COVID and the housing market | Page 153 | GTAMotorcycle.com

COVID and the housing market

There is no way I could've matched the return on my last house with investments. For it to equal out using my initial down payment and a 7% average yearly return I would have needed to invest $2500 a month. Absolutely no chance that was happening through my 20's, especially paying rent on top of that.

After 10 years and one move my cost of living is significantly cheaper then if I was to rent today. It's pretty much impossible to convince me that renting/investing has a advantage over buying. To each their own.
 
blackcamaro said:
There is no way I could've matched the return on my last house with investments. For it to equal out using my initial down payment and a 7% average yearly return I would have needed to invest $2500 a month. Absolutely no chance that was happening through my 20's, especially paying rent on top of that.

After 10 years and one move my cost of living is significantly cheaper then if I was to rent today. It's pretty much impossible to convince me that renting/investing has a advantage over buying. To each their own.
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You could make the numbers work with leverage but most people aren't concerned about ~10:1 leverage on real estate but very few people are comfortable with 10:1 leverage while investing in a market. Hell, the most I've leveraged investing in equities is 1:1 and I'm still not convinced even that is a great plan.
 
GreyGhost said:
You could make the numbers work with leverage but most people aren't concerned about ~10:1 leverage on real estate but very few people are comfortable with 10:1 leverage while investing in a market. Hell, the most I've leveraged investing in equities is 1:1 and I'm still not convinced even that is a great plan.
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Funny thing about that is I'm finally at a point that my monthly payments are low enough that I do want to start investing with leverage. Planning on putting together a small dividend portfolio funded by a portion of my HELOC at the beginning of the new year.

If I was paying current market rent I would not be comfortable borrowing to invest. Not enough wiggle room for me if things go sideways or worse.
 
blackcamaro said:
There is no way I could've matched the return on my last house with investments. For it to equal out using my initial down payment and a 7% average yearly return I would have needed to invest $2500 a month. Absolutely no chance that was happening through my 20's, especially paying rent on top of that.
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Most of this is market timing and making unfair comparisons.

You can't compare the comparatively recent meteoric GTA Real Estate rise against the much longer historical stock market average of 7% returns. It's not an apples-to-apples comparison.

Throughout this longest bull market in history, the market returns have been much higher than 7%, especially if you focused on sectors and individual equities instead of the broader market and ETFs.

And also to GG's point, there is also leverage involved as well. If you're going to compare a leveraged RE investment, then it's only fair that you do an apples-to-apples comparison with equities as well.
 
Bil lives and rents in Thornbury. Boomers retiring in Collingwood are driving prices thru the roof. They are scared they are going to be forced out at 75. They have never owned.
 
Lightcycle said:
Most of this is market timing and making unfair comparisons.

You can't compare the comparatively recent meteoric GTA Real Estate rise against the much longer historical stock market average of 7% returns. It's not an apples-to-apples comparison.

Throughout this longest bull market in history, the market returns have been much higher than 7%, especially if you focused on sectors and individual equities instead of the broader market and ETFs.

And also to GG's point, there is also leverage involved as well. If you're going to compare a leveraged RE investment, then it's only fair that you do an apples-to-apples comparison with equities as well.
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No way 24-25 year old me was going to invest with leverage. Heck I didn't even have a investment account until I was 30. I did need somewhere to live though and paying down a mortgage worked.

Fair point regarding a bull market. At a 15% return I would of needed to invest $1500 monthly which back then I still doubt I could swing with rent on top. You lose me a bit with better returns focusing on sectors and individual holdings. We both know the average stock picking investor won't beat the index. I'm the average I'm nothing special so to think I could have had massive returns is unrealistic.

If I decide to rent today and invest the cash from the sale of my house I could make it work for sure but that's a pretty healthy head start on most people in the rental market.
 
blackcamaro said:
No way 24-25 year old me was going to invest with leverage. Heck I didn't even have a investment account until I was 30. I did need somewhere to live though and paying down a mortgage worked.

Fair point regarding a bull market. At a 15% return I would of needed to invest $1500 monthly which back then I still doubt I could swing with rent on top. You lose me a bit with better returns focusing on sectors and individual holdings. We both know the average stock picking investor won't beat the index. I'm the average I'm nothing special so to think I could have had massive returns is unrealistic.

If I decide to rent today and invest the cash from the sale of my house I could make it work for sure but that's a pretty healthy head start on most people in the rental market.
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The point was less about trying to beat the market and more about making an apples-to-apples comparison.

Historically, and on an aggregate North American level, real estate returns are ~4-5%.

Focusing on the GTA RE market over the last two decades is like cherry-picking an individual stock. I know it doesn't seem that way to you because this is where you live and that's what was available to you. But if I was making a like-for-like comparison, I could have easily said, "Buy AAPL instead of buying a house". Then who would be up more at the end of the day?

Speaking of AAPLs to AAPLs comparison... ;)
 
Lightcycle said:
The point was less about trying to beat the market and more about making an apples-to-apples comparison.

Historically, and on an aggregate North American level, real estate returns are ~4-5%.

Focusing on the GTA RE market over the last two decades is like cherry-picking an individual stock. I know it doesn't seem that way to you because this is where you live and that's what was available to you. But if I was making a like-for-like comparison, I could have easily said, "Buy APPL instead of buying a house". Then who would be up more at the end of the day?

Speaking of APPLs to APPLs comparison... ;)
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I've had AAPL for ~18 months longer than a house. Ignoring leverage, AAPL is up >2000%, house is up <200%. I would be close to retirement if I bought AAPL instead of a house with the downpayment. No leverage required for that transaction.
 
This data point is nothing but an ego stroke, as YMMV, but I occasionally track the value of the place we sold before we left on our trip. We could easily afford to buy back that place today *and* still have a healthy portfolio left over.

For us, renting and putting that equity in another vehicle other than RE has served us well. And no, that vehicle was not a R1200GS...

Just providing another point of view amongst all the house-horniness in this thread.
 
^
If rent was reasonable like 3 years ago that was a different story. I was definitely less "horny" for real estate because renting actually kind of made sense.


Now it's like the only thing Canada is good at ><
 
george__ said:
If rent was reasonable like 3 years ago that was a different story. I was definitely less "horny" for real estate because renting actually kind of made sense.
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Totally agree. There's a lot to be said about market timing.

george__ said:
Now it's like the only thing Canada is good at ><
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You're not wrong. The entire Canadian economy is based on real estate and it's related businesses - construction, home renovation, financing, lawyers, realtors, inspection, speculators, etc.

It's a house (no pun intended) of cards waiting to collapse, hard and fast.
 
george__ said:
^
It's so infuriating, my salary feels puny lol
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Probably because it is. Trying to survive off conventional income alone (either hourly or salary) is a brutal slog. For the majority, conventional income is used to prop up the house of cards, net worth is affected by investments (or lack thereof).
 
GreyGhost said:
I don't know how to respond to that. I don't know how old you are but I don't think we are that far apart.
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Sorry, didn't mean to put you on the spot. I'm much closer to being a Boomer than a Millennial.

If you need me, I'll be hanging out with @Wingboy. We'll be on our trials bikes cause we can't keep up with you young whippersnappers on your whizbang supercycles!

:D
 
There was a thread a while back about age….I think the majority are old farts…with a few of us youngens (41 here) thrown in the mix.
 
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