Do you think this will keep going on forever?
We're not different, it will end, only question is when.
Buying A New House... Need Some Advice, Please!
- Thread starter Mina
- Start date
Do you think this will keep going on forever?
We're not different, it will end, only question is when.
Majority of people are clueless when it comes to their money. I can tell you this not just from reading statistics but from my personal life. I see my friends and even make financial choices that are going to bury them in the near future.
40 percent of canadians live paycheck to paycheck...think about that for a moment. Now lets throw in an interest rate back to normal, not 2,79 percent, but 6-7.
You see that 40 perfcent of people now? They're not gonna be keeping that home for long..along with that car and that brand new bike...
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I'll ask one more time. Who the **** are you paying rent to, if it's not "investors"?
Im talking average prices, like i said you might have gotten a great deal, but this isnt the norm.
And you pay rent to whomever owns the place. Pretty straight forward no?
I answered your question, now answer me mine. What other "investment" charges you 1000-1500$ a month in interest and another 300-400 in property taxes?
And when i give you a best case scenario im "off the rails" but yours is the norm? Come on, lets be fair here...
Gary's point is that the person who owns that house and is renting it out but does not live there ... is an investor. They would not be doing that (owning the house and renting it out) if there were not a potential for profit in it. And that essentially means that if you are renting, you are paying all the costs to carry that house, including the property taxes, PLUS the owner's profit margin. People don't own houses and rent them out from the goodness of their own hearts. They do it to make money! Not all are successful at it ... but that's the objective.
Owning a house and paying interest and property taxes on it certainly costs you that interest and property taxes. But you can rest assured that if you are renting that same house, you are also paying that interest and property tax as part of your monthly rental. It might be buried ... but you are still paying it.
Renting is fine if you expect that you will not be living in a particular location for very long. If you expect to stay in one place for more than 4 or 5 years, it's better to buy.
I've lived in the same house for going on 10 years, and I will freely admit what my current interest payments are: 0. It's paid off.
Owning a house and paying interest and property taxes on it certainly costs you that interest and property taxes. But you can rest assured that if you are renting that same house, you are also paying that interest and property tax as part of your monthly rental. It might be buried ... but you are still paying it.
Renting is fine if you expect that you will not be living in a particular location for very long. If you expect to stay in one place for more than 4 or 5 years, it's better to buy.
I've lived in the same house for going on 10 years, and I will freely admit what my current interest payments are: 0. It's paid off.
The counterpoint is that you need to live somewhere. You are either going to be paying those property taxes directly, or through your rental payments. And you are either going to be paying that interest directly, or through your rental payments.
By the way, $300,000 mortgage at 4% (I know you can do better than that right now, but let's allow for a little future increase) is about $1000 per month but as you pay it down, that interest amount goes lower and lower as you pay off the principal.
It's tempting, if free- no obligation, to list your biggest asset at stupid high price with no real intention of selling. But, hey, if somebody wants to cough up stupid money why not sell, downsize and pocket the difference? No time pressure. I wonder how many houses are listed on that basis? I'm tempted (I need a Panigale R) but I'm not a total dooshammer.:confused2:
w0SS
Active member
There is research that suggests the opposite.
Buying a $400,000 house with 25 year mortgage vs renting for 25 years
http://www.theglobeandmail.com/glob...lly-renting-or-buying-a-home/article11952313/
"The home is worth $837,511 after 25 years, which is close to $319,000 less than the combination of down payment plus mortgage and maintenance costs."
While renting and investing the 100,000 downpayment +extra's you would have spent on mortgage + maintenance "your investments end up worth better than $264,000 more than your rental payments"
Here are also some other interesting articles I found.
Condo crash coming? Aren't these the people who are going to sell later to buy houses?
http://metronews.ca/news/toronto/802977/toronto-trump-tower-unit-receives-below-minimum-bid/
http://www.theglobeandmail.com/repo...t-august-showing-in-a-decade/article14464065/
but immigrant money will save us right?
http://3.bp.blogspot.com/-0zsb8wPiR...X8/s1600/immigrants+to+toronto+every+year.jpg
well renting is still for suckers, they are throwing money away.
http://gailvazoxlade.com/blog/archives/5221
w0SS
Active member
And good on you for being mortgage free. That's a MAJOR advantage.
Some info on why I continue to rent at the moment.
3 of my close friends recently bought houses, 1 new build and 2 built within the last 20 years. We grew up together and are pretty open discussing our income etc. I know our salaries are all within 10k before taxes.
Friend with the new build has an empty house. He never rented, and is moving in only with what he and his wife had from living with the parents. Granted he did have a lot of student loans to pay off before he bought, but he currently has very little extra cash to buy “home” things. His kitchen literally only has what the builder put in, no kitchen table, chairs etc, and he has been living there for over a year.
Friend who bought this spring is renovating. He constantly complains about having no money to do anything because he is spending it all on upgrades which turn out to cost way more than he originally budgets for (intends to fix one thing, discovers more needs fixing). We use to go out to the bar for drinks often, that hasn't happened since he moved in.
Friend who bought 2 years ago is just breaking even. He really wants to upgrade and reno a bunch of stuff in his house but just doesn't have the money at the moment.
In my opinion that is one of the major negatives to buying. You constantly find reasons to spend money on your house. Improving it, decorating it, whatever.
Meanwhile, I am renting and I max out both my TFSA and my wife’s every year, go on vacations, spend money on my hobbies and still put a little cash away for a rainy day. I don't put a cent into my apartment and haven't bought furniture or the like since my first year as a renter.
In the end the three of them could end up selling for way more than they bought, and my investments could tank. Who knows. I actually do want to buy a house one day, but my gut is telling me now is not the time. Prices have just increased too much in too short a time while wages have remained stagnant.
Some say “buy now, prices never go down” while others say “prices can’t go up forever” I’m in the camp of what goes up must come down….judging from the view up here, I’d say we have a bit of a fall coming.
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A lot of people in this thread seem to be reading http://www.greaterfool.ca/ which is good - I read it daily as well.
Funny thing is, every single renter that has "money in the bank and a balanced portfolio" is secretly cheering for a housing crash so that they can buy a house for cheap!
I personally don't think that house prices will continue going up anymore. Whether they will stay at the current prices, stagnate, or slowly deflate is a different question.
An almost $500k average single detached price and $70k average household income implies an over 7x income/price ration, which is insane in my opinion.
People are drunk on low interest rates and long amortization periods. Are they ready for when/if rates go up? $500k mortgage at $2,350 @ 2.5 percent, $3,000 @ 5.0 percent; and $3,800 @ 7.5 per cent, amortized for 25 years.
Another problem are HELOCs. I have 2 friends that have continuously taken money out of their homes' equity for over 8 years. One of them has NOW a larger mortgage than he did when he bought the place in the early 2000s. How crazy is that? And how many other people like that are out there?
I personally own a large(ish) 2 bedroom, almost new condo in Brangladesh that I bought for $200k, 2 years ago. Personally, I don't care if I lose any money on it or not - I ****ing hate rental apartments, but I do know that my mortgage interest/taxes/utilities/maintenance fees combined are $400/month less than what it would cost to rent. Not too many other deals like that around.
Funny thing is, every single renter that has "money in the bank and a balanced portfolio" is secretly cheering for a housing crash so that they can buy a house for cheap!
I personally don't think that house prices will continue going up anymore. Whether they will stay at the current prices, stagnate, or slowly deflate is a different question.
An almost $500k average single detached price and $70k average household income implies an over 7x income/price ration, which is insane in my opinion.
People are drunk on low interest rates and long amortization periods. Are they ready for when/if rates go up? $500k mortgage at $2,350 @ 2.5 percent, $3,000 @ 5.0 percent; and $3,800 @ 7.5 per cent, amortized for 25 years.
Another problem are HELOCs. I have 2 friends that have continuously taken money out of their homes' equity for over 8 years. One of them has NOW a larger mortgage than he did when he bought the place in the early 2000s. How crazy is that? And how many other people like that are out there?
I personally own a large(ish) 2 bedroom, almost new condo in Brangladesh that I bought for $200k, 2 years ago. Personally, I don't care if I lose any money on it or not - I ****ing hate rental apartments, but I do know that my mortgage interest/taxes/utilities/maintenance fees combined are $400/month less than what it would cost to rent. Not too many other deals like that around.
Red_Liner740
Well-known member
Wow, how delusional are you!?
So because your two friends are idiots that constantly wanna renovate, and you're a cheapskate thats living in a dilapidated broke down, old apartment with old raggedy *** furniture, YOU"RE somehow the winner in that?!? Your friends at least have an option of changing their living arrangements to suit them better. Good luck doing that. I love how skewed your comparison is. Its not even apples to oranges, its apples to spaceships!
Let me put it to you this way...
If you are renting, the hidden costs of house up keep you are snickering about "not" having to pay, is included in the rent!!! You think the renters are idiots who are loosing money every year?! And i bet its padded heavily for those "what ifs"
My house mortgage, accelerated btw, with property tax is $1100 a month! Another $200 in utilities and i'm done!
I love the "invest in the stock market, 7% return, its great....." My mother is just NOW breaking even from the 2008 crash. I saw her RRSP investments after 2008. WIPED! She is lucky that she doesnt need the money and left it in there.
So let me see if i get this straight...Invest the money, in a risky stock market which has 100% screwed people over numerous times, or pay that money so i can have a roof over my house, in which i can do whatever the **** i want or please without some landlord breathing down my neck about his investment.
In one case, a stock market sneeze can wipe all my earnings which btw have to be locked in for xx number of years for best return, or i can keep paying into something that is tangible, and i can sell later on if i want
The ONLY think i agree with is that buying at the peak of a housing bubble (Like we're having now) and leveraging yourself so even a slight interest increase financially ruins you are idiotic.
You guys sound like the denegerate gamblers who only tell you about the wins but gloss over the losses....
One last thing. For all you renter flag wavers....What do you think happens when interest rates go up? That the landlord will not off load that incresed monetary burden on you? THey are gonna be generous and eat the difference?
Interest rates go up, renting property costs go up. FACT. So snicker all you want....you're still gonna pay for it just like us idiotic home owners.
So because your two friends are idiots that constantly wanna renovate, and you're a cheapskate thats living in a dilapidated broke down, old apartment with old raggedy *** furniture, YOU"RE somehow the winner in that?!? Your friends at least have an option of changing their living arrangements to suit them better. Good luck doing that. I love how skewed your comparison is. Its not even apples to oranges, its apples to spaceships!
Let me put it to you this way...
If you are renting, the hidden costs of house up keep you are snickering about "not" having to pay, is included in the rent!!! You think the renters are idiots who are loosing money every year?! And i bet its padded heavily for those "what ifs"
My house mortgage, accelerated btw, with property tax is $1100 a month! Another $200 in utilities and i'm done!
I love the "invest in the stock market, 7% return, its great....." My mother is just NOW breaking even from the 2008 crash. I saw her RRSP investments after 2008. WIPED! She is lucky that she doesnt need the money and left it in there.
So let me see if i get this straight...Invest the money, in a risky stock market which has 100% screwed people over numerous times, or pay that money so i can have a roof over my house, in which i can do whatever the **** i want or please without some landlord breathing down my neck about his investment.
In one case, a stock market sneeze can wipe all my earnings which btw have to be locked in for xx number of years for best return, or i can keep paying into something that is tangible, and i can sell later on if i want
The ONLY think i agree with is that buying at the peak of a housing bubble (Like we're having now) and leveraging yourself so even a slight interest increase financially ruins you are idiotic.
You guys sound like the denegerate gamblers who only tell you about the wins but gloss over the losses....
One last thing. For all you renter flag wavers....What do you think happens when interest rates go up? That the landlord will not off load that incresed monetary burden on you? THey are gonna be generous and eat the difference?
Interest rates go up, renting property costs go up. FACT. So snicker all you want....you're still gonna pay for it just like us idiotic home owners.
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^ I'm also not expecting housing prices to increase beyond the rate of inflation (which has been negligible). Know what ... I don't care.
If this has driven speculators out of the market (as the article linked to suggests - good find) that is a GOOD thing.
A spike in interest rates would destroy not only the real estate market but also the fragile economy in general, which is why I'm not expecting it to happen. A slow rise in interest rates could very well happen.
A lot of people buy a lot more house than they can really afford. In Toronto, it's difficult to avoid. Too expensive.
If this has driven speculators out of the market (as the article linked to suggests - good find) that is a GOOD thing.
A spike in interest rates would destroy not only the real estate market but also the fragile economy in general, which is why I'm not expecting it to happen. A slow rise in interest rates could very well happen.
A lot of people buy a lot more house than they can really afford. In Toronto, it's difficult to avoid. Too expensive.
w0SS
Active member
Lol busted. I do read that blog often
However, I don’t agree with 100% of what he says. He has a strong bias toward the financial markets that strikes me as being eerily similar to that of a realtor’s on the housing market.
He acts like a diversified portfolio can do no wrong, no matter the market conditions, which is BS.
Some do root for a housing crash but I think that would be bad for everyone in the long run. What I’d like to see is either a steady increase in wages (not likely) or a slow decline, but not crash, in housing prices (hopefully)
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w0SS
Active member
why you so mad for? I'm not attacking you or your choices...
P.S. I would never buy a condo apartment, especially in today's market. If you have to or want to live in an apartment building ... rent. Reason: easier to get out if management is crappy or neighbors are crappy or the place starts falling apart. There is too much in a building like that which is out of your control, to be worth having an ownership stake in it.
And what happens when interest rates go through the roof? You lose your job, get ill etc...
Bank will come and take your house away and that roof that you thought was yours will be sold to pay off whatever you still owed to the bank
There's no reason for name calling and insults.
A lot of the renters are idiots, because they ignore all the numbers and simply hope to one day sell their house for a fortune. That may or may not happen, but its pretty naive to think its a sure thing.
People like this don't include the initial down payment, closing costs, land transfer tax, home inspections, real estate fees when they try to sell the place, and generally avoid talking about things like the roof, furnace, or general maintenance and upkeep of the property. Its kinda like bragging about gross income when having a business, ignoring the net...know what i mean?
"My house mortgage, accelerated btw, with property tax is $1100 a month! Another $200 in utilities and i'm done! "
Unless you're willing to share ALL the info including the purchase price, down payment, what kind of property it is, the above is completely useless.
Its the same as me telling you that i rent a comfortable location to live for 400 a month, while failing to disclose that its actually a basement :lmao:
And im sorry about your mothers loss, but people who don't understand investing shouldn't just put all their eggs into one basket.
What was lost in 2008 was made up previous years....look at the 5 or 10 year average, not one year.
In all of this, this is the real difference.
When you rent you pay 1000-1500 for a place to live. You will never see this money again.
When you purchase a house you pay 1000-1500 in interest and property taxes. + maintenance and anything else... You will never see any of this money ever again as well.
The real difference is what you do with the next 1000 in this scenario. People who rent have the freedom to invest in whatever they like. People who buy a home have no choice but to add that into their principal.
The numbers are approximate, but the point is still the same.
You're probably throwing away more money by "owning", but you just don't realize it cause you haven't done the numbers, and if you have you don't understand the numbers. Like i said in a previous post, getting people to understand this who already own a house and have made up their mind BEFORE doing all the numbers is a lost cause. People are stubborn and don't want to hear that they could possibly be wrong. You might as well go argue about politics :lmao:
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Condos make ZERO sense, 800-1000 maintenance plus surprise repairs on top of a mortgage? WOW! what a deal! I'll take two! :lmao:
People still use real estate agents? :lol:
In the last 10 years of several real estate transactions, I figured I save at least $70k in commission fees.
