We lovingly refer to our laneway house as the servant’s quarters, as it sits on top of a garage in the alley behind what is essentially a $3 million home. I’ve never been inside the main house, which looks very big and lovely from where we are. But we’ll never buy a home like that in Vancouver.
That’s why when we saw a piece of property in our neighbourhood being developed into multiple units, we were intrigued. I pass it every day on my way to work, so it’s been interesting to see the progress and speculate on how much it would cost to buy. From what I can tell, the property is divided into one stand alone unit (the laneway), and the main house is being sold as four separate units (two 1-bed units, and two 3-bed units). This is the only way in Vancouver to actually buy a laneway house – you’re essentially buying into a small strata, where you have to pay monthly maintenance fees towards the upkeep of the common property. You can’t buy a laneway house outright.
Related: I live in a Vancouver laneway house
Anyway, I was mostly interested in how much the laneway house would cost, as it’s the kind of place we are living in now. And since neither of us are interested in a big house or a big mortgage, we both agreed that the perfect sized house for us in the future would be about 900-1000 sq.ft.
— Krystal Yee (@krystalatwork) April 26, 2016
Okay, so the new laneway house is nicer than ours. It’s 2 bed + den/2.5 bath and 1,077 sq.ft. Ours is 2 bed/1 bath and just under 700 sq.ft. Our home is nice, but their offering is bigger, has a secure parking spot, and comes with a second floor balcony (which I wish we had). But is it worth $1,400,000?
Even if you scraped together a 20% down payment of $280k, your monthly mortgage payment would be over $5k! How can anyone afford this?
— Krystal Yee (@krystalatwork) April 26, 2016
I’ve thought about this a lot, and I can’t figure out how anyone could afford to pay $1.4m for a laneway house (and that’s not even considering a multiple offer or bidding war scenario which would drive the price up). It’s not like you have a basement suite to rent out to help offset the cost of the mortgage! If you were to estimate monthly costs at $5,800 ($5,000 mortgage + $50 hydro + $350 maintenance + $400 taxes), you’d need monthly net income of about $16,500 to stay within a 30% housing cost budget. Ha!
So then I ran the numbers through a mortgage calculator using the list price of $1,398,000 and a 20% down payment of $279,600 to see how much interest you’d pay in the first 5 years of ownership.
The interest alone is more than then $19,800 we pay per year for our place. And that doesn’t even take into consideration the $4,080 in maintenance fees (which can only go up), or the $4,900 in property tax – which would mean whoever buys that home would see $36,425 disappear in the first year alone … and pay $128,794 in interest over 5 years. Which makes me wonder – why would anyone buy real estate in Vancouver when you can rent a similar home in a similar neighbourhood for a fraction of the price?
Related: From home ownership to renting
It seems crazy to invest so much money into one single asset – an “asset” in a market that is so unstable. But I’m pretty sure that all 5 units of this property will sell this weekend when they have their first open house (they’ve probably already received offers!).
I’ve always loved following the real estate market in Vancouver because it’s so fascinating. Even now that I’m renting and even though I know we’ll never buy a house in Vancouver, it’s still so interesting to me. I’ll be keeping an eye out on more multi-unit houses going up for sale in my neighbourhood, as well as other laneways. And in the meantime, we’ve both been looking online at vacant land on Vancouver Island, as well as the cost of pre-fab houses, tiny homes, and even yurts. :) It’s a fantasy for now, but could become reality in the future since the money we’re saving from renting could potentially pay for land and/or a home outright elsewhere in the province.
For RD’s birthday, I rented us a cabin about an hour north of Vancouver in the Upper Squamish Valley (and about 25km off the main Sea-to-Sky highway) through AirBnB.
We brought our own groceries with us and made most of our own meals in the cabin. This saved a ton – but also we were about a 25 min. drive from any store, so it made sense to bring everything with us anyway.
Friday after work, we left Vancouver and headed into Squamish for dinner at the Howe Sound Brew Pub. Cait happened to be in town at the same time, as well as a few Toronto gals I knew who were there for a conference, so it was nice to run into them and have a bit of a catch up!
We didn’t stay too long at the pub though, because we wanted to get to our cabin before it got dark. The cabin itself was super cute and did not disappoint. It was located on a small hobby farm very close to Cloudburst Mountain, and just a short walk down to the Squamish River. This was probably one of my favourite AirBnB stays because the hosts were super nice people, and the area is so beautiful. Plus the tiny cabin was perfect – and it made us start thinking about what kind of cabin we’d like to own in the future. (If you’re ever thinking of staying in the area and would like more info on this listing, send me a message!)
The next morning we went for a walk and explored Anderson Beach. I love places like this where there’s no one else around, and you can just relax. We spent a couple hours at the beach without seeing a single person, but as we were walking back to the cabin, the parade of cars started rolling in. It’s always worth getting up a little early! :)
In the afternoon, we hopped in the car and headed up a few logging roads to explore the area a little more. There are a bunch of great hikes I’ve always wanted to do in the area (and we even found a couple local trails neither of us had heard of before), so it was nice to check out the roads we’d have to take to get there this summer.
Sunday morning we had a leisurely morning as we sipped coffee on the porch.
Then it was off to meet Cait for a walk around Alice and Stump Lake – and then lunch at a cute restaurant in Brackendale.
This was a really nice weekend break from city life, and even though poor RD was sick the entire time, we made the best of the time we had. :) This year of local travel has been pretty successful so far, and we’ll definitely be back this summer to get into the mountains and explore.
Note: this post was sponsored by Meridian, however the views and opinions expressed are my own.
I’m always looking for new ways to improve my monthly budgeting and find different ways to save money. I also love learning about new and innovative ways that companies are helping consumers managing their finances (because not everyone is as involved with their money as I am!).
One of these companies is the credit union, Meridian. They’ve introduced a feature that currently doesn’t exist in Canada – the ability to link your chequing account with your high interest savings account through something called their Sweep feature.
Let me explain why this could be a valuable tool for you:
This Sweep feature lets you set a minimum and maximum account balance to your chequing account. What this means is that funds will be automatically transferred between your chequing and savings accounts to keep your balance within the target you’ve set.
For example, let’s say you’ve set your minimum account balance as $100 and your maximum at $300. If your chequing account exceeds $300, the Sweep feature will automatically transfer the extra funds into your savings account. And if you fall below your minimum of $100, it will transfer money from your savings account back into your chequing.
This benefits you in two ways:
- You will always be maximizing your saving potential by having the majority of your cash in Meridian’s high interest savings account (currently at 1.50%).
- You will never go into overdraft or be short on funds for a bill (as long as you have the money in savings to cover your expenses), because the Sweep feature transfers cash into your chequing account automatically.
Personally I transfer money between my chequing and savings account manually because I like logging into online banking every day and being involved with my money. But not everyone is like that (I think PF bloggers are a special breed), and I certainly couldn’t be logging in all the time if I were on an extended vacation where internet is spotty (like my upcoming 3-week trip to Northern BC and Yukon!).
Overall, I’m impressed with this offering, and am surprised that it hasn’t existed previously in Canada, because it just makes sense. I love that for people who aren’t actively engaged in online banking on a daily basis, they can still maximize their savings potential with this feature without fear of incurring a dreaded overdraft charge (as long as they have the funds in their savings account)!
Please check out the Meridian website for more information on the credit union, as well as the Sweep feature!
How likely are you to use the Meridian Sweep feature?