One of the biggest complaints Vancouver builders have had for years is the difficulty of…
Fan favourite Dustan Woodhouse came on the show recently to make his 2018 market predictions and two of the many interesting points he made got us thinking.
The first point was about investing strategy:
If he could buy anything in Metro Vancouver, Dustan would buy a single-family home as far West as possible. Period.
This is Steller advice: owning your own land is the best bet from an investment standpoint and that means buying a single-family home.
The second point he made about living in Vancouver more generally:
The townhouse is the new single-family home in the Lower Mainland and everyone needs to get used to it.
This second point has been made by other guests, like Nathan Lauster, and the logic is clear. The single-family home has become unreachable for most Vancouverites and townhome (or condo) living is the new reality for even the upper middle class.
But is this second point entirely accurate if you can handle the 20% down payment for a single-family home?
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Let’s look at a single-family house and a townhome currently on the market in East Vancouver and run the numbers.***
Assuming you pay list, and using rough and simple numbers and excluding hydro and insurance that are applicable on both properties, your down payment would be $299,800.00 and your monthly carrying costs would be as follows:
Mortgage with an interest rate of 3.24% over 30 years: $5198.00
Property Tax (without applying the home owner grant): $407.37
Total monthly cost: $5680.37
But here is the often overlooked but crucial consideration – most East Van homes have a secondary suite.
In this case, 2341 Parker has a 2-bed garden suite with a separate entrance or “mortgage helper” that would rent for somewhere between $1500-$1800 per month (rents vary depending on many factors).
Using an estimated rent of $1700, then, your carrying cost would therefore be 5680.37 less 1700.00 for a total monthly cost of $3980.37
Now let’s look at an East Van townhome.
Again, we will assume you pay list and exclude hydro, insurance, and gas, as gas is usually included in the maintenance fee. Your down payment would be 249,800 and your monthly carrying costs would be:
Mortgage with an interest rate of 3.24% over 30 years: $4331.24
Property Tax (without applying the home owner grant): $215.89
Maintenance Fee: 357.36
Total monthly cost: $4904.49
Here, of course, there is no secondary suite or potential for rental help. You are on the hook for nearly 5k per month or $924.12 more than the single-family home.
So, is the townhouse the new single-family home?
Increasingly it will be, as the city rezones many single-family neighborhoods for more multi family developments like townhomes, rowhomes, and condo complexes to increase supply
But does that mean that a townhouse is cheaper than a single-family home?
Absolutely not. While it is true that the mortgage down payment is larger, by $50,000 in this case, your monthly costs are considerably less for the single-family home. You would get that 50k back within the first 5 years with the monthly savings.
The townhome may be the new single-family home in Vancouver, then, but it may not be the best fit for you.
*** Please verify all numbers in this post independently or get in touch with us if you are keen to learn more. The Vancouver Real Estate Podcast does not take responsibility for any of the calculations provided in this post.