Monday, June 11, 2007

What does $400,000 look like?

Give or take a few dollars. No disrespect meant to past, current or future owners.

MLS #231126 current price: $409,900 1200 SF 2 bed 2 bath in Langford


MLS #231281 current price $419,900 2470 SF 5 Bed 3 Bath in Fernwood


MLS #231271 current price $405,000 1877 SF 3 bed 2 bath in Esquimalt


MLS #231037 current price $387,900 1600SF 4 bed 2 bath in Saanich West


MLS # 228907 sold for 362,000 (ask was 389,900) 1590 SF 3 bed 1 bath in Saanich East

Just thought it'd be fun to have a look at what constitutes entry-level SFH around this town now. It wasn't that fun. Really kind of sad.

A Side Note: we'd like to say thanks to all who read this blog. This weekend, while I was in Vancouver watching the World Cup Triathlon, this site rolled over the 10,000 visitors mark! Not too shabby for barely 4 months worth of work. We estimate based on the site meter reports that 1 in 10 visitors stick around to read it and a total of 10 or so of you engage in discussion on the posts. We thank you. We enjoy doing this and will continue to do so for the foreseeable future.

UPDATE: Further to the discussion going on in comments, here's what it looks like financially. You can use the link on the sidebar to run your own numbers.

Using the How much can I afford calculator:

That's it folks. And that's using 25% down (on a $400K place) and assuming no other debt. I'm thinking the output is conservative and that a mortgage seller can get you "better" (read more) $. Sure you can amortize longer, why would you?

Here it is using the mortgage calculator:

Assuming household income of $72K (which is likely close to average in Victoria) $1830/month represents 30.5% of gross household monthly income.

Conclusion: given 25% down, over 25 years, at 5.5% interest, the average family can't afford the average home; instead, they can by a home that will require work in a neighbourhood that may be less than appealing.

12 comments:

Anonymous said...

Too bad 231281 (Fernwood) is gone already...it showed some promise (at least from the outside) in a not so great neighbourhood! (Still way overpriced)

Anonymous said...

Now I can see why everyone is moving to Victoria. Look at all the lovely homes for a steal at $400,000. Just imagine then what half a million can get you Maybe a house without rats.

S2

Anonymous said...

I went onto the CMHC site to find out how much would a first time home owner have to be making in order to buy a $400,000 first time home owner home.

Assumptions:
$20,000 down payment
35 year amortization
Interest rate 5.65
Taxes $200 per month
Heat etc. $100 per month

The answer that I got was $10,000 per month or $120,000 per year.

Seems reasonable to me. Thats only 65 bucks an hour wage.

Anonymous said...

I tried a mortgage calculator from a different site and got $80,000 a year. Has anyone else found that these things are crap. Where can you find a good web mortgage calculator?

vg said...

This is what turns you off thinking of buying,when you see a piece of crap for almost a half a million then renting becomes more appealing in a heartbeat.


Thanks for those numbers HHV,was meaning to ask you about traffic numbers. Great blog and subjects,same to Prairie Boy too.

vg said...

anon,

try the MLS one, just go into a house listed and then you can access theirs then just change the numbers to your liking.

I think those numbers are quite a bit on the high side.

Anonymous said...

Every single buy or rent calculator we have been on the numbers really have to be worked to come up with the better to rent than buy scenario. They all seem to be tuned to buy.

S2

Anonymous said...

Article in today's Times-Colonist about Bank of Canada raising interest rates. Interesting little bit about Victoria being the only market where prices decreased "due to a moderating market".

http://www.canada.com/victoriatimescolonist/news/business/story.html?id=d616f94f-6b66-4718-a9fc-0dac14377882&k=50713

S2

House Frau said...

I am going to send this to my friends in Toronto. They don't believe me when I tell them.

Aleks said...

I use this calculator: http://www.canadamortgage.com/calculators/convhighratio.cgi

It only goes up to 30 year amortization, but with that and all other numbers the same I get $138,000 annual income.

JMK said...

With exactly the above, I get a $2078 mortgage, so monthly is $2378. times 12 is $28,540 a year in housing. At 1/3 of income, I get $85,613. I can see the source code of the mortgage calculator, and it gives me exactly what my mortgage is, so I'm pretty sure it is right. Are you using a different percentage of income to get $120k a year? Maybe 25%?

I agree, that at 5% down it would be much better to keep renting. Interest and maintenance/taxes over 5 years would be about $122k. Your rent would be about $1700/month for $102,000.

vg said...

S2,
I read yesterday that "new" home prices in Victoria were down .8 %. Not a great amount but it is down and thats what counts.

With the bond markets up again today and the stock markets feeling the pain of higher interest rates coming it is only a matter of time til we see it show up in higher percentage declines.

You know that people buying and taking out new mortgages have to be thinking "what if" interest rates keep just moving higher,there are inflation reports out world wide today and if analysts that I quoted exceed expatations then prices will come down big. Once the trend starts down it is hard to stop,don't forget that.