Personal Finance

Impossible to own a house, start a family, and save for retirement in Vancouver. What should we do? 30 yo, 100K combined

  • Last Updated:
  • Nov 19th, 2017 10:59 am
Deal Fanatic
Jan 27, 2006
6454 posts
1668 upvotes
Vancouver, BC
Kiraly wrote:
Nov 13th, 2017 2:42 am
Assuming a 25 year mortgage, you'd need an annual interest rate of about 1.5% that never goes up for 25 years, to be paying a $1600 monthly payment on a $400k mortgage. Good luck with that.
Funny how a lot of homeowners are in exactly that boat... It's going to be ugly in the next few years as rates go 1% or 2% higher on the variable rate mortgages.
Deal Addict
Jun 20, 2011
1403 posts
400 upvotes
VANCOUVER
Kiraly wrote:
Nov 13th, 2017 2:42 am
Assuming a 25 year mortgage, you'd need an annual interest rate of about 1.5% that never goes up for 25 years, to be paying a $1600 monthly payment on a $400k mortgage. Good luck with that.
They do not need to select a 25. I think there is an option for a 30 with TD. Pick up a variable rate at say 2.55 - 2.65% on a 5 year term with a 400k and it's pretty close to what I said. The OP needs to talk to a mortgage specialist to see the numbers and what works for them. Some people like 30 and some don't.
Deal Addict
Nov 2, 2013
4798 posts
901 upvotes
Edmonton, AB
DDHLeigh wrote:
Nov 12th, 2017 11:56 pm
I had a friend exactly like this. Both wife and him didn't want kids because of their lifestyle. I see them flying around the world, eating out, etc. Fast forward 12 years and they've been trying to have their first kid with no luck...
It's strange because in Alberta having children to many of the homegrown women here is like a prophecy. A lot of them "trap" the man into it by purposely getting pregnant. When looking at the women who consider moving here and question the dating culture, many put a high value on men willing to "settle and start a family". I've had a few women end things with me because I refused to have kids, despite only knowing them for months. Coming from Vancouver area (though I've only lived in Vancouver for 3 years) it's really a shock, whereas there it's usually the opposite.

Had this conversation with a colleague the other day, that if I had $1M+ to spend, I'd probably get a nice home for $500,000 elsewhere in an area with higher income and business opportunities, and then spend the remainder to have the time of my life :D
ttrevor wrote:
Nov 13th, 2017 2:03 am
Thanks for the replies.

Just to clarify, we are happy to own an apartment or condo rather than a house. Sorry for any confusion.

I understand that moving away from the city is our best option.
However, the problem remains that even a 2 bedroom condo or apartment 30 minutes outside Vancouver will cost $500K with a $100K down payment and $3K+ mortgage. This, combined with child costs will eat up all of our current and future savings.

It just feels like it's impossible to own, start a family AND save for retirement ANYWHERE in the lower mainland.
Welcome to reality my friend. That's why a lot of families just go elsewhere, or the ones those stay are in pain but will take it. Even a townhouse 1.5 hour away in the very corner of "Greater Vancouver Area" still runs you a pretty $500,000 - 600,000+.

For condos you save by buying older but likely either your condo fees are higher (eating into your qualification room for mortgage), or the reserve fund is underfunded and you'd get hit with a special assessment shortly after moving in.

Pay to play :)
Speedy1 wrote:
Nov 13th, 2017 2:02 am

There are lots of people renting and driving a nicer car than me.

One time I was showing my rental suite to a potential renter and he came in a newer bmw while I came in a 15 yr old car.
One of my former classmates sounds just like that. Leases a BMW 340i but still lives at home. Another colleague has 4 older Mercedes he keeps running and lives like a millionaire; eats $300 steak dinners and takes his extended trips to Vegas and Australia every winter. The former's dad has a Maserati but rents a larger 3 br apartment in downtown Vancouver. There's a lot of oddballs there like that. :facepalm:
Sr. Member
Nov 13, 2013
714 posts
244 upvotes
OTTAWA
ttrevor wrote:
Nov 13th, 2017 2:03 am
Thanks for the replies.

Just to clarify, we are happy to own an apartment or condo rather than a house. Sorry for any confusion.

I understand that moving away from the city is our best option.
However, the problem remains that even a 2 bedroom condo or apartment 30 minutes outside Vancouver will cost $500K with a $100K down payment and $3K+ mortgage. This, combined with child costs will eat up all of our current and future savings.

It just feels like it's impossible to own, start a family AND save for retirement ANYWHERE in the lower mainland.
Kids don't have to cost that much. Certainly the upper-middle class way of raising them is very expensive, but they don't need their own rooms, fancy gadgets, vacations etc. Honestly I can afford to give my kids all of this but I prefer not to spoil them.
Sr. Member
May 12, 2014
873 posts
348 upvotes
Montreal
ttrevor wrote:
Nov 12th, 2017 6:09 pm
What would you do in our situation?
Vote for parties which have pro growth economic policies.

Move to a jurisdiction which has such policies, or where you're paid more, or taxed less, or where it's more affordable to live. (You'll have to do a lot of work to really weight the factors against each other for your specific circumstances).

Reassess needs vs wants: eg you don't need a separate bedroom for each kid, you can certainly put 3 kids in a single room. Give them them the master bedroom, you take the other. You don't need to own, you can rent. No need for 2 cars, or vacations, etc.

Finally, aim to start the family FIRST. Real estate can be purchased later. Retirement can be deferred. But having children "easily" has a pretty strict biological time limit on it (IVF, adoption, etc are not easy). Also it's easier to deal with sleeping less and carrying kids around when you're younger.

Good luck! Come back in 9 months and update us.
:-)
Deal Addict
Mar 8, 2013
1425 posts
389 upvotes
The easy part of the question is saving for retirement. That can wait, and if you are contributing to CPP, you already are making a start. Where do the future grandparents live? They can be a lot of help to you as new parents, and no doubt will want to be close to where you live. Infants can sometime have special needs, so for the first year or so, I suggest you stay close to the big city where there are more services. Many jobs these days require only an internet connection, so you may have more flexibility as to where you live. Definitely start on that family sooner than later. It sometimes is not as easy to conceive as we think.
Banned
Dec 28, 2015
617 posts
232 upvotes
Westmount, QC
Increase income...as experienced workers entering you're prime working years, you should at least be close to average of 70k each as post secondary educated working ft

But if you can't, answer is obvious, move to where your income level can buy what you want and adjust. Not everybody especially with below average ft working income can live in a big city and own a house and etc
Jr. Member
Nov 16, 2006
179 posts
30 upvotes
Nobody has suggested the obvious. You guys need to both quit your jobs and aim for having 10 kids and live on social assistance with everything covered.

You will be able to afford a house and both have new vehicles and you can laugh at the people scraping by trying to raise 1 kid.

Don't worry about retirement either. The government is trying to make everyone equal in retirement, so you end up having people that saved lots of $$$ getting all their savings drained for
retirement care while the people that don't save get the same care, only for free.
Deal Addict
User avatar
Dec 13, 2016
1009 posts
768 upvotes
ttrevor wrote:
Nov 13th, 2017 2:03 am
Thanks for the replies.

Just to clarify, we are happy to own an apartment or condo rather than a house. Sorry for any confusion.

I understand that moving away from the city is our best option.
However, the problem remains that even a 2 bedroom condo or apartment 30 minutes outside Vancouver will cost $500K with a $100K down payment and $3K+ mortgage. This, combined with child costs will eat up all of our current and future savings.

It just feels like it's impossible to own, start a family AND save for retirement ANYWHERE in the lower mainland.

You don't need to save for the retirement. The government is providing that for you. If you own your place by the time you retire you and your wife will have more than enough to live on. Same goes for healthcare.

Regardless of the housing prices, you and your wife earn more than 95% of the planet's population. Be creative....there are a lot of options for you other people can only dream of.
Deal Addict
Jan 20, 2016
1360 posts
512 upvotes
Houston, TX
BiegeToyota wrote:
Nov 13th, 2017 9:56 am
You don't need to save for the retirement. The government is providing that for you. If you own your place by the time you retire you and your wife will have more than enough to live on. Same goes for healthcare.
I think you forgot tag Sarcasm here?
Meanwhile, the percentage of seniors living in poverty rose between 2005 and 2015, when 14.5 per cent of Canadians over 65 were living below the low-income measure, an increase from the 12 per cent recorded in 2005.
1 in 6 chances (and growing) you could be here...

Well, it's not THAT poverty like in Ukraine or MANY other countries...but still.
Make the Trudeau drama teacher again!
Deal Addict
Jan 20, 2016
1360 posts
512 upvotes
Houston, TX
ttrevor wrote:
Nov 12th, 2017 6:09 pm
My wife and I are 30 years old with a combined income of $100K. We rent a 1 bedroom apartment in Kitsilano for $2000 per month and save approximately $1500 each month. Our combined savings is approximately $100K.

We want to buy a place and start a family. Since a two bedroom in Vancouver starts at 1 million we would need to double our income so that's out of the question.

With our income we can afford a $500K place, which would mean moving 30 minutes outside of the city for two bedrooms.
Also, a 20% down payment would eat up our entire savings ($100K) and the $1500 per month that we are currently saving would have to go towards the extra cost of mortgage and of raising the kid(s).

Sacrificing our entire retirement fund in order to start a family seems risky and we enjoy living in Vancouver but we also want to be property owners and have children.

What would you do in our situation?
IMO besides doubling income (which is almost impossible in most cases, I agree), there are really two really different options here - move OUT from GVA area, or continue to rent.
Moving "just outside Vancouver" theoretically makes 2bdr condo affordable, except you will put ALL your CURRENT and big chunk of FUTURE savings (400k mortgage on condo will take 2500 monthly - 1700 cheapest mortgage, 300 condo fee, 500 tax). But I assure you, it would be a stretch to have almost half going to house (2.5k with with ~6k take home)
With 25x multiplier price to rent, it make more sense to continue to rent, 500k 2bdr you're looking to buy are rented for 1900-2000 in thise locations (Burnaby etc)
To get numbers, if you continue to rent and keep saving you'd get 460k in 10y, 1.2M in 20y (100k principal, 1500 monthly 7% RoR), while dumping all to house and saving 12k per year (assuming you would have those 1k left, as house ownership comes with some not really predicted expenses, especially weird in condo) you'd have 170k and 520k, ideally.

P.s. currently in Van as well as in To you could not afford to buy a family sized housing from "scratch", e.g. from "earned" money if you're not making double 6 figures yearly like some doc. Period. You either need to have "old money" (either from previous home ownership or from bank of M&D), or move to some burbs. Sorry, this ship sailed many years ago.
Make the Trudeau drama teacher again!
Member
Nov 30, 2012
215 posts
106 upvotes
Burnaby
Not sure why I'm letting myself get pulled into responding here -- came to forum looking for the SDM points thread. LOL ...

It really depends on what your endgoal is ... but given you're thinking ahead to far into your future, I'm guessing you're the type who want a stable future. That means owning a home, preferably a detached one. Unless you are a very savvy investor, you will not be able to generate a return better than what you can get just through the gains on a primary residence being exempt from capital gains tax. Since housing is too expensive in GVR, you need to move.
Deal Addict
Oct 7, 2007
3016 posts
671 upvotes
ttrevor wrote:
Nov 12th, 2017 6:09 pm
My wife and I are 30 years old with a combined income of $100K. We rent a 1 bedroom apartment in Kitsilano for $2000 per month and save approximately $1500 each month. Our combined savings is approximately $100K.

We want to buy a place and start a family. Since a two bedroom in Vancouver starts at 1 million we would need to double our income so that's out of the question.

With our income we can afford a $500K place, which would mean moving 30 minutes outside of the city for two bedrooms.
Also, a 20% down payment would eat up our entire savings ($100K) and the $1500 per month that we are currently saving would have to go towards the extra cost of mortgage and of raising the kid(s).

Sacrificing our entire retirement fund in order to start a family seems risky and we enjoy living in Vancouver but we also want to be property owners and have children.

What would you do in our situation?
Here is my advice:
1. Consider living close to where you work. I am assuming you work in or near Vancouver.
2. Commuting sucks. Don't make a decision that adds travel time to your day and your life. You will hate it later and you will waste time every day of your life in traffic not to mention traffic delays and congestion when the weather is bad. Not a big point but you also pay for it in gas, wear and tear on your car, etc. but I would take commuting off the table altogether. You are not really making your life better if you sign up for this.
3. If you must move to the outskirts, make sure you get to know your neighbourhood before you do it. We once moved to Coquitlam because we could not commute from Vancouver (and this is when we were renters) and became miserable out there because it wasn't what we were expecting. The place we lived in was amazing but the people, culture and surroundings were not as pleasant as what we were used to. For example, the road rage on a daily basis was unbelievable. It greatly reduced my happiness.
4. Don't buy anything right now because the market is changing. I have been monitoring the pricing and it appears to have plateaued. Most of the detached homes in my neighbourhood that came on to the market just stay unsold until they fall off and get relisted. I would stick it out for another couple of years as renters. Prices will go down. They have to and there is a strong chance that interest rates will continue to go up. As interest rates go up, prices will go down. You will save money if you buy your house for less even if interest rates go up and your payment has a higher interest component.
5. Owning is expensive so don't make the mistake of feeling like you are losing money every month. Property taxes, condo fees, etc. really add up so renting can be a real bargain if you are in a place that you like. You have the freedom to get out whenever you want unlike owning a house which is really dependent on the market.

P.S. If you are considering moving, you might want to check out other parts of the country. We just visited Halifax for the first time and it truly was amazing. Looks like new development is starting to take off so someone moving there now might get in BEFORE it gets too expensive. The people there seemed very happy (have you noticed how miserable everyone in Vancouver is?) and If I was starting out, I might consider moving there. I take a happy vibe to mean "life is good".
Deal Addict
Jan 2, 2015
1113 posts
258 upvotes
Toronto, ON
madhater wrote:
Nov 13th, 2017 8:28 am
Nobody has suggested the obvious. You guys need to both quit your jobs and aim for having 10 kids and live on social assistance with everything covered.
I hope you were sarcastic, because the downvote button disappeared.

Social assistance doesn't pay much (and no, it doesn't actually pay rent) and some provinces cap the benefits based on the number of children.

I found the link to the new BC social assistance rates here: https://www2.gov.bc.ca/gov/content/gove ... rate-table

The family would count as "A" class (employable couple with children) and would get a max of $1321.60 per month, including the shelter bonus of only $820 (not enough to house a family of 12). The top-up stuff seems to occur only if there's a problem collecting child tax, and BC pays very little to child tax (and their portion of CCB is not income-based).

Child Tax would pay about $5,000 per month, which is incredible, if your'e not actually raising 10 children.
Deal Addict
Aug 24, 2016
2174 posts
1097 upvotes
kaliman wrote:
Nov 13th, 2017 12:17 am
Combined income of $100K is common, with many couples making that kind of money, that will drive up the prices as demand exceed supply.

Start small. You don't need to buy a house or a brand new condo. Understandably, if you work in Vancouver, your home is ideally in Vancouver for ease of commute. It is not fun to have a one or two hour drive/transit to get home from work.

Start small with a condo in the resale market. In Vancouver there are 2-bedroom resale condos that lists under $500,000 (see photo). Check out the resale market weekly and you will find something. After a few years, you can then upgrade to a "newer" condo or even a house if such opportunity exists.

http://www.realtor.ca/

Image
These aren’t rich people that can afford to buy a new property every 3 years. This is horrible advice.
While it makes sense to start small for your first home when you’re on a budget, for someone that wants to start a family, they need to purchase what suits them now, and when they have a child or two.
Buying a home and moving 3 years later makes zero financial sense, and that’s without factoring in the potential of home devaluation.

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