income group, there are about 72000 households, StatsCan says about 65000 of these households are owners, so the owernship % is almost 90%? Similarly for other household income groups with income of $80K and above, the ownership % is very high indicating most of the people who has the money to borrow has already borrowed and bought a place. In my view not too many local prime borrowers left for housing.
October 16th, 2009 at 8:41 am
BTW I just did a search for apartments in the City of Vancouver on Craigslist, and the second item on the first page was this:
http://vancouver.en.craigslist.....85666.html
Two seconds of looking and I found a basement suite for $700 (utilities included) at Victoria Drive and 49th. So much for ranging from $900 to $2500.
October 16th, 2009 at 8:31 am
@logic: Yes, but they would have about double the “typical” $580K mortgage.
It says this in the story: “In Vancouver, suite rents can range from under $900 to $2,500 or more depending on the suite’s size, age and quality.”
No way, $1500 is the high end (as you indicate) not the average. The story is all lies.
OK maybe, just maybe, if the “owning” family lived in a Kits basement and rented out the main part of the house, they could get more. But that’s not really renting out “the suite”…and what a way to live while carrying a million dollar mortgage.
October 16th, 2009 at 2:38 am
lots of westside basements (kits, point grey, etc) go for 1500.
October 16th, 2009 at 2:03 am
As for the article, $1500 for a rental suite?! Who the frak gets $1500 for their basement? My girlfriend and I rent a nice, 3 bedroom main floor of a house in central Burnaby for $1300. The couple in the basement below us pay $900. $1500, what a crock.
October 16th, 2009 at 1:50 am
Space 889,
I’m not sure exactly what you were trying to say in your second paragraph but otherwise well said, I enjoyed your rant. I too refuse to believe the the highlight of my working life should be the prospect of owning a house in Vancouver. I get closer and closer to leaving this city every day.
October 16th, 2009 at 1:20 am
no I think the average income went up while the median dropped. Maybe it’s because the higher income households paid off their mortgage??
I did a quick look in the afternoon and it seems the % of high income households (> 80K) is extremely high, maybe even 80%+? The ownership level for those above the median household income is also quite high.
So unless a LOT of those households below the median income households are rich asians, Europeans, US, Albertans households who don’t have to work anymore….seems like the pool of potential buyers who can afford Vancouver is pretty low.
Now I’m Chinese and read the Chinese forums and websites on occassion and apparently Canada, and Vancouver in particular, are well known among the rich Chinese and is a popular destination for moving their family or kids here. Something about if you bring lots of $$$$ here, Canada wouldn’t extradite you back to China for corruption trials due to concerns about human rights, death penalty, fair trial, Falong Gong practices, whatever else an immigration lawyer can come up with. So the bulls might have hopes yet! Corruption is a thousand years plus tradition in Chinese bureaucratic system and you can’t change that in a few decades. Question is how many can slip past the Chinese authority and make it here. Lai Changxing(?) and others have taught the central government some very important lessons about letting too many “rich tourists” or “exchange students” coming to Canada.
Personally I believe housing prices in most places are ultimatedly determined by the disposable income of people who live and work there. Now I know couples who are in top 10% if not top 5% of household income in BC, and if they find that they can’t afford a proper 25% downpayment and living comfortable with a mortgage for a house in the Fairview area in Vancouver then something is definitely wrong with our housing market here! I don’t think you can call them losers who don’t deserve to be in Vancouver!
For me, I doubt I will make more than $1.6M after tax income (in 2009 $) over the next 35 years of my working life. Borrowing say $600K to buy a crappy house in an unsafe area and pay a total of $1M+ in principle and interests over the life of the mortgage just doesn’t appeal to me at all. I mean add in family, children costs, parents care, property taxes, food, clothing, where the hell am I going to get $$ for retirement? Is buying a house the epitomy of my life? Wow I owned a house in Vancouver, yah, that’s the best possible goal I can possibly strive for and achive in my life? Sheesh…
Lastly, I don’t see many people commenting on this…but in my view high housing prices are extremely bad for the economy over the long run! Why? Because capitals are sucked into a non-productive depreciating asset. House provide shelters but that’s it, doesn’t make your life better or easier after that. Also houses get old, worn out, needing repairs, and let’s face it they just aren’t build to last anymore, that’s not the definition of an appreciating asset. Anyways, high housing prices sucks huge amount of money out of the economy, money that can’t go into R&D to create new business & industries, can’t go into improving existing products and quality of life, can’t go into improving infrastructure, etc, etc, etc because everyone will be too busy paying their mortgage! So what happens? We will end up with a stagant economy with no innovation, no new sources of jobs and wealth creation, and deteroriating infrastructure cuz there probably isn’t enough $$ left to maintain them never mind upgrade. When you don’t go forward, you are slipping behind because other people are moving ahead! That’s not a good prospect for Vancouver and BC. I mean just think what a real 200KM/hr passenger train network like they have in Japan, Europe and even China(!) can do for lower mainland!? That itself could potentially solve a lot of the road/highway congestions, cut commute time, traffic fatalities, decrease air pollution, CO2 emission, cut gas prices, etc, etc….and I’m not even talking about the state of the art like the 350Km/hr line that China is building around the country in the next decade!
Ok really long rant and got some stuff off my chest….I used to love Vancouver and say I don’t want to leave for US/China/etc even with the big one we are overdue for. But now I’m thinking more and more of moving out of here….
October 15th, 2009 at 10:34 pm
@skiff72: Isn’t that the average? The median in Vancouver is lower than average; that dropped too.
October 15th, 2009 at 10:19 pm
I drove on w pender yesterday and was surprised to see so many Asians in the soup line.
I thought there were only rich Asians or are these rich ones hoarding there money allowing for increased wealth. Saving on a lunch and dinner here and there.
October 15th, 2009 at 8:24 pm
@skiff72:
Why is interesting? People don’t need income to buy houses! Of course not! All you need is your bank to tell you “You’re richer than you think!” Forget income….we have CREDIT!!!
October 15th, 2009 at 6:47 pm
For Vancouver, I should add.
October 15th, 2009 at 6:43 pm
#71 @space:
What’s also interesting with that statscan data is that among households with mortgages, median income between 2000 and 2005 has DROPPED from $79k to $76k. And that during a significant upswing in prices. Hmmmm.
October 15th, 2009 at 6:31 pm
I’m holding out for the wealthy moon-men, I hear they wear hats made out of solid gold and sneeze diamond dust. They’ll pay anything for a house in vancouver once they discover that everyone wants to live here!
October 15th, 2009 at 5:44 pm
The Scottish are coming too. I just sold my place to a rich Scotsman. My neighbour just sold his place to a rich German. Oh, and my cousin sold his place to some rich people from Luxembourg.
Now Europe, there is a continent with rich people that can outright afford Vancouver real estate. Of course, they came by their wealth legally…
October 15th, 2009 at 5:22 pm
You people are clearly in denial. Housing sales are up. More Chinese are coming over.
October 15th, 2009 at 5:17 pm
Global TV @ 5 announces that the IOC/Vanoc show is bringing in ‘thousands’ of private security contractors to work the crowd ‘out of uniform’ at the Olympics. Now usually these persons are called MERCENARIES ( like in IRAQ and EL SALVADOR)but for Canada we’ll call them guest workers or some lame excuse like that.
THOUSANDS OF MERCENARIES IN PLAINCLOTHES in the streets of Vancouver , armed and dangerous one has to assume!!!! Body count pool anyone????
That new friend or co worker that shows up suddenly is probably not your friend.
October 15th, 2009 at 5:03 pm
Gorky,
Clearly you are not aware that canadian car seats are more expensive in Canada because of the CMVSS sticker and the fact that Canadian car seats have expiration dates.
October 15th, 2009 at 4:53 pm
Who actually buy’s Supraboy’s monopoly houses? Are the Chinese really that desperate to own that they buy those little plastic houses from him?
October 15th, 2009 at 4:27 pm
Hey Superlittleboy is back!
The friendly family basement dweller is back! Did your mommy and daddy restrict your computer privileges for the last little while? Have your parents finally willed you the family house so that you can move upstairs now and claim ownership?
You are always amusing superlittleboy!
October 15th, 2009 at 4:26 pm
@gorky:
It’s called taxes. Every dollar the guberment sucks out of the economy drives up prices and drives down wages. If you want to see the effect in a more pronounced way move to Europe.
October 15th, 2009 at 4:21 pm
Look at all you fools bickering. I put up my third house for sale today and there are so many chinese lined up looking at my house. Listed for 1.8 million. You morons who can’t afford a house in Vancouver, get ready for a Chinese invasion.
October 15th, 2009 at 3:16 pm
To post #2, this link has the data you are looking for:
http://www12.statcan.gc.ca/eng.....GID=838071
Select Vancouver from the dropdown list on top (cities NOT sorted in alphabetical order) and the measure you want. The measures are total household income, household # and income of owners, household # and income of owners with mortgage, household # and income of owners without mortgage, household # and income of renters.
Roughly 60% of households in Vancouver are considered to be owners. Didn’t really check % owners with mortgage vs % owner without mortgage.
I was a bit surprised @ the uptick in the number of households with $150K+ income.
October 15th, 2009 at 2:44 pm
talking about PC shopping in the states… another mystery i haven’t been able to solve after living in Canada for 5 years is why TF is everything so expensive in Canada when compared to the US?
It was really noticeable when shopping for a car seat for the 6 months old: Canada 95$, right across the Border the *exact* same model at the *same* store chain is 45$. What’s the deal with that?
anyone?
October 15th, 2009 at 2:44 pm
@Copswife2:
58, this student punk getting beaten will make you wet then
http://www.winnipegsun.com/new.....11811.html
October 15th, 2009 at 2:38 pm
#65 LMAO
October 15th, 2009 at 2:36 pm
Don’t get Vista, Windows 7 will be available to home users in less than 10 days and runs much faster, using less memory.
Personally, I don’t do pre-built systems. Go to some little hole-in-the-wall computer store near your house and get them to build you something. I don’t know about Seattle, but Victoria and Vancouver are lousy with them. You will get better quality parts and waaaaaaaay better service if something goes wrong.
I have taken my computer in for a number of things from the power supply to the CPU fan to just adding more RAM, and he never charged me for labour. Conversely, my ex-girlfriend bought an HP or Compaq and got charged $70 to be told they couldn’t reproduce the problem.
October 15th, 2009 at 2:34 pm
Has the teachers union woken up….finally, a public organization that thwarts the bilious deniers and fuckwits who have turned a blind eye to the blatant destruction of the rights and freedoms of Canadian citizens.
WOW , Bravo Teachers for waking up and realising that the thugs in power mean us no ggod.
http://www.theprovince.com/spo.....story.html
October 15th, 2009 at 2:26 pm
@wow:
#63 Hey, at 5.5% the nut is only something like 3600 a month. The taxes in the US are usually about 1.5% per annum thereabouts so figure in another 950 or so ( slushy ‘don’t give a crap’ numbers) in taxes plus plus and you get to pay around 4600 a month. Not bad for a hairdresser and a crane operator. Add a couple of car payments at 400 a month each and a few gold visas on the burner and you’ve got the American dream unfolding as it should.
October 15th, 2009 at 2:02 pm
@ renniewhereareu?
For a few years running, Sony & IBM (Lenovo Thinkpad) were ranked the most reliable (for the Non-Mac world). I am using an HP (2 years old) and it does suck big time (CPU issues, hard drive issues, etc).
Warning, if you’re going to run Vista, better get at least 4gigs of RAM. It consumes memory like Gandolfini at a pasta bar.
October 15th, 2009 at 1:46 pm
http://money.cnn.com/galleries.....ers/3.html
is that for real?
a 750K house thanks to the 8K tax credit?
…Noel Delisle, 30, and her fiance, Mike Spence, 31. She is a hair stylist and he operates a crane.
October 15th, 2009 at 12:27 pm
@renniewhereru?: If you want the best, get a Mac.
October 15th, 2009 at 12:19 pm
Contagion still spreading in spite of the cheerleading about green shoots
http://money.cnn.com/2009/10/1.....2009101507
October 15th, 2009 at 12:18 pm
market related matter. guy at work’s son is a controller for major multi-national. said today forecasts are not jiving, and they are preparing for second meltdown mid next year. having lunch soon, so will quiz some more.
October 15th, 2009 at 12:15 pm
Cheers Hey. Will check it out. Someone suggested that HP was junk. Any ideas on decent make?
October 15th, 2009 at 11:48 am
@Try Again:
Glory page of righteousness.
http://video.google.ca/videose.....BUQqwQwAA#
October 15th, 2009 at 11:14 am
http://www.calculatedriskblog......s-for.html
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in September, the Bureau of Labor Statistics reported today. The increase was less than the 0.4 percent rise in August. The index has decreased 1.3 percent over the last 12 months on a not seasonally adjusted basis.
The increase occurred despite declines in the indexes for rent and owners’ equivalent rent, the first decreases in those indexes since 1992.
“Wow, landlords are getting desperate!”: Market Rents are Down « Vancouver Real Estate Anecdote Archive Says:
October 15th, 2009 at 10:52 am
[...] YLTNBoomerang at vancouvercondo.info Oct 15th, 2009 at 8:49 am – [...]
October 15th, 2009 at 10:32 am
“My wife and I just recently got an eviction notice as our landlord wants to demolish the house and build a duplex in place….. ”
You should check… In BC, your landlord can’t legally evict you until they have the necessary permits ‘in hand’.
October 15th, 2009 at 10:22 am
@RennieWhereRU?:
With all the Microsofties nearby, Costco in Kirkland has a pretty darn good selection and decent prices. There’s also Fry’s Electronics in Renton which you could check out. Hope this helps. Have fun in Seattle!
October 15th, 2009 at 10:01 am
Imagine that, they pay for custom millwork to increase the value then rip it out to make room for renters.
hmmm
desperation always smells like
sawdust early in the morning
October 15th, 2009 at 9:42 am
My wife and I just recently got an eviction notice as our landlord wants to demolish the house and build a duplex in place. Too bad as it’s a nice house in Metrotown with the upstairs rented to us, and two lower suites, so it’s a good revenue generator. But anyways, lots to choose from rental wise (and we have 2 cats) and we’ve had potential landlords pester us for business. We found another upper suite in the same area for $75 less per month and negotiated a new dishwasher and kitchen counters and faucets be installed. They are also not asking us for a pet deposit. I also came across a full house (in nice condition) and the rent was originally $1800 but then lowered to $1650. So there’s lots for rent and languishing and rents are definitely dropping.
October 15th, 2009 at 8:49 am
Wow, landlords are getting desperate!
Last year when I looked at places it was a competition to rent, this year I am getting pestered by the landlords of every place I see with offers of “special deals” and rent reductions for signing a longer lease. We looked at one place that was very nice but very small and custom; we told them it was just not big enough as the built-ins would prevent us from using all our furniture (didn’t mention to them that it was over-priced). I got an email follow-up this morning from the landlord/owner offering not only a $200 rent reduction but actually offering to remove the built-ins so we could fit our stuff. Imagine that, they pay for custom millwork to increase the value then rip it out to make room for renters.
This seems to be a re-occuring thing as one of the subjects for the sale of our current place was the removal of the built-ins; it looks like built-ins are not a value add renovation.