Vancouver - 74% income goes to Real Estate

[Singh]

Hi Everyone,

Had one question, in Real Estate Investing in Canada, it said that 39% or more income goes to real estate, it is considered speculative. Now in Vancouver, totally different ball game 74% goes to real estate, does that mean we are in bubble territory, should a person cash out?

Singh

 

[Dan_Eisenhauer]

It means that the Lower Mainland is not a place to invest in income producing property at this time.

What was your goal when you bought the property? Are you generating a reasonable cash on cash rate of return? Are you replying on appreciation and inflation to make your ROI?

If your cash on cash ROI is reasonable, and you are not counting on appreciation to "make your money", then I suggest you should continue to hold. If you are relying on appreciation, then you need to examine the tax effect of selling now, and reinvesting the proceeds in a more interesting property.

 

[Thomas Beyer]

those statistics can be mis-leading .. the "average" joe in the Lower Mainland does NOT buy an "average" house .. Vancouver especially has many high-end neighborhoods like West-Van, Coal Harbor, Point Grey, with $2M+ homes .. and quite a few condos in Vancouver are 2nd (or 3rd or 4th) homes ... owned often by Asians who wish to maintain a residence in Canada but actually live in Hongkong .. just look how many condos have their lights on at 9 pm .. not many .. and quite a few have their curtains drawn for months at a time ...

Vancouver is a nice place to live .. it has an ocean and ocean or mountain views from many areas .. an international airport and quite a bit of industry and the Lower Mainland is projected to have 1,000,000 more residents overthe next 20 years .. so prices will likely not collapse !

Hence: hard to find cash-flow properties that make sense ... but likely still a decent environment to invest for the long term .. including many a retiring Albertan that is sick and tired of the cold ...