July 30, 2014

Buy a Home vs. Rent & Invest

There was an interesting article recently in the Globe and Mail. What is the best financial decision - to buy or rent a home?

It used the following scenario; save up for five years for either a down payment on a home or take the money and invest in stocks and then continue to buy stocks every month as you save money being a tenant. The finer details can be found in the article itself (see link below), but the conclusion was that it is financially more prudent to rent than to buy. Yes. This might surprise quite a few, including us realtors who tend to rave about the financial benefits of owning your own home. So, are we all idiots having bought our home? Well, not so fast. Here’s why:

- Theory vs. reality. The assumption in the rent & invest scenario is that you take the money saved by renting and add that to the stock portfolio. Great in theory, but how many have the opportunity and discipline to do that? The vast majority of renters we come across do not put money aside every month based on theoretical savings compared to “if-I-owned-my-home”. Paying into your home is almost a forced savings plan that continuously builds your equity base and thereby improves your financial situation.

- Leverage. One of the financial advantages of owning your home is that it gives you access to equity and at the same time preserves the asset itself. An example; You buy a car with a line-of-credit on your home as opposed to selling stocks in the same amount (if you were renting). The long term appreciation on your home will continue to be on the full market value, not affected by the line-of-credit, or mortgage for that matter, but had you sold the same amount in stocks, the future dividends would have been negatively affected by the diminished stock portfolio.

- Feel good factor. It just feels better to sit in your own living room. It’s a very subjective and emotional factor, but based on the conversations we have with our clients contemplating to buy a home, its significance cannot be ignored.

Besides that, life as a tenant comes with the uncertainty of not knowing how long you can stay in your rental home. Your landlord is in control and most likely cares more about the profitability of his or her income property than your peace of mind. So, in relation to the comparison of buying vs. renting a home, this might help to explain why people become homeowners despite the financial conclusions in the mentioned article.



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Here is an article with a list of FREE (or nearly free) activities, tours, and attractions to do around Vancouver.

Free things to do in Vancouver


There is a little something for everyone here. From Salsa and Ballroom dancing lessons at Robson Square to the free outdoor movies at Stanley Park.


Go enjoy our beautiful city this summer!

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I used to love living in Kits. My husband and I had a great one bedroom and den condo that had a huge south facing patio. We literally invited our friends over at least once a week for a BBQ (Wednesdays became known for our “humpaques” - our mid week BBQ on “hump day”).


We both enjoyed walking, running or cycling to the beach. We felt spoiled to be able to walk to all the great produce markets, restaurants and stores along West Broadway and 4th.


But then we had a baby and suddenly our totally kick-ass-condo-for-a-couple, began to feel too small. It’s not that the actual baby took up a lot of space, but their accessories do! Our former den which had held a bookshelf, desk and swivel chair just fine, could now barely accommodate a crib, a dresser/change table combo and a rocking chair. Our living room decor now featured a play mat with dangly toys, a jumparoo type contraption and a baby swing. Forget about my former minimalist, modern look that featured a white L shaped leather couch and a turquoise accent wall. The accent colors now were green, red, yellow and blue all over making it look more like an explosion in the kid section of Ikea and nothing like a Restoration Hardware catalogue.


It was time for a house.


We couldn’t afford a detached house in our current neighbourhood so started looking East of Main street. We spent a lot of time driving around, checking out the different neighbourhoods. I wanted to be able to walk to a grocery store as well as other amenities, something that seems simple but once you have it, you take it for granted. We found a house that suited our needs close to Commercial Drive.


live in East Van


I have to admit that the first couple of times we walked down The Drive, I felt completely out of my element! Instead of the Lululemon clad crowd, it was an eclectic mix of people. Within the first few minutes, I walked by some guys with mohawks, some bra-less tank topped lesbians, a group of people covered in piercings and tattoos, and families pushing strollers. I definitely wasn’t in Kitsilano anymore.

I admit that I suffered from Westside snobbery, which I think really just stemmed from the unknown. I hadn’t spent any time on the East side, other than an occasional Saturday afternoon on the patio at Havana. It’s human nature to be wary of the unknown.

After having lived in the Grandview-Woodlands (Commercial Drive) area for over 4 years now, I have come to love it more than I ever imagined. It has a true neighbourhood feel, from the old Italian men playing bocci ball at Victoria park to the preschool moms playing with their kids on the playground at Trout Lake. You can find live music on the Drive almost any night of the week as well as fantastic cafes, restaurants and shops. With the skytrain you can be downtown in 10 minutes and as a parent, Science World is only one stop away which is a bonus!

We can walk to at least 7 different parks from our house and the new Trout Lake community centre and ice rink are awesome. From Italian Days to the Lantern Festival to the Parade of Lost Souls, there is always something family friendly happening in East Van.

Don’t be afraid to go East all of you Westsiders. Especially if you’re looking for a detached house to raise your family in. After all, probably half of us out East used to be just like you!

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The reality of buying real estate in Vancouver has changed over the past couple of years. The perception in Vancouver for the past 10 or so years has been that you are going to make money on anything to do with real estate, whether pre-sale or resale.


In most cities in the world, people haven’t been “trading up” every few years. Historically purchasers would buy a property and keep it long term. In Vancouver, that changed when real estate started to appreciate rapidly and our city saw an abundance of smaller homes become available (bachelor pads and one bedrooms), with the big push for densification.


It used to be that you would make money on real estate twofold. Not only were you reducing your debt by paying down your mortgage, but you were also seeing a substantial increase in the value of your property.


These days, some sellers can’t quite wrap their head around that what they paid for their property two years ago, is what they are selling it for now. In fact, with transaction and moving costs, they aren’t recognizing the profits that they have grown accustomed to.


If you are looking at purchasing a strata property now, your goal should be to hold onto it for 3 to 5 years, more if possible. If this is the difference between stretching yourself a bit now in order to acquire a home that will suit your needs for a longer period of time, it can mean the difference between realizing a profit or not.


Buying a strata property now is still a winning proposition in terms of building your equity by paying down your mortgage.


Just remember to think long term. Gone are the days of the fast flip for profit.

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Please visit my Open House at 301 440 5TH AVE E in Vancouver.
Open House on Sunday, January 12, 2014 2:00 pm - 4:00 pm
BEAUTIFULLY RENOVATED, TOP FLOOR, SW CORNER SUITE THAT FEELS LIKE A HOUSE! Open concept kitchen boasting stainless steel appliances, eating area & breakfast bar looking out to bright, spacious living room, balcony & cozy gas fireplace. Amazing Master bedroom that is separated from 2nd bdrm & has a large flex/den space off of it as well as a balcony, ensuite bath, walk in closet & INSUITE LAUNDRY! Tile floor (heated in bathrooms &kitchen), crown mouldings & pot lights throughout! LANDMARK MANOR is a solid, well maintained building in a quiet neighbourhood just steps to Main Street, Mt. Pleasant community centre, a short walk to Olympic Village & minutes to downtown! Parking & storage incl. Open Houses Sat/Sun Jan 11/12 from 2-4pm.
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It's not a seller's market or a buyer's market, it's a balanced market.

The Greater Vancouver housing market maintained a consistent balance between demand and supply throughout 2013. 

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2013 reached 28,524, a 14 per cent increase from the 25,032 sales recorded in 2012, and an 11.9 per cent decrease from the 32,390 residential sales in 2011. 

“Home sales quietly improved last year compared to 2012, although the volume of activity didn’t compare to some of the record-breaking years we experienced over the last decade,” Sandra Wyant, REBGV president said.

Last year’s home sale total ranks as the third lowest annual total for the region in the last ten years, according to the region’s Multiple Listing Service® (MLS®)

The number of residential properties listed for sale on the MLS® in Metro Vancouver declined 6.2 per cent in 2013 to 54,742 compared to the 58,379 properties listed in 2012. Looking back further, last year’s total represents an 8.1 per cent decline compared to the 59,539 residential properties listed for sale in 2011. Last year’s listing count is on par with the 10 year average. 

“It was a year of stability for the Greater Vancouver housing market,” Wyant, said. “Balanced conditions allowed home prices in the region to remain steady, with just a modest increase over the last 12 months.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $603,400. This represents a 2.1 per cent increase compared to December 2012. 

Let's look at the mood of the real estate market in Greater Vancouver in the later part of 2012 as this set the stage for the start of 2013.

In the final half of 2012 the lower volume of sales relative to the spring market created a gridlock of buyers and sellers who wanted to purchase but were unable to do so as their homes hadn’t sold. By the end of the year, patience and anticipation of garnering the peak prices of 2012 was exhausted. With the start of 2013 many sellers and realtors accepted that a new pricing reality had to be embraced in order to sell the property. Consequently many properties which were re-entering the market in 2013, and new properties on the market were being priced below peak prices of 2012. New prices and sales reflected a 5% – 10% price reduction depending on the community, type and age of home. 

Because of this price adjustment, the percentage of sales to listings in 2013 was up from 2012 in both East and West Vancouver, meaning that more properties that went on the market, actually sold.  

Keep in mind that the Great Vancouver Real Estate market has become a collection of "micro markets", in which pricing trends and activity can vary significantly between communities and types of properties. We have observed some multiple offers and certain neighborhoods and types of properties have performed better than others over the year. 

In 2014, I'm expecting activity to continue to rise with little fluctation in prices, primarily because I believe interest rates will remain stable, there will be continued job growth, economic stability and continued immigration to the province. I believe we can expect to see 2014 continue to build on the momentum and stability of last year. 

If you have any questions about the market in your neighborhood or your personal property, I am more than happy to discuss this with you. Please call me at 604-396-4433.

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I am hosting an open house at 1701 550 PACIFIC ST in Vancouver.
AQUA AT THE PARK! Every room has a view! With water views of False Creek, and George Wainborn Park just to start, this immaculate 2 bed, 2 bath & large den includes a gourmet kitchen finished with granite countertops and a gascook-top/oven. The original owners have upgraded the suite which includes new laminate floors and paint throughout. First class amenities at Super Club includes a gym, squash court, indoor pool, billiard room, theatre, steam room, guest suites and concierge services. Located in the sought after Yaletown with a winding seawall leading to English Bay, ferries to Granville Island, parks, shopping and first class restaurants. 1 parking and 1 locker incl. Pets/Rentals allowed. Open Houses Sat/Sun Dec 14/15 from 2-4pm.
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With the holidays fast approaching, sellers often wonder if they should keep their properties on the market or take them off? Or if they haven't listed their homes yet, should they wait until after the first of the year? Maybe hold off until spring? 

I came across this interesting article that makes a good argument for why you shouldn't wait.  

Serious buyers are always looking, especially online. If you list now before everyone else who is waiting for the Spring market, buyers will be excited to see something new for sale! 

To read the full article, click here.

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I am hosting an open house at 304 - 2680 ARBUTUS ST in Vancouver on Saturday, December 7 from 1:00 - 3:00pm.
CUTE & METICULOUSLY KEPT 2 BDRM & 1 BTH IN POPULAR ARBUTUS WALK! SUITE: Spacious & beautifully updated open concept with granite counter tops, African Oak hardwood floors, fresh paint & new blinds. Large master bedroom & small 2nd bedroom perfect for a guest room, child's room or roommate. Building: "Arbutus Outlook", well maintained concrete building built by Bastion. Location: steps from every convenience you could want with a great community feel! In suite storage & 1 parking included. Come check it out! Open House Sat Dec 7 from 1-3.
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The Bank of Canada governor, Stephen Poloz, testifying before the senate banking committee said that Canada's housing market is not in a bubble and not likely to suffer a sudden and sharp correction in prices, unless there is another major global shock to the economy.


The central banker said he believes the most likely scenario is a soft landing where home prices stabilize, although he acknowledged that an imbalance in the market and high household debt remain key risks.

"It looks expensive," he said of home prices. "But which markets are expensive? Well those markets have been expensive my whole life,"he said, noting that Toronto and Vancouver both absorb high rates of immigration.

Read more here: http://www.vancouversun.com/business/real-estate/Canadian+real+estate+market+bubble+Poloz+says/9191900/story.html#ixzz2laorAM85


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