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My housing costs are low in Vancouver because I bought several years ago before prices were too crazy. So my starting mortgage was much lower than it would be

by iamjdg 11y ago

My housing costs are low in Vancouver because I bought several years ago before prices were too crazy. So my starting mortgage was much lower than it would be for a first time home buyer today. I also made accelerated payments on my mortgage. So timing and a bit of luck. I could not afford to enter the Vancouver housing market today. When they speak about the percent income required to own a house in Vancouver, they only speak about first time home buyers entering the market today. The housing costs for current owners who have been in the market for some time (like me) or current owners selling and buying are not as high because their starting mortgages were much lower and they have lots of equity for a down payment. But I do sometimes feel the pain of people trying to enter the market or renters. For example, I’ve had a couple great job offers in the SF bay area in the last few years, but I turned them down because the cost of renting would have eaten away more than the salary increase. I was not willing to sell my house in Vancouver to remedy this (i.e. have a big down payment for a house there).

mistermann 11y ago
Would you mind sharing how many years ago it was that you bought, and what your estimated % increase is in your house since then? > I don’t count house equity in our extreme retirement plan, as far as I am concerned, it will be icing on top of the cake. If that turns out to be true, you are doing very well indeed with your saving. For typical income in Vancouver vs typical housing price (and even in other parts of Canada, but to a lesser extent), your house is the cake and everything else is a rounding error. There is a vast net worth chasm in this country between those who purchased before housing started going nuts vs those who did not, regardless of your saving level.
- kohanz 11y ago
  > There is a vast net worth chasm in this country between those who purchased before housing started going nuts vs those who did not Housing has gone up nation-wide, but not everywhere is nearly as crazy as the major urban centers (Vancouver, Toronto, etc). For mid-sized cities or smaller, I don't think the gap can be called a "chasm".
- iamjdg 11y ago
  sure. i bought 10 years ago. i would say the value of my house has climbed 262%. if i sold my house today and found a place to rent for the same housing costs, we would only have to work 4.5 years before "retiring" (work by choice, earn enough interest to cover expenses) compared to the 10 to 13.5 years I mentioned above. but i don't want to sell right now to "retire" earlier. my kids are still young and in school and we love our place. We can walk and bike almost everywhere. My current job is still interesting. If things change (jobs, health, etc.) then maybe I would sell and move.
  - mistermann 11y ago
    Wow, good for you, and you seem pretty grounded about it. My prediction is you'll find holding turns out to be a wise financial move as well, I think another doubling of housing (houses, not condos) prices will happen, within 10 years if not much sooner.
    - iamjdg 11y ago
      thanks, but really just timing, i am not any smarter than the next person. financial i do hope my equity continues to rise, but i do worry about the negative effects on our neighborhoods and society.
- iamjdg 11y ago
  regarding savings rate, i do believe it is the only thing that matters, not how much you make, when it comes to obtaining financial freedom. sure there are extremes, one should be making a multiple above the poverty line. but if you assume this is the case, then how much you make can either be translated into earlier financial freedom through an increased savings rate or "nicer things". here is an ouput of my simple retirement calculator: https://drive.google.com/file/d/0B8k8RO7VeaIbc0JlUExLZmktSkE/view?usp=sharing https://drive.google.com/file/d/0B8k8RO7VeaIbc0JlUExLZmktSkE...
  - mistermann 11y ago
    I agree, but this normally correct theory is less valid in societies that have simultaneously decided that median housing costs should be be 3,40,50%+ of the median salary. Sorry, just a little bitter that I lived below my means and actually saved, unlike those who stretched dangerously to buy as much house as possible, and essentially won the lottery in the process.

by iamjdg 11y ago

mistermann 11y ago

Would you mind sharing how many years ago it was that you bought, and what your estimated % increase is in your house since then? > I don’t count house equity in our extreme retirement plan, as far as I am concerned, it will be icing on top of the cake. If that turns out to be true, you are doing very well indeed with your saving. For typical income in Vancouver vs typical housing price (and even in other parts of Canada, but to a lesser extent), your house is the cake and everything else is a rounding error. There is a vast net worth chasm in this country between those who purchased before housing started going nuts vs those who did not, regardless of your saving level.

kohanz 11y ago
> There is a vast net worth chasm in this country between those who purchased before housing started going nuts vs those who did not Housing has gone up nation-wide, but not everywhere is nearly as crazy as the major urban centers (Vancouver, Toronto, etc). For mid-sized cities or smaller, I don't think the gap can be called a "chasm".
iamjdg 11y ago
sure. i bought 10 years ago. i would say the value of my house has climbed 262%. if i sold my house today and found a place to rent for the same housing costs, we would only have to work 4.5 years before "retiring" (work by choice, earn enough interest to cover expenses) compared to the 10 to 13.5 years I mentioned above. but i don't want to sell right now to "retire" earlier. my kids are still young and in school and we love our place. We can walk and bike almost everywhere. My current job is still interesting. If things change (jobs, health, etc.) then maybe I would sell and move.
- mistermann 11y ago
  Wow, good for you, and you seem pretty grounded about it. My prediction is you'll find holding turns out to be a wise financial move as well, I think another doubling of housing (houses, not condos) prices will happen, within 10 years if not much sooner.
  - iamjdg 11y ago
    thanks, but really just timing, i am not any smarter than the next person. financial i do hope my equity continues to rise, but i do worry about the negative effects on our neighborhoods and society.
iamjdg 11y ago
regarding savings rate, i do believe it is the only thing that matters, not how much you make, when it comes to obtaining financial freedom. sure there are extremes, one should be making a multiple above the poverty line. but if you assume this is the case, then how much you make can either be translated into earlier financial freedom through an increased savings rate or "nicer things". here is an ouput of my simple retirement calculator: https://drive.google.com/file/d/0B8k8RO7VeaIbc0JlUExLZmktSkE/view?usp=sharing https://drive.google.com/file/d/0B8k8RO7VeaIbc0JlUExLZmktSkE...
- mistermann 11y ago
  I agree, but this normally correct theory is less valid in societies that have simultaneously decided that median housing costs should be be 3,40,50%+ of the median salary. Sorry, just a little bitter that I lived below my means and actually saved, unlike those who stretched dangerously to buy as much house as possible, and essentially won the lottery in the process.