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Old 12-11-2014, 11:27 AM   #2951
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Even when they are banging the drums about tightening rules, its still ridiculously easy to get a mortgage that's just way way WAY too big.
This really sums up the big picture here. People are left with no money after their mortgage and living expenses, then they use credit for basically every form of entertainment and material possession they want and can't afford. Giving people "cheap" credit is whats eliminating the middle class. Everything the average person is buying is costing them 1.1x what it actually costs. Its not easy to get ahead when you do that.
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Old 12-11-2014, 11:37 AM   #2952
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rent vs own...

It depends on the price of the house.

Without going into deep calculations, I surmise lower priced homes (condos, townhouses, etc.) have a higher rental cost when compared to higher priced homes.

Basically, the more expensive the house is, the more it makes sense to rent, but the tipping point ($1mill+? 1.5?) is debatable.
Bingo. Renting a detached home is much cheaper than owning one.

However, if you're tired with living in someone's basement and want some stability because you're raising a family, the difference between renting a townhouse or 3-bedroom condo and owning a similar property is not that great, even when you takie into account property taxes, strata fees, etc.
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Old 12-11-2014, 11:51 AM   #2953
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Bingo. Renting a detached home is much cheaper than owning one.

However, if you're tired with living in someone's basement and want some stability because you're raising a family, the difference between renting a townhouse or 3-bedroom condo and owning a similar property is not that great, even when you takie into account property taxes, strata fees, etc.
Agreed to an extent, but even mortgaging a lower priced home with a 25% down payment is a poor excuse and poor way to "save money" because the first 5 years your are in your mortgage, around 50% of the amount you paid in are on interest.

If one doesn't have enough down and one's reasoning for buying is "you save money when you mortgage, and not paying some one else's mortgage", then please, don't buy. That person will come out on top by renting.

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This really sums up the big picture here. People are left with no money after their mortgage and living expenses, then they use credit for basically every form of entertainment and material possession they want and can't afford. Giving people "cheap" credit is whats eliminating the middle class. Everything the average person is buying is costing them 1.1x what it actually costs. Its not easy to get ahead when you do that.
THIS! It kind of hit her in the face when the costs came out to be so ridiculous. She wanted to buy her own place before us moving out and renting, and she didn't realize she would be left with 0 discretionary spending for at least 5 years. I wouldn't say its eliminating the middle class, but rather weeding out the financially retarded, and burdening the rest of the society.
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Old 12-11-2014, 12:27 PM   #2954
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Its unfortunate, because its not just the financially retarded anymore as our banks, our society, and our media tells us we MUST own a home or we aren't successful. Its hard to ignore that pressure even for those who are financially responsible. I bought my first condo @23 years old because "its so stupid to pay someone else mortgage." Now at 29, I have sold it, I have no debt, and a plenty nice cushion in my bank account. I rent a much larger place in a much better location than I could afford to purchase, and no stress when a fridge breaks, a foundation has a crack or whatever else. I'm still interested in owning a home, but understand now that is isn't an appropriate measure of success that people often think it is. Its worth it when its worth it, and for someone like me, it maybe tomorrow, and it may be 20 years from now. People need to look at their financial situations more objectively and stop comparing it to the 3000 square foot house their grade 12 classmate 10-15 years ago just flashed on Facebook.
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Old 12-11-2014, 01:11 PM   #2955
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This really sums up the big picture here. People are left with no money after their mortgage and living expenses, then they use credit for basically every form of entertainment and material possession they want and can't afford. Giving people "cheap" credit is whats eliminating the middle class. Everything the average person is buying is costing them 1.1x what it actually costs. Its not easy to get ahead when you do that.
Its also people living above their means. A 300k mortgage today costs around 1200/mth over 30 years, and that was just based on a single modest income. Our second income is just 'bonus', for savings, vacation, rainy day fund, lumping into mortgage principle, etc etc. There is no way we would be renting a house anywhere close to what we have bought for 1200/mth. If we look at rents double that, then we are just getting into the ballpark.

We obviously do not expect rates to stay this low for 30 years. But to say credit is the only form of money left after mortgage and living expenses is a bit extreme, and people also need to take ownership for their spending habits regardless of whether you rent or own your home (or lease or own that fancy BMW or Landrover)
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Old 12-11-2014, 01:23 PM   #2956
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Its also people living above their means. A 300k mortgage today costs around 1200/mth over 30 years, and that was just based on a single modest income. Our second income is just 'bonus', for savings, vacation, rainy day fund, lumping into mortgage principle, etc etc. There is no way we would be renting a house anywhere close to what we have bought for 1200/mth. If we look at rents double that, then we are just getting into the ballpark.

We obviously do not expect rates to stay this low for 30 years. But to say credit is the only form of money left after mortgage and living expenses is a bit extreme, and people also need to take ownership for their spending habits regardless of whether you rent or own your home (or lease or own that fancy BMW or Landrover)
If you don't mind me asking which area did you buy and how much downpayment you put in?

I do cautiously agree that if you want to live in a higher quality unit and or high rise, then it makes more sense to to buy and pay $200-300 extra a month to do it versus renting. At the same time you tie yourself down to as well.
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Old 12-11-2014, 01:29 PM   #2957
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300k with say a 50k down payment (which is a reasonable down payment to expect gets you a 350k apartment. So lets just say for the sake of my breakdowns its a 650 square foot place in fairview.)
1200 for mortgage
280 condo fees
130 in taxes
$1610 total
$1600 would get you more or less the same place for rent

I'm in NO WAY saying that everyone who buys a place has no money other than credit for left over expenses after a mortgage. I have no idea how you could have taken that from what I said. I'm saying when people max out what mortgages they can get approved for in an income bracket that allows them into entry level condo ownership in this city, when you add up:
food
mortgage
condo fees
taxes
car
insurance
gas
We are now getting dangerously close to taking up ALL of this hypothetical new homeowners budget. Being that almost anyone thinks they are entitled to that $3000 vacation per year and eating at nice restaurants a few times every week. We are talking all of those things going on credit. I'm not talking about mathematical equations here. I'm talking about observations on how people in this city really work.

I'm interested in hearing how much needed to be put down for you to have a 1200 dollar mortgage to have a place that would cost 2400 a month to rent. 2400 a month in this city can get you quite a nice place. Also, a mortgage is not your only cost of that home ownership. Taxes, and condo fees should be included in that cost of living that would add to your mortgage payment when comparing to rent.
I'm not saying you are better off either way, as I don't know your situation, but I'm replacing you in your housing situation with the average new homeowner in this city.
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Old 12-11-2014, 01:39 PM   #2958
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300k with say a 50k down payment (which is a reasonable down payment to expect gets you a 350k apartment. So lets just say for the sake of my breakdowns its a 650 square foot place in fairview.)
1200 for mortgage
280 condo fees
130 in taxes
$1610 total
$1600 would get you more or less the same place for rent

I'm in NO WAY saying that everyone who buys a place has no money other than credit for left over expenses after a mortgage. I have no idea how you could have taken that from what I said. I'm saying when people max out what mortgages they can get approved for in an income bracket that allows them into entry level condo ownership in this city, when you add up:
food
mortgage
condo fees
taxes
car
insurance
gas
We are now getting dangerously close to taking up ALL of this hypothetical new homeowners budget. Being that almost anyone thinks they are entitled to that $3000 vacation per year and eating at nice restaurants a few times every week. We are talking all of those things going on credit. I'm not talking about mathematical equations here. I'm talking about observations on how people in this city really work.

I'm interested in hearing how much needed to be put down for you to have a 1200 dollar mortgage to have a place that would cost 2400 a month to rent. 2400 a month in this city can get you quite a nice place. Also, a mortgage is not your only cost of that home ownership. Taxes, and condo fees should be included in that cost of living that would add to your mortgage payment when comparing to rent.
I'm not saying you are better off either way, as I don't know your situation, but I'm replacing you in your housing situation with the average new homeowner in this city.
I'm interested in UFO's numbers, if he feels comfortable sharing, is because what he says seems like close to what we are looking at right now. Granted he has said 30 years, so he might have gotten the mortgage before they tightened it down to 25 years. They might have also bought a $500k unit which puts them at a better position loan-to-value wise and a better interest rate. $1200 a month definitely won't be renting you a 500k apartment that's for sure and he has a decent case for buying. But that also furthers my point of not buying until you have 40% down.

I am looking to borrow $225k on a $300k condo. Its just under $1100 a month for mortgage, not including strata fees ($224/m), property taxes ($170/m), mortgage insurance, home owners insurance, and utilities. Let's say we discount the utilities part, I am still looking at $1500 a month all said and done for a 688sqft 1 bedroom 1 den that I can rent for $1200.

Granted, this is based on a comfortable level of spending. We aren't sacrificing any luxuries in our lifestyle, if we cut back a bit I am sure we can contribute a fair amount towards the principle.
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Old 12-11-2014, 01:46 PM   #2959
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+1 for a guy here who is a in a similar financial position, although being that I really want to stay in the area I am in the range of places I'd be looking at are about 50k higher. I honestly don't think I'm comfortable with the money I have to put down on the price I'm looking at when doing all the math, but my opinions of that change daily.
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Old 12-11-2014, 03:23 PM   #2960
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After being an avid follower of this thread and GreaterFool, I actually just closed on our first home today and get the keys tomorrow, so this conversation is very pertinent.

Having broken down the numbers, with all housing and living expenses we are only just over half of our take-home incomes.

We were renting a 7-year old 2br 880sqft high rise in Richmond and bought an 8-year old 3br 1200 sqft low rise in Richmond. Home ownership costs (mortgage, strata, taxes) are an additional $350/mo vs renting.
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Old 12-11-2014, 04:31 PM   #2961
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I'm in NO WAY saying that everyone who buys a place has no money other than credit for left over expenses after a mortgage.
I think UFO is quoting Evofire's post about how he said his GF would have $0 for spending for the next 5 years if she went and bought her own place.
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Old 12-11-2014, 09:54 PM   #2962
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I think UFO is quoting Evofire's post about how he said his GF would have $0 for spending for the next 5 years if she went and bought her own place.
^ Partly this, because the mortgage he would have gotten would be based solely on his GF's income, which is unrealistic to expect that his income would be $0 as a contractor. So to say she would have 0 disposable income is a bit of an unfair scare tactic IMO, though it is preparing for the worst case scenario, would mean that he's just kickin' around on the sofa playing xbox 24/7 living the highlife while she goes to work to pay the bills. But mostly this:

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This really sums up the big picture here. People are left with no money after their mortgage and living expenses, then they use credit for basically every form of entertainment and material possession they want and can't afford.
No, you didn't say ALL people are like this, but the implication is there for the majority/most. Your view of the big picture is different from my view, maybe I'm just looking at it through rosy glasses though.

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Being that almost anyone thinks they are entitled to that $3000 vacation per year and eating at nice restaurants a few times every week. We are talking all of those things going on credit. I'm not talking about mathematical equations here. I'm talking about observations on how people in this city really work.
Those aren't my observations, not with the peer groups we associate with at this stage in our lives. Go talk to multicartual and he'll tell you that you need to make a 200k annual salary in order to live a comfortable life, anything less and you're living like a hobo. How many people absolutely max out their available mortgage? I don't know, I know we didn't, I know our friends didn't, though I'm sure there are those that do. All the same, we don't feel entitled to that annual $3k vacation, nor do we eat out at a casual restaurant even a couple times a month. So it's all relative. I know you aren't saying EVERYONE maxes out their mortgage and lives off credit, but at the say time, you are saying that MANY/A LOT of people do this. Do they? I don't know. We don't, and based on our observations we don't feel that most people do this either. But I'm sure there are those that do.

We value a nice neighbourhood to settle and raise our family in over the next 10-20 years, owning our own home and land and having say in what and when we want to have things done to our home and land, and knowing any possible future moves will be on our own terms, more than eating out at a nice restaurant several times a week, taking multiple fancy vacations annually, driving a shiny new car every 3 years, etc etc.
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Old 12-11-2014, 10:18 PM   #2963
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I'm interested in UFO's numbers, if he feels comfortable sharing, is because what he says seems like close to what we are looking at right now. Granted he has said 30 years, so he might have gotten the mortgage before they tightened it down to 25 years. They might have also bought a $500k unit which puts them at a better position loan-to-value wise and a better interest rate. $1200 a month definitely won't be renting you a 500k apartment that's for sure and he has a decent case for buying. But that also furthers my point of not buying until you have 40% down.
We've owned our current condo for the past 6 years, sank about $45k over that time in special assessments only, on top of the $250/mth strata fees which have since grown to just over $300/mth for the past 2 years. We considered selling about 3 years ago just prior to finding out about the building envelope remediation. Fast forward to now and our unit has probably lost about $20k in market value, despite the $40k we put into it for full building envelope remediation with 10 yr warranty and peace of mind, so I'm considering a net loss of $60k. So yes, I feel all of your guys' skepticism buying into a condo, new or old.

During our time of ownership we've also been frugal with our lifestyle, it's the way we roll, but by no means do we live uncomfortably. We've been able to take numerous nice (by our standards anyways) vacations, have newer reliable vehicles, have some fancy hobbies/toys, contributed to our retirement. We have been aggressively paying down our principle to build our equity.

Having said all of that, our downpayment our new house is just a bit over 50% and as previously mentioned we're borrowing $300k for our detached house in Coquitlam. A house similar to this would be $2500-$3000/mth to rent. We looked into renting for 6-12 months to see what the market would do while we were looking for our house, and we were willing to live in a suite/basement for a while since its only shorterm. But we saw what was available in the $1000-1500 range which is what would make this arrangement even worthwhile for us, and the selection sucked. So as I previously mentioned, our minimum monthly commitments are about $1200/mth for the mortgage. We plan on kicking a few bills extra each month above that directly into the principle. Basically we're planning on 1 income to take care of all house-related expenses and continue to tackle the mortgage aggressively, then we'll be living/saving off the 2nd income. And we fully expect, though are not counting on, this property to increase in value over our time of ownership. The area has gone up probably 10-15% over the past 12 months--we could have saved an easy $50-70k had we been in a position to buy this a year ago. If we were looking at a condo, not sure we would take the same approach. But at the same time I wouldn't be thinking to live in a condo for more than 5 years. This house, we plan to be here for 15+ years so the considerations are much different and we have the benefit of time on our side.
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Old 12-11-2014, 10:26 PM   #2964
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+1 for a guy here who is a in a similar financial position, although being that I really want to stay in the area I am in the range of places I'd be looking at are about 50k higher. I honestly don't think I'm comfortable with the money I have to put down on the price I'm looking at when doing all the math, but my opinions of that change daily.
If your priority is the area, and you want the space you're currently in or something similar, think about it as an extra $50k over 30 or even 25 years. It's probably not the best mathematical way to think about it, but that's where the intangibles of emotion become involved. They say money doesn't buy happiness. But this is at least your attempt to try and get some of that. You cannot, and its impossible to, make the decision to buy based solely on the math. That's just my take. There are other factors and values that you just can't quantify with a dollar figure. And you will never be able to take the emotional factor out of this decision, and I disagree that one should even try to do that.

It's difficult to ever fully be comfortable dealing with a big decision like this, unless you're just rolling it in or working as an international playboy.

But as your opinions seem to be flip flopping on this regularly, I'm sure all of the above have cross your mind at one point or another.
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Old 12-12-2014, 12:11 AM   #2965
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You cannot, and its impossible to, make the decision to buy based solely on the math. That's just my take. There are other factors and values that you just can't quantify with a dollar figure. And you will never be able to take the emotional factor out of this decision, and I disagree that one should even try to do that.
I agree with this 100%. I mean, your place to live is very important to your quality of life. Your financial comfort is also very important to your quality of life. Its up to each individual to figure out their own formula for what works for them.
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Old 12-12-2014, 12:19 AM   #2966
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No, you didn't say ALL people are like this, but the implication is there for the majority/most. Your view of the big picture is different from my view, maybe I'm just looking at it through rosy glasses though.
I think it really depends on the people we associate with. I know I may be a little more pessimistic than I should be, but you know the old saying: perception is reality. I live in kits and work in yaletown, so perhaps that explains my perception. I think statistics show I'm not being overly out of line when we look at things like the average credit card debt/individual in Canada or statistics that show the % of income that people in the GVRD spend on housing. Its pretty well known that the #s are ludicrous.
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Old 12-12-2014, 12:52 AM   #2967
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Its unfortunate, because its not just the financially retarded anymore as our banks, our society, and our media tells us we MUST own a home or we aren't successful..
it's so funny how countries, with what I would regard as similar people (western, high immigration, initially christian base, etc.), can differ so much in their 'view' of home ownership.

in my current land of residence (mainland Europe), all the locals own, it's not just that society tells you, it's ingrained in them from day one (granted, they have 100+% mortgages (yup, no down payments), tax destructibility, etc. and a housing bubble which saw a 20% haircut a number of years ago, and will have another in the next 5 years, but i digress).

Yet, this country (specifically all the major cities) has a HUGE white collar expat community, and they all rent. Admittedly, that comes with being an expat, you move around, so renting fits the bill.

And in most other European countries (except Scandinavian ones and the UK), ownership rates are low, people rent, they will eventually take over the 'family home' (though this tradition is becoming less prevalent as we become more mobile).

Society, the norms, the expectations of people we don't even know or like, have such a profound effect whereby a certain proportion of people make terrible financial decisions just to say to society that 'look at me, i'm a home owner, i've made it'.

fight club comes to mind:
"Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need."

In our case, it's "Society has us buying houses we can only afford due to temporarily low rates, trapping us in jobs we hate, in cities we can't move away from to follow our dreams, all so we can appease some douche bag we've never met that views success by the house you own, even though you don't technically own it, and probably never will"
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^ If you have no plans to start a family, then yes, what you say makes sense.

When you have a family, lots of things change, like your priorities. I don't know what type of upbringing you had, but I know that I valued being in the same home, with the same group of friends during my childhood.
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I agree with this 100%. I mean, your place to live is very important to your quality of life. Your financial comfort is also very important to your quality of life. Its up to each individual to figure out their own formula for what works for them.
Pretty much this, there isn't a formula that works for everyone we all have different needs and are at different points in our lives. Everybody needs to figure out what works best for them, crunch the numbers and then decide.

Saying everybody should rent or everybody should buy just doesn't work, every situation is totally different.
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^ If you have no plans to start a family, then yes, what you say makes sense.

When you have a family, lots of things change, like your priorities. I don't know what type of upbringing you had, but I know that I valued being in the same home, with the same group of friends during my childhood.
Ur stretching to make ur point.
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Old 12-12-2014, 11:54 AM   #2971
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Ur stretching to make ur point.
My point is that the life that you depict (being a globetrotting supercitizen) is actually not the norm. Most people actually value stability, particularly as they get older and if they decide to start a family. This explains why many make an emotional decision and buy real estate.
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Old 12-12-2014, 02:07 PM   #2972
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We've owned our current condo for the past 6 years, sank about $45k over that time in special assessments only, on top of the $250/mth strata fees which have since grown to just over $300/mth for the past 2 years. We considered selling about 3 years ago just prior to finding out about the building envelope remediation. Fast forward to now and our unit has probably lost about $20k in market value, despite the $40k we put into it for full building envelope remediation with 10 yr warranty and peace of mind, so I'm considering a net loss of $60k. So yes, I feel all of your guys' skepticism buying into a condo, new or old.

During our time of ownership we've also been frugal with our lifestyle, it's the way we roll, but by no means do we live uncomfortably. We've been able to take numerous nice (by our standards anyways) vacations, have newer reliable vehicles, have some fancy hobbies/toys, contributed to our retirement. We have been aggressively paying down our principle to build our equity.

Having said all of that, our downpayment our new house is just a bit over 50% and as previously mentioned we're borrowing $300k for our detached house in Coquitlam. A house similar to this would be $2500-$3000/mth to rent. We looked into renting for 6-12 months to see what the market would do while we were looking for our house, and we were willing to live in a suite/basement for a while since its only shorterm. But we saw what was available in the $1000-1500 range which is what would make this arrangement even worthwhile for us, and the selection sucked. So as I previously mentioned, our minimum monthly commitments are about $1200/mth for the mortgage. We plan on kicking a few bills extra each month above that directly into the principle. Basically we're planning on 1 income to take care of all house-related expenses and continue to tackle the mortgage aggressively, then we'll be living/saving off the 2nd income. And we fully expect, though are not counting on, this property to increase in value over our time of ownership. The area has gone up probably 10-15% over the past 12 months--we could have saved an easy $50-70k had we been in a position to buy this a year ago. If we were looking at a condo, not sure we would take the same approach. But at the same time I wouldn't be thinking to live in a condo for more than 5 years. This house, we plan to be here for 15+ years so the considerations are much different and we have the benefit of time on our side.
Thank you for sharing your numbers. How old is your condo and where? Building envelope and roof replacements are two the biggest things that worry me with condos right now, to the point where I am fairly skeptical about buying.

So you sold the condo and bought a detached home? I feel like that is probably the only safe choice in terms of buying property. One just can't expect property values to rise like it has over the last decade, especially for condos.

We are looking at a low-rise around the Brentwood area and only because the building is relatively newer (2008) and I don't see the values dropping heavily even if there is a minor correction (proximity to skytrain and Brentwood mall rebuild).

One more binding condition is that we would have to stay at that unit for at least 5 years for it to make sense. Ultimately it doesn't make sense math wise, and my gf is doing this based on what she wants emotionally. I have no such emotional attachment and its just been the whole way for me.
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Old 12-12-2014, 02:40 PM   #2973
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One more binding condition is that we would have to stay at that unit for at least 5 years for it to make sense. Ultimately it doesn't make sense math wise, and my gf is doing this based on what she wants emotionally. I have no such emotional attachment and its just been the whole way for me.
Time for a new girlfriend, I guess.

On a serious note, at least this discussion should give you an indication of your long-term compatibility.
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Old 12-12-2014, 04:10 PM   #2974
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Time for a new girlfriend, I guess.

On a serious note, at least this discussion should give you an indication of your long-term compatibility.

lol!

But on a serious note. I do want to own, but just not right now. I've gotten her mostly convinced that owning is not a good idea and chances are we are going to keep renting. She's emotional, but not irrational, and can be convinced with hard numbers.
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Old 12-12-2014, 04:17 PM   #2975
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lol!

But on a serious note. I do want to own, but just not right now. I've gotten her mostly convinced that owning is not a good idea and chances are we are going to keep renting. She's emotional, but not irrational, and can be convinced with hard numbers.
You can afford to wait if you're wanting to buy in the Brentwood area as there is lots of supply which will keep prices relatively stable. If you have 75K, then try to save another 25-35K and spring for a 2-bedroom unit. Lots of them around in the 400K range. Even with 2 people, 1 bedroom isn't a lot of space.
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