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We will never be homeowners in Vancouver

We will never be homeowners in Vancouver. Combined, RD and I will gross about $165,000-175,000 this year. Our housing costs are relatively low ($1,650/month rent), and we are both good savers with enough in the bank for a decent down payment. The problem is, we live in Vancouver. And according to a recent Globe and Mail article, the average price of detached houses sold in November 2015 reached $2.53-million – which is up 27.7% from November 2014.

More than 91% of 66,752 detached homes surveyed within Vancouver had assessed values of at least $1-million on July 1, 2015, and prices have jumped at least 10% since then.

I just quickly plugged our numbers into a mortgage affordability calculator. Even if we spent a year or two saving a bit more money, we will still be forever priced out of the detached housing market here in Vancouver.

scotiabank_mortgageaffordability1

Based on the above numbers, the bank says we could afford a maximum purchase price of $982,000 (LOL), but we’d also be responsible for almost $20,000 in CMHC mortgage insurance (LOL x2). And our monthly mortgage payments would be $3,800? Hahaha just, no. But I went to Realtor.ca anyway and plugged in a search for detached houses in the Vancouver area that were less than $950,000 – and this is what I found:

housesinvancouver

A boat. In all of Vancouver, we could afford to live on a 480 sq.ft. boat. Sure that boat only costs $300,000 – but you also have to pay $9,700 in moorage fees each year, as well as an annual $1,870 licensing fee. And even still, you’re living on a boat.

As depressing as these numbers are, I’ve never pictured myself living in Vancouver forever. Neither has RD. Even though we both love our neighbourhood, our tiny house, and our jobs right now, I’ve never considered putting down permanent roots in this city. Vancouver is amazing, and I can absolutely see why it is so appealing. But it was always my plan to spend 10 years here gaining experience, and then move back to Victoria where I could use that experience to get a well-paying job. I don’t know if I’ll make it back in that 10 year time frame, but I think long-term living somewhere outside of this city is going to happen. At some point.

In conclusion, it’s obvious we will never EVER be homeowners in Vancouver. And I’m okay with that. Really. Because even if we could afford something, it doesn’t make sense to forfeit everything else in life that we love – like travel and early retirement and living a comfortable life with plenty of disposable income – just to own the roof over our heads. It’s also a very unsettling thought to have so much money tied up in a house that will drop in value when a housing correction hits Vancouver. So we’ll happily continue to pay 10% of our gross income towards rent, and maybe one day we’ll be ready to buy a home in another city … where we can afford more than a boat. :)

On renting or buying in Vancouver

Vancouver is expensive.

Okay, yes, stating the obvious. I’ve known this for years,  yet I never really understood it until I started looking for a place to live close to downtown Vancouver. I’ve always lived in the suburbs – whether it was Burnaby, New Westminster, or Port Coquitlam. Rent and housing is cheaper out here – not by much – but definitely manageable.

Now that I’m about three weeks into my search for a new place to live, I finally understand what people are talking about when they describe how horrible the rental and real estate market is in Vancouver. For $1,300 to $1,400 in rent, I could get a small outdated apartment – that is if I can snap it up fast enough off of Craigslist. It seems like as soon as they are posted, they’re taken down. So after a while, I started increasing the amount I was willing to pay in rent. Because, the lifestyle is worth not having the commute, right? For $1,500 to $1,600 I’ll get a more modern (but definitely smaller) apartment.

And it was at that moment – when I briefly considered spending $1,500+ on rent – that I decided to look at potentially buying a home in Vancouver. With a budget of around what my current home is worth, I got to work with my Realtor to look at my options. I realized right away I wouldn’t get everything on my checklist. Every place I looked at had something wrong with it – no in-suite laundry, too far away from my preferred neighbourhood, sky high condo fees, or needed a ton of work I just wasn’t willing to take on. There are some things I’m willing to overlook (like no parking – I can park on the street, and I’d be willing to do some renovations), but location and monthly condo fees are deal breakers for me.

So now I feel a bit stuck. I don’t want to live in the suburbs. I don’t want a roommate. I don’t want to pay $1,500/month in rent. And I don’t want to buy another condo if I can’t find what I’m looking for.

The good thing is that I have time. I’m in no rush to sell my place. The bad news is that the thought of trying to find a new place to live is making me a bit stressed out at the moment. :)

P.S. I am sorry for coming back to the blog and then disappearing again. Things got crazy for a while with work (summer holidays means a way bigger workload for me) as well as in my personal life, but it has all settled down now.

Breaking down my cost of renting vs. owning

Over the last few days I started calculating how much it would cost me to sell my home in the suburbs and move downtown. After a feeble attempt at finding a condo in Vancouver within my price range (that wasn’t a complete dump), I’ve come to the (obvious) realization that I’ll be a renter once I move. And I’m okay with that, because there are actually a lot of options for me to choose from.

So in order to see how much I would save by moving downtown, I decided to take a typical monthly budget with my mortgage and compare it to what I would be paying if I were renting instead:

mortgage_vs_rent

Note: Rent in the area I want can vary in price from $750/month micro-lofts to $6000/month luxury oceanfront condos. While I actually do find the idea of living in a micro-loft appealing, for the purposes of this exercise, I went with $1,200/month rent – which is slightly lower than the average of around $1,400 that I was finding.

So based on the numbers above, I’d be saving $400 month. Huge money to me. Not only that, but I’d be cutting down on my commute (most places I looked at I could walk to work), and I’d be within walking distance to a lot of the things that I love to do in this city.

There are drawbacks though. First of all, according to my mortgage terms, I’d have to pay approximately $1,900 to back out of my mortgage. Not as much as I thought I’d have to pay, but still a significant amount. And for field hockey and visiting my friends, I’d have a longer commute from downtown because obviously I’d be farther away. But I know I’d be happier moving, so I think the positives outweigh the negatives.

$400 extra in my budget means that I could bring my retirement contributions up towards the $1,200-$1,300/month range with no real effort, and I find that extremely appealing. It then becomes feasible to start looking at potentially being able to put away closer to 50% of my income from my full-time job towards retirement, but one step at a time I suppose. :)

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