To all the Vancouver home owners
 

:p

http://www.cbc.ca/money/story/2009/0...se-prices.html

I've been reading a lot of articles on house prices in Vancouver, and you can count on a few snobby house owners to chime in with "renting is for losers". These comments were even louder recently as house sales surged in Vancouver this spring, fueled by 35yr mortgages and low rates that suddenly opened the market to many new buyers.

Hopefully this is the start of a trend of slowly lowering prices in Vancouver, if builders have to lower prices and throw incentives to sell houses with 35yr mortgages and historic low rates... what's next?

good luck on that thinking ;) call me when vancouver hosue prices go back to around 500-600k.

Houses maybe, yet condos have a long way to fall.

I've said it in other threads: 35yr mortgages and low rates cannot continue to bring in new buyers forever, and low rates will eventually end (and hopefully 35 yr mortgages will disappear like 40yr mortgages did!).

$500K @ 6% over 25 yrs == $3220/mn
$500K @ 4% over 35 yrs == $2210/mn (31% cheaper)
$500K @ 5% over 35 yrs == $2520/mn (22% cheaper)
$500K @ 6% over 35 yrs == $2850/mn (11% cheaper)

So a whole bunch of new buyers rushed out and bought condos this year cause, on paper, they were 31%/mn cheaper and prices still dropped 20% in some areas.

Wait till rates go up (bond prices and fixed rates have already crept up) and its only 11-22% cheaper/mn at 5-6% rates.

I can afford $2200/mn, yet there's a risk that in 5 yrs I'll have gotten a $600/mn raise ($7200/yr == $10K raise before tax). Its unfortunate a lot of new buyers don't look at it this way, and unfortunately Canada might see a version of the sub-prime mess of the US when many people have the renew at higher rates and now they're paying a higher ratio of their income and carrying a higher debt ratio (or worse, not qualify to renew cause the ratios are too high).