Excerpted from ‘Selling your home could finance your hopes and dreams’, Garry Marr, Financial Post, 26 May 2011 –
Cam Hayduk sold his house in May 2010 on Bowen Island -a 20-minute ferry ride from Vancouver -for about $580,000. “Prices had gone through the roof in the 10 years we have lived here,” says Mr. Hayduk, who now rents a home with his wife and child.
He bought the house for $380,000 in 2004, putting a 10% down payment. The return on his approximately $40,000 investment was nearly $180,000, for 450% return in six years.
“We wanted to start our business. Originally we wanted to scale down, but there were no options at the prices we wanted, so we sold,” says the 45-year-old former camera operator. “We invested the money and some of it went to a video production company we started.” He went from what he describes as “eking into debt” to a situation where he was able to buy new video gear and lights for the business to make it profitable and establish a nice nest egg that is locked away and untouchable.
“We don’t have any regrets. We are sleeping well and there is so much less pressure. Our house put us into the black in a way we never could have been before.”
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“We had one realtor dealing with a mainland Chinese client who found a property they liked. The client said they liked the house but they wanted to know if the neighbour would sell their house, too,” says Elton Ash [executive vice-president of Re/Max of Western Canada]. For the person who didn’t have their home on sale, it was a huge windfall. “In this example, the neighbour sold.”
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How do you say no? Average prices in Vancouver in April soared to $801,252, a 21% increase from a year ago. Profits in some pockets of the city are even larger. At the same time, affordability in the city has become absurd.
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“I think it’s a good time to downsize if you are moving to a less costly home because even if prices do go down, you do lock in equity,” says Clay Gillespie, managing director of Rogers Group Financial.. “Most of my clients are people near retirement, some of whom bought their [million dollar] houses for as little as $50,000.” Mr. Gillespie says he had a client who recently sold in Vancouver, bought a similar home in Victoria and pocketed a tidy $800,000 profit. “The big problem is if you want to stay here, you have to buy something else,” Mr. Gillespie says. “The fear is you will be [priced out] if you sell out now.”
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Kudos to those wise enough to cash out. – vreaa