Holy shit! Where is all this money coming from?

[BobTheSubgenius]

A 2 BR 2Bath condo in Nanaimo - a nice enough place, but absolutely a second-tier town, even compared to just the towns in BC, let alone elsewhere.

$2 million. Nice condo, but not exactly jaw-dropping. *

A 1940 house next door...cute inside and not badly done, but the dormer "master suite" has an en suite that the most recent seller had a bit of an issue using because the roof slopes and he is 6' 3" 1320 square feet, 2 bedrooms, 2 bath.

Asking price $749,000. Sold for over asking.

How is this remotely sustainable? It was only a year or two ago that the first $1 million price tag occurred in Nanaimo. The average single family home is selling for $1.25 million.

If you SOMEHOW get a $150,000 downpayment together - a VERY big ask, unless you already have some equity in a house to sell - you still have a million dollar mortgage!

I bought this house decades ago as a starter, but it turned out that I LOVE this neighbourhood - quiet, yet handy to all kinds of useful venues, and fantastic neighbours - and don't really need a bigger house. I paid $51,000, and now it's worth roughly $700,000???

How do people get a start any more? I'd be more troubled than I am, but I'm coming up 69 years old, have a pieced-together heart, so it's unlikely I will see this Jenga market fall. And, my only son is going to get a house when I go, so he's going to be at least "all right."

What about everyone else his age (40) and younger? Some of them can't even afford to leave their parents' house.

*Jaw-dropping was a penthouse in Vancouver where your HOA fees and municipal taxes came to a total of $10,000 a month.

[LakeArenal]

1. Pretty sinful.

US is pricey.

[DBoon]

2. foreign money laundering?

[BobTheSubgenius]

3. That's possibly the case in Nanaimo, but definitely the case in Vancouver and Victoria.

There are much tougher anti-laundering laws now. In casinos, there was nothing preventing you from walking in with a satchel of money, converting it to chips, playing for a while, and asking for a cheque as your payout.

Not any more.

Years ago, a friend of mine bought a small acreage on the Sunshine Coast - a nice cabin and a small one about 200 feet down the hill. Paid for it with a paper bag full of money. US funds, at that.

Not any more.

[MissB]

4. Around here (Pacific Northwest)

The money comes from California. California has jacked up house prices, which in turn jacks up the house prices around here.

The inventory in Portland right now is very low. Heck, the inventory pretty much anywhere in Oregon is low. Dh and I have been looking on and off for over a year, almost pulled the trigger twice on different homes and have decided that staying put is just fine.

Our first home was $56k. We sold it for more than $300k more than that and bought one just under $500k. If we were to sell it now, it’d be over a mil and it isn’t that big or that fancy, just in a great neighborhood that’s always in demand.

Not moving. Too much hassle. We are remodeling the couple of rooms that drive us crazy and working on the exterior things we *want* to do like retaining walls and concrete pathways for when we are too feeble to walk on lovely flagstone pathways.

Younger people are simply screwed. You have to already own a home to buy one right now, or push way out to buy a small starter home.

[TexasBushwhacker]

6. Mark my words. Real estate, at least in the US, us on bubble

Granted, interest rates on mortgages are great, but forbearance from the banks isn't going to last forever. Right now, Biden extended it to June 30th, and that only affects FHA and VA loans. There are 10 Million home owners behind on their mortgages right now.

We've been through this before. Back in 2008 with the subprime loan crisis, and going back farther to the real estate crash in the 80s. I was a single school teacher at the time and bought a 2 year old foreclosure for 60% of what it originally sold for. The bubble will burst. They always do.

[dhol82]

5. Not sure what the inheritance laws are like in Canada but

Make sure that your son gets to inherit without a taxable event.
Consult with a tax advisor. Otherwise he might get hit with a sizable inheritance tax on the house.
Might be nothing, just check to be sure.

[Duppers]

7. Was wondering if one could change the deed

To a home to include an offspring to avoid such inheritance taxes?

Anyone know?

[mnhtnbb]

8. Depends upon whether there is a mortgage

on the house that could trigger the mortgage coming due if someone else is added to the deed. Check with a local real estate attorney.

[Duppers]

9. Thanks! In our case...

The mortgage has been paid off but we'll ck with an estate attorney.

Thanks!

[DFW]

10. Inheriting a house was a nightmare for me and my siblings

My parents built the house they lived in way back in 1955. They borrowed and scraped up the $50,000 or so it took to build it, and it was pretty modern for the time, though they couldn't afford (and didn't want) fancy. It was out in a (then) new settlement way out in the woods in northern Virginia. We were the third family in the area. There weren't even paved roads there at the time, and when it rained, we couldn't even get up to the street. The mud was just too slippery.

Fast forward to 2002. My dad had died in 2000, and we lost my mom two years later. I was commuting between Dallas and Europe, my brother had his own house out in Langley, near where he worked, and my sister lived with her husband in New Jersey. We wanted to keep the house in the family, but couldn't live in it ourselves, and much of the infrastructure was the original from back in 1955. But it was "lakefront" property--perilous back then, prestigious now. No longer a Virginia backwater, now the streets had long been paved. There were highways and malls, and it had become the "Washington suburbs." The house was assessed at near $1 million. We had to come up with $500,000 in inheritance taxes for a house none of us could live in, or else sell it and split half the cash three ways. If we could have, we would have kept it, but we couldn't and had to let it go.

[dhol82]

12. In Pennsylvania they had something called right of survivorship.

I had that with my dad and inherited the house clear. Fortunately, I was an only child.

[DFW]

14. That would have been ideal for us.

Unfortunately, Virginia had no such law.

[Duppers]

17. OMG! $500,000 in inheritance tax!!!

Even on a $1M property, that's outrageous!! Half of the estate!!!

2yrs ago my mother died down in Tennessee; we settled the estate (valued at much less tho) last yr for so a small fraction of that. Big differences between TN & VA laws.

[DFW]

18. Don't forget, the house was built in a backwater in 1955

They were cool with living out in the boondocks, and as it is, they spent many years paying back the $50,000 it cost them to build the house. There was no way they could have known that the Washington metropolitain area would end up expanding so vastly as to eventually engulf them, and drive the value of their house into the stratosphere.

I have no idea of how the tax was structured. I always thought it was all federal, but my brother took care of that. As the only family member who ended up returning to Virginia and settling there, he took on the job of executor of the estate. For me to do it from Europe, or my sister to do it from New Jersey would have been a nightmare. I think that since 2002, there must have been a dramatic increase in the tax-free exemption before the inheritance tax kicks in. But back then, the threshold was low enough that we couldn‘t afford to keep it.

[Fla Dem]

11. Don't people get around that by selling the house for $1?

I 'm not sure where I heard this. Just remembered someone telling me about a guy who sold his house to his son for $1 then continued to live there until he died. Did it to avoid the son paying inheritance taxes.

[dhol82]

13. I think all of this depends on the state.

Which is why anybody in this situation should consult with an attorney.
As to the selling the house for a dollar, some parents are wary of doing it in case the child then throws them out of the house. Yes, frighteningly, it does happen.

[Disaffected]

15. There is no

inheritance tax in Canada (one of the few tax breaks we get here compared to the US).

[dhol82]

16. Nice!

[lastlib]

19. Homebuyers in Japan take on 150-year mortgages.

I guess if they buy a house, they figure on great-grandchildren paying it off......?