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Old 08-31-2006, 04:36 PM   #1
wrx-rex
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Default OT - Real Estate

Hi folks,
Anyone know of any local real-estate advice web-site or forum or perhaps you yourself are very well-versed in the industry?

Basically, I'm thinking I'm ready to buy a place soon, but don't know if it's a bad time or what. I'm a first time buyer and the wife and I make a little over 110K per year...yet I don't think that's enough to buy a decent place and still maintain a tolerable standard of living.

I want to live in the Vancouver / Burnaby area, not in Maple Ridge or Coquitlam. BTDT. So a house is basically out of the question as they go for like 700K minimun even on the East side. By the time I'm ready to buy, we'll probably have roughly 40 or 50K saved up for a down-payment.

Your thoughts / advice / tips are greatly appreciated.
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Old 08-31-2006, 04:45 PM   #2
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FYi, the US housing market saw a major decline in both July and it appears that their August will also be a bad month. Basically, new home purchases have stopped altogether, while used home prices have hit a level where people don't want to buy. Since we have a similar market to theirs, it's a matter of time before our prices start to fall.

I've been following the housing market for years. Imho, it's the only way to make good money. One thing I've noticed in the last few months though, is that the same houses are for sale. There are a number of developments in our area alone that have stalled as they just don't have buyers for them. It appears that supply has met demand at the current prices, and when that happens you start to see prices fall.

Now the real estate market is a living thing and therefore you can't make a blanket statement that the whole market will fall. I still believe that penthouses, waterfront, and special areas like UBC endowment lands won't see as much of a loss, but I guarantee that by this time next year anything in the suburbs, condos and apartments will begin to see a decline in prices.

That's what I'm waiting for.



btw, at $110k co,bined per year, and a $50k d/p you don't have enough for a house. At best, you'd be approved for about $500k at a 35 year term. That's just plain horrible.

I'd take a second look at your priorities and see if the burbs' can be done. I know myself, I'd rather have a $400k house with land, as opposed to a $400k apartment with 720 square feet.
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Old 08-31-2006, 04:50 PM   #3
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It's a pretty unpredictable time in the real estate market right now, with many factors indicating that we might be hitting the crest of how high prices are going to get, with a possible retreat in some areas. That being said, if your plan is to buy and hold for a long time, then any retreat in market value will always come back to you eventually.

As for buying a place with your income/downpayment, I think you could afford something in the 300-400K range while still maintaining a decent standard of living. My situation is pretty close to yours and I have a nice townhouse in North Burnaby and I can still afford to eat out and have fun. I got in about 2 years ago and we're up about 130K so we got lucky.

If it were me (and I'm definitely no expert), I would wait a little bit to see what happens over the next 6 months to a year. You can save more for a downpayment and try to hit the 25% mark, which saves you a lot of money because you don't have to insure your mortgage.

That's my 2 cents. Probably worth about a cent.
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Old 08-31-2006, 04:52 PM   #4
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Thanks Hypa. I hope you're right.

I've given up on buying a house right off the bat, I'm gonna have to work my way up from condo to townhouse to house methinks.

Edit...Thanks also Ryeeno.
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Old 08-31-2006, 04:56 PM   #5
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If you buy I definitely recommend getting property (with or without a house) as property increases where as a home decreases as time goes on. As Hypa said, much better to buy a $400K house in the burbs than a $400K apartment in the city. With an apartment you own such a small portion of the land it resides on that you are way more subject to falls in the realestate market than someone who owns propery (even a town home is a better purchase as you own more of a foot print than an apartment).

Being in debt sucks so try and do something that doesn't force you to over extend yourself. Generally buying now is going to be better than buying later as prices will generally go up, there will be dips and plateau's but as land becomes less available it will become more expensive.

If you can do reno's look at buying a ghetto house and build it up or rebuild it. Look at getting land in a new development and building your own house. If the housing market plumets then cost of building a house will also go down as house building will not be in as high demand.

mls.ca can give you an idea of housing prices over a wide area range...and help you with what you would be paying for a mortgage at various price ranges. Generally for every $100K borrowed you will pay around $700 per month. So, if you borrow $500K that's $3500/mo mortgage (over a 3rd of your income).
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Old 08-31-2006, 05:06 PM   #6
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There's got to be some form of assistance to first time buyer cause this market is just plain insane.
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Old 08-31-2006, 05:42 PM   #7
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Quote:
Originally Posted by wrx-rex View Post
There's got to be some form of assistance to first time buyer cause this market is just plain insane.
First time home buyers grant, but it is miniscule. Trust me, it doesn't help at all.

I bought in March and saw an almost immediate $30K appreciation (17%) in the first 2 months. Since then, judging by similar condos for sale in my building, prices have been stagnant. No price appreciation for the last 3 months. The Fed has paused on interest rates as well. I am no expert, and this is just my opinion, but I would actually hold off on buying.
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Old 08-31-2006, 06:35 PM   #8
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I agree that the conventional wisdom is: snap up as much land as you can, and put as much of your income into it as possible.

Still, though, I've seen many friends (especially back home in the SF Bay Area) sacrifice their 20s and 30s working like dogs for their little bit of land, preoccupied with renos, contractors, and spending their lives in traffic commuting. In the long term, I don't doubt that the money will come back to them, but they certainly paid a price for it.

We are lucky in Vancouver to have choices. You can choose to spend, for example, $300K on a tiny but new urban apartment, or $500K on a beat up old house in the burbs. Personally, I choose the former (hypothetically speaking, of course, as I chose grad school instead and am now ghetto arse broke).

There are zillions of ways to invest your time and money, and land is just one of them. It's had historically great returns, but for the majority of us who aren't wealthy, it also comes with a lot of sacrifices.

That, and the "grab as much square footage as you can" attitude is at the root of the sprawl problem that mucks up society in North America...
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Old 08-31-2006, 06:53 PM   #9
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It all depends on the size of your d/p. at 50k, that's not a whole lot, unless you plan to get a condo in places like Port Moody or Coquitlam. Take a look at some of the home prices in Bby and Vancouver and you will notice that even a run down sorry-ass shack of a house in South Slope is over 500k! No garage whatsoever.
Will the market slow down, sure. But don't hold your breath for that Point Grey rancher going for 50% of it's original price nor that 3000sq.ft mansion in Westwood Plateau going for $300k. Just ain't happening.
Pricing aside, you have to look into the neighbourhood. Do you feel safe? Traffic congestion due to small roads? I find property crime in GVRD pretty deplorable and I came from Toronto! Lots of home invasions in East and South Van. Certain parts of Bby aren't nice either. Cars getting stolen.... I like North Burnaby. They have some nice areas there. Terramor by Polygon is going for 400k t/h. Maybe you can try those... Also lots of new developments in Richmond assuming you have an inflatable raft.
Of course more choices as you venture out to the 'burbs. I also echo the comments of better by a landed property if possible.

www.realestatetalks.com has some good insights (once you seeve through the negativity in there)
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Old 08-31-2006, 07:09 PM   #10
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Live on a hill, generally way less crime as most thieves are lazy and don't have cars (unless they are stolen) so don't want to hike or ride their stolen bike up those hills.
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Old 08-31-2006, 07:16 PM   #11
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Quote:
Originally Posted by wrx-rex View Post
There's got to be some form of assistance to first time buyer cause this market is just plain insane.
It's called the 35 year mortgage, and it was co-invented by both Satan and Hitler in the bowels of hell. The main problem with the 35 year is that pretty much anyone can get a ton of money that they really can't afford, and that is causing people who would normally only spend $300k to now spend $500k throwing prices off even more. In 35 years you'll have paid 3 times the value of your mortgage. Imagine paying back 1.5 million over the next 35 years on your $500k house.

Nasty stuff.

Quote:
Live on a hill, generally way less crime as most thieves are lazy and don't have cars

funny thing is, this is true.
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Old 08-31-2006, 07:52 PM   #12
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If need be, my mom's a pretty decent realtor if you need an honest realtor. Those two words are often oxymorons but a few people from Nasioc who have dealt with her can vouch for her
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Old 08-31-2006, 08:09 PM   #13
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Quote:
Originally Posted by Necromancer View Post
There are zillions of ways to invest your time and money, and land is just one of them. It's had historically great returns, but for the majority of us who aren't wealthy, it also comes with a lot of sacrifices.
Good point.
I also know a few people who have given up their ability to buy a nice car, or even go to Whistler for the weekend. A major chunk of their cash goes to the mortgage payment, and to me, that's almost like being in jail. Instead of a cell, you're in your own home.

Real estate is the sort of investment that should be considered a long term one, but also for the avid investor, one should be ready to jump into a bigger and/or better property if the opportunity arises. I know people in Mission who made a fortune, not from grow ops, but ny selling off their 2 acre parcels along Lougheed hwy. Hello 2+ million dollars!

Real estate is a fine art, and one that you get a good feel for with time. Remember, the market is cyclical and as such you will see trends repeat themselves. Look at 10 years ago when Hong Kong was about to be taken over by China. That's a perfect example of housing prices going up due to an increased market, but when 1997 hit and Hong Kong realized that China wasn't out to swallow them up, prices dropped as offshore investors dumped thei second and third houses in the 604 region. Langley is an example of a market that crashed in the late 90's only to rebound with a vengeance in 2001.

Learn to recognize these trends and have some money ready to go, and you too can be a real estate mogul.



Or just come to mah seminah!
I teach you fine art of making lots of money!







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Old 08-31-2006, 10:06 PM   #14
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I was in the same position as you about 6 years ago when i bought
around 110k a year 50k downpayment

we decided on a nice 200k condo, since we had the 25% down
which saves quite abit of interest.

We had friends making the same kinda money as us, buy places for 2-3 times as much as us. Where they were paying $3000 a month just to make the mortgage payments, we were also paying about $3000 a month, but hammering away at the principle. We paid it off last year, it makes life so much easier..

And whereas friends that bought a 400000k place is now worth 600000k
our 200000k place is worth 300000k, this interest we saved alone to date has probably covered the difference in appreciation. plus they still have years of payments and interest ahead. We are in the process of buying a third rental property right now, as the bank loves us.

From my life experience, I think its good to live within your means, I have friends pulling in 80k a year, and when you go to dinner with them, they order water with their meal to save money for the mortgage. Thats not life
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Old 08-31-2006, 10:13 PM   #15
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^^ Werd.

Just in general, too, I have an ethical problem with the real estate craze, as it rewards the act of simply sitting on a piece of land instead of doing something active and good for society. That, and the aforementioned sprawl thing. Anyway.
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Old 09-01-2006, 12:02 AM   #16
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If you can wait, why not wait a little to see how the RE market will turn out in GVRD. No point rushing into buying something just because you think you may be priced out of the market. Enjoy renting. It's not bad at all.
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Old 09-01-2006, 12:05 AM   #17
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my buddys parents just sold there house for 490k and there in port coquitlam.. and id much rather have a nice house then a nice car..
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Old 09-01-2006, 10:54 AM   #18
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Thanks Y'all, this is all good info. I'm feeling more at ease now.
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Old 09-01-2006, 12:26 PM   #19
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Definetly do save enough money for a good chunk of the down payment. Try to stay away from CHMC's (Canadian Housing and Mortgage Company) high ratio mortgage. Witha larger down payment, you'll have some negotiating leverage because you can show the bank that you've got money saved for your house. You can also use some of your RRSP's (I believe up to $30k) for the downpayment of your first home. You can withdraw it without any penalty and you have to pay it back within 15 years.

Do watch the interest rates. As the rates go up, less people can afford housing so prices will come down. It's a balancing act. We were lucky - my wife and I got into the housing market during the peak of the buying boom and the valley of the interest rate. We got a 3.75% interest rate for 3 years on our house which we got for a tad under $400k. With that low of an interest rate, we definetly could have taken the risk and purchased a more expensive and larger house, but we knew down the road if the rates started to climb higher and closer to the double-digit mark, we could still afford our house.

How's your credit rating? Carry a balance on your credit cards? Do you have credit cards? All your car payments, student loans, bills paid on time? These definetly play a roll in terms of your credit rating. Pay everything off and carry no debt, then you'll have a good credit rating - you can negotiate for a lower interest rate.

DO go to the bank (or banks would be better) and negotiate a pre-approved mortgage. They typically hold that negotiated amount for you for at least a month. Then you can go shopping and know EXACTLY what you can afford. Besides, let's say you negotiate for a $600k mortgage and find the house of your dreams for $500, that leaves you with $100 for renos and maintenance.

House owning is EXPENSIVE. You think your car is expensive with gas and insurance and stuff, with owning property here are some of the expenses that come along with it:
Property Insurance
Alarm monitering
PROPERTY TAXES
Maintenance - gotta cut the grass and stuff...
Hydro
Gas

The list could go on...

Oh, and back to the bank and getting a pre-approved mortgage. If you need someone to talk to at a bank for a mortgage, I have a friend who works at RBC. Try talking to a mortgage broker too - they "shop" the various banks for you.

One thing the banks will try to sell you is mortgage insurance. You don't need this. If you've got good coverage on your life and disibility insurance, it should cover the amount that would normally be covered in the mortgage insurance. For more info about this, you should talk to a financial advisor (which I am not).

Are you planing on suiting the basement and renting it out? It's a fairly easy way to help generate income to help pay off your house. We were going to do that with our basement, but in the end, we decided to keep it all to ourselves.

Do take a look at the other properties in the neighbourhood you're interested in. By that, take a look at the neighbour's houses and houses across the street. Are they well kept? What is there a lot of traffic going in and out of the street? How is the street lighting? Is there a block watch sign? How close are the ammenities like bus stops and public transit, schools, shopping, major roads and highway access? Drive what you think is the route from the house to your work. Can you live with that route day in and day out? What is the view from your property? Do you have a view of the north shore mountains? Fraser River? Your neighbour's bathroom?

Hope this helps, and good luck!

LaterZ!
Darren!!
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