April 17, 2015

We finally took the plunge after all these years of renting.

Our landlord gave us notice that we may have to move at the end of our lease.  We’re both sick of renting.  Annette is no longer thrilled about Pacific Academy.  And I’m fed up with Surrey, traffic, big city, no access to outdoor recreation, bridge tolls, neighbors who can’t speak English, high prices for old rotten houses, no kids for our own children to play with, and leash-nazi park wardens in the local green space who threaten me with $1000 fines every time I walk slow, dopey Rupert beside me without a leash.

We spent a year researching the schools, evaluating every area, and watching all the listings in Victoria, Kelowna, Abbotsford, North Vancouver, and other communities with known good Christian schools.

Our wish list:

– Reasonable price.  Hopefully in the $700K range to avoid a mortgage.  That eliminated North Vancouver right off the bat.  No way can you buy anything reasonable there for under $1M or even $1.5M.

– Neighborhood full of kids that is easy walking distance to the Christian school.  Even better if the house is on a cul-de-sac.  Victoria, Kelowna, and North Van Christian schools are not near residential areas. Only Abbotsford provides potential in this area.

– Near universities.  North Van okay, but who wants to go to SFU and UBC when you can’t speak the language?  Victoria excellent with UVic.  Kelowna excellent with interior’s UBC.  Abbotsford poor, as there is just the University of Fraser Valley or expensive Trinity College.  But maybe that will change in the next decade?

– Newer house.  Tired of decades-old, worn out homes with old technology that require constant repair and maintenance.  Sick of rat, mouse, ant, moth, termite, raccoon, and other infestations.  Can’t stand mold and rot.  Had my fill of appliances that don’t work and regularly break down.  Most houses in Victoria are older houses. Kelowna is loaded with newer houses.

– House with 4 bedrooms, 2 offices, and an open concept.  How about a workshop?  Lots of storage?  Easy to find in Kelowna, harder in Abbotsford, and almost impossible in Victoria.

– Ideally, close to our friends in Vancouver.  Abbotsford and North Van are best in this department, but Abbotsford has easy access to the border, which means I can buy everything off of Amazon.com.  This is huge in my opinion, as everything is cheaper in the USA.

– House adjacent to green space.  Can’t find it in Kelowna.  They’ve done a poor job in creating neighborhood parks.

– Sunny yard for a garden.

– Easy access to mountain biking right out the garage.  Victoria okay.  Kelowna okay, but you have to ride a ways to get to the hills.  And they are very barren and dry.  North Vancouver awesome.  Abbotsford seemed good, with Sumas Mountain and other surrounding mountains.  Upon further investigation, I learned that Sumas Mountain has excellent trails.

– Clean air.  Victoria best.  North Van good.  Kelowna Okay.  Abbotsford fails.

– Christian school with lots of 1/2-time kindergarten classes so Annette has a chance of getting a job.  Abbotsford was hands-down best.

See how difficult the process became?  There was no clear winner. Every community excelled in some areas while failing at others.

In February Annette said, “Have a look at this one in Abbotsford.”  I was frankly sick of looking at houses.  Tired of disappointment because there was always a “show stopper”.  But I had a look, anyway.  We arranged to go see the house and were impressed immediately by the cul-de-sac it was situated on.  And behind the house is a green space with a creek!  And there were tons of kids playing on the street!  And the house is only 2 blocks from the Christian school!

Inside, the house was beautiful.  It smelled of quality.  Lots of bedroom space upstairs. Beautiful kitchen and open main floor.  3-car garage.  Office for Annette.  But what about storage?  And an office for me?  Ah!  A 3-bay underground storage bunker!  And an office, exercise room, washroom, and storage down there, too!

We visited the elementary, middle, and high schools for tours.  We walked the neighborhood.  We explored the creek behind the house and researched the bylaws for trailer storage, tree cutting, etc.  I rode my bike on the Sumas Mountain trails to confirm they met my expectations.  They certainly did.

The house had already been on the market for 3 months and we learned that the sellers were getting frustrated.  We intentionally used the seller’s realtor so that commissions could be reduced, bettering our chances at getting a low-ball bid accepted.

Before going on our Costa Rica trip, we offered $700K.  I told the realtor that that was our limit.  The sellers didn’t even counter.

Towards the end of our Costa Rica trip, the realtor emailed us to ask if we were still interested.  I responded that we hadn’t talked about it on the trip, but were planning to head up to Kelowna for more research.

A couple days after our arrival home, the realtor phoned to let us know that there was another offer on the property.  It was the same as our $700K offer.  But because we were using the seller’s realtor, we had more wiggle room.  The realtor had a big incentive to sell to us.  I told him we would be willing to offer $705K and no higher and he shocked me by saying, “I might be able to make this work.  I’m willing to forego some of my commission.”

A few hours later we received word that it was a go, and by the evening we had a signed deal!  And today, April 17, after all subjects were removed and we paid the deposit, we drove over the the house and placed the SOLD sticker on the sign.

Our first house.  Me, at age 51.  Annette at 46.  It was now or never.

What did we get?  A 2010 newer house with tons of storage, beautiful cul-de-sac setting with backyard forest, 1/4 acre, an amazing amount of space, 3-car garage, close to the school and biking, and most importantly something we can be proud of after all these years of waiting.

The house was purchased in 2010 for $628,476.  The owner spent $50K in upgrades, $40K to finish the basement, and $5K on landscaping.  That adds up to around $725K. This does not include all of the owner’s labor to upgrade and improve the house.  And we bought it for $705K.  So I am happy that not only did we not pay a jacked-up premium in a bidding war, we found a deal.  A good deal.

The price to replace the house is estimated, by the insurance companies, to be roughly $595K.  So we paid just over $100K for the lot, rather than the turbo-bubble $1M needed in North Van for a similar lot.  That means less downside risk, in dollar terms, in this once-in-a-century real-estate frenzy.  I still believe prices could fall to 1/2 their current value – meaning we’d have a $350K hit.  Not bad.  On the other hand, maybe this insane money printing gains traction in the mainstream economy and we enter a period of hyper-inflation.  It’s possible.  In that case, at least we are in the market.

Today, after removing subjects, the realtor revealed to us just how financially stressed the sellers were.  They are moving to Chilliwack for a job.  They already bought their house there on leverage and needed to sell.  That’s why the accepted our low-ball.