FFFA! Debt, Assets, Math and Compare

It’s that time of the week again!

As we ease into the weekend lets do our regular end of the week news round up and open topic discussion thread, here are a few recent links to kick off the chat:

Inventory Graph update
Vancouver rent a bargain by comparison
Cognitive dissonance on debt
Everything higher than ever before
Running the numbers
DTES building crumbles

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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gah
Guest
gah

FIRST FIRST FIRST

yvr2zrh
Member
Hello Vancouver – – in town tomorrow!!!!! Thank you to all who keep coming here to post. It has been interesting to watch the market really shift over the past 24 months. This month we will see a spike in sales for sure in REBGV compared to 2012 and 2011 same month. This increase will be headline generating as you can’t ignore a 20% sales growth – it has to mean the market is back . . no?. However- – one must really dissect the stats. There seem to be a few areas where these increases are coming from. Some recent price decreases have finally generated some interest at lower price points in Vancouver and Richmond. I am also interested to see what the downtown condo market looks like as it probably has some spikes now that the young and… Read more »
logic
Guest
logic

just a note on the links

hell will freeze over (or Ms Clark will go a week without lying to her voters) before I subscribe to that worthless rag the globe and mail.

carry on.

George
Guest
George
George
Guest
George

People in the greenest city on Earth are complaining about maggots and insects in their green bins. It’s a funny thing. When every house in the city has a box of kitchen waste in the back yard that has a way of attracting bugs. Who would have thought. I would expect the rodent population in Vancouver will also be benefiting from these green bins.

http://www.vancouversun.com/news/yuck+issue+Maggots+find+homes+Metro+Vancouver+green+bins/8709550/story.html

Turkey
Guest
Turkey

Can some well-connected individual hook me up with the selling price of 808 Gore Street (V997258)?

It’s the end of an era! After years on the market, one of the five Strathcona Gateway properties has a sold sign on it. This is one more piece of anecdotal support for the sales up-swing.

db
Guest
db

@Turkey

635K originally listed for 760k in 2012…

Pdub
Guest
Pdub

Interesting that Environics chose to use mark to market pricing to determine the wealth of Canadians. Some might even say irresponsible to give people the impression they are wealthier than they probably are.

For years I have done a household balance sheet to give me an understanding of our wealth. The big issue was always how to value the home. So I did two balance sheets: one using book value and the other using assessment (essentially mark to market) value.

I suppose I could have also used something based upon price-to-rent to give me an economic value that might have been more accurate.

New Perspectives
Guest
New Perspectives

Can any of the armchair economists on here tell me why I SHOULDN”T buy an investment condo at Coquitlam Centre in a new building that will be within 100 meters of the new skytrain?

The one I’m looking at is West facing, partial unobstructed view of sunset, 21st floor, 1bed+den, after 20%, at 3.99 10 year term, i owe 240K with a mortgage payment of $1260 + $270 strata + $250 property tax.

My plan is to add an additional $500 bi-weekly to the principal to have the mortgage basically paid off after the 10 year term.

I would be interested to hear the argument why I SHOULDN”T BUY, as I already have arguments on why i SHOULD.

Thanks

jane's pajamas
Guest
jane's pajamas

The Future of Real Estate
BY TIM KNIGHT – JULY 26, 2013

http://slopeofhope.com/2013/07/the-future-of-real-estate.html#comments

Kratos
Guest
Kratos
@New Perspectives I wouldn’t buy an investment condo now. I think you are putting all your eggs in one basket in real estate. When you invest, people always tell you to diversify and if you already have a place to live in, and you’re buying more investment condos, you are essentially putting all your eggs in one market (Vancouver). Perhaps in 10 years, your condo may be worth 500K, nobody can say for sure, but if you’re investing long-term, real estate (even Vancouver real-estate) loses to simply investing in the S&P and holding it. There’s also little carrying costs to buying index funds (but most of all the carrying costs are predictable). People can say, oh my house doubled in value in so and so many years, but the compounded annual return is actually not that great compared to other… Read more »
Turkey
Guest
Turkey

@db,

635K originally listed for 760k in 2012…

Thanks! The sale price is 5% off the last listed price ($668k) and 16% off the original listed price. One albatross down, four to go.

Just a reminder: this property was the subject of a lawsuit between Wadaco Development and Vicki Lum. The BIV link is dead now; I wonder what became of the suit?

Joe Mainlander
Guest
Joe Mainlander

@ New Perspectives:

If you believe the market will drop, you shouldn’t buy. If you believe the market won’t drop you should buy.
No easy math or formula. It’s a gamble. Good luck.

Son of Ponzi
Guest
Son of Ponzi

@new perpsectives.
“partial unobstructive view”?

Son of Ponzi
Guest
Son of Ponzi

@new perspectives.
Your expenses (without calculating opportunity cost) will be around 1,800.
I think you could probably rent it out for 1,200.
So you do the math.

registered
Member
registered

Pdub Says: “….use mark to market pricing to… give people the impression they are wealthier than they probably are.”

The situation is much worse than that. Using real estate to argue people are getting wealthier was a common pre-crash tactic in the US and anyone countering it – for example Peter Schiff – were only trotted out in the media for laughs. History of course shortly and dramatically proved him right, their real estate valuations were only paper wealth. The same falsehoods are now trotted out in Canada with our bubble drawing global attention and they’re just as transparent.

crabman.
Guest
crabman.

@New Perspectives –

Your total costs will be $1,780/month + about $200/month in lost income on your 60k DP.

If $1,980 is comparable to the cost of renting a similar unit, then it might make sense to buy if you are planning on staying there for several years.

But I’m guessing you could rent something similar for about $1,200? If so, why not rent and save the extra $780/month? Especially since I’m not sure you would be happy in a tiny condo like that for 10 years. Any plans on starting a family in that time?

FWIW, the fundamental value of that condo is probably $75k-$100k less than what you are paying based on the price/rent ratio.

New Perspectives
Guest
New Perspectives

@Son of a ponzi

FWIW, i verified that $1300 is the current market rate for that unit in the building.

I do get your point that I have to pay out of pocket some $150 biweekly for the foreseeable future.

on the other hand, It’s also possible it could command higher rents when the skytrain is built.

I also consider i could have it paid off in my late 30s and have an additional imcome stream for some 40 years of 15-20K a year that supplements my other investments.

Thanks for your input

New Perspectives
Guest
New Perspectives
@Kratos Thanks for your input. I get your point about eggs the basket. I have a property in Asia and a primary residence already in Port Moody ~ but then i figure since im 30 now is the best time to have some leverage. While I have investments in TD E-series, Investors Group, Manulife, and a DBP with the Gov’t, I DO like property since I can get leverage. I’m also more interested in future yield than capital gains, so I see this 50K d/p investment yielding a stream of 18-25K net annual returns after 10 years, when I would plan to have the mortgage discharged. Presumably, this would supplement my retirement income. I just got back from the Skeena to look at detached property investments ~ all that did was tell me how inconvenient it would be, while it… Read more »
Newcomer
Member
Newcomer

@New Perspectives

What does a one bedroom +den in the area currently rent for?

Using this
http://vancouver.en.craigslist.ca/pml/apa/3959556280.html
as a yardstick $1200 before utilities for the unit you are describing might be a stretch.

Another question is, how much do you assign to the cost of finding tenants and dealing with their requests.

There are probably other cities where you could get a better return on your investment dollar.

VMD@work
Guest
VMD@work

@New Perspectives

Are you going to live there yourself for a few years first? For investment properties (and to maximize return), people tend to buy the lower floor 1Br’s/bachelor’s. Afterall, each floor higher will cost extra few grand. On 21st floor you’re looking at an additional cost of potentially $40k vs buying on 2nd floor. The rent premium for higher floors does not justify buying a upper floor unit, unless you plan to live there yourself and would pay extra for the better view.

I also tend to avoid west-facing “sunset view” condos, as such units turn into ovens during summer months.

Also, don’t buy the units facing the skytrain line if you plan to live there yourself. Can get noisy even at 100m.

rp1
Guest
rp1

#9 Because we’re at the end of a commodities supercycle driven by China. If you look at history, that means the Canadian economy is about to get hit unexpectedly hard. The last commodities cycle was 1970-1981.

Son of Ponzi
Guest
Son of Ponzi

@new perspective.
As a former amateur landlord myself, let me tell you the thrill wears off prettly quickly.
After a couple of years, you’re tired of the hassle.
Renters have so many options these days.
And if you would hire a professional company, that would be extra cost.
Also, I can attest to the comment about “ovens” in summer.
Impossible to sleep.

Skook
Member
Skook

@New Perspectives #9

Do you have that much faith in today’s construction methods that you are willing to invest in a new build? I certainly don’t.

Today’s new buildings will never stand the test of time. So in my opinion,that is another gamble you would be taking.

One Migrant Economy
Guest
One Migrant Economy

Expedia Travel Agents (EXPE) aren’t getting the HELOC bizneth anymore
pukes 26% today on 2nd Qtr profit down by a third.

Thatz ok, bitchez, keep in mind yo still gotta pay off those House Extraction loans. But, thanks for the wonderful travel memories.,,, Priceless!

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