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Luckycharm

Without family money, can you afford to buy a home?

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Went to a reunion dinner with my law school classmates. Many felt home ownership is a pipe dream only. Unless you got help from family.

Agree? Disagree?

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Partially agree. I can honestly say so much about this topic right now. the real estate market (esp in GTA) is crazy. Banks are getting so strict with approving mortgages even for people with 750+ credit score and no debt. Many, if not, banks ask that you put at least 10% down if buying property under 500,000. and 20% if more than 500,000. Even then, there is no guarantee.I recently tried putting down 10% for a condo which was a little over 500k. and my application got rejected. I mean? I have a very stable job which clearly proves that I can pay the mortgage and I also have 0 debt. I literally mean ZERO. I only use my credit cards for points and then pay them off before the due date. Ironically, I work at a bank myself and the reason is because a lot of people who were putting min. % down were defaulting on their mortgages which called for a tons of foreclosures. so banks were probably like nahh we need more security. Sorry for the rant, as I said, I have so much to say when it comes to buying a property in this region. 

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I'm inclined to believe the average lawyer with several years of experience is able to buy a decent home in most Canadian cities. Especially if they have a significant other who is contributing. 

If you're talking a 2 million dollar shed in Vancouver the conversation obviously changes a lot

Edited by Toad
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13 minutes ago, Dreamchaser said:

Partially agree. I can honestly say so much about this topic right now. the real estate market (esp in GTA) is crazy. Banks are getting so strict with approving mortgages even for people with 750+ credit score and no debt. Many, if not, banks ask that you put at least 10% down if buying property under 500,000. and 20% if more than 500,000. Even then, there is no guarantee.I recently tried putting down 10% for a condo which was a little over 500k. and my application got rejected. I mean? I have a very stable job which clearly proves that I can pay the mortgage and I also have 0 debt. I literally mean ZERO. I only use my credit cards for points and then pay them off before the due date. Ironically, I work at a bank myself and the reason is because a lot of people who were putting min. % down were defaulting on their mortgages which called for a tons of foreclosures. so banks were probably like nahh we need more security. Sorry for the rant, as I said, I have so much to say when it comes to buying a property in this region. 

You are off than many Generations X

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14 minutes ago, Toad said:

I'm inclined to believe the average lawyer with several years of experience is able to buy a decent home in most Canadian cities. Especially if they have a significant other who is contributing. 

If you're talking a 2 million dollar shed in Vancouver the conversation obviously changes a lot

A good percentage of lawyers with several (under 5 years) years of experience are unable to save enough for a down the payment. 

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I bought a home around 2 years after my Call. Not a big place,  but in downtown Toronto. My spouse's income was very helpful in that.

But that was four years ago. Prices have gone up a lot since then. It doesn't feel like a long time, but when I look at current listings it's clear that the experience for current buyers is going to be a lot harder than mine. (And I'm dreading the inevitable search for an additional bedroom in the next few years.)

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1 hour ago, whereverjustice said:

I bought a home around 2 years after my Call. Not a big place,  but in downtown Toronto. My spouse's income was very helpful in that.

But that was four years ago. Prices have gone up a lot since then. It doesn't feel like a long time, but when I look at current listings it's clear that the experience for current buyers is going to be a lot harder than mine. (And I'm dreading the inevitable search for an additional bedroom in the next few years.)

Good for you.

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Prices will even out. Market has slowed. Banks have gotten smart. Less demand reduces the price until prices are affordable with good mortgage practices. 

Give it a few years.

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20 minutes ago, pzabbythesecond said:

Prices will even out. Market has slowed. Banks have gotten smart. Less demand reduces the price until prices are affordable with good mortgage practices. 

Give it a few years.

Most buyers will chase the rising market but hesitate to dive in when prices are falling. 

Will you buy if prices drop by 10%? Or will you wait till it drops 20% ?

One of my aunt bought a condo in late 90s and sold it to my friend 10 years later and lost 30%. The condo dropped another 20% for the next three years. 

 

 

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16 minutes ago, Luckycharm said:

Most buyers will chase the rising market but hesitate to dive in when prices are falling. 

Will you buy if prices drop by 10%? Or will you wait till it drops 20% ?

One of my aunt bought a condo in late 90s and sold it to my friend 10 years later and lost 30%. The condo dropped another 20% for the next three years. 

 

 

When/if I buy property I'll buy not with a view to investment. Obviously if some report comes out by every bank ever saying housing prices to fall 100 percent in the next week, I won't buy, but you get my drift. If I want a home, and prices get to a point where I can get that home, I'll buy. I don't view owning my own home as (principally) a capital investment, so the decision is easy for me.

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Something I've noticed but have not been able to pin down entirely is how different people have different ideas of what it means to be able to afford a house. 

As an immigrant, I know that just about any other immigrant family that I know will take more risks to improve their future well being. For example, for my family, this meant taking a huge risk on a $400k home (lower mainland) on a $40k household income while having only lived in Canada for four years.

From my experiences, for alot of people that are born here and/or that are non-poc, this kind of decision would be ludicrous. Aka not affordable. And probably rightly so, but seeing housing prices skyrocket, my parents saw this as a rare opportunity to move forward. But this is what it meant to afford a house for us. Coming to a new country, not yet knowing if you will/can live there forever, not having citizenship etc, there is a strong desire to attain security (not necessarily financial but security as in feeling a sense of belonging, hope, owning something in this new land aka being connected to it etc.) That's not to say non-immigrants don't have the same feelings, I just think it's uniquely disproportionate in immigrant families. 

For me, having had these experiences, I think I still feel this angst/drive when I picture myself on my own. And whether or not its the right decision at the time in terms of the market etc, a house is the most accessible, and tangible, representation of that security. As such, I'm probably willing to be in a worse financial positon when I do buy a house then others. 

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6 hours ago, pzabbythesecond said:

When/if I buy property I'll buy not with a view to investment. Obviously if some report comes out by every bank ever saying housing prices to fall 100 percent in the next week, I won't buy, but you get my drift. If I want a home, and prices get to a point where I can get that home, I'll buy. I don't view owning my own home as (principally) a capital investment, so the decision is easy for me.

My aunt bought it as an investment and my friend bought it as family home.

My aunt didn't have any mortgage but she loss over 36% on the (sales commissions and legal fees etc.) Investments. 

My friend had to pay a certain amount when he renewed the mortgage.

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24 minutes ago, yeezy said:

Something I've noticed but have not been able to pin down entirely is how different people have different ideas of what it means to be able to afford a house. 

As an immigrant, I know that just about any other immigrant family that I know will take more risks to improve their future well being. For example, for my family, this meant taking a huge risk on a $400k home (lower mainland) on a $40k household income while having only lived in Canada for four years.

From my experiences, for alot of people that are born here and/or that are non-poc, this kind of decision would be ludicrous. Aka not affordable. And probably rightly so, but seeing housing prices skyrocket, my parents saw this as a rare opportunity to move forward. But this is what it meant to afford a house for us. Coming to a new country, not yet knowing if you will/can live there forever, not having citizenship etc, there is a strong desire to attain security (not necessarily financial but security as in feeling a sense of belonging, hope, owning something in this new land aka being connected to it etc.) That's not to say non-immigrants don't have the same feelings, I just think it's uniquely disproportionate in immigrant families. 

For me, having had these experiences, I think I still feel this angst/drive when I picture myself on my own. And whether or not its the right decision at the time in terms of the market etc, a house is the most accessible, and tangible, representation of that security. As such, I'm probably willing to be in a worse financial positon when I do buy a house then others. 

I understand how you feel.

For many people, buying a home is probably the most expensive purchase in their life. It is also the biggest financial risk.  There are home owners who default on their mortgage every day.

When the housing market falls, there will be more home owners who will be unable to renew their mortgage and force to give up their home. 

Most buyers will not catch a falling knife. 

 

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Partially agree. I bought a house recently. A family member helped out. Not with a large amount of money, but it made the whole process a lot less stressful. I could have made the purchase without the help. But, TBH, I don't know a lot of ppl buying homes 100% on their own.

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Agree based on the city. The salary to condo cost ratio for an Edmonton lawyer is very reasonable and purchasing a home is doable. Bigger firms pay first years about 75-80k, can get a nice condo downtown for 300-400k with about $500 condo fees. 

The question is whether or not, in the long run, investing in a home is a better move than investing your money elsewhere. 

I can afford to buy a house but have opted not to. I have a reasonable rent and my money is working way better for me in the market. 

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This is why I left Toronto. Yes, it's possible to buy a home on a lawyer's salary without family money. Just depends in where you are and what you're looking for. 

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16 hours ago, pzabbythesecond said:

Prices will even out. Market has slowed. Banks have gotten smart. Less demand reduces the price until prices are affordable with good mortgage practices. 

Give it a few years.

No way. The price point for Toronto real estate is more like Manhattan or pre-Brexit London.

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8 minutes ago, pzabbythesecond said:

This is an insane statement.

This is boiling frog talk. GTA rental housing is already less affordable in terms of real income than London or Brooklyn. Those rents buoy condo prices and make it attractive to speculate. The factors driving rent

  • extreme population growth
  • inability to build new stock because of political inability to fund transit, density locking, and 'rent control' lite
  • permissive approach to asset sheltering draws 'flight capital' invested in real estate speculation

are not going to stop.

Edited by Eeee
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