Alan2005

I rent - I'll continue to rent while renting is cheaper than buying. It's a myth that there is never a bad time to buy when clearly there is. 1988 was a bad time to buy in the UK even tho eventually prices rose to cover the loss, but in the meantime many people were trapped as debt slaves unable to plan anything further than making the mortgage payments. I don't want to live like that and I suspect that once the ZIRP ends (which it must otherwise CAD will be worthless) then we will see bigger falls. This is a good thing, people spending 60% of their income on servicing mortgage debt isn't good for the economy as they have nothing left to spend on anything else.

Obviously I could be wrong and we may see 20% increases in prices over the next few years - but really what do you think that will do to the Vancouver economy?

dboy

Rent. I can actually afford to buy, perhaps not quite what I would like to buy but could get a 2 bed down town. I won't settle buying somewhere I have no desire to be, just to own a piece of real estate. To me it's simply not worth it. I don't need the forced savings and I'm able to invest more than I spend on a month to month basis. I max out my rrsp's and don't have any debt. I can retire in 9 years. I also like the freedom after almost 15 years of owning - or is it owing?

The rent to own ratio will have to come more in line. Either that or wages go up dramatically which is clearly not going to happen. We have amongst the worst fundamentals in the world right now - possibly even worse than London and New York.

I don't think young people today will have the same relationship with owning as we have had. Further, it not just about wanting right away what their parents worked for, I can barely afford now what I could when I was 25 getting on the rung for the first time.

Not to mention what will happen when all the boomers try and sell their over-sized homes to fund their ill prepared retirements?

I might be wrong and struggling to own a piece of re may become the norm. But I doubt it. Bubbles always deflate - i don't see how Vancouver can be any different. How much - no idea.

I fear that by this time next year or the year after, many first timers who bought at the height of the market will be seriously underwater.

johnh009

Interesting subject and I am fence-sitting on this. In the UK, figures show that house prices have risen on average 8% per annum over the past 100 years. Not bad. I suppose the question is, can you make more by investing? And, if so, you still have to pay for somewhere to live.

johnh009

Given the upcoming demographic hump, you are probably correct. What gets me is that, here, in southern Ontario, houses are very maintenence intensive because of the climatatic swings. Plus, new built properties, to put it crudely, are crap. My house is 13 years old, I have to have the roof shingles replaced, the water heater is leaking, the water softener is shot, I need new window frames, the furnace is on it's last legs. I never spent this amount of money in my house in the UK. I reckon, it costs 1% of the house value per annum to keep it in a good state of repair.

dbd33

Something that hasn't been considered here is the way in which an owned property consumes your time. Today was an extreme example for me, I sanded, painted, cut grass and collapsed, twelve hard hours, but all the houses I've owned have always needed something doing. So did the rented houses but I just shrugged at those problems.

I have a chequered history with houses. The one I lost in the divorce cost us $140,000 in 1986 and is now worth $800,000 or so. I don't think my ex, who now owns it outright, could have amassed as much capital over the same period by other means. otoh, we've been in this house nearly three years and could sell it for what we paid for it, despite the new roof, the new bathroom, the great gobs spent. In between I had one, admittedly a cheap one, that nearly doubled in value in two years.

Shifts in value are, I think, about luck, the individual buyer of a single house is unlikely to be able to predict the market. The idea that houses always gain over twenty years is, I think, quite sound but I, at least, don't have double decade periods of domestic stability so that's no help. There's more to be said for renting than post-Thatcher Brits generally believe.

dbd33

That is the rule of thumb in Ontario and I know, thanks to MBRealtor, also in Manitoba.

Consider a metal roof, that does away with the job of replacing it for a lifetime.

johnh009

Yes, I had not factored in my time, that would throw the figures. Also, regarding the metal roof, or improvements in general, I have always worked contract and have often considered that I would never get my money back from some improvements. Therefore, I have always been a semi-detached suburban Mr. James. Not my style.

Alan2005

The statistic to watch for house prices in the UK is the ratio of average price to average earnings - it's been around 3.5 for the last 40 years until this recent credit binge. I would suggest that another round of debt madness is not a good thing.

I know they do things differently here with the crazy 'affordability' measure, but vancouver's average property is over 8x average earnings. What do people think should be an upper limit 10x, 20x?

Alan2005

dboy, that is an absolutely stellar post.

johnh009

Interesting, at one time, I could never understand why property was so expensive in the UK but I think it is more to do with the availability of cheap credit.

johnh009

In the town where I live in southern Ontario, the newly weds are sucking up the 4000 square foot homes with the three car garages as fast as they can get them. I know, I am selling one and getting out while the going is good.

Alan2005

That's all housing bubbles ever are - they are really credit bubbles. Credit bubbles need to deflate - keeping them inflated in 2005 is what caused the whole collapse we have now.

dboy

Renters of cheap money that's all they are.

Alan2005

One of the arguments against renting is that it's 'dead money'. Unlike interest payments which aren't for some reason

johnh009

I am not so sure that renting is dead money, if you take your capital, and know what you are doing, it can be invested at a far greater rate than what the property market can provide. For example, if you had bought at the lows in the stock market this year, you could have increased your investment by more than 100% to date. Of course, no one is good enough to pick the highs and lows, but there is money to be made outside of the property market.