October 23rd, 2007

Filed under:
Vancouver
9 Comments »

Vancouver Property Trend: Buying a Holiday Home First?

Despite having bought and sold three properties, I know very little about real estate. I don’t watch the market, peruse MLS.ca and I’m at a loss three minutes into any conversation in Vancouver (because they’re all about real estate). So, take my trend-spotting with an ocean-load of salt (funny anecdote about salt).

As you know, house prices in Vancouver are pretty insane–the average is nearing CAN $600,000. I don’t know anybody under the age of 40 who’s recently bought a free-standing house in Vancouver without:

  • Being rich
  • Lots and lots of help from their parents
  • Selling their children

I know two couples who continue to rent in Vancouver, but they’ve bought holiday homes in Point Roberts and on one of the Gulf Islands, respectively. These properties are more affordable because of their location, and because the houses are generally smaller than average.

How common is this approach? Do lots of people start with a holiday home, and then acquire their primary residence?

Tags: , , , ,

Comments: 9 Responses so far

Andrea >> Become a Consultant
October 23rd, 2007
8:25 am

I’ve seen some US real estate shows where people try this. I think the key is to designate the holiday home as your primary residence (in Canada), so that you are not dinged with high taxes.

Housing prices are crazy in Vancouver. When you read $580k as the average price, you have to realize that means they are including crack shacks in Whalley. In fact, it may even include condo prices. The average West Side condo is around that price.

It’s just sad. I know 30-something professionals (teacher/developer, marketer/engineer, engineer/engineer, etc) who cannot even afford to buy a 2BR condo because they don’t have enough money. I know single people earning $70k a year who can’t qualify for a studio apartment. If these people can’t afford entry-level housing, what will happen to Vancouver? And these are people in the top 10% income bracket. What about the other 90% of this city? Not everyone is over 40 and loaded.

I’m glad we got into the condo market when we did. But it has not been without pain. We’re on our second fixer-upper and that’s meant two pregnancies highlighted by renovations. Most people aren’t willing to put up with that level of stress. But it’s the only way to get ahead in this town, unless you got a free ride through university and other major help from your parents.

Reply

darren
October 23rd, 2007
8:32 am

Andrea: I often wonder who’s going to buy those huge houses I grew up among in West Vancouver, especially when my very ordinary 50-year-old childhood home is going for a cool $1 million.

Reply

Derek K. Miller
October 23rd, 2007
9:13 am

I think a lot of the homes will be passed down through generations. We’re renting half a duplex in Burnaby from my parents (who own the thing and live in the other half). Eventually — in a fairly long time, I hope! — we’ll end up owning the house.

That only works well in situations like mine, where I’m an only child and get along well with my folks. I guess passing a duplex down to two kids would work too. But if the homeowners have more children, or don’t get along with them, or have reverse-mortgaged the place? I don’t know.

What I want to know is, who are the people who are buying (or building) new houses in this city? There seem to be enough of them. Where do they get the money?

Reply

Laura
October 23rd, 2007
10:12 am

Well, I don’t really know much about real estate either, but here’s my take. I am 27 years old, cohabitate with my 28 year old fiance in the upstairs of a rented duplex in Burnaby, we make a combined income of over $100k, and we’re terrified of becoming first-time buyers. I have a friend who has $35k saved up for a down payment, and she and her husband want to buy a 1 bedroom condo in Vancouver and have been turned away. For my fiance and I, a 1 BR condo is not going to cut it. We have a dog and we want kids. We don’t see a home purchase anytime in our near future and we have this low-level but constant presence of frustration with the status quo. I don’t know how we will ever make enough to be able to afford a down payment; I reckon by the time we have enough saved for the current down payment size required, a larger down payment will be necessary. I don’t think we can save as fast as the housing prices rise.

Reply

Andrea >> Become a Consultant
October 23rd, 2007
10:15 am

Derek: Someone I know told me that her friend bought a house on the West Side for $450k around 10 years ago. They put $100k into upgrades and now it’s worth $2M. So you sell for $2M, buy a $1M tear-down and spend $500k building an awesome house. And you have $250k to give to each of your kids, so that they can buy condos.

Darren: You’ve got me. I think a small portion of the population (here and internationally) owns a large share of the properties. I mean, most people in this city didn’t grow up living in West Van, let alone in a luxury home. It’s certainly not the admin assistant and Home Depot worker in Aldergrove owning those homes….

Reply

Hannah
October 23rd, 2007
3:44 pm

I am certainly planning to buy my vacation home before my own home. However, that’s because I’m not sure where I want to settle down, but I do know where I want to spend my time away from work.

I agree with Andrea – buying small and improving it is the only way to get a house in Vancouver. My parents did that – bought a small house 20 years ago, improved it, sold it for 4 times what they spent on it, bought a better house, improved it, sold it for 4 times what they spent… You just need an eye for a bargain and a bit of luck. Oh yeah, and enough money and patience to buy a fixer-upper to start with.

Reply

Roland Tanglao
October 24th, 2007
8:19 am

basically we’re gonna to have to re-adjust our expectations about free standing homes in the city of vancouver

unfortunately most people won’t be able to afford them and most housing will be non free standing even in East Van

…Roland “lives in large East Van condo luckily financed by selling Kits condo and not angst ridden about not being able to afford a free standing East Van fixer upper” Tanglao

Reply

Chris
October 24th, 2007
11:40 am

If you don’t mind doing renos, as some commenters have mentioned above, you can actually do quite well for yourself. Similarly to what these guys did: http://en.wikipedia.org/wiki/Million_Pound_Property_Experiment

“find areas on the up, buy the worst house in the best street, research what sort of people buy in the area and aim your development squarely at them”

Reply

Andrea >> Become a Consultant
October 25th, 2007
10:28 am

I watch a lot of home reno and house flipping shows. The developers and agents often say, “Put $6k into this bathroom and you’ll increase the home’s value by $15k” or “New appliances are $2k and you’ll get $5k back”. How do they come up with these estimates? Are they fake? Is there any way to know whether I should tear out my laminate bathroom counters and put in stone counters? It was a no brainer for the kitchen.

Reply

Add a comment