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Vancouver Off-Topic / Current Events The off-topic forum for Vancouver, funnies, non-auto centered discussions, WORK SAFE. While the rules are more relaxed here, there are still rules. Please refer to sticky thread in this forum.

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Old 12-19-2013, 10:40 PM   #1751
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The fields in yellow are all editable, which means I can input the different scenarios on a case-by-case basis in the yellow fields for comparison and the non-highlighted fields are automatically calculated.

I can easily punch in the numbers and run the scenario as you posted below (higher ROR on investment, rent increases, etc.) tomorrow, just about to log off for the night.

Quick answers below in red...

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Originally Posted by Ferra View Post
didn't really look at the numbers in detail...but I think even a 1% increase in house value will skew the numbers to the other side...(tho many will argue housing price won't be going up)

Yes it will definitely skew, but even with this scenario even at 0% growth you might just barely better off buying vs renting if you manage to sell in 5 years.

- I would probably use a higher investment return than a 2.3% GIC....
Of course, these can be altered as well. I chose GIC just for more conservative figures.

- strata fees is probably going to cost you more than $300/month?
Strata fees were taken from MLS listing posted above

- doubt your rent will stay the same for 5-10years...
Valid point, and again, can be altered on my spreadsheet. In my experience, my rent has been stable for the past 3 years, the owners tried to sell to no avail and plenty of similar units for me to move into nearby if they do ask to raise the rents.

in the end..i think these make-up scenarios are kinda pointless...
you can always make one better than the other by changing the parameters to your liking...(e.g. your investment return %, expected changes in home value, the unit price-to-rent ratio...etc)

I would do these analysis on a case by case basis using actual numbers you are faced with....but you really can't prove renting or owning is better than the other in general using some make-up scenario..
This is the reason I took the time to create this spreadsheet for myself, so I could easily get a rough idea on a case-by-case basis of what the turn out will be in the long run for various 'made up' scenarios.
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Old 12-19-2013, 10:49 PM   #1752
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I personally wouldn't invest in GIC's but it's what most people know. I like my PGP, PHK, NCZ, NCV. That 125k downpayment = roughly $1200 extra monthly income... My principal can go up, down, left, right in value and I'd still get the same dividend. Average about 10% yield over the years I've owned them. Keep reinvesting every month and you get more the following month or use it for rent and live for free!
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Old 12-19-2013, 11:27 PM   #1753
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1. strata fees are more than you think. $300 (for condo) is cheap if you can believe it or not. Townhouses, you are looking to start at about $200. As I said a few posts above, for the average condo, you are looking at $400+. And don't forget, like rental increases, strata fees increase yearly as well. I have owned for 5 years...and every damn year I get that letter.

2. In the last 5 years, my property has gone down in value....great for property tax, not so much if I wanted to re-sell. So, a yearly increase to property value may be a bit generous in some situation.

3. Rental increases. They do happen. They are based on inflation plus 2%. Here is a small history of increases: http://www.rto.gov.bc.ca/documents/GEN-01.pdf. Based on those numbers, if you had rented an apt in 2004 for $2000 and you received a maximum annual, in 2014 your rent would be $2837.

Is that REALLY possible? Probably not....I rented a condo in 2005 for $1000...as a coincidence, I saw an ad on CL for the same condo the other day...they are renting it for $1150.

As for those numbers being "real". They were based on 2 apartments in the same building...one for rent, one for sale. Try it...look on CL for an apt to rent then go find the same one on mls.
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Old 12-20-2013, 08:11 AM   #1754
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Quote:
Originally Posted by Ferra View Post
didn't really look at the numbers in detail...but I think even a 1% increase in house value will skew the numbers to the other side...(tho many will argue housing price won't be going up)
- I would probably use a higher investment return than a 2.3% GIC....
- strata fees is probably going to cost you more than $300/month?
- doubt your rent will stay the same for 5-10years...

in the end..i think these make-up scenarios are kinda pointless...
you can always make one better than the other by changing the parameters to your liking...(e.g. your investment return %, expected changes in home value, the unit price-to-rent ratio...etc)

I would do these analysis on a case by case basis using actual numbers you are faced with....but you really can't prove renting or owning is better than the other in general using some make-up scenario...
If anybody's interested, here's a 5-year breakdown with the following as suggested:
  • higher investment returns over 5 years
  • 3% rent increase per year
  • higher strata fees
  • monthly contribution of the difference in rent to mortgage payments with compounding interest at 3%

At 20% down and 3% rates, your home value would have to increase approx 2.5% to break even with renting that same period.

For First-Time Home Buyers with less than 20%, mortgage rates will be higher requiring either a fixed rate or variable rate with the benchmark rate minimum (5.34% last I saw), plus CMHC insurance. With all that, the difference between buying and renting is much greater.

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Old 12-20-2013, 08:30 AM   #1755
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Quote:
Originally Posted by sonick View Post
If anybody's interested, here's a 5-year breakdown with the following as suggested:
  • higher investment returns over 5 years
  • 3% rent increase per year
  • higher strata fees
  • monthly contribution of the difference in rent to mortgage payments with compounding interest at 3%

At 20% down and 3% rates, your home value would have to increase approx 2.5% to break even with renting that same period.

For First-Time Home Buyers with less than 20%, mortgage rates will be higher requiring either a fixed rate or variable rate with the benchmark rate minimum (5.34% last I saw), plus CMHC insurance. With all that, the difference between buying and renting is much greater.


So what can we conclude about this?
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Old 12-20-2013, 08:32 AM   #1756
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So what can we conclude about this?
Only poor people rent.

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Old 12-20-2013, 11:24 AM   #1757
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but sonick you're forgetting dat dere intrinsic value of owning....such pride. much equity. wow.

easily worth $60k over five years...amirite
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Old 12-30-2013, 05:00 PM   #1758
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I thought I'd share a pretty interesting article on the media and how it affects property prices. Really good read imo.



you can read it here:

Spoiler!


Can the media predict a housing bubble? - Business Blog, Econowatch - Macleans.ca

coles notes: nobel prize winner has argued that media is an important player when it comes to spreading "stories" that explain or justify certain property or asset price increases. "In other words, the kind of narratives we tell each other and ourselves about why the latest craze is somehow fundamentally different from — and better than — the previous craze."

I find it really relevant to Vancouver because developers are one of the biggest purchasers of advertisements and providers of news source for newspapers and media.

It also relates to what I recently read in a RE blog about how the media is just regurgitating stories that they get from their sources, and it's funny because they don't even fact check (MAC marketing) or change up the stories to make it unique. It literally is copied word for word.

check out this Conan O'Brien segment to see how the media reacts.


I do agree that the media coverage is a huge factor to the housing craze or "house hornyness" we have here in Van.
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Old 12-30-2013, 07:49 PM   #1759
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i doubt media coverage of real estate has any meaningful impact on real estate whatsoever. canada's RE price went up because of low interest rate and how much money BoC pumped into mortgage back securities.

i think you give the media way too much credit if you actually believe just because they got some talking heads talking up or down on RE and it might actually move sales and price the coming month you got another thing coming. Interest rate and general state of the economy dictate RE trends. anything else is just noise.
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Old 12-30-2013, 09:23 PM   #1760
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^ I think it plays a factor, I'm not saying it's THE FACTOR. Look at how many real estate advertisements you see on your local papers, province, sun, 24Hours, Metro.

there's lots of reasons that others and I have already discussed as to why RE has gone up in this thread if you scroll through the many pages. I just brought up this point as it's something else that hasn't really been mentioned/discussed.
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Old 12-31-2013, 01:59 AM   #1761
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Came across this interesting article with a lot of photos on rental lane-way houses in Vancouver.

Good rental prices? Looking Good? What do you guys think?

Photos: Vancouver laneway home rentals ? for a price







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Old 12-31-2013, 08:10 AM   #1762
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Rent may be cheaper now, but when you're 65 making $1000/month from your old age pension how are you going to afford your $2200/month rent?
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Old 12-31-2013, 09:35 AM   #1763
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$1k-1.3k wouldn't be too bad for your own private entrance home vs renting a basement. But if the owners come & go at odd hours i would think the sound of a garage door opening/closing would make me go nuts. not sure if there's enough sound proofing to make it unnoticeable.
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Old 12-31-2013, 09:53 AM   #1764
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Rent may be cheaper now, but when you're 65 making $1000/month from your old age pension how are you going to afford your $2200/month rent?

Still selling porn, still writing books is my plan!


A lot of old people will be homeless in our generation. It is up to the individual to be responsible for themselves. Do whatever you can do to keep a roof above your head. You are ultimately responsible for your own place in life.
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Old 12-31-2013, 10:53 AM   #1765
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A lot of old people will be homeless in our generation. It is up to the individual to be responsible for themselves. Do whatever you can do to keep a roof above your head. You are ultimately responsible for your own place in life.
I totally agree with what you're saying, but from my own experience, the vast majority of people either underestimate how much money they need to set aside for retirement, or are simply unable to contribute enough to their retirement planning. The group that I dislike the most are the ones that refuse to give up a little (or a lot) in the present to save/plan for the future. At the end of the day, all of these under-savers / under-planners are going to put tremendous pressure on the social welfare system. And that goes directly against my belief of taking reasonable measures of being responsible for yourself.
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Old 12-31-2013, 11:02 AM   #1766
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This is why I've invested in cheaper condos in the valley that pay completely for themselves (Mortgage, strata, property tax). They're all paying me more return yearly than my RRSP's were and some one else is paying the mortgage.
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Old 12-31-2013, 11:09 AM   #1767
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I totally agree with what you're saying, but from my own experience, the vast majority of people either underestimate how much money they need to set aside for retirement, or are simply unable to contribute enough to their retirement planning. The group that I dislike the most are the ones that refuse to give up a little (or a lot) in the present to save/plan for the future. At the end of the day, all of these under-savers / under-planners are going to put tremendous pressure on the social welfare system. And that goes directly against my belief of taking reasonable measures of being responsible for yourself.

I don't really ever plan to "retire" I don't think. Working on the internet is kind of enjoyable, and writing is very fulfilling. There are some careers for sure that people need to retire from, a guy I know has been a miner for like 10 years and his body is fucked already!
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Old 12-31-2013, 01:41 PM   #1768
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Originally Posted by sonick View Post
If anybody's interested, here's a 5-year breakdown with the following as suggested:
  • higher investment returns over 5 years
  • 3% rent increase per year
  • higher strata fees
  • monthly contribution of the difference in rent to mortgage payments with compounding interest at 3%

At 20% down and 3% rates, your home value would have to increase approx 2.5% to break even with renting that same period.

For First-Time Home Buyers with less than 20%, mortgage rates will be higher requiring either a fixed rate or variable rate with the benchmark rate minimum (5.34% last I saw), plus CMHC insurance. With all that, the difference between buying and renting is much greater.

I am sure the numbers are correct, but buying a house is also an investment. Vancouver has been a crazy real estate market for the past 30yrs. Every 10yrs there seems to be a major spike in prices, Just when people say it can't going higher, it does. If you bought before 2008, you are happy you bought vs renting
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Old 12-31-2013, 01:47 PM   #1769
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I think 5 years is probably too short of a horizon to really realise gains. However I can see how a newly college grad see as the window to get his life started.

eg when I bought my townhouse in Coal Harbour in 03.. it didn't get until 09-10 to get the buyers in a frenzy.

In the end, it is location, location, location and don't overextend. There are other investments which makes you higher return that real estate right now, use that to build up your principle. My longest mortgage is 10 years and my shortest one has been 3.

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I am sure the numbers are correct, but buying a house is also an investment. Vancouver has been a crazy real estate market for the past 30yrs. Every 10yrs there seems to be a major spike in prices, Just when people say it can't going higher, it does. If you bought before 2008, you are happy you bought vs renting

Last edited by godwin; 12-31-2013 at 01:56 PM.
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Old 12-31-2013, 02:00 PM   #1770
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My longest mortgage is 10 years and my shortest one has been 3.
Thats incredibly impressive. To be honest after looking at the numbers, the only way I will likely buy something in Vancouver after I sell my condo in Edmonton is if I can pay off the mortgage in 10-15 years. If that isn't realistic, I will continue to rent.
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Well.. I’d hate to be the first to say it, but Westopher is correct.
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Old 12-31-2013, 02:18 PM   #1771
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I notice on this forum, people seem to expect to get their property right out of college and right in Vancouver. I think with the increasing house prices, people should invest in something else or somewhere else for that matter, before settling down in Vancouver. It gives a broader view of life outside the BC bubble.

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Thats incredibly impressive. To be honest after looking at the numbers, the only way I will likely buy something in Vancouver after I sell my condo in Edmonton is if I can pay off the mortgage in 10-15 years. If that isn't realistic, I will continue to rent.
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Old 01-20-2014, 03:05 PM   #1772
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What correction?

RBC mortgage rate cut unlikely to spur price war among major lenders, expert says | Financial Post
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Sonick is a genius. I won't go into detail what's so great about his post. But it's damn good!
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Old 01-21-2014, 08:22 AM   #1773
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Wheels are falling off in Canada. Jobs growth is non existent, if not negative, the cdn dollar is dying, making cdn real estate less attractive (in falling environment, yes I know it makes it cheaper, but I'd be waiting for more weakness if I were going to invest)

I tend to find, outside of monetary stimulus, a currency says so much about an economy.

I got out perfectly, earn an appreciating currency, not a depreciating currency - this is it, boys and girls, the next 5 years will smell like shit for real estate
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Old 01-21-2014, 08:47 AM   #1774
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Bombardier cutting 1700 jobs. Seemingly so many mass layoffs out east in recent months.
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Sonick is a genius. I won't go into detail what's so great about his post. But it's damn good!
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Old 01-21-2014, 09:42 AM   #1775
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Bombardier cutting 1700 jobs. Seemingly so many mass layoffs out east in recent months.
And job cuts are just one part of it, I had out grown my job, spent a year looking for a good move, found none, got offered what I refer to as a joke locally.

Move abroad, earn 50% more! and pay less tax, work for a huge multinational, have endless career growth opportunities.. wtf Vancouver, wtf indeed, not a place to work, but a place to be rich in
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