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08-22-2012, 04:43 PM
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Join Date: Jun 2012
Location: East Van!
Country: Canada
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Originally Posted by opendoor View Post
Under current interest and property tax rates 15:1 is considered about equivalent in terms of monthly costs. A place that rents for $2K a month ($24K a year) would cost roughly the same month to month as a $360K place. At 25:1 (which is arguably the low point of any average location in metro Vancouver), a $2K a month place is going to cost about $3500 a month in mortgage, taxes, etc to own. So that's nearly 2X at the absolute low end. At 58:1 which is the IMF's number for the city overall, you're seeing a $2000 a month residence cost about $1.15 million to buy and $6500 a month
I guess I look at these numbers and think the people at the IMF spent too much time partaking in the herb.

I own a house just off the Drive. (Lakewood and 5th) When I bought the house, it came with a suite that was already rented for $1200 a month. My neighbour rents out a suite for a little less than that, but it is smaller. If I was to rent out the rest of the house to a family, I'd get between 2500-2800 and get the choice of my tenant. My neighbour would likely get more.

My mortgage is about 800K, payments with taxes are about 3800, and the current market value is likely close to $1M. Of course there may be a correction, then there'll be another upward trend. Then a stall. Then a drop. Then a continuing growth. Then a crisis. That's life. Some people will spend most of their lives waiting to get started, some won't.

I guess I am bored of the constant barrage of first year ECON students (and their equally as inept Profs) and journalists opining on the topic. I think it is now year 10 of the great bubble. OMG, what if rates go up! What if I get cancer. What if I....

It's old, but sooner or later it'll be right for a while. Then wrong. Then right again.

And really, even if you ignore pretty much every other factor, interest rates alone are going to see Canadian real estate taking a hit. Here's what $4K a month on a 25 year mortgage gets you under various interest rate scenarios:

3%: $850K
4%: $750K
5%: $685K
6%: $620K
Simply another part of the cycle. Up and down. Sit and watch.

craigcaulks* is offline