Let’s just get the f*%# out of here: getting off the Vancouver property ladder.
Okay…how many of you have actually thought about just throwing in the towel and either cashing in (if you already own) or leaving Vancouver altogether? Every few months or so, my husband and I have “the talk”.
The MLS (a.k.a., Realtor.ca) is like crack to me. I just can’t stop looking at houses. I troll around on there at least three times a week to check out the recent listings in my neighbourhood. This is because, although I love my home, I know our family will outgrow it. We have two bedrooms. Our son and daughter currently share one. Therefore, we will need to either create another bedroom or move to a place that has three. Unfortunately, our options are few. We could sell our home. When be purchased it almost 4 years ago, our neighbourhood was affordable to us. Now, with the huge increase in housing prices and lack of increase to our own salaries, we couldn’t afford our own house if we were to buy it today. So…yes, we could sell our home…but where would we go?
Option one is that we’d move out further, into the suburbs.
Now, we have explored the suburban option. There are so many beautiful, amazing communities beyond “Vancouver” proper. And the bang that you get for your buck is amazing. What gets us every time, however, and deters us from making that move right now are two things. Family and work. I am really, really close to my family. I love that my kids can pop over to Nana and Grandad’s anytime. I have a special needs brother who, as my parents age, I would like to be close by for as part of an extended support network. My work (and my husband’s) is based in the city. The idea of spending so much time commuting is a concept that I can’t get my head around. I know lots of people do it every single day…however, when you have never had to commute, I think it would take some time to get used to. So…for now…a move further out of the city is off the table.
Another option, would be to downsize out of a house. I thought I liked this idea until I did the math. Perhaps it is because I work full-time and maintaining a house is, in fact, a full time job in itself. We’ve looked at townhouses in our area (very few ever become available) and although they are lovely…they are expensive. We recently a viewed a 3 bedroom townhome not far away from where we currently live. It was $200K more than what we paid for our house!! So basically, we would be downsizing without benefiting financially, which to me doesn’t really make sense.
Option 3…sell our house and rent for a while hoping for a major market correction to come. There are so many unknowns with this option. Will the market actually correct? If it does, would it be enough for us to get back on the property ladder? I don’t deal well in uncertainly, so – unless we did it with the intention of never buying in Vancouver again – this option is null and void to me.
Finally, we’ve even discussed leaving Vancouver altogether and moving abroad (we both have Irish citizenship, so can basically live and work anywhere in the European Union). It’s kind of a conversation that doesn’t go anywhere, however. My family is here and so are my friends. And I’m a person who likes having those people close by. We’ve lived abroad, away from family and friends and it’s not something we feel we could do “forever”. So…moving to a quaint European town or sunny tropical island isn’t an option…as heavenly as that sounds!
So…for now we’re staying put. As for what we’ll do when the time comes that it’s no longer really appropriate for our kids to share a room, we’ll cross that bridge when we come to it. I realize that this is a “first world problem,” and want to convey that I know how lucky and blessed I am to have a roof over my head, food in my belly and family and friends around me. However, it’s still something I think about…and am wondering if you do the same?
Moving to the suburbs is false economy as your commuting costs rise and your time in your vehicle increases. If you can hang in and somehow turn another room into a bedroom you would be saving yourself a lot of grief.
I would buy a place and move into the burbs, and rent out your current house. I don’t know how much income your household makes though so this might not be possible. I’m not a big fan of option 3 myself :S
Oh my goodness yes! We think about this all the time. The conversation always comes back to the same thing though – to stay put. Our kids are older now 12 and 10 and both firmly against moving away. I wonder if the quality of life would be better in a town like Nelson (I can’t think of any other place in BC. Ladysmith?) I grew up in a small(er) town though and as a teenager there wasn’t much to do so there was a lot of drinking and driving etc. I guess the city is better for teens. We live in a small 3 bedroom co-op. The location is wonderful and it’s set up like a townhouse so we’ve got it pretty good. A 3-bedroom townhouse up the road from us is for sale for $700,000.
The selling the house and waiting for a correction thing is something my husband has talked about a lot. We bought ten years ago, so are in a good position equity-wise, and he believes a correction is definitely coming. And the truth is that even if it didn’t, we’d have a pretty good nest egg we could invest and use the return to pay at least part of the rent. But I’m not interested in renting or uncertainty or, hell, moving all the stuff we’ve accumulated here in all these years, so we’re staying put. It may well be the wrong financial decision, but I think it’s the right emotional one for us/me right now.
We did this for 8 years – mls peep shows every night searching for a solution!
We eventually did the “sell out” and got out of the city and moved to Saltspring. It has been the best decision we ever made. Sometimes we try to patchwork solutions when in fact it is impossible. I say . . leap! Into whatever your heart most desires!
My husband spends $500 a month in gas,commuting from Abbotsford to Richmond and spends at least 3 hours in his car a day. That’s a full 30 DAYS in his car a year, just to get to work…don’t move, it’s not worth it!
There are three other options that require you buying a bigger house:)
1. Buy a bigger house with your parents. Have separate living areas to keep your privacy and sanity.
2. Buy a bigger house with mortgage helper suites. When the time comes your parents could move in, and your brother too.
3. With a bigger house you could rent rooms to international students. You’d bring in an income and have the benefit of getting to know people from around the world. Having students means you cook for them but there is no long term commitment like with renters. And the income is tax free:)
We are in a similar dilemma but we decided not to buy in this market. We live in a coop and are surrounded by tons of families. When we do buy, we will probably buy a bigger house that can accommodate all these options and still be able to stay in Vancouver.
Great ideas by Leanne. A friend is currently building an up-down duplex similar to what you are describing in (1). His family will live downstairs, his parents will live upstairs. Two separate entrances so they can come and go as they please.
This enables them to live in a newly-constructed house in a neighbourhood they would never be able to afford on their own. The parents get single-level living which will work well for them as they age. A great solution, if your situation permits.
You articulate the dilemma facing young families in the City of Vancouver very well. Vancouver’s current zoning districts do not provide a supply of housing that serves young families well at all. I would characterize the problem as follows:
(1) There is ample supply of apartments for young singles, couples and downsizers. This is the vast majority of new supply in the marketplace. This product generally does not work well for families and is not what most families would desire or demand.
(2) There is some limited supply of townhomes in the market, but there are problems with these – (a) not enough of them, especially older, more affordable units and (b) the configuration of these – being higher-density with underground parking typically – doesn’t work well for a family. Families need private outdoor space that is contiguous with the home’s main floor (ideally with the kitchen). A common courtyard, a balcony, roof deck or front stoop are all nice features but these are not what families require.
(3) There is a large (but slowly dwindling) supply of single-family homes. With land costs what they are, these are generaly too expensive for anyone with a household income of less than $150k.
So the young family, even in the upper-middle income range, is completely underserved in the City. We need to fix this. There is currently almost no supply of truly family-friendly housing in the $500k-$750k range.
We can’t change land values in Vancouver. They will continue to escalate, as long as the economy remains healthy and this city remains one of the most desirable/liveable places on the planet. The expensive land close to the core of the city is being woefully underutilized with inefficient single-family housing. This underutilization of land is a restriction on supply which only helps to increase the cost of housing.
The only solution to this, as I see it, is to rezone significant swathes of the city’s single-family lots for family-friendly row houses. This would be a density comparable to the RT-zoned duplex districts, but in a form that works better for families. Unfortunately, because we are coming so late to the party on this, there is no existing older stock of this kind of housing. Anything new-built will by definition have to be expensive. It will take decades to get an adequate stock of this housing form, in price ranges that people will be able to afford.
The longer the single-familiy NIMBYs rule, the worse this problem will get. More and more of our young creative people who are the future of this economy will continue to have the same thoughts that you are describing.
You could also look around for older townhouses with 3 bedrooms that are not going to cost more than your house. I live in a 3 bedroom townhouse in North Van. I bought it 3 years ago, totally renovated, for $515,000. Still outrageous I think, but I’m betting that’s less than what you paid for your house. It’s probably less square footage but it would have the 3rd bedroom. And although your kids would not be able to “pop over” to their grandparents, you are not hours away either and the commute downtown is really not bad. Just another option to think about. I think the townhouses in my complex are now selling for around $545,000. They are 20 years old.
We have definitely had this conversation and actually sold and are renting for the time being. We have a toddler and needed more space than we had in our loft apartment but could not afford to buy a single family home which is what we really want.
We now have a large 3 bedroom condo in the west end very close to Stanley Park and love our space. We are spending less in rent than we were on mortgage, condo fees etc with our old place and have twice as much space.
We debate constantly about whether we’ll buy in Vancouver again or save and buy vacation property out of the city and continue to rent in the city.
Unless the market falls substantially we may stay renters despite earning over $300K/year!
We moved back to my hometown of Vancouver from London (England) and decided immediately to move to Squamish. The appeal of a small town was fantastic at the time (sick of big cities, and didn’t want to live in a thinks-it-is-a-big-city town – Vancouver) but from your point of view, I still think it is worth considering.
Pros
-we have a 3 bedroom half duplex PLUS 1 bed suite (which pays half our mortgage) and our lot is 1/4 of an acre, for less than $450K
-the neighbourhood is fantastic and the the sense of community is quite incredible
-the schools aren’t amazing right now, but are bound to get better as there are a lot of people like me who have moved up here and had kids.
-It is a young community! 20% are under 5. That’s nicer than an old community.
-You feel safe (despite the bears and cougars.)
-the friends we have made here are like family
-little small town things, like never waiting more than 30 minutes in emergency (which seems to be a frequent hang out of pregnant people or those with small children)
Cons
-the commuting does suck, but we carpool which makes for nice adult conversation there and back, and we only end up having to drive two days a week which saves incredibly on gas and car mileage
-family is in Vancouver. But the thing is, they learn to drive across the bridge. And the friends we have made here have more than made up for the fact that my family is not very hands on in the raising of our son. You don’t NEED to be surrounded by family to raise a child, as long as you are surrounded by great people who care about them and have their best interests at heart, then that is just as good.
-the clothes shopping isn’t great. But hey, you can buy everything you need online.
Love this post. My wife and I often talk about selling and moving, less so because we want to do it and more because it is such an important decision that I think it is worth examining on a regular basis just to make sure that we are continuing to do the right thing for ourselves and the family. For many of the reasons that you wrote about we have decided to stay put for now. If it makes you feel any better, we are also in a house that is arguably smaller than ideal (3 bedroom house, 4 kids). I think that the secret is to think of yourself as actually short the housing market right now and in a very good place. If the market sharply corrects, then the difference in price between your house and the house that you want will become much smaller, if it continues to go up against all reason, you’ll have more of a monetary reward to compensate you for the loss of lifestyle if you decide to move further out into the suburbs.
One final note, the whole bigger house/yard tradeoff versus less commuting time and closer to family and work is fascinating to me. I know that for some the dream is a big house/backyard and that they are happy to move a significant amount of commuting distance to get that. Or if your family lives out in the burbs then that’s understandable if you want to live out there. Personally though, there are so few spare hours in the day, I’d happily give up living area for more time. People seem to think nothing of a one hour commute, but between work, mealtimes, chores, getting ready for bed and all the sundry other stuff involved with a family, how much free time do you really have a day? 2,3 hours max? What’s the use of a big house in the burbs if your commute burns a large part of that leisure time?
A very valid point but the reason for moving out of Vancouver should not ONLY be because of property prices. There are other benefits too. Where I live, it is safer. Kids can play on the street. You know all of your neighbours, really well. Everyone is friendly. People help each other out. The environment is basically the opposite of what I experienced in Vancouver West Side (which was even less friendly than London, England.) If it is simply about space vs commuting time, I would totally agree with you. But there are many other reasons to leave a city, and those should be explored, given that Vancouver has little to offer in terms of salaries vs. property prices.
Sell now while you can before you get stuck with little or negative equity. A big correction is coming, already prices are 150k off the peak in February. Rent 3 years or so, save and invest in the mean time, then upgrade to the bigger house which will be 20% or more cheaper than today.
JLR, that is a very risky strategy (and in my mind, a foolish one). You are advising people to gamble with their family’s financial security. Take the following into consideration:
(1) Transactions costs alone would eat up a substantial chunk of the gains you think you will gain. Not to mention mortgage prepayment penalties.
(2) As for “save and invest” in the mean time – how much are you going to be able to save on top of rent, and what rate of after-tax return are you going to earn on your family’s life savings? Paying down your existing mortgage earns you an after-tax guaranteed return of whatever your mortgage rate is. You would need to earn double that guaranteed in your investment portfolio to stay even…a 6-8% guaranteed rate of return investing in the markets is likely not achievable for most people these days. Not to mention the discipline of forced savings which most renters can’t match.
(3) I have heard a lot of people talk about how they are waiting for this inevitable big correction. What do you think is going to happen when all of those people finally decide now is the time to buy? Exactly.
(4) Finally, what do you think mortgage rates will be in 3 years? Our low mortgage rates are the biggest reason that prices are where they are. Any savings brought about by a decrease in prices will probably be offset by higher mortgage interest costs. Better to renew or blend-and-extend your existing mortgage, you can get 5-year money for 2.85% and will pay off more principal guaranteed in 5 years than you could ever hope to make through your risky strategy, not to mention the stress and turmoil you’d be putting your family through.
I admit the thought of a windfall gain is a tempting one. I have had the same thought myself. But it always comes back to: what if you’re wrong? It’s one thing to try to time the market with your investments. It is another thing altogether to try to do that with your family home. You have to live somewhere, and the risk of missing the market, or losing money in your investments, or not being able to secure an attractive-enough mortgage when you do jump back in, is not one I’d be willing to take with my family.
Bottom line is, if your house works for you and your family, stay put. If it doesn’t, then it makes sense to evaluate other alternatives.
We face the same choice in the same neighbourhood–I think we live just a few blocks apart.
We have no intention of moving to the burbs though–I LOVE being able to bike & walk where I need to go most of the time. That isn’t really possible in a more spread out area with virtually no cycling infrastructure, like most of the cities around Vancouver proper.
Besides the time spent on the commute from the burbs, there’s no way I’d spend thousands of dollars a year running a car or two that we’d need out there. We don’t need to own one here in Mount Pleasant–we’ve been putting that money into our house, which, regardless of what you think of the state of the market, is a better investment than all the expenses of car ownership.
I’m with Leeanne on the rental suites. This is how we afford a home that’s big enough for the three of us plus room to grow a bit. I’ve never been all that tempted to host homestay students because I don’t think I’d like to have someone living in my space like that long term. But having a suite or two downstairs is really no big deal.
I think about it all the time but we love city culture too much. Renters for life probably but we’ve (mostly) made peace with that.
Just wanted to respond to one thing Richard said about townhouse living (otherwise I agree with all of Richard’s comments. very well put). I actually love the common courtyard for families. It has allowed my daughter to play outside, essentially unsupervised, from about the age of 4, with tons of other kids. We have an enclosed common courtyard and about 10 other kids her age in our complex and they all play together in the summer, so someone can always see them from a window or pop out to see what they’re up to. It’s been great. My friends who live in houses don’t have that. They can’t let their kids just walk out the front door and go play until much much older.
I agree, Nicola. We are very close with our neighbours a few doors down and have said if we lived right next door to each other, we would take down our fences to have one big common yard!
Point taken re: courtyards. When we lives in a townhouse while our house was under construction, our kids were much younger (1 and 3) and the courtyard was less than ideal.
The value of your home is the land not the house. Renovate your house to meet your needs. Or sell, buy a townhouse in false creek on leased land that expires in 2030 and wait for your inheritance.
Richard,
Locking in a real gain by selling today isn’t a risk, it’s a sure way to capitalize from the unrealistic and unsustainable speculative Vancouver RE market of the past 10 years. Betting on the Vancouver RE market to continue to perform even close to the way it has over the past ten years or even do anything more than go sideways for the next decade is a much greater risk.
Regardless of the point of view it will be interesting to have this conversation 5 years from now. Having ridden though several boom and bust cycles now over the past 40 years I can say that many people in the current Vancouver RE market will have a very different perspective of home ownership by then.
What really makes me mad is there are thousands of people out there like this blogger, stuck between a rock and hard place, just wanting to do a little something to make their families happy. It’s the average person that ultimately is going to suffer the pain of the market hangover, due to the greed of the professional flipper and RE industry. I hope I’m wrong but my personal history and the views of most unbiased RE experts says to get off the ship now before it sinks.
Have you considered Richmond? Well maybe not the center of Richmond, but Steveston? It’s really only a half hour drive into downtown (if you leave by 7:15 AM) and home isn’t much longer. I parked in my building at work for $150/month. Or, you can park at the River Rock and take the Canada Line in now – 20 mins to downtown. Not sure how prices would compare to the burbs further East, but I’d never consider anywhere else in the Lower Mainland.
Sorry, I meant to add, I even had parking for $30/month when I rented a space from someone who lived in a downtown West End apartment building. Took me 7 minutes to hoof it to my office. Then I moved jobs and my new office was a bit too far from the apartment building, so I started paying more for parking.
I love your real estate perspective. It does seem crazy to be spending so much of our hard earned income on a house! I know, it is a home, not JUST a house, but unbelievable.
I am a shift worker and moved out to the valley years ago. Commute into Vancouver about 160 days a year in off peak hours. I love working in Vancouver, but really love living in the valley in our large, roomy house with a great view and a big pool. I still have money to travel and spend on activities for my kids (which are expensive!)
I like how you compare properties in Vancouver to other cities outside of the area…how about this one a little closer? http://bit.ly/T6ilew Just an example of the bang you can get for your buck.
Moving somewhere warmer also has a certain appeal though!