5833 replies to this topic

[qv]

Why is everyone encouraging this poster to do whatever it takes to buy a home? We know next to nothing about her financial situation. Does it even make sense to buy a home? What's wrong with renting?

[FirstTimeHomeCrier]

^{this place is not bad, 2 bedroom, insuite laundry and allows pets}

^{this area is not far from town, on bus routes and would take 10-15 minutes to bike downtown}

^$249,900

 

^{https://www.rew.ca/p...earch=474801877}

 

That one is definitely on the top of my list. It's still a bit out of my price range, especially with the higher strata fees. In a couple of years, I'll have a larger deposit saved up and a slightly higher salary thanks to scheduled increases. But at the rate prices are going, this same property will be at least 300k by the time I can afford 250. 

[FirstTimeHomeCrier]

Why is everyone encouraging this poster to do whatever it takes to buy a home? We know next to nothing about her financial situation. Does it even make sense to buy a home? What's wrong with renting?

I think I am in a pretty solid financial situation compared to others my age. I've got a solid career in the public service, no debt, and a healthy savings account. What I don't have is enough for 20% down on a condo in Victoria, so I have to pass the new stress test to prove I could still pay the mortgage with a 4.5% interest rate. For a condo that's about 300-350k, I could manage. I wouldn't have extra money for clothes and vacations and fancy restaurants, but I would be able to afford mortgage payments. But the mortgage brokers aren't okay with me paying more than about 40% of my income on my mortgage. So the most they will approve me to pay monthly (in this theoretical 4.5% interest rate situation) is actually significantly less than we are currently paying in rent. It's bizarre.

 

What's wrong with renting? Plenty of things. Spending half my income paying off someone else's mortgage, not being able to make decisions about the space I live in, being vulnerable to eviction if the owner wants to move back in (this happened to me last summer, and the vacancy rate was so low I nearly couldn't find a new place). Most of all, I would love to feel like the housing payments I make every month are an investment in something. Even if the return on my investment is low, it's better than throwing my money out the window every month.

[AllseeingEye]

At the risk of coming across as somewhat callous FTHC - and that is not my intent, rest assured - but if you are determined to buy a home/condo/townhome, why not do so in a market that won't bankrupt you? Is it *imperative* that you live (and own) in Victoria? There are lots of great cities & towns in Canada where you can have a great quality of life without paying the stoopid real estate prices currently commanded by this market....

 

Although born and raised here, without a milli-second thought I've moved twice to another city when work prospects here were poor (Vancouver, on two occasions). I would not hesitate for an instant to do so again if necessary. Ditto for home ownership. If I was bound and determined to own vs rent, and I couldn't afford this market, I would look elsewhere and wouldn't give it a second thought.

 

I would love to own a 1967 Ford Shelby GT500 Super Snake automobile; however as there was exactly one 67' Shelby SS manufactured with a one-of-a-kind 427 c/u 600 hp engine, it is currently worth somewhere north of $1.5 million US dollars on the open market. I therefore drive a Ford Eddie Bauer Explorer SUV instead because the latter I can afford to own. Sometimes, unfortunately, you do have to compromise.....

[LeoVictoria]

Wife and I talked about this before.   We were lucky to be ready to buy in 2013.   Prices were high (double that of 15 years ago) but doable and that turned out to be the bottom of the last cycle.  

If we were starting out now just graduating, we would likely leave Victoria instead of buying a house here.   Plenty of places are still nice without being insane price-wise.

[AllseeingEye]

Wife and I talked about this before.   We were lucky to be ready to buy in 2013.   Prices were high (double that of 15 years ago) but doable and that turned out to be the bottom of the last cycle.  

If we were starting out now just graduating, we would likely leave Victoria instead of buying a house here.   Plenty of places are still nice without being insane price-wise.

Real eye opener for us occurred when visiting our very large extended family in Nova Scotia last May; they live in Falmouth in the north-central part of the province, astride the Minas Basin, 5 minutes from Windsor and about 40 minutes along a 6-lane highway north-west of Halifax.

 

In a rural area - but a short hop to Windsor (pop. 5000) - eight acres with a small brook running through the back yard and a newer 2900 s/f 2-level/full basement, 4 bedroom, 3 bathroom house, with a massive ground level deck out back, was < $230K, all in.

 

I asked a local realtor who was a friend of the family what I could get in Falmouth for $300K; her eyes bugged out and she shook her head and muttered "I could get you into an eff-ing castle for that kind of money" - as if it was a veritable fortune. In the context of this market it does make you think.....

[dasmo]

I have family in Portugal right now. They could buy the orchard they are living on for about ten thousand Euros....

[LeoVictoria]

I have family in Portugal right now. They could buy the orchard they are living on for about ten thousand Euros....

And here in Canada with a 30 times lower population density we are somehow running out of land...

Edited by LeoVictoria, 20 March 2017 - 09:39 PM.

[LeoVictoria]

Buying our house in 2013 required a 390,000 mortgage. Today it would be about $770,000. No thanks. Even at well above the median family income there is no way we would chain ourself to that pile of debt.

[FirstTimeHomeCrier]

At the risk of coming across as somewhat callous FTHC - and that is not my intent, rest assured - but if you are determined to buy a home/condo/townhome, why not do so in a market that won't bankrupt you? Is it *imperative* that you live (and own) in Victoria? There are lots of great cities & towns in Canada where you can have a great quality of life without paying the stoopid real estate prices currently commanded by this market....

 

Although born and raised here, without a milli-second thought I've moved twice to another city when work prospects here were poor (Vancouver, on two occasions). I would not hesitate for an instant to do so again if necessary. Ditto for home ownership. If I was bound and determined to own vs rent, and I couldn't afford this market, I would look elsewhere and wouldn't give it a second thought.

 

I would love to own a 1967 Ford Shelby GT500 Super Snake automobile; however as there was exactly one 67' Shelby SS manufactured with a one-of-a-kind 427 c/u 600 hp engine, it is currently worth somewhere north of $1.5 million US dollars on the open market. I therefore drive a Ford Eddie Bauer Explorer SUV instead because the latter I can afford to own. Sometimes, unfortunately, you do have to compromise.....

 

I've heard this advice before, but I'm not willing to leave my career and my life to live somewhere with cheaper housing prices. Maybe that exempts me from sympathy. I guess if there were no chance for me to ever buy here, I would rent forever. 

 

Here's the frustrating bit. A couple years ago, I started casually looking at condos. I was in a lower paying job with no major savings. I went to the bank to find out what I could afford and was told to keep saving. So I did. I worked hard and improved my education and landed a job that pays about $10,000 more per year. My savings grew significantly as a result of having a higher income, as well as a lump sum payment from my former pension plan and a small gift from a relative's estate. I attended a couple open houses and started thinking about getting an agent. Then, I got an email from the owner of the place I was renting. She wanted to move back in wasn't going to renew my lease. I had a month to find a new place. I was fortunate enough to have a friend with a relative in a property management company and was able to sign the lease on a place before it was posted anywhere. With all the stress of moving, I had to give up on looking at condos. Six months later, I got an agent and started looking again. But when I talked to the mortgage brokers, I found out that the new stress test had just been introduced. Combining that with the rapid increase of housing prices, I was suddenly back to where I started. I worked hard and made sacrifices, but the market outpaced me. 

 

I know I haven't a different perspective than many posters here. I don't think the current system is fair, but others have a right to disagree with me. Despite that, I hope that even the more right-leaning folks can see why I'm a bit salty. 

[qv]

I think I am in a pretty solid financial situation compared to others my age. I've got a solid career in the public service, no debt, and a healthy savings account. What I don't have is enough for 20% down on a condo in Victoria, so I have to pass the new stress test to prove I could still pay the mortgage with a 4.5% interest rate. For a condo that's about 300-350k, I could manage. I wouldn't have extra money for clothes and vacations and fancy restaurants, but I would be able to afford mortgage payments. But the mortgage brokers aren't okay with me paying more than about 40% of my income on my mortgage. So the most they will approve me to pay monthly (in this theoretical 4.5% interest rate situation) is actually significantly less than we are currently paying in rent. It's bizarre.

 

What's wrong with renting? Plenty of things. Spending half my income paying off someone else's mortgage, not being able to make decisions about the space I live in, being vulnerable to eviction if the owner wants to move back in (this happened to me last summer, and the vacancy rate was so low I nearly couldn't find a new place). Most of all, I would love to feel like the housing payments I make every month are an investment in something. Even if the return on my investment is low, it's better than throwing my money out the window every month.

 

The argument that renting is throwing away money (paying someone else's mortgage) is a fallacy. You are not throwing money away, you are getting utility for it. There are many reasons why renting can be better than owning. For example:

 

1. You're not actually building much equity for a while. Early payments mostly go to interest, i.e. rent you are paying to the bank.

 

2. If you need to move or sell for some other reason, transaction costs can eat up any equity you've accumulated. Renting gives you much more flexibility.

 

3. There are many other costs on top of a mortgage: property tax, insurance, city utilities, maintenance, new roof, special assessment (leaky condo), etc. All that money could be going into a Tax Free Savings Account. Meanwhile, when the elevator breaks or the roof leaks, the landlord is on the hook, not you.

 

The mortgage stress test seems pretty reasonable to me. Mortgages at 4.5% were the norm just a few years ago. Do you really want to assume that you'll never have to pay an interest rate like that?

[Szeven]

I've heard this advice before, but I'm not willing to leave my career and my life to live somewhere with cheaper housing prices. Maybe that exempts me from sympathy. I guess if there were no chance for me to ever buy here, I would rent forever. 

 

Here's the frustrating bit. A couple years ago, I started casually looking at condos. I was in a lower paying job with no major savings. I went to the bank to find out what I could afford and was told to keep saving. So I did. I worked hard and improved my education and landed a job that pays about $10,000 more per year. My savings grew significantly as a result of having a higher income, as well as a lump sum payment from my former pension plan and a small gift from a relative's estate. I attended a couple open houses and started thinking about getting an agent. Then, I got an email from the owner of the place I was renting. She wanted to move back in wasn't going to renew my lease. I had a month to find a new place. I was fortunate enough to have a friend with a relative in a property management company and was able to sign the lease on a place before it was posted anywhere. With all the stress of moving, I had to give up on looking at condos. Six months later, I got an agent and started looking again. But when I talked to the mortgage brokers, I found out that the new stress test had just been introduced. Combining that with the rapid increase of housing prices, I was suddenly back to where I started. I worked hard and made sacrifices, but the market outpaced me. 

 

I know I haven't a different perspective than many posters here. I don't think the current system is fair, but others have a right to disagree with me. Despite that, I hope that even the more right-leaning folks can see why I'm a bit salty. 

 

My advice (not that anyones asking) is document these posts. Print them or something and look back at them in a year, 2 years, 10 years. I think you will be surprised at how all this energy is being spent and what the end result is going to be. 

[LeoVictoria]

Perfectly reasonable to be annoyed by the stress test. Buyers before you were not subject to it so they bid up prices and now you have to buy a higher priced property and qualify at a higher rate.

I think it's good policy but the people that get trapped in the crossover got a raw deal.

Can't recall if I already asked you, did you look into the BC Home Partnership plan?

[Mike K.]

With the partnership plan, do you need to save up only 15% to avoid the stress test?

[aastra]

 

My advice (not that anyone is asking) is...

 

Isn't this VV's unofficial motto?

[LeoVictoria]

With the partnership plan, do you need to save up only 15% to avoid the stress test?

 

You need to be approved for an insured mortgage to be eligible for the program, so I don't think you can avoid the stress test.   Not sure though, check with a mortgage broker.

[PraiseKek]

 

 

I know I haven't a different perspective than many posters here. I don't think the current system is fair, but others have a right to disagree with me. Despite that, I hope that even the more right-leaning folks can see why I'm a bit salty. 

The irony here is Trudeau is the one who introduced the stress test spiff.

[LeoVictoria]

The irony here is Trudeau is the one who introduced the stress test spiff.

 

CMHC has been on a credit tightening cycle since the fall of 2008.   Measures have come to tighten credit once or twice a year since then.  

[FirstTimeHomeCrier]

The irony here is Trudeau is the one who introduced the stress test spiff.

 

Don't assume everyone who is left-leaning is a Trudeau supporter.

[nerka]

Cold comfort to someone that wants to buy, but there are tons of advantages to renting:

 

Spend weekends and evenings doing fun things instead of fixing things.

No big unexpected bills

Flexibility to save money for other things

Way more flexibility to move for career reasons.

 

I rented till I was 38 and unfortunately missed the start of the big housing boom, but I did enjoy the carefree lifestyle.

 

FTHC have you checked out housing cooperatives? There are a ton of them in Greater Victoria. They all have waiting lists, but several of my friends have found spots in coops and ended up with excellent and affordable situations. One couple who went the coop route could have bought, but they would have had to compromise so severely that the coop option made better sense.