After my post about when we plan to buy, we decided to do up a list of what we actually want to determine whether it’s attainable now or in the near future.
It hasn’t changed at all since we looked last year, but I think it’s good to get it down in writing so that if we are completed enamoured with a home that goes against our basic principles, we can refer back to save ourselves from future despair.
Budget
I’m uncomfortable with publishing numbers on the blog as far as what we would be setting for a budget, but as a ratio of our take home pay, we would not be comfortable spending more than 25% of our combined after-tax income, including property taxes.
This should be able to afford us a decent house in one of the suburbs of Vancouver.
(I am not including the down payment in this percentage because of closing costs, title insurance, lawyer fees, inspection, appraisal and PMI)
Type of Home
J refuses to consider anything where we will have to pay strata (HOA fees for Americans), about which I agree with him. Strata is a huge waste of money, and the value of condos and apartments don’t go up; it’s the value of the land that increases, so we’ll be looking at a house in the suburbs. We wouldn’t be able to afford a house in Vancouver and I’m not much of a big city person for the long term.
We want a chunk of land larger than 8,000 sq feet, but the house doesn’t have to be very big.
Must-Haves
We don’t have all that much on our “must haves” list because J is a carpenter and there is not much he can’t do. But what is on the MUST HAVE list is:
- A two story house (for a basement suite = rental income) OR a house with a detached garage/carriage house
- 3+ bedrooms
- Good bones (no hazards)
- Quiet street
Yes, that’s it. I don’t care if it has the ugliest kitchen in the world, or only one bathroom; we can add on, renovate, and fix things for almost free (my father sells building supplies, J is a carpenter).
I would really like to purchase a house for a really good price that requires some work (as long as it has good bones). I would love to renovate and make it my own; I don’t like the thought of living in a newly renovated house because that was the previous owner’s preferences, tastes, and vision. Plus, we would have to pay more for somebody else’s taste! No thanks.
The Perfect House
If I could buy the perfect house, it would be a court-ordered sale (foreclosure for you Americans). Not many people can buy them, because of timing and subjects; if you are already a home owner, you need to have the house that you previously owned sold already prior to buying one.
Plus, the timing is always tricky. But because we rent right now, I am okay with timing and we don’t own a house yet so buying one is a great way to save a few thousand dollars.
Ideally, it wouldn’t be all that nice and we could fix it up. The house we were looking at last year was nice on the top floor but the basement suite needed work; I thought that would be ideal.
It was also a court-ordered sale, and the Realtor thought he could get it for $330K – a price unheard of for this area.
So, this is our ideal situation. Does it seem realistic?
Daisy – have you thought about buying a plot of land on the cheap and building your dream house? 🙂
I wish! With the boy being a carpenter, and my dad selling business supplies, this is a huge dream of ours. A plot of land in a decent area that is not tiny would be about $375K, and then the house another $200K so we would be out a lot of money.
Agreed on the strata. And that’s why we also bought a freestanding house.
But… not so sure about that any more. Of course, it depends on what the individual association covers, but the breakdown isn’t so clear-cut when you add the following:
Yard maintenance (I’m not a gardener)
Fertilizer and assorted weapons of mass destruction (weeds and bugs)
Water
Insurance
Fence
Roof (in California we lived in a place where the HOA covered the roof, which they actually replaced while we lived there).
Paint – every so many years
We were fortunate in that our roof got reaplced by insurance after it was severely damaged by hail. But it was coming due for its 10 year resurfacing.
But it was that last one (paint) that made us sit back and go, whoa, maybe an HOA wouldn’t have been THAT much more expensive.
We have plans to travel more in the future. Being retired, we have the luxury of being gone for more than a month at a stretch. In that situation, an HOA is beginning to look better and better.
So… we’re waiting for prices to go up just a little more, and then we hope to sell the house and trade down to a townhouse (with an HOA) so we can just close the door and leave… knowing that we’re not throwing away as much money as we used to think we would…
As a general rule, the closer you can buy to the bottom of the market (i.e. recession) the better off you will be. The next one might not be that far away.
Good luck on your search! 🙂
I hope you guys find the house you want! I can’t imagine paying so much but that’s just because I live in the Midwest. And yes I agree, HOA is a big waste of money.
I agree with this. We got a good sized house (1900sq-ft) with a full basement and a garage that actually holds large cars for around $100K. The neighborhood is great and we have a large plot (half an acre) with large mature trees. Got to love living in the Midwest.
Oh and no HOA crap to deal with. It is voluntary (we pay $100/yr since it help with snow removal).
I am so glad I live where I live and can get housing dirt cheap compared to most Canadian cities (and big American cities too)! A big part of why we loved our townhouse is it doesn’t have an HOA so no HOA fees! YAY! They do seem rather unnecessary so hopefully you can avoid them!
I hope you guys find the right place, too! Doesn’t sound like an unreasonable list to me at all. I hate HOA fees. One place we rented it was worked into our rent. Money waster for sure.
Money really doesn’t go very far up in your neck of Canada.. Our house is nowhere near $375k, and I can’t imagine trying to skate with that type of mortgage payment. I am sure you guys will find something, your list of demands is certainly not outrageous.
BTW.. I don’t thnk HOA fees should be an absolutely showstopper.. We pay just over $300 year but for that we get a pool with a neighborhood swim team, tennis courts, and nice common ground, and holiday parties (easter egg hunts, breakfast with santa, fourth of july parade). TOTALLY worth it. Would I rather live in the next subdivision down without any of that, but without the $300/yearly fee.. Heck no.
We only pay “HOA” fees here if you live on a strata owned property. Meaning you don’t really OWN your property. You do, but you don’t. So, if we lived in a subdivision with HOA (strata), we would have to get strata approval for renovations, and landscaping, etc. I want freedom! haha
I live in the midwest and houses here have a totally different price range so it’s hard for me to but it in perspective. However, I hope that you get exactly what you want. Don’t settle for less!!!
Are you calculating the mortgage payment to include things like property taxes and homeowner’s insurance? Those make up about 36% of our mortgage payment, and they increase every year – usually by rates much higher than inflation. Don’t know if that’s the case in Canada, but sure worth checking on.
Property tax, yes, but not homeowners insurance. Like tenants insurance, it wouldn’t go in the “housing” budget, it would come out of the “insurance” category. But yes we all well prepared and have done our fair share of research 🙂
Wow, prices your way are just as pricey in our neck of the woods. When we bought our house we didn’t go into as much detail as you both did but we will on the next house. We know what we want now. Like you we have many tradesmen in our family. Now that I make well over triple what I did when we bought the house I still don’t think we’d spend the money to go bigger. We may get a bigger plot of land but the older we get the less house and land we want mind you we are only in our 30’s lol. I also notice alot of older couples moving into bungalows as they don’t want to walk up the stairs or can’t. Amazing how life changes us. Good luck finding your dream home. I’m sure it will all be a reality before you know it! Cheers Mr.CBB
It sounds like you have a clear idea of what works for you, labor wise and financially. Good luck!
Good luck! The housing price is your area is so expensive.
HOA dues aren’t completely a waste of money. I wouldn’t want to buy a house with them, but a condo? For sure.
My HOA dues cover: water, sewer, trash, building insurance, basic cable TV (actual cost to me otherwise: ~$15/month), and all maintenance on the building like keeping the stairs and common areas clean, the mailboxes, the front door, the garage doors, the siding, cleaning the windows etc.
Personally, I don’t want to have to mow a lawn or deal with gutters. Maybe you would say that I shouldn’t have bought a place then, but I think that a condo was the right choice for me for the next 5 years.
We wouldn’t ever buy a condo. We’re not that far off from having kids and we couldn’t raise kids in a condo. Plus, I come from a relatively small town so having people above you, below, and to both sides – not for me. I’v never heard of a condo around here that doesn’t charge strata.. ever.
No, I think that you made the right choice in that case. I love the thought of taking care of a lawn, (because it will be mine!)
Good luck Daisy! Sounds like you’ve got everything covered.
That is a pricey house!!!! 😯
Thanks for all the translations for us Americans 🙂
Sounds like you have a solid plan in place, though “renovating” is not all fun and games. You just need to amke sure you have a timeline and step by step goals to hit, otherwise you’re living in a construction zone, and that gets old after a few weeks, let alone months or years.
Though you don’t want stalkers, pictures of houses you are looking at would be awesome 🙂
“Renovating” is what my boyfriend does for a living, so we certainly know the frustrations with it 🙂 It’s not fun but for us, it’s worth it.
Oh, you bet I’ll post pics!
Here’s what I love. When you talk to “regular people” they want the house perfect and will pay a huge premium for it. Daisy? Imperfection and discount = dream. I totally agree with your analysis. Let me fix it later if I can score a great deal today.
I’m not sure I want the house/yard/suburbs thing, after hanging out in a house for a week. It’s so much work! Now I’m thinking some awesome condo would be more my style, even with kids. Parks are just as good as backyards, right?
Hahaha, no way. I could debate that for hours. I loved having a huge back yard as a kid. But I don’t want just one 🙂
We looked at lots of places to fix up as well, but went for a condo during a developer fire-sale (bank was leaning heavily on the developer). Strata fees can be high or low, depending on what you get for them. Ours are “high” but cover many, many things that we’d be paying for otherwise.
Note: while bare land stratas may set rules, there are also building covenants with similar restrictions. Be mindful of them when you are looking.
I hope you’re not too far out in the burbs with those prices 😉 I have a few guesses as to the location, haha.
The idea is to get away from the city. I feel rushed all the time on the “other” side of the bridge. I prefer the suburbs 100x over, but that’s just me. My hope is that there will be a lot of locations open to us in the lower mainland by them, assuming the prices drop!
That’s awesome, sounds like you’ve got a really good plan to buy a house. When I buy a house I also want to make sure it has a basement suite to rent out. Hey, maybe you can get on some HGTV reno show and they’ll pay for it for you!
I wrote a post on my personal finance blog that shares 40 questions to ask before you buy a place: http://www.canadianpersonalfinance.com/40-questions-you-need-to-ask-before-you-buy-a-house.html.
I am not looking right now but I suggest getting a realtor to give you access to their MLS tool (you can setup alerts for your price requirements).
Good luck!
To echo some of the other comments, housing is so expensive in your area! Just curious if the salaries are also higher or if people just have to devote a huge portion of their income to own a home.
I live in the Lower Mainland too and we have struggled with the housing challenges. I’m sure to outsiders, $375k – $450k sounds like a crazy high amount. We’re about 10 years older than you I suspect which made things easier for us since I had a small condo before the crazy big price increases happened. I’m impressed that someone of your age and generation is able to make this happen!
Question for you: Are you comfortable with the demographics and safety in the areas that you are looking to buy a house? We live in Langley, but found that there were a number of “rough” areas in Langley (and of course in Surrey) that have more reasonable housing prices… but with the downside of “rougher” neighborhoods. I generally found “city” of Langley to be a big rough (vs. Township) and of course there are a lot of tough areas of Surrey (‘tho they are probably evolving).
Other than those areas, I don’t know of much that is here or west of here that have many detached houses less than $450k? That said, I respect your decision not to share too many details 🙂
I agree, HOA dues are a waste… these days, it’s tough to find a nice neighborhood in the USA without an HOA. You said 8,000 sq feet of land – do you realize how small that is? My lot is just over 10,000 sq ft and is not even a quarter of an acre!
I’m jealous of the skilled trade folks in your family. C and I can only do so much (and it’s not much).
We loved our first house, but hated the commute. Our second house is okay, but our lives are a lot better.
I think there can be a lot of trade offs, but with your plan- buying a distressed property that you can then fix up to how you like it, you should be pretty stet.
Not trying to nit-pick, but I wanted to point out that a $450k mortgage for 25 years with a 3.99% interest rate, which I believe you said in the comments of your last post would be what you were looking at, would be a $2,372.78 minimum payment per month. I am not sure if that extra $200 per month would be a huge difference, but I wanted to make sure you had the right numbers. The amortization calculators online always default to a 30-year mortgage (which gives you the $2,150), but the new 25-year rule means that you have to adjust that setting.