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First time property buyers.


Gustavo Fring

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Anyone here just like me, are hoping to buy property soon?

I've talked to a mortgage broker just recently and gave me some sound advice. Apparently the market isn't like what it was pre 2007 where you can buy condos and make 50,000 within the year. Some condo owners these days are slightly making less or a tiny bit more on their equity.

I'm planning to get a condo within the next year or two, my goal is to have one before my 25th bday (the advantages of going straight to the workforce instead of choosing an expensive university education).

I was wondering if anyone has any advice or a disturbing experience ya'll like to share.

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Derek Hynes was thinking like a lot of Vancouverites when he purchased his one-bedroom condo in one of Surrey’s new towers. He thought its value would rise each year, enough to make the purchase an investment in his future. He’d build equity until he had enough to purchase a bigger place, maybe even the down payment on a house.

The expectation that every home should build equity is a hangover from the pre-2008 years, when it seemed that real estate had nowhere to go but up, up, up. Average income earners were purchasing presale units and flipping them by the time they were completed, pocketing $50,000 or so in the process. Those days are long over. A shift is underway. As many condo owners who purchased five years ago and are trying to sell today can attest, the equity simply did not materialize. They are often breaking even, or selling for slightly more or less. Today, a condo in Vancouver is no longer viewed as a winning investment, so much as affordable housing and forced savings plan.

And if you consider that mortgage payments are still higher than those in Toronto, condos aren’t even that affordable. A recently released real estate report on Canadian cities says: “Despite the 2012 drop in Vancouver’s median condominium price and a further decline expected in 2013, the area’s affordability is forecast to remain the weakest by far among this report’s eight cities, both this year and throughout the forecast.”

The report, released by the Conference Board of Canada and Genworth Canada, also says that interest and principal payments on the median condo in Vancouver last year were a full 20 per cent more than payments in Toronto. For that reason, Mr. Hynes, who’s become a father since he purchased his 620 sq. ft. condo, will rent out his condo and use the money to rent another place, in an area with better value. Mr. Hynes paid $182,000 for his condo, which was $7,000 below the asking price. He was thinking of selling the unit until he saw that his neighbour on the same floor, with the same suite, has just listed for $179,000.

“I thought it would at least keep its value, so I’m surprised,” Mr. Hynes says. “If it had kept its value, I definitely would have sold right now.”

He says his work colleagues, friends and relatives are facing the same situation. His cousin just sold her condo after renting it out for five years, and she lost money on it.

“It was for the exact same reason I’m losing out,” Mr. Hynes says. “Because there are so many condos in the area.”

There are too many new condos. Since the economic slump of 2009, condo starts have been on the rise, and above the 20-year average ratio of starts-to-population growth. Developments were going up almost as if it were 2007 again.

“This left the inventory of completed but unsold apartment condominiums very high by the past decade’s standards,” says the Genworth/Conference Board of Canada report, which provided those numbers.

With the slump in prices, sales have recently picked up. The benchmark price of an apartment decreased 1.1 per cent from August, 2012, to $366,100 in August this year, according to the Real Estate Board of Greater Vancouver. Sales last month went up 40 per cent over August, 2012.

“Even though the real estate market is booming, the prices mostly remain the same,” says Vadim Marusin, who’s the founder of Estateblock.com, a new real estate search engine that maps the Multiple Listing Service listings and uses colour coding to provide data on education, minority group visibility, education level, income levels, crime, violent crime, schools, daycares, transit and climate in neighbourhoods throughout the Lower Mainland. Want to live among people with a high percentage of university degrees? He’s got the map that will show you. Such neighbourhood profiling might sound cold, but it makes sense in a city that’s more often treated as a land bank than a community.

“If we are talking about Metro Vancouver, the hottest areas are Richmond downtown, Vancouver downtown, and Vancouver west, mostly large low-rises,” Mr. Marusin says.

Urban Analytics’ Michael Ferreira tracks the market on a quarterly basis, and he sees a condo glut that’s softening prices.

“We’ve seen the unsold inventory of product under construction increase steadily over the last year,” he said, seated in a coffee shop with several cranes working in the distance. “Not to the point of concern for oversupply, but certainly to the point where buyer urgency is not as great.”

Because buyers know there is another building coming up, they aren’t pressured to buy, adds Urban Analytics’ analyst Jon Bennest.

“In some markets where there’s a lot of supply and not as much demand, it’s hard to say that we’ll see a price increase. In others where there is less supply and consistent demand, we do see those areas increasing. So it’s very specific to the submarket,” says Mr. Bennest.

“Areas we see flatlining or stabilizing would be Langley and Cloverdale, for example, where you have quite a bit of supply in that market. There is a continual supply base that will make it hard for prices to come up.”

Long-time commercial development analyst Richard Wozny of Site Economics, says that condo equity growth may remain a slow hill to climb.

“After six years of low interest rates and high population growth, the annual value increase was still far less than 1 per cent,” he says. “Owners require rising prices to offset costs associated with mortgage payments, interest rates, property taxes, monthly operating fees, the lack of liquidity, possible vacancy and building depreciation. However, more than 340,000 new condo units – 10,000 per year – are being planned in the Metro Growth strategy.

“Massive new supply, coupled with higher interest rates should continue to keep average condo prices from rising faster than inflation.”

With the city population steadily growing by about 37,000 people a year, the condo will remain the only affordable housing option for a lot of people. And the people with real equity – foreign investors and local boomers – will continue to look to them for investment.

“A lot of people have built equity over time, and have more buying power, and that is what allows our market somehow to keep going, despite the prices,” says Mr. Ferreira.

With condo starts expected to stay low in comparison to the previous decade, and demand expected to rise, condo inventories should become more sustainable, the Conference Board of Canada report says. With the drop in listings and a sales increase in the forecast, prices should slightly rise between 2014 and 2017.

Mr. Hynes says he’ll hang onto his condo long enough to see that happen.

“I’m in a situation where I cannot afford to sell it, so I’m going to be renting it out, probably next month.

“For me, it feels as if I am moving backward in life, but I have no choice, because I need to move on because I have a family now. I am going to move out and go rent a basement suite in Coquitlam.

“I know a lot of people can’t afford their mortgages because there are tons of cheap basement suites in Coquitlam.”

http://www.theglobea...rticle14162513/

This article just discourages me.

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Something else is different today (last 5 years or so) - "flipping" doesn't really work anymore.

Why? All house sales are tracked. If you buy say something today for $309,000, and 1.5 years later put it on the market for $399,000, you won't get it unless you "prove" you put $90,000 into the place.

If you spent $10,000, you will only get (BuyingPrice) + (WhatYouSpent) + (AnyPropertyIncreasIfLucky)

Same goes if you think you're smart and buy a foreclosure - you won't flip it for a huge profit - because every To, Dick and Harry knows what you paid for it.

House prices are no longer just based on what's going on in the market.

Condos, have the least equity gains...

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I wouldn't buy now. Wait and see what happens with Fukushima, Should only be a year or two before we now the extent of the damage it's going to cause here.

Worst case scenario: property value plummets.

Best case scenario: It stays on it's current course of mediocrity.

Those are not good buying conditions.

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My thought has always been, If you're looking to make money, don't buy a condo.

Also, put down more than just the minimum down payment. Make sure you keep your mortgage payment managable, don't max yourself out.

Remember that with a condo, there will be strata rules that you may not like and you'll have to abide by them.

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Something else is different today (last 5 years or so) - "flipping" doesn't really work anymore.

Why? All house sales are tracked. If you buy say something today for $309,000, and 1.5 years later put it on the market for $399,000, you won't get it unless you "prove" you put $90,000 into the place.

If you spent $10,000, you will only get (BuyingPrice) + (WhatYouSpent) + (AnyPropertyIncreasIfLucky)

Same goes if you think you're smart and buy a foreclosure - you won't flip it for a huge profit - because every To, Dick and Harry knows what you paid for it.

House prices are no longer just based on what's going on in the market.

Condos, have the least equity gains...

Not exactly. I invested in a flip with some buddies a year back or so. They paid roughly $375,000 and put around $50,000 into it. It sold for just under $500,000, which was based on the comparables in the area.

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Not exactly. I invested in a flip with some buddies a year back or so. They paid roughly $375,000 and put around $50,000 into it. It sold for just under $500,000, which was based on the comparables in the area.

You could hardly say that was much of a profit at all...what do you and all your buddies make? somewhere around 10k each? Give me a break. More like a waste of time.

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Not exactly. I invested in a flip with some buddies a year back or so. They paid roughly $375,000 and put around $50,000 into it. It sold for just under $500,000, which was based on the comparables in the area.

Then the buyers got ripped off and/or had a bad Realtor.

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Not exactly. I invested in a flip with some buddies a year back or so. They paid roughly $375,000 and put around $50,000 into it. It sold for just under $500,000, which was based on the comparables in the area.

This is exactly whats going on. A lot of people have clashing opinions. I've talked to a more older generation of ppl and they say buying property is a profitable idea. But they are old so they must've bought theirs loong ago when property was cheap.

Like a poster said it does indeed take a lot of balls to flip houses. Balls meaning a helluva lot of patience and heaps amount of luck.

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You could hardly say that was much of a profit at all...what do you and all your buddies make? somewhere around 10k each? Give me a break. More like a waste of time.

Made a little bit more than that, but it was hardly a waste of time. It was a good learning experience.

Then the buyers got ripped off and/or had a bad Realtor.

I'd say neither. The house was in really bad shape from neglect. The roof was rotten and tarped off and had pretty much all original flooring, appliances, etc. The buyers got a house in the area they wanted to live and it was comparable in price to anything in the area.

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I don't know about you guys, but for me I want to save up and get a place to live in. Prices have been so crazy for so many years that the average person can't afford it. It would be nice if most of us can just save up, buy a place and call it home.

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This is exactly whats going on. A lot of people have clashing opinions. I've talked to a more older generation of ppl and they say buying property is a profitable idea. But they are old so they must've bought theirs loong ago when property was cheap.

Like a poster said it does indeed take a lot of balls to flip houses. Balls meaning a helluva lot of patience and heaps amount of luck.

I bought my house 3 years ago for $425,000, its worth considerably more today. But the area I bought into is also booming right now and growing FAST.

I don't know about you guys, but for me I want to save up and get a place to live in. Prices have been so crazy for so many years that the average person can't afford it. It would be nice if most of us can just save up, buy a place and call it home.

Look towards the burbs, there is affordable housing out there.

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I don't know about you guys, but for me I want to save up and get a place to live in. Prices have been so crazy for so many years that the average person can't afford it. It would be nice if most of us can just save up, buy a place and call it home.

I think this should be the ideal for any first time property home owner. You buy a house with the intent to live in it, not to invest/gamble by flipping homes. 10+ Years ago, it was much easier to buy a home, but at the price of housing now, it is much riskier. The time and money for a small gain might excite some people, but it doesn't make sense for a 20 something year old, to put all or the majority of their money and be patience. Teens just don't have that extra money.

400k-500k isn't a lot of money for a home and is a fair price but do you have the 80+k for the Down and extra money to pay your own bills at the same time. Then, maybe the spare money to put in it for a flip. We're potentially talking about another 50k+ here. Condos are a bit cheaper, but the point is, think about the money that needs to be put in it.

It's not whether you have balls or not, it's whether you have enough money to do it comfortably. Too many people think they have enough, only to get raped by interest rates by the banks.

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Yeah my intention is to buy a place and live in it instead of flipping it. I'm saving hard and trying to put in a significant downpayment instead of putting the minimum and then being house poor because of the mortgage and bills. It's tough, but it's better to save up long.

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Yeah my intention is to buy a place and live in it instead of flipping it. I'm saving hard and trying to put in a significant downpayment instead of putting the minimum and then being house poor because of the mortgage and bills. It's tough, but it's better to save up long.

I don't really plan on moving anytime soon, but as a home owner, you need to pay attention to the market closely. You got to look out and be flexabile when it comes to moving, because after all, it is an investment, and likely the biggest one you will ever make.

I agree with the house poor thing. I have a buddy who lost it all basically because he over extended himself. He put the minimum down and took the biggest mortgage the bank would give him. Don't fall for that.

Take a hard HARD look at your finances and pick a number that you can REALISTICALLY afford. Also, talk to people who own to get an idea of the added expenses you might overlook. Include your house taxes in your mortgage payment as well. I didn't the first year and it kind of sucked.

Buying a house is also way more expensive and more work than a condo when it comes to maitnance, but you do get alot more freedom.

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I think this should be the ideal for any first time property home owner. You buy a house with the intent to live in it, not to invest/gamble by flipping homes. 10+ Years ago, it was much easier to buy a home, but at the price of housing now, it is much riskier. The time and money for a small gain might excite some people, but it doesn't make sense for a 20 something year old, to put all or the majority of their money and be patience. Teens just don't have that extra money.

400k-500k isn't a lot of money for a home and is a fair price but do you have the 80+k for the Down and extra money to pay your own bills at the same time. Then, maybe the spare money to put in it for a flip. We're potentially talking about another 50k+ here. Condos are a bit cheaper, but the point is, think about the money that needs to be put in it.

It's not whether you have balls or not, it's whether you have enough money to do it comfortably. Too many people think they have enough, only to get raped by interest rates by the banks.

Thanks for the cautious insight. Its best to just save up until I'm comfortable. Although being a tenant is the biggest reason I want to buy. Waste of money

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