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Luckycharm

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

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21 minutes ago, Eeee said:

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.

You said Manhattan and pre-brexit London. Figures in the gta aren't on the same planet as those. Try buying a plot of land in Manhattan and building a detached home on it. Assuming it's possible municipally to even do it, it's financially impossible to do. You can buy that plot of land in Toronto for under a million.

Toronto markets have already slowed down immensely. Houses that would get multi-bids two years ago squander on the open market for months at a time now - in response to new real estate laws. You can't foresee all this leading to some sort of balancing?

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30 minutes ago, pzabbythesecond said:

You said Manhattan and pre-brexit London. Figures in the gta aren't on the same planet as those. Try buying a plot of land in Manhattan and building a detached home on it. Assuming it's possible municipally to even do it, it's financially impossible to do. You can buy that plot of land in Toronto for under a million.

Toronto markets have already slowed down immensely. Houses that would get multi-bids two years ago squander on the open market for months at a time now - in response to new real estate laws. You can't foresee all this leading to some sort of balancing?

OK, I should have been more precise and said "ought to be." I agree it is obviously true that purchase (not rental) prices in those cities are less affordable relative to avg incomes than the GTA.

Yes price growth for detached homes has plateaued because volumes went down. And yes I agree that part of the volume decrease may be financing rules.  Part of the volume decrease is also likely a new round of Chinese capital controls that haven't been bypassed yet.

But there is no 'rebalance' towards affordability. Prices aren't going down. And condo volumes/prices continue to rise.

Edited by Eeee

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34 minutes ago, Eeee said:

But there is no 'rebalance' towards affordability. Prices aren't going down. And condo volumes/prices continue to rise.

Care to provide any studies? Literally anything I've read has pointed to stagnation in nominal dollars (which is a decrease in real dollars, but you know this) or decrease in real dollars.

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I bought my first house (mid-oughts) for $103,000 with no money down.  I was moving to a new (and small) town, on a whim called up a bank to see if they'd give me a mortgage, and they did.  Sold it a couple years later for a 50% return.  Sold my next house 5 years later for another 50% return.

I don't mention this to brag, because it was 100% luck and good fortune on my part.  I've now been in my current place for several years with no appreciable increase in price, but I'm not complaining.  I honestly have no idea how a new lawyer starting out would be able to buy a house in any of our major urban centres these days.

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1 minute ago, Malicious Prosecutor said:

I bought my first house (mid-oughts) for $103,000 with no money down.  I was moving to a new (and small) town, on a whim called up a bank to see if they'd give me a mortgage, and they did.  Sold it a couple years later for a 50% return.  Sold my next house 5 years later for another 50% return.

I don't mention this to brag, because it was 100% luck and good fortune on my part.  I've now been in my current place for several years with no appreciable increase in price, but I'm not complaining.  I honestly have no idea how a new lawyer starting out would be able to buy a house in any of our major urban centres these days.

You made the "right" move at the right time.

Hindsight is always 20/20 but you deserve credit for your decision.

I know someone who are sitting on 50% gain but unable to sell unless they move to another city with lower condo/house price. 

I don't think you can do "no money down" now.

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5 minutes ago, Luckycharm said:

I don't think you can do "no money down" now.

I think some of the private mortgage lenders have some ways of skirting that regulation, but you definitely can't walk into a big five bank and get a zero-down mortgage like I did.

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I was able to buy one without family money. I am not in the crazy expensive markets though. I am in a pretty large city. We bought in a modest area and did some work on it ourselves (well, my husband and father-in-law did.) My mortgage was actually cheaper than my rent, but of course there are other expenses involved with home ownership. 

Edited by lioness
grammar

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20 hours ago, pzabbythesecond said:

Care to provide any studies? Literally anything I've read has pointed to stagnation in nominal dollars (which is a decrease in real dollars, but you know this) or decrease in real dollars.

2017/2018 TREB home price index for single family detached homes sat at about ~1.5% y/y for 2017-2018, so just under inflation. I guess it's nitpicking but I'm comfortable calling that a plateau, especially after a runup of almost 200% over 9 years.

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3 minutes ago, Eeee said:

2017/2018 TREB home price index for single family detached homes sat at about ~1.5% y/y for 2017-2018, so just under inflation. I guess it's nitpicking but I'm comfortable calling that a plateau, especially after a runup of almost 200% over 9 years.

plateau, if it lasts long enough, is a reduction in the total market value in real dollars. That's the strategy the feds and province have taken to cool down the market (to avoid a bubble burst). We'll see how it plays out, but I'm comfortable in saying property in toronto is not yet strictly for the ultra-wealthy inter-generational bourgeoisie of the world. Maybe in 2050 when we're under the domination of Chinese investment in the market.

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50 minutes ago, beentheredonethat4 said:

Disagree. I'm in the Vancouver market, have no help from family, and can afford to purchase a home. 

 

A one bedroom in East Van? 

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On 1/12/2019 at 9:03 PM, Luckycharm said:

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?

Depends where, what, how, etc. If you're looking to buy a mansion in the Beaches in Toronto, probably as a first home that's a stretch. Looking for townhouse in Regina? Probably doable. Looking for a condo but not in the heart of Victoria? Doable. But expensive as hell. 

Just to play devil's advocate though, if you look at interest rates from let's say 25-30 years ago (ie when they hit double digits) vs today, after factoring in inflation, prices have gone up absolutely but not by as much as people think. With some smart saving it's doable. 

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On 1/12/2019 at 10:45 PM, 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

This is not true for almost every 3-6 year call I know in Toronto (and impossible before 3 year call). As mentioned the issue is the down payment. The prices are rising more quickly than we can save. The majority of family-type houses (i.e. not a condo) are going for close to $1M or over $1M. As soon as you cross the $1M threshold, even as a first time home buyer, you enter 20% down territory. Very few lawyers with several years experience have $200K+ to use as a down payment (and you need lawyer fees, real-estate commission, land transfer tax etc. in addition to that). Working on Bay has many advantages - but owning a home isn't one of them. 

 

Edited by TheScientist101
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Assuming a bank would give my wife and I a mortgage despite my student debt, there's no way we will be able to afford monthly payments on a $600k home, which is about the lower end of the average here. I estimate we are 5 years out from affording those payments, as a first year call now, though that is me being optimistic that my income will be high enough to bridge the gap between our very low rent now (living with family) and the $3000-$4000 potential mortgage payment. Also optimistic that housing prices do not begin to rise again. Also optimistic that we will be able to save up a downpayment in that time.

So yeah, I'm of the opinion that family money is almost a necessity to be able to afford to buy a house (not just talking professionals here, but everyone!)

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You plan on having a $3000-$4000 mortgage payment on a $600K home?  How much do you expect to put down? 

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My partner and I have planned out that we should be able to afford a $600,000 house within the next two or three years. Again, I'm sure I'd be singing a different tune if I was living in Toronto or if I was thinking from a single-income perspective. 

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I’m curious why owning a home is so important to some people around here. Is it the investment opportunity? Some personal goal? Not being beholden to a land lord? 

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4 minutes ago, setto said:

I’m curious why owning a home is so important to some people around here. Is it the investment opportunity? Some personal goal? Not being beholden to a land lord? 

I know for us it's two fold

1. I begrudge paying down someone else's mortgage and contributing to their investment as opposed to my own. When we rent it feels like we're just throwing our money away.

2. Having a sense of permanency. The idea that a landlord can't sell our house and evict us is appealing (this isn't an unrealistic fear - it tends to happen a lot in Toronto). 

Edited by TheScientist101
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1 minute ago, TheScientist101 said:

I know for us it's two fold

1. I begrudge paying down someone else's mortgage and contributing to their investment as opposed to my own. When we rent it feels like we're just throwing our money away.

2. Having a sense of permanency. The idea that a landlord can't sell our house and evict us is appealing (this isn't an unrealistic fear - it tends to happen a lot in Toronto). 

Or... pretend to intend to move their aging mother in, and evict you. 

"It's always been our dream to stuff Nonna into a crumbling bug infested walkup hours away from her friends, family, and the home where she's lived the last 50 years."  

Edited by Eeee
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37 minutes ago, goalie said:

Assuming a bank would give my wife and I a mortgage despite my student debt, there's no way we will be able to afford monthly payments on a $600k home, which is about the lower end of the average here. I estimate we are 5 years out from affording those payments, as a first year call now, though that is me being optimistic that my income will be high enough to bridge the gap between our very low rent now (living with family) and the $3000-$4000 potential mortgage payment. Also optimistic that housing prices do not begin to rise again. Also optimistic that we will be able to save up a downpayment in that time.

So yeah, I'm of the opinion that family money is almost a necessity to be able to afford to buy a house (not just talking professionals here, but everyone!)

Even with little money down your mortgage payments wouldn’t cross the $3000 threshold (including property taxes which tend to be lower in Toronto than the rest of the GTA)

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