As Taylor #1 already knows, I'm a man of few words,so I found a pic that speaks thousands about the Vancouver market.
This 2 bedroom shack with it's 9 sq/ft yard is selling for $669'000. In other words, a tiny building lot in a less than desirable (commercial drive) area of town is selling for almost 3/4 of a million bucks. In some more developed parts of the world, this price tag would be warranted, but considering it was worth 200'000 5 years ago, I think the potential buyer is sending the seller to his retirement. My uncle said houses in this area were selling at 80G in 1988. THAT was a good time to buy Taylor 1.
If you want to figure out what a society can sustain as far as housing prices, look at some of the higher paid individuals like family doctors. They make 14'000 a month (government regulated) After tax, they have $10'000 in their account a month. A bank will give them a mortgage based on 33% of their income, so their mortgage payment can be $3300 a month, or a $550'000 mortgage.
A DOCTOR CAN'T EVEN AFFORD THIS SHACK!
And people look at me like I'm crazy for buying an apartment on the east coast for $100'000 that rents for $22'000 a year.
Doomsday Prophesy
Keith Green once said "If God wants to get our attention he do three things.
First: He'll touch our ecology (In BC that's the pine trees, and if you don't believe me, then you've never been north of Vancouver)
Second: He'll touch our economy (A strong dollar isn't always a good thing)
Third: He'll raise up an army to overtake us. (Hopefully we've learned by this time)
Keepin it reeeeeeeaaaal
Mr. Taylor(#2)
7 comments:
Ah ha! Bringing the Almighty into the discussion again, eh? When expert predictions can't lower the prices around here surely the Lord can! Amen! As long as he sends it through the roof when I'm ready to sell.
But true dat on the pine beetles. Those little gaffers are a royal pain in our aging bums.
But...here's the deal. Vancouver is probably (and I'm speaking fairly unschooled on the topic) way less dependent on our resources than other parts of Canada. Look at the demographics of Vancouver - I'd say we probably depend more on Asia's economy than our own! I also think of certain places like Hollywood in the US. It doesn't really matter what happens in the rest of the country if all the bling-sportin' deep-pocketed folk want to live there. They'll pay whatever because they can. If the place is desirable, there also will the housing prices be high. And to add to that is the lack of expandibility (new word?) of our terrain. At least in TO they can sprawl any which way. In Vancouver we hit either mountains or oceans or both. We have no way to go but up. And look downtown. It's happening. And how around Skytrain stations.
Vancouver remains desirable. Until that changes the prices will hold. I feel they will certainly dip a bit or at least not shoot up more (for the reasons you mentioned about the doctors) but who's to say that Vancouver will not become home to the rich and famous of North America? Who's to say that the price of land will not increase?
Vancouver's prices must be considered in direct correlation to desirability.
In conclusion, you are very wise to not invest here. The margin is small. All other places will start to go up as well as worldwide land decreases. It's just a matter of time. Way to go, Taylor 2, on the investment. You'll reap in due season if you faint not.
I faint daily
Well, the way people are getting into houses like that is with a 40 year amortization. What can happen in time with that? You can have a malpractice suit and lose your job. Interest rates might go through the roof. House values can crash like they did in the states.
Anyhow. The place is a dump as is everything else in that price range, so we are ending up with people being waaaay overextended to live in nicer places. Somethings gotta give.
I agree with you. The 40 year Amort (note the word 'mort' or 'death' in French)ization period is wacky and wild. I found out that at least 2 people are living in our 400K+ development with, you guessed it, $0 down! What the?? They better just hope the market doesn't dip at all. I can't imagine what their monthly mortgage is. Probably...let me check... Close to 3K/month! And almost 50% is interest when it's all said and done! It's so tempting. They put that carrot in front of people and the get this kind of deery-eyed homeowner's haze going on. It's a renter trying to rent new. People need to totally revamp their minds. I'm so glad I was an Amway rep when I was 17. That really helped. It got me out of this 'average' mindset.
A fixer-upper that will leave you broke. It sounds like Doomsday is already here in Vancouver.
Vancouver is moving up, but it is also moving out. Metro Vancouver as it is now called, includes all of those fancy suburbs. People are being pushed out of Vancouver, Vancouver and into more affordable areas.
We're not entirely restricted by the mountains and the sea; however, the mountains and the sea are what make Vancouver such a beautiful place. Without the natural environment, we're just like every other ugly city.
Having doctored up our image, we have won the 2010 Olympics among other popularity contests. Just like Expo '86 we are seeing an increase of all sorts of things (development, people, cars...) that are puffing up prices.
Land is becoming scarce, but certain sustainability movements will need to be put in place in order for Vancouver to remain desirable.
With the increase of population, the quality of living is going down. We're polluting the natural environment, which is what gives Vancouver its advantage.
Here's something to reference:
http://thetyee.ca/Views/2006/10/09/Vancouver/
Mr. Liau, I shall now call you 'mister because this eloquent, thoughtful and concise post left me thinking and re-thinking. Good stuff. I'm getting more value out of the first 24 hours of this blog than I have in the last 12 months of any other blog. That ain't no joke. Thanks for contributing with this.
I agree with everything you say, but... just use your time in Japan and think about it. What would happen to Japan/Korea if they didn't start going up and massively putting in mass-tran? Total demise, that's what.
I like the referenced article there about the poverty issue as well. It relates to every aspect of our lives and if we don't take a proactive approach, our city will lose the aforementioned desirableness, killing our real estate investments and leaving a mess for our kids (I'm speaking for Taylor #2 because I don't have my own!)(unless you count these slick homestay kids)
By the way. I JUST saw the photo you posted. For some reason it didn't load before. Wow! You're bang on about this one, Taylor 2. How about we shorten it to T2/T1? Anyways, that house does speak a thousand words about Vancouver's market. I see where the motivation came from!
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