Hot Okanagan Real Estate

[Captain Awesome]

How I wish some of you were around 5 or 6 years ago to experience the epic *removed* thread... post after post about how overvalued Okanagan real estate was and how we were headed for a market crash that would see prices fall by 80%.

Here we are, years later, still waiting and still hearing the same chatter.

Come on. I'm still ready to man the chokepoints against invading Americans.

[TylerM4]

How I wish some of you were around 5 or 6 years ago to experience the epic *removed* thread... post after post about how overvalued Okanagan real estate was and how we were headed for a market crash that would see prices fall by 80%.

Here we are, years later, still waiting and still hearing the same chatter.

11 years ago I bought my 1st place. Everyone on Castanet forums was screaming "Bubble is going to burst! Don't buy". So glad I didn't listen! I've watched in interest and that message from the forums has never changed in 11 years. Perhaps the vigor has lessened, but to this day for every 1 person who says "Now would be a good time to buy" there's 3 that say "No don't buy the bubble is going to burst"

[Ari Gold]

11 years ago I bought my 1st place. Everyone on Castanet forums was screaming "Bubble is going to burst! Don't buy". So glad I didn't listen!

It's all about TIMING...thats what many people completely disregard in these real estate threads. forget the adage that location, location and location are the three most important things in real estate. It's timing, location, location.

So many posters think because they bought a house in 1985 for 85K and now it's worth 700K, that's the end of the debate.

Timing is everything. Right now it's simply not a good time to buy. 11 years ago it was! Nobody is saying it's NEVER a good time to buy. Its not 2005 or 1985. Real estate is currently overvalued by every possible metric.

If you bought a home years ago and can manage the mortgage, that's great. Unless you're selling soon you have nothing to worry about. But, if you're a first time home buyer or moving up to a more expensive house, you have to be pretty brave to consider that decision.

[Ari Gold]

Renting can definetly be a better option, especially in the current market.

My younger brother bought a townhome for 325K with 5% down in June 2014 because he was sick of renting and fell for the "renting is for losers" line. He sold recently for 330k. This is in Calgary so he was lucky to sell for more than what he paid.

His total out of pocket was $56,390 (below)

- down payment $16,250
- total mortgage over 20 months $30,600
- property tax over 20 months $ $3,320
- strata fees over 20 months $4,720
- legal fees to purchase $1,500


When he sold, his net proceeds were $8,000 after real estate commissions, early mortgage cancellation penalty, and another $1,500 to the lawyer.

So his total net cost over 20 months to live in his townhome was $48,390. He could have rented the identical place for $1,600 a month. Over 20 months, that's $32,000. Had he never bought that place and rented instead, he'd be ahead $16,390.

[TylerM4]

It's all about TIMING...thats what many people completely disregard in these real estate threads. forget the adage that location, location and location are the three most important things in real estate. It's timing, location, location.

Totally agree with you. My point is that according to Castanet forums - there hasn't been a good time in the last 11 years and anyone buying was making a huge mistake.

[Hassel99]

Renting can definetly be a better option, especially in the current market.

My younger brother bought a townhome for 325K with 5% down in June 2014 because he was sick of renting and fell for the "renting is for losers" line. He sold recently for 330k. This is in Calgary so he was lucky to sell for more than what he paid.

His total out of pocket was $56,390 (below)

- down payment $16,250
- total mortgage over 20 months $30,600
- property tax over 20 months $ $3,320
- strata fees over 20 months $4,720
- legal fees to purchase $1,500


When he sold, his net proceeds were $8,000 after real estate commissions, early mortgage cancellation penalty, and another $1,500 to the lawyer.

So his total net cost over 20 months to live in his townhome was $48,390. He could have rented the identical place for $1,600 a month. Over 20 months, that's $32,000. Had he never bought that place and rented instead, he'd be ahead $16,390.

who buys for a single year? Not really a fair comparison to the average person who amortized those cost over a decade.

[Queen K]

How I wish some of you were around 5 or 6 years ago to experience the epic *removed* thread... post after post about how overvalued Okanagan real estate was and how we were headed for a market crash that would see prices fall by 80%.

Here we are, years later, still waiting and still hearing the same chatter.

I've been around long enough to remember "that" thread! And it was a great back and forth for what? Over 300 pages where most threads die well before page 6. Ahhh the good old days. And yes, still awaiting the epic crash of 2012 to hit. Dang it.

But I did pay attention to those who said to have vulture capital awaiting. Now I just need more capital because prices have not gone down, not that I can tell.

[Ari Gold]

Totally agree with you. My point is that according to Castanet forums - there hasn't been a good time in the last 11 years and anyone buying was making a huge mistake.

Yes, I agree with you there...it has been a topic of debate for quite a few years. Having said that, the economics are much worse than they were 11 years ago and low interest rates have kept the market buoyant over that time while prices have continued to rise.

Except for a small blip in 2008, Canadian house prices have increased every year for nearly 20 years. I can't think of any other asset that has performed the same. Equities, bonds, commodities, precious metals...even US real estate - all have corrected at least once in that span.

[Ari Gold]

who buys for a single year? Not really a fair comparison to the average person who amortized those cost over a decade.

You think that was the plan? And it was almost 2 years. He had to move for work.

Things happen, man.

[goatboy]

Renting can definetly be a better option, especially in the current market.

My younger brother bought a townhome for 325K with 5% down in June 2014 because he was sick of renting and fell for the "renting is for losers" line. He sold recently for 330k. This is in Calgary so he was lucky to sell for more than what he paid.

His total out of pocket was $56,390 (below)

- down payment $16,250
- total mortgage over 20 months $30,600
- property tax over 20 months $ $3,320
- strata fees over 20 months $4,720
- legal fees to purchase $1,500


When he sold, his net proceeds were $8,000 after real estate commissions, early mortgage cancellation penalty, and another $1,500 to the lawyer.

So his total net cost over 20 months to live in his townhome was $48,390. He could have rented the identical place for $1,600 a month. Over 20 months, that's $32,000. Had he never bought that place and rented instead, he'd be ahead $16,390.

Not sure your numbers are correct. His down payment shouldn't be counted as an "out of pocket" expense (interest that would have been earned on it would be) as this all came back to him when he sold. That is also true for the portion of his mortgage payment that came off his principal, this would be returned to him on selling.

His true of of pocket costs would be:

The interest only on his mortgage payments
mortgage penalty
legal fee's
real estate commission
portion of strata fee that wouldn't include insurance as he would have paid that on his rental and any utilities that were included in strata fee that wouldn't be included in rent
property tax

Not sure what that equals but I'm pretty sure its better than your original calculation

[atenbacon]

You may want to re-examine your “evidence”. The Seattle market is tanking, and “growth” has been in the negative for three months already.

The entire US economy is undergoing upheavals that are unprecedented in our modern history. By many metrics, what the US is experiencing is several times worse than what it was experiencing right before the Great Depression. All we need is another Black Tuesday, and the US will be in a Greater Depression; a great depression that is even larger than the one experienced in the first half of the previous century.

And with 86+% of our trade tied up with the US, we follow where they stumble.

Sure, we could change whom we do trade with; but even with concerted effort by both Government and business, historical evidence tells us we can only effect a change of about 1% per month. That means it would take us about three years to lower our trade with the US to about 50%. That’s still 50% too much to avoid the same fate.

The average Kelowna home requires a buyer to make about $50/hr in order to afford it. The average Kelowna resident, however, makes only $10/hr. The vast body of history tells us that these two figures must be pretty well the same in a healthy and sustainable economy, so it is clear that one must change to meet the other within a reasonable amount of time (~5-8 years). And since I really can’t see a Starbucks Barrista making $50/hr anytime soon, I would be more inclined to expect price drops of 50-75% in housing within the next two to five years (prices have already been badly out of whack for about three years so far, so they *must* start to change within the next two to five).

My optimistic prediction? Next year, about May to July, we will suddenly wake up and go, “what the heck?” when we suddenly see house sales screech to a sudden halt (like they did in the States this last August). My pessimistic prediction is some time in 2009. But as sure as the sky is blue and water is wet, we *will* see a major housing correction.

When 90+% of the people buying here have their funding sources gutted (Oil Field Barons by the new Albertan tax, retirement savings of the elderly poisoned by the toxic subprime mortgage hedge funds that they were invested in, etc.) there will be very few people left willing to pay these ridiculously high prices.

When the entire economy goes to hell in a handbasket, even the rich think twice about copious spending.

It is 3012 days from the date of this prediction to the end date, end date included, or 8 years, 2 months, 29 days including the end date, so excuse me if I put little stock in the opinions of renters like Ogopogo and his ilk. Too long has it been hearing the same old drums of doom and gloom.

There are those that have said over and over that buying a home is based on ones personal situation and financial standing. That is all that determines a "Good time to buy" They are the ones the folks above call real estate pumpers.... Silly.

Watch todays predictions fall as badly as the one above...

[jamapple]

You think that was the plan? And it was almost 2 years. He had to move for work.

Things happen, man.

They absolutely do. But your example is poor, as you would lose in 99% of the time if you went in 20 month cycles. Again, with the 1% of time when you buy low, and the market turns for the better overnight.
Maybe your friend should have rented the house until the market was more favourable for him.

[OgopogoO]

It is 3012 days from the date of this prediction to the end date, end date included, or 8 years, 2 months, 29 days including the end date, so excuse me if I put little stock in the opinions of renters like Ogopogo and his ilk. Too long has it been hearing the same old drums of doom and gloom.

There are those that have said over and over that buying a home is based on ones personal situation and financial standing. That is all that determines a "Good time to buy" They are the ones the folks above call real estate pumpers.... Silly.

Watch todays predictions fall as badly as the one above...

It's hilariously ironic how a housing cultist like you has to the gall to opine on my evidence-based comment as an "opinion". Rather than sink down to your level I will respond yet again with numbers and facts (scary, I know). Ready? Here we go:

"The average national house price rose about 5.8 per cent annually on average over the past 30 years, which is a great result from an asset that is supposed to merely keep up with inflation. But the Canadian stock market averaged 9 per cent annually over that period with dividends included."

Source (that pesky evidence-based thing again): http://www.theglobeandmail.com/globe-in ... e24583446/

I could go on, but debating someone who demonstrates all the traits of a financially illiterate ideologue is a waste of time.

[OgopogoO]

Hey, owning a home has worked out for me, but I'm sure your strategy is cool too. I do wish you all the best.

Glad to hear it's worked out for you. It's good to see someone who actually can see both sides of the issue. All the best of luck to you as well.

[atenbacon]

It's hilariously ironic how a housing cultist like you has to the gall to opine on my evidence-based comment as an "opinion". Rather than sink down to your level I will respond yet again with numbers and facts (scary, I know). Ready? Here we go:

"The average national house price rose about 5.8 per cent annually on average over the past 30 years, which is a great result from an asset that is supposed to merely keep up with inflation. But the Canadian stock market averaged 9 per cent annually over that period with dividends included."

Source (that pesky evidence-based thing again): http://www.theglobeandmail.com/globe-in ... e24583446/

I could go on, but debating someone who demonstrates all the traits of a financially illiterate ideologue is a waste of time.

lol... Thanks for your input Rekabis.

It's really hilarious how you attempt to make a 5.8% annual return (Over 30 years) sound like a bad thing. This on an asset that should only be keeping up with inflation, and generally is used as ones primary residence. But then, how could I possibly explain that to you, I'm sure your stocks and dividends get 23% annually and easily pay for your $6700.00 a month rental right? Not the first of your kind to walk in screaming that the end of the market is here... Excuse me whilst I yawn a little.

Yes, thanks for using real numbers that most people already know. Are you in your mid to late 30's? That report suggests you should be buying a home now.