for the market correction to begin and prices to be more reasonable?
We looked at five properties yesterday. We had hoped to get in to see one we'd viewed before; we were almost ready to make an offer. It was a 2 bed 2 bath condo that needing extensive updating but was ready to move into. We thought we'd be able to get in well under asking. Asking was close to assessment, we thought we'd get under that and in a year's time, be in a place to begin slowly updating our home. (by updating we mean, painting, new flooring, perhaps new counters/cupboards in bathrooms and kitchens: those would more likely be long term things though)
So, it sold before we got back into it. We're surprised to say the least. The location was convenient, but busy. There is no parking there for 2nd vehicles or guests, not even on the street. The parking isn't secure. The building isn't attractive, really it's rather drab. The common spaces haven't been touched in years. But the suite was big; at least 150 square feet bigger than anything we've seen in condos and it had two full baths. We gave it potential and thought we may be able to bargain.
We got the report this morning. The deal closed at assessment, only $4.9K less than asking. We'd planned to offer closer to $20K under. It wasn't meant to be.
So we spent the rest of yesterday fairly dejected looking at other properties. One building had two suites listed. The first one was owned by the strata president... there's a reason why Realtors tell you not to be home when your suite is shown... we'll leave it at that. Turned us off the building completely, won't consider it at all.
Two other suites we saw were nice. Both ground floor which are harder to sell and we feel a bit uncomfortable with the idea of being in busy neighbourhoods on the ground level. One had been on the market a while and had come down in price over $15K already. The other was completely updated and showed really well, but you could tell the building had issues, and the location was less than ideal.
We think we've decided to rent until the fall. We don't think we're seeing price increases at the moment, more like a market that can't decide if its going up slowly or coming down slowly. We'll have increased our income by $30K in September (I'll be done Uni then) so making a purchase will be less of a stretch than it is now.
After doing the math on two-dozen places over the past 2 months, we're not any closer to understanding the differences between renting and buying on average. The only building that we have seen that we know what rents are at has a difference of about $400/month. For a 2-bed one bath suite is that high or low? Given the gains in the market, what do you think is a reasonable correction. The unit I'm talking about has a market value of $225K. To close rent and purchase price it would have to come down $40K or just about 20%. When the correction happens, what do you think we can expect to see? The last time we saw prices in condos like that was 2002 according to the VREB historical price sheet.
If we don't buy now, we'd be losing about $800/month in rent with no chance of getting it back. If we buy now, we could lose some value in the correction, but we are all agreed that it is highly likely that the market will cycle up and over this level in a subsequent boom period, so you don't lose if you don't sell. History supports this. So if we wait a year or two, that rent money adds up quick doesn't it?
I hope you use the comments to weigh in on this debate. I think it's safe to say that most people reading this are outside the market looking in. What are you waiting for and why? If you're in, how do you look at it, and would you sell now to rent again?