Mrs. HHV moved to Vancouver. She found a rental in the West End, exactly one block from Stanley Park. It's a beautiful, character one bedroom apartment. Great building, great location, wasn't the easiest search, but it took only a week and she got the place and it's about as perfect as one can get for a rental.
We pay $900 in rent, $25 for parking, $25 for hydro and $50 for cable/internet. This is more than we paid in Victoria at our old place by about $100 per month (I still live in Victoria, but found a zero rent family place). The place is about 100 SF smaller than our old place, but at 650 SF is big in relative terms for a one bed suite.
Let's take a look at the competition: MLS # V701479. 508 SF at $284,900. $125 Strata fee, roughly the same $100 per for bills, plus mortgage of $1650 (25 year amortization with 10% down) for a total of $1875 per month compared with $1000 per month for renting a slightly larger place on a slightly better street in the same great neighbourhood of town.
Ask yourself if you'd rather have that $875/month invested in a rapidly building condo market that is demonstrating some economic cracks or in something safer, like say, a balanced mutual fund? We did, and even in this market, renting won.
I'll be back in Victoria in the next week or so (politics ended my trip to the top of the world prematurely) and will continue this blog's focus on the Victoria real estate market in these most interesting of times. Thanks for the great commentary in the previous post. I haven't read them all, but it looks like this blog didn't die a fast death after all.
30 comments:
Welcome back HHV
I am in a very similar situation with the rent vs own debate.
Over the last year I have looked at dozens of condos in the low end range of $250,000 MAX. Depending on strata fee, mortgage rate at the time, hydro etc. I figured it would be $1650/month on the conservative side. That amounts to about 45% of my household income. After ruling out condos (due heavily to bear blogs like this) I started back at the rental market to find a nice/bigger place. I finally found the nicest place I can ever imagine needing until/if I have kids. Huge character suite with a massive unbelievable deck in a McClure Mansion in the heart of Rockland. Rent includes all expenses at $1300/month. I am banking more then then $350/month in difference between buying a crap-hole condo and renting my mansion suite. Additionally, the money I bank is a heck of a lot more then the principle I would be paying down on a 20 year mortgage. All told I have a better place to live, more money going to savings and i no longer rip out my hair checking MLS every day. I still read the bear blogs almost daily because I find them interesting and I do believe that I will buy a house one day. Just not today.
Wow metaldwarf, almost the exact same situation as I am in (except I'm in Vancouver).
I looked for an entire year for a condo then decided on renting two blocks from kits beach for $1000/month. I'm currently investing $1500/month as opposed to buying a smaller unit and living off dog food :)
And I agree looking on MLS every day can definitely shorten your life expectancy....
Welcome back hhv,
the blog could have died, if anonymous had his way. Numerous attempts to put the bears under seem to have failed.
The first sure sign of the US housing crash I saw was an article in the NY Times in early 2006 which spread the news that renting was no longer a matter of "throwing your money away" (as if it ever was).
The article did an analysis of renting vs buying in a number of big US cities and found- surprise surprise- that with (at the time) stabilizing house/apartment prices renting made more sense.
The article actually went as far as to say that buying was the new "throwing your money out the window" paradigm.
Buying today in BC is just that good money after bad.
welcome back HHV, good score so close to the park.
As greg, mentioned,there was ugly rumours of this blogs demise and deterioration of the quality of my posts due to your absence as I supposedly ran rampant and out of control posting FACTUAL information. ;)
Meanwhile the bulls and RE agents hiding under "anonymous" titles seeked out efforts to save the severely injured and dying Victoria RE bull. The bears persevered thru the attacks as daily price reductions are now the norm.
You came back just in time to see the official headline in the Globe this morning, bye bye Victoria boom :
"Housing boom 'officially over'
Globe and Mail Update
April 17, 2008 at 2:39 PM EDT
It's time for Canadians to bid the housing boom farewell as data for the first quarter of the year, released Thursday by the Canadian Real Estate Association (CREA), showed a 13 per cent tumble in existing home sales year-to-date.
“Canada's six-year housing market boom is officially over. Aside from a few choice Prairie locales, sales are melting faster than this year's snow pack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
Double-digit declines in sales activity in “more markets than you can shake a stick at,” suggest the weakness has spread across Canada rather than being centred in any specific market, Mr. Porter said in an interview.
Home sales waned and new listings surged in the first quarter of 2008 as activity in Toronto cooled and a glut of sellers hit the markets in Western Canada, according to CREA's data.
http://www.reportonbusiness.com/servlet/story/RTGAM.20080417.wcrea0417/BNStory/Business/home
HHV,
I was SO lonely without your words of wisdom. Please promise never to disappear for that long ever again.
Looks like the party has begun in Canada. Toronto's sales down 22%, prices down in areas of Alberta. But we don't care about anywhere but Victoria, right?
I can tell you that listings are sitting and being reduced daily here. Previously-successful realtors are scratching their heads wondering where the buyers went.
Open houses are like jokes these days, with some having ZERO visitors. Yawn, not even curious neighbours are coming out.
I used to say the decline would be 20-30%. Now, I upped that to a 50% discount on Victoria real estate. Looks like Qualicum/Parksville has a buyers' market presently, with several months of inventory to unload.
Hey sourgrapes,
What area are you talking about? And I mean that as a serious inquiry. Everywhere I see SOLD signs. Mind you, that is for valuable SFH, not over built air boxes. Oh ya I forgot, the market is collapsing.
Everywhere in your dreams happy owner.
Since you are a happy owner, what do you care, anyway?
happy owner,
Good for you. The market is hot, hot, hot. A gesture to the bulls, buy a few more SFHs before you. Please refinance your current house and buy, buy, buy. You will double your money guaranteed in 3 years. Don't let us bulls down.
The rent or own debate is one that I always come down to when I deceide not to buy.
My circumstance is a little different to most. I work out of my rented home and deduct a portion of the rent. You can do the same for a mortgaged home, but you may have capital gain problems in the future. When I do buy, I will not deduct a portion of the mortgage for the above reason.
So, taking the home that I currently rent.
Estimated market value is $400,000
Taxes $2,400
Maintenance neglible
High ratio mortgage (why not everyone else has one)
$2,500 per month plus $200 taxes for an annual total of $32,400
Annual rent after deducting a portion to the business is $8,000.
For a difference of $24,400.
You see, I'm just too cheap to buy. The pressure to buy a home is incredible, all of my friends own a home and all of them have had massive appreciation in their home values. But, none of them have savings or an RRSP. Lots of debt, but no cash.
So at this time, renting has been working very nicely for me. In the future, I probably will purchase a home - but not now.
So, who's sitting pretty now.
Siobhan
more nasty headlines :
Housing sales tumble across Canada
From Friday's Globe and Mail
April 17, 2008 at 10:00 PM EDT
The biggest housing boom in more than 50 years appears to be out of steam as sales tumbled in all major cities this winter and listings surged in Western Canada.
Sales of existing homes cooled in almost all major markets – including Toronto, Calgary and Vancouver – in the first quarter of 2008, according to figures released yesterday by the Canadian Real Estate Association.
At the same time, a glut of sellers entered the markets in the West, sending new listings to their highest level on record.
The first-quarter data prompted one prominent Bay Street economist to declare the end of the most robust housing cycle of the post war era.
“Canada's six-year housing market boom is officially over. Aside from a few choice prairie locales, sales are melting faster than this year's snowpack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said in a research note.
In the first three months of the year, 75,467 resale units changed hands, a 13-per-cent drop from the first quarter of 2007, according to CREA.
Sales fell 18.7 per cent in March from a year earlier, the largest year-to-year decline in unadjusted home sales since January, 1998, when activity dropped 28 per cent from the year before. These figures have not been seasonally adjusted.
In contrast to the weakening sales, new listings soared to a record 154,217 units in the January-March period."
http://www.reportonbusiness.com/servlet/story/RTGAM.20080417.wcrea0417/BNStory/Business/home?cid=al_gam_mostview
Just bought a house? Don't read this
David Berman, today at 11:31 AM EDT
The Canadian housing boom looks as though it has ended, and you can't fault U.S. commentators for taking some pleasure in our real estate woes. But is there more to their pleasure than mere schadenfreude?
Canadian observers are not yet predicting a cataclysm along the lines of the U.S. downturn (National Bank Financial said in a note that the market is “normalizing” here). But that's not stopping Michael Shedlock, who writes the Mish's Global Economic Trend Analysis blog, from piping in with his own view: “The party's over, Canada,” he said. “Look at the U.S. for what's to come.” Yikes.
The talk of a Canadian downturn began on Thursday, when the Canadian Real Estate Association reported that sales of existing homes fell 13 per cent in the first quarter, year over year, even as new listings continued to rise. This has created a situation where inventories are on the rise.
According to Mr. Shedlock, prices will be sticky for a while – just as they were in the United States for six to nine months after its own market turned – and then one local market after another will begin to turn. “Meanwhile, denials will run deep with all kinds of ‘It's different here' logic. Rest assured, it's not different in Canada,” he said.
Canadian economists counter that the economy is still relatively strong here and that employment – which they believe is a fundamental foundation for the housing market – is fine. Mr. Shedlock believes these economists are “dead wrong” and points to the fact that employment in the United States is still relatively high, even as it suffers through its worst housing market in decades.
“What matters is affordability. People cannot really afford the prices here, and it is a mistake to think that 40 year amortizations in Canada will make things affordable up North,” he said.
Cutting interest rates will not do the trick. Lower rates haven't helped in the United States, where the Federal Reserve has cut its key rate to 2.25 per cent from 5.25 per cent in 2007, with more cuts are likely on the way. The reason why the housing market has shrugged off the rate cuts is that default risks have risen, keeping mortgage costs stubbornly high.
“So even as [Ted Carmichael, chief economist at JPMorgan Canada] thinks rates need to come [down] so mortgages are more affordable, Canadians would be advised to not hold their breath waiting for that pass-through,” Mr. Shedlock said.
http://www.theglobeandmail.com/blogs/markets
You know what! I own a house. Have for over 10 years and I am happy this is happening! I was tired of hearing how RE will only go up and Victoria is the greatest place in the WORLD and it is different this time.
I am a home owner and never believed in the market and think property is over-priced.
Cheers!
I am also curious how the RE powers-that-be in Victoria are going to spin this one!
Spin Mish?
Good luck, he's one of the most influential contrarian financial commentators in North America, and his track record is a lot better than the track record of his detractors in recent years.
Anyone remember Lereah?
Can't wait for Muir and Pastrick to crank out the company line about employment, affordablility with your credit card as a down payment,get used to living in a shoebox cause you missed the boat, etc, etc. Watch the media in Vancouver turn on these guys like a pit bull turning on its owner.
Time to face the facts bulls, the tide has turned,the party is over,it's time to ride the wild bear. ;)
for those out there thinking the US will escape a recession :
High probability of U.S. recession: survey
The Associated Press
April 18, 2008 at 7:13 AM EDT
WASHINGTON — — Turmoil in credit and housing markets will be the most significant threat to growth this year, according to a survey of top financial company executives released Friday.
These executives believe there is a high probability — 88 per cent — that the country will suffer a recession in the next 12 months.
The responses came from executives whose firms are members of the Financial Services Forum, which represents 20 of the largest financial companies in the country including Bank of America [BAC-N], JP Morgan Chase, Goldman Sachs [GS-N], Merrill Lynch, Allstate Insurance and Fidelity Investments.
After credit market tumult and troubles in the housing market, the executives listed the next biggest threats to the economy now as the possibility the government will impose higher taxes or raise protectionist barriers to foreign competition.
http://www.reportonbusiness.com/servlet/story/RTGAM.20080418.wuseconsurvey0418/BNStory/Business/home
I was tired of hearing how RE will only go up and Victoria is the greatest place in the WORLD and it is different this time.
I'm sorry you don't like it here. You should sell now and go away.
Sitting pretty,
You must be really concerned about your slumlord assets (if they truly exist), always trolling the bear blogs. If you weren't, you'd be out there buying, buying, buying..and not having to try to push your point (in fact you'd want to keep it a secret, knowing what the future holds, you will easily become a zillionaire). What other rational reason would explain you coming here, unless you really have some psycho problems, are really lonely or noboby wants or cares for you?
What other rational reason would explain you coming here
And what are your reasons? You are too chicken to even adopt a pseudonym!
"I'm sorry you don't like it here. You should sell now and go away."
Thats quite the ignorant response to a fellow home owner who realizes being a greedy paper princess does not make for a healthy community. Glad to see some owners out there with a brain in their head who care about where they live and not what they are worth so they can brag on some blog to impress no one but "my bubba says".
Glad there are homeowners who care that their children be able to buy a home and raise their children here without stressing about affordability.
sitting pretty must have had a rough week at the office pushing paper thru the fax machine all day to keep up the double duty on both blogs tonite. Guess it couldn't have been easy watching all those paper profits disinegrate into thin air.....poof ! $50 G's gone just like that.
What other rational reason would explain you coming here, unless you really have some psycho problems, are really lonely or noboby wants or cares for you?
My theory is a SP ios a cantankerous, fearful developer who has hired someone in [pick developing world country] to disrupt the bear messages from broadcasting unchallenged until after he unloads all his crappy pre-construction shoeboxes.
Which means of course that the bears are causing a recession and are popping a bubble just by airing their negative views. Why oh why are they allowed to do that. Why aren't they forced to pony up the dough for his crappy, soon to be repossessed preconstruction shoeboxes?
His track record is amazing, his posts have been spot on about the rising of housing prices ever since his arrival on this blog a few months ago.
Except -- Prices have been going down and inventory has been going up ever since SP arrived on this blog a few months ago.
Or maybe SP is just a bored realtor, with a blackberry and no emails and no clients, no buyers, no interests, who tried to write a boring realtor blog that nobody read, so he tries to leech on here to get his 15 seconds of flame.
That's it, I think.
'.....You can do the same for a mortgaged home, but you may have capital gain problems in the future. When I do buy, I will not deduct a portion of the mortgage for the above reason....'
CoRRECT ME IF i'M WRONG.
I had thought that a home owner was liable to pay tax on Capital Gains ONLY IF they had been claiming CCA (depreciation) as an expense on the OFFICE portion of their home.
I didn't think it made any difference if one rented or owned the property.
No, please correct me if I am wrong.
From what I understand. If you are operating a home business and deducting a portion of the mortgage interest and utilities for the business use - when you sell the home the amount that you have deducted over the years may have an affect on what is Capital Gains tax free.
Anyone out there - that can explain this better than I.
Yes, the portion of the house declared as business will be subject to capital gains tax. So, if you use 25% of your house for your business, and you make $100k profit on the sale of your home, $25K will be subject to capital gains tax.
Yes, the portion of the house declared as business will be subject to capital gains tax.
Technically yes, practically no.
See IT-120R6.
Hello. This post is likeable, and your blog is very interesting, congratulations :-). I will add in my blogroll =). If possible gives a last there on my blog, it is about the Placa de Vídeo, I hope you enjoy. The address is http://placa-de-video.blogspot.com. A hug.
Thanks for creating this blog! I have been looking into the house market for the last year and I find the comments very encouraging.
I really do hope the market goes down. I still don't understand how everyone can afford to own, I think everyone has become comfortable living in debt.
Personally I think I'll continue to rent and invest the rest until the market comes down. I strongly feel the buyers will determine the housing prices, and according to the last couple months it's looking more and more like a bear market.
Post a Comment