The Renting Option
Well Global is certainly getting a lot of attention on this blog with their ‘Generation How’ series. This is an interesting one though, all about the renting choice and how much cheaper it is in Vancouver than buying.
Are young families in Vancouver better off renting?
During the height of the US bubble, many of the most expensive cities had prices that outran rental values. That trend has flipped now with the correction and it’s cheaper to buy in many US cities. It’s been cheaper to buy in the past here, will Vancouver ever see that again?
October 11th, 2011 at 5:56 pm 1
Really? Renting by choice? Surely you jest.
Bulls say that's a myth like Santa Clause and the Easter Bunny.
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October 11th, 2011 at 7:15 pm 2
"During the height of the US bubble, many of the most expensive cities had prices that outran rental values."
Rather all of the bubble cities had prices that outran rental values, because the very definition of a RE bubble is that buying is more expensive than renting.
It is impossible for buying to be more expensive than renting long term, because that's a Ponzi scheme and Ponzi schemes necessarily fail.
That's the whole issue in two paragraphs. The rest is commentary.
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October 11th, 2011 at 7:38 pm 3
I'm willing to pay 8% to rent but I only pay 4%.
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October 11th, 2011 at 7:52 pm 4
@CanuckDownUnder:
"I’m willing to pay 8% to rent"
8% of what? The market price of the property? I think not.
More seriously, shelter is obligatory but buying is discretionary, so the market price of RE is set by how much buyers are willing to pay relative to rental costs. It's rental costs which are the independent variable in the RE sales market, just as earnings are the independent variable in the stock market.
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October 11th, 2011 at 10:37 pm 5
If you think Gord's communications with CRTC and this story aren't related, you're not thinking hard enough.
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October 11th, 2011 at 11:13 pm 6
VanMag has published an article in their most recent edition regarding housing in Vancouver, entitled "Going, Going, Gone, Why We Are Losing Are Best People."
http://www.vanmag.com/News_and_Features/Gone
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October 11th, 2011 at 11:59 pm 7
@Manna from heaven: An interesting article. Broadly misses the root causes of the bubble, but provides some insight into what those close to the City are tossing around as "solutions".
Tyee Bridge obviously put a lot of thought into that article.
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October 12th, 2011 at 12:42 am 8
@jesse: Misses, because all these types of articles assume Vancouver real estate will never correct, hasn't in 5 years, hasn't in 3 years, therefore it never will, and even if it did, it would not be enough. It's a world class city, dontcha know, right up there with Paris and New York (an inevitable comparison when talking Vancouver real estate).
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October 12th, 2011 at 12:47 am 9
Looks like Occupy Vancouver will focus on protesting previous tax cuts to the rich:
"In 2000, the tax rate was fairly consistent across income groups, with the top 10 per cent of households paying slightly more. But after tax cuts by the provincial government, by 2010 the richest 20 per cent of households were actually paying a lower tax rate than the other 80 per cent."
I think they should focus even further by calling for the end of MSP. This is a BC-specific issue that really hurts the working poor and struggling small businesses.
Also this:
"Nearly a quarter of those in B.C. with debt say their success in managing it is "very poor" or "poor." Forty-four per cent of B.C. debt-holders say they're making sacrifices in order to deal with the burden of what they owe."
Read more: http://www.theprovince.com/news/Occupy+Vancouver+…
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October 12th, 2011 at 12:49 am 10
Jesse,
Wonder why the pointy-head types didn't think that laws preventing foreign investment in real estate warranted a mention as a possible solution?
Honestly, as far as I'm concerned, foreign investors bidding up Vancouver's real estate negatively impacts me far more than the sale of Potash or MDA to foreign investors (Feds halted both the sale of Potash and MDA because the proposed transactions didn't or wouldn't provide a "net benefit" to Canada).
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October 12th, 2011 at 12:52 am 11
It’s been cheaper to buy in the past here, will Vancouver ever see that again?
not likely, growing population on a fixed land base. vancouver is one of the few places where land actually has value. the majority of real estate only has value in what its dwelling can generate. i wouldn't expect the rental premium to grow much from this juncture, but don't expect it too shrink a whole lot either.
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October 12th, 2011 at 1:22 am 12
@stagnate: With vacancy rates at historic highs and migration becoming negative, rents could end up going down alongside real estate prices.
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October 12th, 2011 at 1:28 am 13
"Forty-four per cent of B.C. debt-holders say they’re making sacrifices in order to deal with the burden of what they owe.”
God forbid people have to actually make sacrifices in their lives, to pay back money that they borrowed in the past.
Talk about dysfunctional. It's like they think these CEOs and Execs that make the big bucks, didn't have to break a sweat to get there. There'a a reason companies are willing to pay millions of dollars for talent; they produce. And they get rich on stock options. If they don't produce, the stock options aren't all that profitable. ie. RIM.
You want less tax pain, elect a government that doesn't spend $600M to put a roof on a 30 year old stadium that only cost $260M (in today's dollars) to build in the first place.
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October 12th, 2011 at 1:35 am 14
@Patiently Waiting: I've heard some bubble cities saw rents drop with prices, but did others see rents rise as prices dropped?
What about Vegas where population continued to grow as prices crashed?
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October 12th, 2011 at 1:37 am 15
Oh Good.
No more realtors commissions discussions, more important stuff like Schneider versus Luongo or Umbrella Hedge funds for BC Place patrons.
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October 12th, 2011 at 2:04 am 16
@Patiently Waiting:
I care not about tax cuts to the rich.
Fact is the rich are mobile and will flee to whatever jurisdiction provides them with the suitable taxation rules.
That's not what got us into this mess.
Governments promoting home ownership above all else is the culprit.
We think we live in a free market society but that could hardly
be further from the truth.
They stick their hands into different markets and then when
things don't work out, they bail out risk takers.
Occupy Wall St organizers may be well intended but too
misguided to bring about any practical change.
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October 12th, 2011 at 2:06 am 17
OT
Where your taxes go.
http://money.ca.msn.com/taxes/gallery/top-10-plac…
9. HR & Skills Development Canada
Your contribution: $1,069.97
Percentage of total tax bill: 17.78 per cent
Total government spending: $46.9 billion
Human Resources & Skills Development Canada's mandate is to offer economic services to help Canadians buy homes, find work, get skills training and move into retirement. The agency provides funding for The Canada Mortgage & Housing Corp., the Guaranteed Income Supplement and Spousal Allowance and Old Age Security.
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October 12th, 2011 at 2:08 am 18
@Manna from heaven:
"foreign investors bidding up Vancouver’s real estate negatively impacts me far more than the sale of Potash or MDA to foreign investors"
It doesn't have to impact you because you don't have to buy.
Foreigners who buy Canadian RE at terrible yields are giving money to Canada, just as if they'd bought a Canadian dot-com company in 2000.
On the other hand foreigners who buy productive Canadian businesses are going to be repatriating real profits to their home countries.
I would prefer the former. But, as I've said, I don't think foreigners are responsible for this bubble in any significant way.
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October 12th, 2011 at 2:12 am 19
@Ziggy Strawdust:
"What about Vegas where population continued to grow as prices crashed?"
Population continued to grow in every US market. You don't think people picked up and left did you? Where would they have gone to?
Someone posted a link to a chart showing falling US median incomes. Incomes are what determine rents.
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October 12th, 2011 at 2:15 am 20
@kansai92:
"Fact is the rich are mobile and will flee to whatever jurisdiction provides them with the suitable taxation rules."
That isn't the fact. It's not even the fact within the US where some states have much higher taxes than others.
Where did Steve Jobs live all his life? Do any rich people live in New York City, which has the highest taxes in the US?
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October 12th, 2011 at 2:25 am 21
I thought this segment was pretty good, but I feel like they could have done a better job of spelling out just how much less expensive it really is to buy vs. rent. I could see a lot of people watching this segment and then thinking, "well, it might be cheaper to rent, but then you're not building equity, so buying is still better. They make it seem like the home equity trade-off wasn't a part of the renter thought process – which I'm assured it is for many lowly renters.
I mention this because it's the argument I usually face from friends and family who own. They don't believe me until they see the spreadsheet.
Also – did they say that it's 30% less expensive to rent than buy? I'd like to know where that number comes from
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October 12th, 2011 at 2:48 am 22
@Melster:
"They make it seem like the home equity trade-off wasn’t a part of the renter thought process – which I’m assured it is for many lowly renters."
The "home equity trade-off" is a completely bogus issue because it assumes before the fact that prices are going to go up. You can't assume that for anything.
If renting is less than ownership expenses – interest, taxes, maintenance, opportunity cost of down payment, etc. (but not principal payments which are not an expense) the renter is ahead.
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October 12th, 2011 at 2:53 am 23
@patriotz:
Everyone has a breaking point. Just because they are here now, doesn't mean they will be after tax reform.
Tax the rich all you want, it won't solve the fiscal problem.
We need lower taxes and smaller government.
No more bailouts.
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October 12th, 2011 at 3:20 am 24
@patriotz: There is also an assumption that the savings on rent is not invested. When that difference is invested there seems to be a further assumption that it sits in a savings account earning 0.5%, but RE will rise at a rate of 10% forever.
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October 12th, 2011 at 3:22 am 25
@patriotz:
"opportunity cost of down payment"
… which could easily be negative in today's market.
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October 12th, 2011 at 3:25 am 26
@patriotz: "I don’t think foreigners are responsible for this bubble in any significant way."
From what I've seen it's a small segment of buyers who are outbidding locals. There are over 20,000 properties for sale in the Vancouver area right now, and nobody — foreigners or locals — is being forced to buy them. Rich foreigners provide a plausible excuse that excuses any reason to invest in careful thought.
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October 12th, 2011 at 3:37 am 27
I thought the piece was good, a refreshing departure from past stories. It should quash all the conspiracy theories about reporters being in bed with developers. The news is just entertainment, not investigative journalism, it panders to the emotions and hot topic of the moment. For the past 10 years it's been on the RE is religion bandwagon, because that's what everybody except a few whackjobs on VCI believed. Lately, I am sensing a shift in opinion among friends and family where more and more are complaining about the high prices of RE and whether it's a good thing or not for the city and families, especially among the Xers and Yers who are mostly being priced out completely. I think the recent stories on Global just reflect that change in sentiment.
That said, I agree with other posters who thought they could do a better job of spelling out the cost of owning vs. renting. 95% of the population still doesn't have a clear idea that having a mortgage is also 'throwing money away'. It wouldn't have taken much work to throw up a graphic showing some of the costs of owning, interest, strata fees, taxes & maintenance.
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October 12th, 2011 at 3:38 am 28
@kansai92: Even worse, Chinese people renting?? Seriously?? Can this report scream "staged!" any louder?
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October 12th, 2011 at 3:43 am 29
I was just eating breakfast at a little resto in E. Vancouver and I heard the waitress talking to one of the customers about how she just got herself a Realtor(tm) and has been looking for an apartment to purchase. She looked maybe mid-twenties and talked about how she's tired of throwing away money for rent, she found a place for 178k (I think that's what she said), and she has a friend that will rent some space from her. She might be moving to Vernon, though, so she'll just rent the whole place if she does.
This is who buys real estate in this city? I cannot believe that a bank would give her a mortgage. She's a server at a cafe. She said she's pre-approved for 250k, but thinks that's too much, so she's being conservative! what can you buy on the east side for that kind of money, anyway? I find this:
http://www.realtor.ca/propertyDetails.aspx?proper…
and the Maint fees are 500 pm. Sheesh.
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October 12th, 2011 at 3:47 am 30
@Troll: "It wouldn’t have taken much work to throw up a graphic showing some of the costs of owning, interest, strata fees, taxes & maintenance."
I think, actually, there's a great chance to take it to the logical conclusion, that long-tail risks are not meted out evenly, and that ownership costs are almost always higher than budgeted. Might as well do it right if you're going to do it.
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October 12th, 2011 at 3:50 am 31
@kansai92: Hmm….the conservatives have been chanting this for ages and yet we keep getting bigger deficits, bigger debt, high taxes, less services, more bailouts. But hey, the rich and big business certainly are benefiting a lot though….
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October 12th, 2011 at 4:03 am 32
@Oilman: "I cannot believe that a bank would give her a mortgage."
Why not? They have nothing to lose thanks to you and me and the CMHC…
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October 12th, 2011 at 4:06 am 33
@jesse:
You lost lost them at 'long-tail risks', by the way when is that Mike McCardell coming on with his feel good story?
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October 12th, 2011 at 4:09 am 34
@patriotz: All I'm saying is that the average person who watches a segment about renting being cheaper than buying is going to write the whole thing off because of their -perceptions- about building equity.
I'm talking about average people here – not people who spend all day picking apart the arguments of people on housing bubble boards
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October 12th, 2011 at 4:22 am 35
@Flip Flop:
This is the biggest load of bull-puckey I've read in a while. The correlation between corporate executives' compensation and performance is just about zero. We are (and have been for a couple of decades) in the era of CCC–casino crony capitalism.
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October 12th, 2011 at 4:22 am 36
@kansai92:
I don't know about misguided, more like unguided. Just people who feel something is wrong, but don't know what, venting their frustrations. Ripe to be marginalized by the media and coopted by establishment interests, much like the greens in the US, or the tea party more recently.
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October 12th, 2011 at 4:27 am 37
Axing the MSP is one of the few things the CCPA and Canadian Taxpayers Federation agree on:
http://www.straight.com/article-277563/vancouver/…
BTW the NDP seems strangely reluctant to get rid of it. They never touched it when they were in government.
I think its partly because core NDP activists rarely worry about it since they have comfy union or political jobs, and want to defend the government workers who administer it.
Also, more understandably, they fear the right-wing backlash the moment the NDP talks about changing taxation.
Ironically, only a moderate right-wing government could get away with axing it and finding an alternative way to raise the revenue (any way is better). And taxation is being reviewed now, anyhow.
So this is the time, if Crusty wants to live up to her Families First propaganda.
Even Alberta got rid of its version of the MSP.
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October 12th, 2011 at 4:40 am 38
This is interesting:
"In a piece of news that can not be taken well by students of Dr. Copper, the FT reveals for the first time that China's estimated copper inventories, based on numbers from the China Non-Ferrous Metals Industry Association, were 1.9 million tonnes at the end of 2010 which is almost double the lower end of the consensus estimate of 1.0-1.5 MM tonnes (and, as the FT points out, "more than the US consumes in a year). "
http://www.zerohedge.com/news/chinese-copper-inve…
Copper investors, you may start running for the door marked exit. China investors, you may want to double check those growth estimates.
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October 12th, 2011 at 4:59 am 39
I have solution.
Based on Darwin …" Origin of the Space Cadets "
Renters basically like primordial ooze, bottom of Totem Pole.
They get drunk,(nachos optional) crawl on all fours…yell "Go Canned Schmucks Go"…..up steps leading out of basement suite.
However. like videos shows, tree…..maybe tree house as rental option.
This like Darwin…renters evolve into quasi- monkeys…. climb tree with scraped knuckles .
Then max out as Leftie retards .
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October 12th, 2011 at 5:03 am 40
@Oilman: haha…taxes and maintenance fees would add up to the rent on that place. Good thing she'll no longer be throwing money away on rent.
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October 12th, 2011 at 5:08 am 41
Housing starts on the upswing; Richmond one of a few construction hotspots
Read more: http://www.richmond-news.com/Housing+starts+upswi…
Metro Vancouver's housing starts are on the upswing, rising to 1,783 in September over 1,644 in the same month last year, with most activity in the multi-family category, according to Canada Mortgage and Housing Corp.
Year-to-date, the numbers were even stronger, with the multi-family sector seeing a 39-per-cent increase in starts from January to September compared to the same period in 2010.
The reason for the multifamily strength, according to CMHC's senior market analyst for Metro Vancouver, Robyn Adamache, is two-fold: builders are increasingly confident taking on larger multi-family projects, and buyers are skeptical of higher-priced detached homes because they want to avoid the HST threshold of $525,000.
"On the single-family side, we're seeing a decline this year," Adamache said in an interview after the report was released Tuesday. "We think people interested in a single detached home are putting off the decision until the HST tax ramifications are sorted out.
"When the economic recovery was fragile, builders were more comfortable doing single-family starts rather than a large project. It was a more incremental way of getting out of the recession. Since the recovery has taken a better foothold, we're seeing the multi-family side pick up again."
Construction hot spots year-todate compared to 2010 included North Vancouver, Richmond and the Tri-Cities area.
.—————————————
See all is well.
Have we ever lied to you before ?
Oh yeah..F*ck you too
PS Tsur is Eric Bogosian with a beard.
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October 12th, 2011 at 5:18 am 42
@Cam Good-Muir and Tsur:
Never mind of those f idiots,Vancouver and Richnmond are full of Chinese Buyers;who would give a damn to those losers.
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October 12th, 2011 at 5:22 am 43
@space889:
They are white Chinese not real ones.
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October 12th, 2011 at 5:32 am 44
#5, Jesse: Thanks. It would be nice to think my many hours with that complaint served some purpose beyond forcing Global to write me again and again and again.
#27, Troll: I think you're wrong. This one Global series, as good as it was to finally see, certainly *doesn't* quash all that Global has done to build this back-breaking bubble over the past months and years. Its news department has pandered to the RE industry over and over and over again because it's so heavily supported by the RE industry – one sleazy, slimy cheerleading piece after another.
As for news being "entertainment," gimme a break. It isn't *supposed* to be entertainment – it's supposed to be news.
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October 12th, 2011 at 5:35 am 45
@gordholio: We know that it's supposed to be news, but it is (as Troll rightly suggests) only entertainment. If it were news, it would look very different on a nightly basis than it does.
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October 12th, 2011 at 5:49 am 46
Credit suisse says that chinese banks are bankrupt. Bad news for china and bad news for the chinese driven local RE market.
http://nerdinvest.blogspot.com/2011/10/credit-sui…
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October 12th, 2011 at 6:00 am 47
ha-ha-ha..news supposed to be "news" on TV… anybody who could put a finger on mouse and scroll up and down is NOT getting their NEWS on TV
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October 12th, 2011 at 6:01 am 48
@Troll: "You lost lost them at ‘long-tail risks’"
I wouldn't use "long tail", I'd use "very bad things that sometimes happen". I'd also use lots of:
- Stick figures with happy or sad faces
- Piles of dollar signs to indicate how much money you have
- Animated explosions when I blow stuff up real good
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October 12th, 2011 at 6:02 am 49
like Li KAi who gets his NEWS from build a burger conferences.
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October 12th, 2011 at 6:09 am 50
Calling all RE Bears!
The Vancouver Board of Trade is hosting the following panel.
Bubble Trouble: Leading experts discuss Vancouver's real estate sector.
11:45am Friday, October 21, 2011, at the Fairmont Waterfront
Moderator is David Podmore, Chairman and CEO of Concert Properties. Supporting sponsors are the Real Estate Board of Greater Vancouver and the Vancouver Regional Construction Association.
Trouble makers with free time on their hands should head down and ruffle some feathers.
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October 12th, 2011 at 6:18 am 51
@Manna from heaven:
Why would we bother? It's all people involved in the real estate industry. They're just going to tell us that there is no real estate bubble and everything is just fine (mountains, water, overseas investors etc etc). It's like inviting a bunch of atheists to a religious conference. The atheists' views will be drowned out by the religious leaders' insistence that their way is "the way" and no other opinions will be tolerated. Been there, done that.
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October 12th, 2011 at 6:20 am 52
US 5 year treasury rate October 3, 2011 at 0.87%
Today, US 5 year treasury rate at 1.17%
Up 30 bp in just 1 week of trading.
Looks like twist went twat.
A small increase in rates will magnify the cost of money since rates at historical lows. Rates to the upside will be the big surprise going forward.
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October 12th, 2011 at 6:45 am 53
@Jay-z:
Build a Burger Conference …
Hoo Boy.
Just got back….Waiter told me what he added to Gordon Campbell's burger secret sauce…..eewwwhhhh!
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October 12th, 2011 at 7:09 am 54
This was another refreshing story from Global, but they did not point out that people who buy in an inflated market are in danger of getting in trouble when interest rates rise; a fate that renters are protected from. In five years, interest rates will very likely be higher, and buyers today will not even have touched the principal on their mortgage by then.
Also, the 30% cheaper number is highly suspect. My husband and I crunched the numbers, and if we were to buy a similar place in our neighbourhood (with 20% down and a 25-year amortization), renting is actually about HALF of the monthly cost of owning when you factor in taxes and maintenace.
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October 12th, 2011 at 7:20 am 55
@gordholio:
Well, I think you're wrong. So there.
Well, there is another possibility. Global reporters are for the most part lazy and take whatever 'news release' is available and repeat verbatim. I challenge you to look at other Global stories on other topics and see if they are more balanced, they're not. They pander to whatever view they think will garner the most viewers. The 'NEWS' is a reflection of public opinion, not a shaper of it.
Agreed. But's it not.
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October 12th, 2011 at 7:25 am 56
@Sheesh:
I call BS on that. In most cases renting is currently marginally cheaper than owning, but not HALF. Why don't you show the numbers?
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October 12th, 2011 at 7:39 am 57
@Troll: Currently renting entire house in NV for $1700/mth. House down the street, same age, same size, and on the same size lot sold a couple months ago for just shy of $1M.
Do the math on that and let me know if that is marginally cheaper?
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October 12th, 2011 at 7:50 am 58
@Troll: "but not HALF"
Have to agree here but… if the property is, say, a bungalow surrounded by suited detached houses, the rent will be considerably cheaper than the mortgage. The property isn't at highest and best. You would also need to include suite rental income in the total.
That said, there are a few condos downtown that are renting $2500 for an $800,000 value. That's a cap rate of about 3%.
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October 12th, 2011 at 7:53 am 59
@Not much of a name…: Using the RBC mortgage calculator and their posted rates, the mortgage alone (assuming 20% down (i.e, $800K mortgage) and 5-year fixed, with 25-year amortization schedule) would be $4,785.79/monthly. Add in property taxes of about $400/month and you get 5175.89.
So 1700/5175.89=32.8%. Hmmm…methinks that's a bit less than "marginally cheaper."
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October 12th, 2011 at 7:54 am 60
My wife and I have been renting since 2008. First in a crappy basement suite in Van. Now in a nice 1200 sf. 2 bedroom condo in Queensbourgh. Our landlords wanted to raise our rent from $1600 to $1900 after our 1 year lease was up. They said because the cost of strata etc… And they said people are lining up to rent this place for that much. We said $1700 is the best we could do. The people they had "lined up" to rent at 1900 didn't show… So about a week later, they got back to us and said that $1700 is o.k.
In that time we have been looking for another apartment and HOLY CRAP is there a-lot on the market compared to last year! And the prices… we can rent a 5 bedroom 6 bathroom house in Richmond for $2500!
http://vancouver.en.craigslist.ca/rch/apa/2644732…
Don't want to move because of the hassle… but we can get better for less and much better for a little more!
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October 12th, 2011 at 7:57 am 61
crap… this is the house I want to rent http://vancouver.en.craigslist.ca/rch/apa/2629309…
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October 12th, 2011 at 8:02 am 62
@jesse:
"That said, there are a few condos downtown that are renting $2500 for an $800,000 value. That’s a cap rate of about 3%."
I thought cap rate was the rental yield net of property expenses. So take $1K or so off the rent for taxes, condo fees, and maintenance and you get $1500/$800K or a cap rate of under 2%.
REIT's generally want a cap rate of 8%. But what do they know?
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October 12th, 2011 at 8:08 am 63
@patriotz: Don't know condo fees, but yes 2% is probably more like it. I am reasonably sure a few people are negative carry on places like this, and special assessments would be particularly brutal.
A friend who was looking for rentals recently was surprised how many landlords were thinking of selling and wanted move-out option in the contract.
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October 12th, 2011 at 8:11 am 64
Photos: The 20 cheapest homes for sale in Vancouver
Looking for rock-bottom pricing? Check out the city's least expensive single-family homes now listed with MLS.
http://www.househunting.ca/vancouversun/homes/554…
=================================================================
Hoo Boy !!!
Special deal for VCI comrades….even Meth Man
I am blowing off some inventory…..concubines not like Fall weather, want to go to world class city …like Whalley- Newton.
If feel awkward….out of place…can build custom basement suite with damp smell, 5 ft or less ceiling… and backed -up plumbing !
Send in offers to Popez…( no ask commission structure !!!!! )
Remember….buy now or be priced out the day before tomorrow
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October 12th, 2011 at 8:18 am 65
@Sheesh:
"In five years, interest rates will very likely be higher, and buyers today will not even have touched the principal on their mortgage by then."
For a 20yr mortgage at today's typical 5yr fixed rate your monthly payments are about 50% interest, 50% principal.
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October 12th, 2011 at 8:19 am 66
@Li Kai Shing: " 20 cheapest homes for sale in Vancouver"
+1. Check out the last picture, an ad for prescription lenses. Nobody can make this stuff up.
See if you can find this one there: http://i52.tinypic.com/15ex104.jpg
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October 12th, 2011 at 8:28 am 67
Li Kai you are sooo funny ..hi-hi-hi
keep cuming
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October 12th, 2011 at 8:30 am 68
@Not much of a name…:
Well, either you're getting a smoking deal on rent ($1700 for a decent whole house in N.Van is unheard of) or it's a tiny shack on a huge lot (not at highest and best as Jesse points out). In either case, it's an anomoly.
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October 12th, 2011 at 8:47 am 69
Troll is obviously just that. High End DT condo's are much cheaper than 1/2 rent vs owning.
My example:
My family lives in a big place that is "worth" about $2.2 mil. I have been here 5 years and not had a rent increase. I did however get new hardwood floors and blinds a few months ago.
rent $4,500
To own
Strata $750
Taxes $1,000
Mortgage $2.2 mil @ 3.5% 5 yr fixed = $10,983
Monthly outlay $12,733
Cost to rent vs owning 35%
I am using a full $2.2 mortgage as a figure due the fact that what ever I put down is opportunity cost. I can't invest that money elsewhere. That said, I am sure some will cry foul so lets run the numbers assuming I could come up with 25% down which is $550K.
The monthly mortgage would be $8,237
Monthly outlay $9,987
Cost to rent vs owning 45%
These numbers do not even include the extra insurance costs and special assessments that pop up.
That means that if I was to buy my place today and rent it to someone I would need it to go up at least 4.5% per year. Even the kool aid drinkers would have trouble believing that.
Let's do the same numbers with a "never gonna happen" 6% mortgage:
In my first example the monthly outlay goes to $15,825 but my rent stays at $4,500 changing the cost to rent vs own to 28.5%.
I can see how rising interest rates will dramatically squeeze the part time landlords who are bleeding now and will force them to sell at what ever they can get out at.
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October 12th, 2011 at 8:47 am 70
#55, Troll: Agreed. It's not. And that's why I spent so much fricking time talking to reporters and hitting Global with CRTC complaints. You either roll over and accept this self-serving puke-fest, or you do what you can to change it.
Here's the thing. People *still* look to "trusted" news sources such as Global to find out what's going on in the world. And that's one of the prime reasons people are *still* buying at price points that are nothing but absurd. They DO NOT see it as entertainment, and they keep hearing and reading that Vancouver RE is and always will be smoking hot (recent Tanya Beja spots aside). And ultimately, they look at it as salvation from the high cost of everything else. It's pure, unadulterated evil that will break the bank for many.
Of course, none of this has anything to do with all the real estate industry dollars Global rakes in.
This post, BTW, was *not* sponsored by Re/Max.
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October 12th, 2011 at 8:51 am 71
http://i55.tinypic.com/2ry3j8p.jpg
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October 12th, 2011 at 9:00 am 72
@rent4evr: If you're going to post crazy price-rent ratios on Dunbar properties, get used to Troll calling you out. It's not apples-to-apples.
The 2.5MM condo is hard to refute, but is generally the exception. Most condos are not horribly divergent based on a simplistic buy-vs-rent calculations. That does not make them a good investment, mostly because simplistic buy-vs-rent calculators are not good tools to make sound investment choices.
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October 12th, 2011 at 9:09 am 73
gordholio Says: " Of course, none of this has anything to do with all the real estate industry dollars Global rakes in."
well, consumerism and fascism are essentially social, cultural and political mechanisms of offsetting diminishing returns to capital and complexity.
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October 12th, 2011 at 9:30 am 74
@ 56 Troll: Voted up. In local news, reporters just report. Bodies to sit around analysing, developing and researching stories fell to the budget axe long ago. Like those Hollywood Top Ten shiat shows that try to pawn off studio press releases stitched together with anonymous 'experts' as original programming, other than first person sound bite gathering and baby/kitty/car crash shots the majority of modern newsrooms live and breathe by stitching together what's handed them.
Cheap, easy and low legal exposure.
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October 12th, 2011 at 9:43 am 75
@Troll:
"But the bigger faux pas is that you need to look only at the interest portion, about $2K/month. I mean really? You’re supposed to be a bear who understands this stuff."
And that $2K/month interest decreases over the life of the mortgage.
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October 12th, 2011 at 10:09 am 76
@fixie guy:
Amen:
The media is so f*cking lazy.
In local papers….people on various issues are often asked by the Media to send in the detailsof said issue…aka literally write the story for them.
TV?….what the hell can you cram into a 3 minute report?
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October 12th, 2011 at 10:11 am 77
Lots of listings!
New Listings 302
Price Changes 127
Sold Listings 101
TI:16894
http://www.laurenandpaul.ca
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October 12th, 2011 at 10:17 am 78
Any leads?
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October 12th, 2011 at 10:39 am 79
Not looking like last October so far after 7 business days.
Avg listings last Oct – 210
Avg listings this Oct – 276 +31%
Avg sales last Oct – 105
Avg sales this Oct – 121 +15%
At the current pace Oct listings are on track to be the highest in at least 10 years, if not in history.
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October 12th, 2011 at 11:06 am 80
McLovin, do you you know what paulb's high was for last month?
thx
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October 12th, 2011 at 11:27 am 81
Which Bacon-ator Brother is that in the photo ?
My odds are one -in- three ……right?
What?
Oh sorry….one in two.
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October 12th, 2011 at 11:44 am 82
Mclovin'. My Halloween costume will be a big sign on my chest that says, "Foreclosed"…if they ask what it means, I'll gladly bring 'em up to speed
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October 12th, 2011 at 11:46 am 83
Rippedtoshit:
According to Paul B 17,194 as of Sept 30
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October 12th, 2011 at 12:24 pm 84
Q: How do you sink a Chinese ship?
http://www.chinasmack.com/2011/stories/17-million…
A: Put it in water.
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October 12th, 2011 at 2:17 pm 85
What Canadians said:
the youths were “driving like complete jerks.”
“I felt these cars need to be stopped before they caused a serious accident,”
Read more: http://www.vancouversun.com/news/Street+racing+yo…
What Chinese said:
"Disgusting parasites!"
"Canadian police should jail them for a hundred years for jeopardizing public safety and help this society by castrating all of them so future generations won’t have idiots."
http://www.chinasmack.com/2011/stories/rich-chine…
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October 12th, 2011 at 2:45 pm 86
@Best place on meth:
That's by far the least seaworthy looking vessel I've ever seen!
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October 12th, 2011 at 3:03 pm 87
I'm still looking for a house or townhouse to rent, and I'm shocked by the sad state of rental stock. Here are the usual reasons we've passed on everything so far:
1. Hasn't been updated since 1972. Horrid rug, wood panelling, badly out-of-date kitchens and bathrooms. Hey landlords: putting a slab of granite over POS cupboards isn't going to do it.
2. Mini-apartment building. Hey, I thought the point of living in a house was having the place to yourself. There's a surprising number of landlords living in their own basements.
3. Nice house, but it's on a very busy street.
4. Nice house, but it's badly located, which would mean 1.5 hours commute to downtown.
And I'd like to let all those Craiglist landlord wannabes know that they really should post at least one picture of the place. When they don't, it suggests they're trying to rent a POS. If it looks great, why not show it off? Is the idea to get me to come for a viewing so they can use their powers of persuasion to convince me that I should really rent their smelly POS for ungodly sums. WTF?
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October 12th, 2011 at 3:24 pm 88
Frances Bula: Olympic Village Update
It's been a few months since we've received an update on the finances of the Village at False Creek. No finance information to update my stress tests, though my bet is Mr. Rennie has managed to recoup something. Remember the baseline, as of about a year ago, was a $519MM loan. Since then a few units have been sold and another chunk has been leased or rented out. It's a bit more work trying to get a firm handle on the outstanding loan amount.
It's rather confusing to be honest and I'm skeptical a straight answer will be received from the City. I'll try to dig through the numbers and revise the tests, one year on. I'm disappointed the numbers aren't made public in a timely fashion, it's a ton of money to be repaid by taxpayers and they should be getting regular and clear updates on the salvage efforts.
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October 12th, 2011 at 4:22 pm 89
@oneangryslav2: “So 1700/5175.89=32.8%. Hmmm…methinks that’s a bit less than “marginally cheaper.””
You’re including principal payments as an expense.
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October 12th, 2011 at 4:24 pm 90
@oneangryslav2:
Really? It takes about 10 seconds to find a million mistakes in your analysis. $800K using ACTUAL rates, not posted puts you at aboud $4K/month. But the bigger faux pas is that you need to look only at the interest portion, about $2K/month. I mean really? You’re supposed to be a bear who understands this stuff.
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October 12th, 2011 at 4:46 pm 91
I’m renting a garden suite in Burnaby for $725. It’s actually half of a duplex. It includes private laundry, heat & hot water & is ~ 10 yrs old. Similar duplex’s in the area sell around $550K. Go ahead, tell me it’s only “marginally” cheaper & I’ll tell you my net worth is higher than my landlords.
I vote that some skilled and industrious bear should do the math again & remind us all what it’s about. Maybe use these two links for a place in Dunbar?
$2500 a month.
http://vancouver.en.craigslist…..92026.html
It’s also for sale. 2.5 million.
http://www.realtor.ca/property…..=408168413
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October 12th, 2011 at 4:49 pm 92
Updated links for the Dunbar rental…
http://vancouver.en.craigslist.ca/van/apa/2640092026.html
http://www.realtor.ca/propertyDetails.aspx?propertyId=11140597&PidKey=408168413
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October 12th, 2011 at 4:54 pm 93
@patriotz:
Why would I not be serious about renting as long as gross rental yields are under 8%? Sure that number looks ridiculous in Vancouver or Sydney at the moment but we both know it's because prices are way out of whack.
When real prices have fallen 50% the yield on our apartment would be 8% instead of 4% and at that point we would seriously consider buying something.
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October 12th, 2011 at 5:01 pm 94
For those of you who want a longer term comparsion with princpal reduction. Using my 1st example over 5 years @ 3.5%
Strata $750
Tax $1,000
Interest – principal repayment = $5,952
Total outlay $7,702
Rent $4,500
Cost to rent vs owning 58%
This makes the following assumptions:
One stays in the same place for 5 years
They lock the rate at 3.5% for 5 years (this will not last forever)
No maintance costs of any kind and no special assements (unrealistic)
No increase in taxes or strata fees for 5 years (impossible)
I am happy to rent and will continue to do so. We are running at 2.5%-3.0% inflation and my rent hasn’t gone up in 5 years so I guess its 12-15% cheaper than when I moved in.
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October 12th, 2011 at 5:44 pm 95
@rent4evr:
“Rental period: 6 – 8months.”
This example doesn’t work as the house is for sale, it’s a short term rental and the price is therefore reduced.
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October 12th, 2011 at 5:58 pm 96
Bearish numbers at Yattermatters! 34% sales/listings.
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October 12th, 2011 at 6:01 pm 97
@Anonymouse:
“And that $2K/month interest decreases over the life of the mortgage.”
The decrease in the interest payment is matched by an increase in the opportunity cost of the compounded total of the principal payments. That’s why the interest payment goes down in the first place.
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October 12th, 2011 at 6:02 pm 98
@Vulture Fun:
"I’m shocked by the sad state of rental stock"
Of course the root cause of this is that almost all landlords of individually titled properties are speculators who are trying to make money not by renting the property out but by selling it to someone else. So there's little perceived return in making the property more attractive to a tenant, and negative cash flow means many don't have the money to do it in the first place. In addition, many expect the property to be torn down by the next owner, so there's not much incentive to keep it up.
Today's rental where the landlord lives downstairs is likely to become tomorrow's foreclosure. I've seen that back in the 80's.
CDU, the phrasing of your first posting was confusing, which is was I was commenting on. I didn't know what you were trying to say.
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October 12th, 2011 at 7:03 pm 99
Net 200. If I use Bull math and extrapolate directly into the future forever we will have over 19,000 listings by the end of the month. Bha aha ha ah hahah a
I’m sticking with my 18,500.
Still haven’t decided what I’m going to Halloween as but I am thinking about a For Sale sign maker. Or maybe an employee of Lease Busters specializing in “lightly used” BMW 3 Series?
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October 12th, 2011 at 7:05 pm 100
Meth,
the MSM may tout the rise in sales YoY, eh….hmmm…do you/Paul B know what his listings topped out at again (thanks)?
Will be interesting to see if we climb to a new listings high….wow, could be a record October for total listings….
bond market is (currently at least, with the equity market rally) selling off on the back o better economic numbers, we could see a new round of mortgage rate hikes soon.
Interesting times.
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October 12th, 2011 at 10:58 pm 101
"BC Hydro to slash 300 jobs this week"
http://www.cbc.ca/news/canada/british-columbia/st…
The fat cat loses a few pounds this week, but still fat nonetheless.
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October 12th, 2011 at 11:39 pm 102
A big part of the problems in the GVRD are caused by "Metro Vancouver" (the former GVRD entity) and TransLink with their mis-management of revenues causing an increased burden on the citizens of the lower mainland. Other regions don't have to deal with these incompetancies.
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October 13th, 2011 at 12:03 am 103
@A.Guy:
Metro Vancouver and TransLink are not the causes, they are the symptoms. The real cause is that the provincial government does not want a local government structure in Greater Vancouver which could effectively plan for transit or other developments – i.e. an amalgamated megacity or a truly accountable metro government.
Of all major cities in Canada only Vancouver has this mess.
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October 13th, 2011 at 12:30 am 104
"The real cause is that the provincial government does not want a local government structure in Greater Vancouver which could effectively plan for transit or other developments"
The provincial Liberals have stated they would amalgamate if the individual cities and municipalities wanted this. Unfortunately they and the citizens who live in them don't. Personally I think it would be better to have the lower mainland and fraser valley divided in 2 or 3 cities but most people would not want this and it would be political suicide for the provincial government to push it through.
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October 13th, 2011 at 12:36 am 105
"Of course the root cause of this is that almost all landlords of individually titled properties are speculators who are trying to make money"
The fact is people will rent these dumps so what incentive does a landlord have to invest more money to fix it up? If people refused to rent these dumps the situation would change.
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October 13th, 2011 at 12:39 am 106
@Anonymous:
The other thing is people will also buy these same dumps to live in. Again no incentive to fix the place up.
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October 13th, 2011 at 1:08 am 107
@patriotz:
I hear what you're saying about the lack of incentive to fix up a place for renters, but if I were a landlord, I would be embarrassed to offer some of the places we've seen. Doesn't "pride of ownership" apply even if you're renting a place out. I realize landlords can get away with a lot, but how can they stand tall, knowing that they're slum lords. I suppose I'm reluctantly beginning to accept the huge chasm between how it should be, and how it is. Well, this vulture is not going to forget this when it comes times to start making stink bids. I will be grinding these f.ers down. And you should know, all you realtards out there, I won't care about "insulting" the seller.
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October 15th, 2011 at 6:54 am 108
[...] “I was just eating breakfast at a little resto in E. Vancouver and I heard the waitress talking to one of the customers about how she just got herself a Realtor(tm) and has been looking for an apartment to purchase. She looked maybe mid-twenties and talked about how she’s tired of throwing away money for rent, she found a place for 178k (I think that’s what she said), and she has a friend that will rent some space from her. She might be moving to Vernon, though, so she’ll just rent the whole place if she does. This is who buys real estate in this city? I cannot believe that a bank would give her a mortgage. She’s a server at a cafe. She said she’s pre-approved for 250k, but thinks that’s too much, so she’s being conservative! what can you buy on the east side for that kind of money, anyway? I find this; and the Maint fees are 500 pm. Sheesh.: #502 – 175 E BROADWAY Vancouver. MLS V905512 437 sqft; condo/strata Ask price $177,000 Maintenance Fees: $498.40 Monthly” – Oilman at vancouvercondo.info October 12th, 2011 at 11:43 am [...]
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