Renters 4 Ever or How I Learned to Stop Worrying, and love the Housing Bubble. Part II

Last posting I started giving some background on our decision to continue renting in the city, and go the cabin route...

Seeing as hastily built townhouses in East Van are now selling for $550k, and that our budget was at best suited to a two bedroom condo in a mediocre neighbourhood, we quickly realized that we'd be crazy to give up renting our current digs. We, a standard Mom, Dad, and Boy operation currently share what I would describe as a very cozy dump just off of Commercial Drive with our roommate of 10 years. We're mere steps to shops, restaurants, delicious coffee, and funky family friendly community services that draw in yuppies from across the Lower Mainland like moths to a flame. So than why the hell would we leave for a box in nowheresville?

The house hunting process left us tired, and demoralized but it got us thinking seriously about what we were going to do. In the unlikely event that we did find a place we liked and could afford, did we really want to get into a situation where all of our disposable cash went into our home? We would be living pretty lean to make payments, but what would we do if our income was affected by job loss, or another baby? We would no longer be working to live, but living to work.

The recent announcement that banks will now be offering 35 year mortgages sealed the deal by making us realize how utterly retarded the current real estate climate has become. At what point does borrowing on an investment turn into indentured servitude? Will people finally finish paying off their mortgage just so they can swing one of those deals where the bank buys the house back so they have enough money to live on? Screw that.

It took a while for the reality of the situation to set in, but finally we realized that the Vancouver housing market has passed us by. We will never be able to afford the home we want unless A) we somehow start making another $50k per year, or B) the housing bubble bursts, and doesn't take the rest of the economy and us with it. On the other hand, we could pursue our dream of owning a cabin - something we've always wanted to do anyway - without feeling like we were making a stupid decision.

The challenges of finding land were similar to finding a place in the city... too little land for too many people, but the cabin idea had been percolating for years, and so we were no stranger to what was available within three hours of Vancouver. After a tonne of research, and a few false starts, we settled on the previously mentioned water view property on Gambier Island.

Now don't get me wrong... a house would have been great, but not a house that would become a millstone around our necks. If we can manage to put a cabin on the land for around $40k, then, who knows... maybe we'll get a condo. But for this to happen, the numbnuts developers in Vancouver are going to have to stop building the cracker-box shit currently going up around town, and they're going to have to build something in the Commercial Drive area. So if anybody is reading this... and you build something down in that useless light-industrial area near Clark, give us a call.

Renters 4 Ever or How I Learned to Stop Worrying, and love the Housing Bubble

I've changed my mind about not writing anything until the deal is done. It can't hurt to fill in a little of the back story right?

Not too long ago a guy from the bank called to see how our house hunt was progressing. "We've given up on this whole house thing" I told him. He comisserated that yeah, housing prices were definitely crazy in Vancouver, but always on the job, he reminded me that they're just likely to keep climbing.

He was right. A recent feature in the Georgia Straight claims that housing prices have gone up 70% since 2000 with the average home selling for $705,141. Vancouver is now the 15th most expensive city in the world with the median housing price 6.6 times greater then the median household income. Winnipeg by comparison is just 2.4.

We'd been close a few times. The most recent was a great old place in Strathcona that was the kind of fixer upper that would make Mike Holmes faint. We managed to bring an inspector with us when they did the open house, and so we descended on the place one rainy afternoon when an assorted mix of other couples, most of whom looked like isotopes of us.

After we gave the place a going over, we had a hushed conversation in the alley with the inspector. The bottom line was that the $479 K price was too much considering the work needed. We were prepared for some extensive renovations, but he basically told us we would have to practically rebuild the place before we could move in, so we could should expect to add at least another $150K + to the original price before we could even move in. We found out later that it went for $545K. The people who bought it did so without an inspection. We sat at home thinking that maybe everybody has lost their minds.

More tomorrow.

Is This Thing On?

We've slapped our money down on the table, and are just waiting to close the deal for Lot 14 in on Gambier Island in Howe Sound. Fingers are crossed, magazines thumbed, and plans drawn on napkins. And I bought a chainsaw, which scares me a little.

So as not to jinx the deal we won't be writing anything else until we actually get all the paper work done. Fingers crossed.