Thoughts on our open house tour
Last weekend, our Realtor took us on an open house tour in our desired neighbourhood. We wanted to see in person what we could afford, and what we actually wanted in a future home. Because it’s fine to start jotting down a list of condo requirements, but it’s completely different to actually be in the space and figure out exactly what you want.
I mentioned on Twitter a few weeks ago that our mortgage broker said we’d be pre-approved for an $850k mortgage. We both have good jobs, no debt, and a nice down payment, but still I couldn’t help but be shocked. I thought it would be much lower considering I only got approved based on income from my full time job, and didn’t take into consideration my average freelance earnings over the last 3-4 years. In what world would anyone be able to pay a $3,700/month mortgage?
The rule of thumb is that the cost of a home should be no more than three times your gross household income – which would put us firmly in the $475-500k range, which felt a lot better.
So we settled on looking at places in the $400-500k range (which is just a step above entry-level in the Lower Mainland lol) and picked a list of places to look at.
The first Open House was for a 2 bed/2 bath condo listed at around $400k, and it absolutely shocked me. There were literally dozens (!!!) of people lined up to view it by the time we got there. No joke. They had to take people through in waves because we all couldn’t fit at the same time … and who knows how many saw it in the previous 2 hours of the Open House. After we saw it, my Realtor said the condo probably should have been listed at closer to $475k, and we found out later that it eventually sold for well over $500k. Okay… moving on.
After that one, we saw a mix of other condos – some in more “entry level” buildings, some that were used for rental income (one tenant just sat on the couch while we poked around … which was weird), a beautiful (but small) condo in a heritage building, and a nice warehouse conversion loft.
Here are some observations I took away from that day … most of them didn’t come as a huge shock, but it was interesting to see with my own eyes:
- There were a lot of young people with their parents. I don’t know if it’s because their parents were co-signing, gifting money, or if they just wanted their parents along, but I was definitely surprised.
- One of the listing Realtors commented that he was seeing a lot of activity from younger buyers because they’re wanting to take advantage of the BC Government’s Home Partnership program, which provides loans up to $37,500 (or up to 5% of the purchase price) which are interest-free and payment-free for the first 5 years.
- Most listings were going to multiple offers.
- Most listings were being sold above asking price.
- Since most people are getting priced out of the detached housing market here in Vancouver and the surrounding area, that’s putting a lot of pressure and competition on the condo market.
- Most condos seem to be selling within 7-10 days of being listed. FAST. Not at all like when I was buying my first home back in 2011.
Personally, I was a little turned off by how competitive the market is. I’m annoyed at how listings are purposely priced low in order to push the price tens of thousands of dollars above asking. I hate the idea of multiple offers and bidding wars. I hate how crowded and busy Open Houses are. And I hate that look of desperation I can see on the faces of prospective buyers.
But I also see how easily it can be to get carried away. Emotions get involved when it comes to buying a home, no matter how much you swear you’ll think and act logically … and when you’re faced with a decision to bid $5-10k more or risk losing your “dream home,” all of a sudden it doesn’t seem like such a big deal to slap some more debt onto your back … even though $5-10k could represent an entire year (or more) of savings.
I know that RD are lucky in that we can afford to buy exactly what we’re looking for, even in this over-heated market. But it doesn’t mean that we’re going to. Maybe we’ll end up buying this year, or maybe we’ll just keep watching the insanity from the sidelines.
Author: Krystal Yee
I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.