Stretching The Loon – tips for first time buyers.

So you’ve got your eye on a little condo – you’re thinking its time to get your own four walls, or at least one wall to yourself and three shared walls. But then there’s the prices and the way they’ve been running up up up for the last three years. Wouldn’t you like to get a piece of that action? So how DO you get in to this market as a first-time buyer?

Well, you’re going to need money.

A lot of money.

Luckily for you, there’s no shortage of money out there. Where’s all this money I speak of? The Banks! And they’ll gladly give you a whole bunch of it to you as long as you promise to pay it back over the next 25 years.. or 30 years.. well heck, lets go 40 years, imagine what a condo in vancouver central will be worth in forty years! Billions!!

Also, as you can understand they have to cover the risk of you absconding into the night with your condo, so they’ll charge you a small interest fee to cover that risk and make it worth their while.

So lets say you borrow $300,000 to buy a nice little condo, what do you have to pay back based on a 5% interest rate?.. Over 25 years you’d pay a little over $1750.00 a month to rent that money from the bank adding up to a smidgeon over $250,000 in interest to be payed back on top of the original $300k.

But what if $1750 is a bit much for you to pay monthly? Maybe you’re paying $900 monthly to rent that same condo now and you’re not convinced its worth the extra cost. Never Fear! The banks will work with you. If you opt for a 40 year mortgage you will save tremendously, bringing your monthly cost down to under $1450 with a total interest payment of just under $400,000. This means that as long as you dont have to pay any extra ‘hidden’ fees like property taxes, strata fees, maintenance, heating & electricity, etc, and as long as interest rates never go above %5 that $300,000 condo will cost you a total of only $700,000 over the next 40 years. Thats not much to pay for a condo that will be worth BILLIONS now is it?

the ‘affordability’ myth in vancouver.

I hear a lot of people in vancouver complaining about the ‘affordability’ factor of the real estate here. Mostly it’s people whining about the usual suspects: “boo hoo, I want a place that is liveable” or “I want a place that is not comprised mainly of mold” well you know what? You’re coming at this thing all wrong-headed, and I’ll tell you why.

Most of you are looking at what you can afford to rent vs. what you can afford to buy and thinking “..wait a minute.. I can live in a nice house in a nice area, or for the same monthly cost I can buy a tiny box in an ‘undesireable’ part of town. Uh.. I’ll take the nice house.”

..But what about THE FUTURE?!?

It’s not what you spend today, but what you bid to spend to live here in the future. Basically you’re betting against others to determine the highest you’re willing to spend on monthly housing to have a part of this city, and WHAT A CITY IT IS! I mean what other city has any connection at all to a two week sporting event of OLYMPIC CALIBRE? Right?!? Therefore, we rightly believe that the DEMAND to live in this city will outstrip the current SUPPLY. After all, they’re not making any more LAND are they? No. They’re making more CONDOS, because THATS where the DEMAND is.

So we’re betting on how much we’re going to want to live here in the FUTURE and we’re thinking, hey.. It pretty much gets more expensive to live every year, because I need a flatscreen TV and flatscreen TV’s are more expensive than that hand-me-down oak cabinet floor-standing model I got from uncle Vic.. So if it gets more expensive to live, and I bid somewhere in the middle of what I’ll pay for the cost of living over the next 30 years it’ll be a great investment because housing prices NEVER GO DOWN and interest rates are great and thanks to inflation I’ll pretty much make more and more money each year to cover this purchase and every thing will be GREAT!!

But then you start looking at charts.. Those fucking charts that narrow down on one disturbing little factoid to the exclusion of all other things.. Little things like the median income in Vancouver has actually DROPPED between 2000 and 2004 and we simply don’t have the jobs to support a market of million-dollar condo’s right now and you think “shit. I’m going to lose my shirt. Someone’s going to go and pull the whole tablecloth out from underneath this house of cards and the whole free lunch is gonna dissappear in a cloud of pepper and tears.”

But here’s what I say to that:

Charts are the past man! Why focus on the past when you can look to THE FUTURE! You can’t always judge something by it historical patterns.

I mean really, just look at tech stock prices during the boom – They went up and up and then suddenly *zap* they dissappeared in a moment of mass-panic as everyone realized they were horribly over-valued. Just goes to show – you can’t trust the charts man, and if you don’t buy that tiny box you can barely afford NOW are you ever going to have a place of your own to hang your flatscreen TV?

Whats wrong with bubbles anyhow?

What with Vancouver’s real estate market being so hot lately, there’s been a lot of talk about real estate ‘bubbles’ online and in the news.. even some of the banks have come out with statements warning of ‘bubble like activity’ in the vancouver market. Everybody seems to use the term bubble in a negative sense, but really, what’s wrong with bubbles?

Who doesn’t love to see a delicate bubble gliding through the air on a summer afternoon as you sip lemonade on your 15 sq ft. deck? Bubbles are fun! Bubbles are beautiful! Embrace the bubbles! love the bubbles! ..but not too hard or they may pop. Which I guess is why people speak of them negatively.

Yes, its true, some bubbles pop – but what about those that don’t? What about the bubbles that float through the air going up and up and up until you cant afford them anymore? What about those sort of bubbles?

Lets stop picking on bubbles, after all picking on bubbles is exactly the sort of activity bound to make them pop. Let’s enjoy the beautiful aspects of bubbles and tish-tosh to the nay-sayers.

Up with bubbles!

Negativity not helpful

Check out this article on Forbes. Negative, negative, negative. It just goes to show that the mainstream media doesn’t get it and are always looking for the negative story. I suspect that they are beholden to the interests of wealthy renters who have a vested interest in seeing property values drop.

Ok, so there seems to be a bit of a dip in US real estate values – that doesnt mean that the party’s over! No sir! If we can all remain positive and focused we’ll continue to see a constant and solid rise in Vancouver real estate values because VANCOUVER IS DIFFERENT. I mean really, who wants to live in California anyways? Vancouver has sunshine, beaches & beautiful outlying areas to visit: Surrey, Burnaby and Port Coquitlam just to name a few. We also have low taxes and lots of good paying jobs in construction building houses.

So lets keep those people employed! Lets focus on the positive and keep pushing property values up. Negativity is of no help to anyone.

think like a MILLIONAIRE!

Would you like an investment that DOUBLES YOUR MONEY every year to infinity? Would you like to become RICHER and RICHER without any effort while everyone around you scrapes and saves every last penny? Would you like to enjoy 4 meals a day at fancy restaraunts where the waitstaff is envious and frightened of your economic might?

Of course you would! Who wouldn’t?

So go where the smart money goes: VANCOUVER REAL ESTATE! Its the investment that can never go wrong. Just look at this graph:

graph taken from the vancouver housing market blog)

Over the last two years real-estate prices in Vancouver have risen dramatically.. What happens when we extrapolate these increases into the future? LIMITLESS RICHES! You can still purchase a 600 sq ft condo in Vancouver with a pleasant alley view and minor water ingress issues for under $400k. In just four years that same condo will be worth over THREE MILLION DOLLARS!

And the best thing about a real-estate investment is that it can make you money while it gains value! With a healthy downpayment you’ll pay just under $2000 per month for that condo, and you can rent it out for up to $800 per month. That might seem like a money-losing proposition at first glance, but you’ve got to THINK LIKE A MILLIONAIRE. How do you make money when you’re subsidizing your renters by $1200 a month? VOLUME! Rent that condo out four times over and you’re pulling in an easy TWO THOUSAND DOLLARS A MONTH!!

Get in now before it’s too late!