Monday, April 18, 2016

Breaking into the housing market: My advice to millenials at Kollel April 7, 2016

A full house at Kollel learned about housing policy and taxation, and where and how to buy a home.
You don't have to be Jewish to worry about getting into the Vancouver housing market. However, on April 7th I was pleased to join UBC professors Tom Davidoff and Penny Gurstein on a panel discussion at Kollel, a Jewish community organization, to discuss housing affordability in Vancouver.

Davidoff is a very interesting guy.The incoming Director of the Sauder Centre for Urban Economics and Real Estate, he obtained degrees from Harvard, Princeton and MIT; worked in real estate development in Brooklyn, with two startup real estate intelligence companies, and at UC Berkeley. He has published research in leading economics and finance journals, and advised the White House on housing and mortgage policy. Most recently, he attracted a lot of attention with a taxation proposal he developed with and other UBC and SFU professors, to discourage vacant housing.

Penny Gurstein is Professor and Director of the School of Community and Regional Planning and the Centre for Human Settlements at UBC. Her research interests focus on helping people who have been marginalized in planning processes. She has led a number of large research projects investigating housing access and affordability, and inequality and access issues for low-income people.  

While Tom and Penny provided a broad overview of housing and taxation policies, and how they should be improved to increase affordability for all segments of society, I decided to provide more practical advice to those in attendance, based on my own experience.

So what did I tell people?

My first bit of advice was something told to me when I was still at university. While hitchhiking to school, I was offered a ride by someone who warned that he had to make a few stops. I soon realized he was picking up rent cheques. He asked me where I lived and if I owned my property. I was 21 and told him of course not. He told me to buy as soon as possible, and not to worry about paying too much because in the long term, the price wouldn't matter. If I couldn't afford a place of my own, buy one with one or more friends. Foolishly, I didn't take his advice until 11 years later. 

In terms of where to buy, I suggested that the best investments are often in the worse part of town. I reflected on how many years ago I used to tell people to buy in the Downtown Eastside, other parts of East Vancouver, Maillardville (Coquitlam), New Westminster, and Squamish, I still regard these places as good investment areas in terms of potential upside.

In terms of buying new or used, I recommend buying older condominiums, rather than presale units. While we don't talk about it a lot, in some parts of Metro, new units are like new cars; they depreciate when driven off the lot. However, if you are buying an older unit, do not buy into a project that has not completed a depreciation report. 

This led to a discussion of the value of depreciation reports. While some are being prepared by firms that are not qualified, and too lax, others may be overly conservative. I think this is fair comment; however I stand by my advice.

On whether to buy wood frame or concrete, as a rule I prefer concrete, noting the premium is often not as high as it should be. If buying into an older building, it is important to see if it has been 'rain-screened'. If buying into a wood frame building, it is best if it has roof overhangs. If not, it is likely to leak again. 

We briefly discussed the benefits of co-housing. While this is a relatively new concept in Vancouver, it can be a good way for younger people to band together and get into the market.

 I also suggested a few small 'tricks'. When looking at a unit, examine it carefully. Too often people buy, especially in this market, without checking to see if there are enough electrical outlets, or room to furnish properly. Also check to see if there is a lazy-susan in kitchen corner cupboards. If not, don't buy. If the developer is trying to save a few dollars here, where else has he tried to save money?

If you can't afford to buy, you may need to rent. As a general rule, while rents may seem high, they are often a good deal compared to buying. I have found that many new laneway houses rent for much less than I think they should, given all they have to offer. 

Finally, I told anyone who still hasn't bought real estate who has a car to sell it. When one compares the cost of operating a car over 10 years, with what the same money will do if invested in real estate, you're much better off without the car. Join a car-share instead.


ركن الخليج للخدمات المنزلية said...
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ركن الخليج للخدمات المنزلية said...
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Smart Khan said...
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Anonymous said...

I totally agree with your advice. Dr. Channing's Blood Pressure Protocol

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It is good if your house is near to the market.
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Come into the house market.
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