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Thread on strata insurance crisis impacting condo values in Vancouver:
Let& #39;s assume a baseline 600 sf 1-bed downtown condo. Bought 2016 for $650k with monthly strata fees of $0.50 psf, or $325 per month in strata fees.
Let& #39;s assume a baseline 600 sf 1-bed downtown condo. Bought 2016 for $650k with monthly strata fees of $0.50 psf, or $325 per month in strata fees.
Until 2019, insurance for condo tower was $65k annually, with strata lot deductibles of $25k.
Fast forward to January 2020. Strata insurance premium skyrockets overnight, from $65k to $325k, with deductible increasing from $25k to $250k.
Fast forward to January 2020. Strata insurance premium skyrockets overnight, from $65k to $325k, with deductible increasing from $25k to $250k.
Assume building has 145 units, and further assume this particular strata lot has a unit entitlement of 1/145.
Only on account of strata insurance increase, this unit& #39;s monthly strata fees increased from $37 to $187.
Only on account of strata insurance increase, this unit& #39;s monthly strata fees increased from $37 to $187.
Assume another 10% increase on other non-insurance strata fees ($288 --> $325 less old monthly insurance portion of $37), this unit& #39;s monthly strata fees jumped from $325 to $504.
This is by no means the end of the story.
This is by no means the end of the story.
Now, the strata lot owner must deal with the jump in the deductible from $25k to $250k. Most insurers will not cover anything in excess of $250k deductible coverage. This owner got lucky, I guess.
The cost of this deductible coverage is an additional $141 per month.
The cost of this deductible coverage is an additional $141 per month.
Add the $141 to the $504, which results in $645 per month for this unit measuring 650 sf, or $0.99 psf effective holding costs, excluding property taxes!
Add property taxes taxes to this number, and you are easily increasing monthly holding costs from $645 to $775.
Add property taxes taxes to this number, and you are easily increasing monthly holding costs from $645 to $775.
Assuming 20% down payment, mortgage may cost right around $2,650. Add $775 to this, and you get a total monthly cost for this condo of $3,425.
This owner could rent the same unit in the same building for $2,100.
This owner could rent the same unit in the same building for $2,100.
The point of this thread is to highlight the relative costs of owning a condo vs a detached home with an income suite.
This same owner, assuming he or she (or this couple) can qualify, could have purchased a $1.4 million detached home with an income suite.
This same owner, assuming he or she (or this couple) can qualify, could have purchased a $1.4 million detached home with an income suite.
Assume income suite generates $1700 per month and buyers put 20% down. Mortgage on detached is around $5,500, plus $200 insurance and $350 for taxes, call it $6300 per month total costs, including some buffer for maintenance.
Subtract $1700, you get effective holding cost (simplifying this at the moment, so no tax considerations here) of $4,600 per month.
This same owner pays less than $1,200 more per month, but gets a 33x122 lot and an 1800-sf 3 bedroom 2 bathroom detached house!
This same owner pays less than $1,200 more per month, but gets a 33x122 lot and an 1800-sf 3 bedroom 2 bathroom detached house!
