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Luckycharm

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

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4 minutes ago, Eeee said:

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

So so common nowadays 

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3 minutes 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). 

1. I used to feel the same way. But then I realized after considering the condo fees, maintenance, special assessments, taxes, closing fees, inspections, and (eventually) realtor fees, that I would be lucky to match the cost of inflation in the market I live in. Especially when some condo fees are roughly what I'm paying in rent. But I haven't completely written-off the concept of home-ownership, I guess I would just prefer to have my money elsewhere right now.

2. I think this is a solid reason. I don't really like my entire home being under the control of someone else.

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I needed more space than an apartment for a growing family, and buying made the same economic sense as renting since the carrying costs were essentially equal. 

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1 hour ago, healthlaw said:

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)

Monthly payment for $400K mortgage is about $2800 to over $3000 depending on the terms you choose.

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20 minutes ago, Luckycharm said:

Monthly payment for $400K mortgage is about $2800 to over $3000 depending on the terms you choose.

Well it can also be a $400k monthly payment if you amortize the whole thing over a one month period...

But with even a modest 5% down, aren't you looking at something significantly lower than $2800 if you amortize over 25 years? Or even 20 years?

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On 1/13/2019 at 7:16 PM, Eeee said:

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.

https://news.shupilov.com/location/canada/canadian-real-estate-prices-post-largest-decline-since-1995/?utm_source=Facebook&utm_medium=Advertising&utm_campaign=news&utm_content=slowdown-2018

 

"

BMO’s Chief  Economist Douglas Porter wrote in a release:

“It’s probably not a stretch to think that the Canadian housing market has entered into a prolonged period of relative stagnation, where sales are roughly flat and prices no longer outrun inflation.”

This slower pace was felt in three quarters of all markets, most notably in British Columbia’s Lower Mainland, Okanagan Valley, Calgary, Edmonton, Greater Toronto Area and Hamilton-Burlington region."

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I have no trouble at all accepting that owning a single family home on a plot of land in the city has become progressively father out of reach for my generation than it was for the last, and this will be a trend that continues. Leaving aside arguments about interest rates and payments, we're talking about cities where the population is growing, intensification in terms of people per square kilometer is increasing as it inevitably must, and personal homes that aren't stacked in the air on top of each other (aka condos) exist in a finite supply that isn't growing and never will. So what in the bloody hell do you think is going to happen?

People who want to look at former generations and consider only a single factor such as home ownership and complain that we are getting a raw deal confuse me. I mean, if you just want to complain, I get that. It sucks to not be able to afford a house if you want one. But if you actually want a generation-by-generation comparison, you need to take into account a lot of other factors also. And those get so complex it turns into a long conversation. But to start, how about life expectancy? How about the portion of that lifetime you can reasonably expect to be healthy and active? Based on every factor I can think of, I wouldn't want to have been born 50 years earlier. Would you?

Anyway, some of the numbers thrown around here make me wonder also. They are either based in ignorance or willful exaggeration. But the basic idea isn't wrong. It's harder to own a single-family home, on a plot of land with a backyard, than it was for an average family 50 years ago. Note that expectations for what constitutes an adequate home (bedroom for every child, spare room for an office, big-ass kitchen, etc. etc.) have also inflated, that that's another topic. It is harder. I'm just not sure that proves anything, or is surprising in any way.

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The reason why people make generation-by-generation comparisons is that plenty of the issues (wage stagnation and lack of housing) are deliberate policy choices implemented largely by the boomers who benefited from policies they eviscerated when they came to power, while telling the next generations to go fuck themselves. It's not like the lack of housing affordability and lack of real wage growth are scientific mysteries. Some German dude wrote about the root causes in the 1800s.

Life expectancy is a red herring, though not entirely given the same boomers down in the U.S. are driving life expectancy down as fast as they can through their policies choices.

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If you're someone who wants a detached house with a backyard for not too much money, aim to live and work in a city like Windsor. Not badmouthing Windsor, my point is that if you want more affordable housing in the sense of, literally, detached houses, then either move and work someplace it's cheaper, or aim to get significantly wealthier. Maybe a small town that is actively recruiting people to live there and has subsidized home ownership?

But if you like living in a city that has more expensive housing, 

If you're going to be happy with owning a home, not necessarily a house, well then, apartment condo seems the most realistic. And more environmentally friendly, if one chooses a place that works well re transit instead of driving and/or is closer to work. As well as being a lower carbon load in construction and residence not just commuting I assume given the amount of energy needed per dweller in construction as compared to a detached home, even with the carbon offset from a lawn (and the treatments and chemicals necessary for a nice lawn, and mowing, etc. cut into that offset).

If, however, one wants to be living in a detached house in a major popular city that many people already want to live in and want a low down payment and low mortgage payments and conveniently located, well then, that strikes me as an entirely unrealistic goal unless one has a lot of money, by income or family or lottery or whatever. Me saying it's unrealistic is being polite instead of using harsher terms... :rolleyes:

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On 1/16/2019 at 1:57 PM, setto said:

Well it can also be a $400k monthly payment if you amortize the whole thing over a one month period...

But with even a modest 5% down, aren't you looking at something significantly lower than $2800 if you amortize over 25 years? Or even 20 years?

If the actual mortgage amount is 400k its more like 2400, 2200 if you put 5% down

Edited by lawstudent20202020
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It's absolutely possible to buy a home without family money, depending on where. I grew up in a small town about 30 minutes outside of Ottawa, and I know houses there are entirely affordable - you can get a perfectly nice starter home for 100-200k. As a first year call I could definitely afford that on my own if I so chose, and I could have the down payment saved up in a year if I wanted to. Obviously the story for like, downtown Toronto is different. But just blanket stating that you can't afford a house is incorrect.

Housing prices are just one part of the story - lots of people just blow their money on other things, which is fine, but you can't then complain that you can't afford a home too. You can afford anything, you just can't afford everything.

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53 minutes ago, darkangel45422 said:

you can get a perfectly nice starter home for 100-200k.

cries in BC. There is only one listing in my area in that range that isn't a time share or mobile home, and it's for a 300sqft studio in the first phase of a new development. And Im 5 hours away from Vancouver.

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59 minutes ago, darkangel45422 said:

It's absolutely possible to buy a home without family money, depending on where. I grew up in a small town about 30 minutes outside of Ottawa, and I know houses there are entirely affordable - you can get a perfectly nice starter home for 100-200k. As a first year call I could definitely afford that on my own if I so chose, and I could have the down payment saved up in a year if I wanted to. Obviously the story for like, downtown Toronto is different. But just blanket stating that you can't afford a house is incorrect.

Housing prices are just one part of the story - lots of people just blow their money on other things, which is fine, but you can't then complain that you can't afford a home too. You can afford anything, you just can't afford everything.

Is it cheaper across the river?

That is only 15 Min's from DT Ottawa.

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22 minutes ago, lawstudent20202020 said:

cries in BC. There is only one listing in my area in that range that isn't a time share or mobile home, and it's for a 300sqft studio in the first phase of a new development. And Im 5 hours away from Vancouver.

Even the interior?

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3 minutes ago, pzabbythesecond said:

Even the interior?

Yup, average detached house price in the Okanagan is ~650k right now which is a massive drop from what it was last year at 750k. Townhouses average 500k and condos 350-400k.

It's not as bad as Toronto or Vancouver but compared to average income (in general not just lawyers) it's pretty tough to get into the market right right now.

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On 1/16/2019 at 2:47 PM, 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!)

According to the RBC Mortgage Calculator (https://www.rbcroyalbank.com/mortgages/mpcrds/index.html?buyerType=first-time-home-buyer&purchasePrice=600000&downPayment=120000&postalCode=M4T1Z7&mortgageTiming=zero_to_six&&#details

If you put 20% down on a 600K property, that works out to a monthly payment of about $2460/month. Saving up the downpayment is the hardest part (although there's always the CMHC option) which will take a couple years of hard work, but by no means is that a pipe dream. Keep your head up, work hard and it's possible. There's also the option of purchasing a property with a higher purchase price, but which allows you to rent out the basement, which would then bring down your overall costs. 

Look on the one hand sure prices are prohibitively expensive today, but on the other hand, we're not looking at double digit interest rates as was the case 25-30 years ago, even though prices may have been lower then. If you actually do the analysis and factor in inflation, prices have certainly gone up, but not as substantially as the media would have you believe. Housing affordability is not a new issue, yet people have been managing for decades. Hard work and don't be a negative nancy is key. 

Case and point: https://www.theglobeandmail.com/real-estate/the-market/remember-when-what-have-we-learned-from-80s-interest-rates/article24398735/

Edited by Mycousinsteve

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8 hours ago, lawstudent20202020 said:

Yup, average detached house price in the Okanagan is ~650k right now which is a massive drop from what it was last year at 750k. Townhouses average 500k and condos 350-400k.

It's not as bad as Toronto or Vancouver but compared to average income (in general not just lawyers) it's pretty tough to get into the market right right now.

Worth noting here that the Okanagan is part of the Interior, but the Okanagan isn’t the Interior. 

In the vast majority of the Interior, housing prices are much more reasonable. 

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47 minutes ago, BlockedQuebecois said:

Worth noting here that the Okanagan is part of the Interior, but the Okanagan isn’t the Interior. 

In the vast majority of the Interior, housing prices are much more reasonable. 

That's also untrue, the vast majority population wise is not more reasonable. Kamloops would be the other major area in the interior outside the Okanagan and the housing prices there are quickly catching up to the okanagan. Other than that you are looking at tiny municipalities where there might be lower housing costs but there's a lack of jobs in those communities.

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4 hours ago, lawstudent20202020 said:

That's also untrue, the vast majority population wise is not more reasonable. Kamloops would be the other major area in the interior outside the Okanagan and the housing prices there are quickly catching up to the okanagan. Other than that you are looking at tiny municipalities where there might be lower housing costs but there's a lack of jobs in those communities.

Sure, population wise. But what you’re doing is the same thing as looking at Ontario and saying it’s housing prices are unreasonable because the GTA’s housing prices are unreasonable. 

The interior constitutes all of BC that isn’t coastal or the lower mainland. That includes medium sized cities like Prince George and Kamloops, and smaller cities like Quesnel and Revelstoke. To look at just the Okanagan and declare that the entirety of BC is unaffordable is just silly. 

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May be I should add 

Houses within computable or driving distance from your work.

Driving should include cost of parking. Commuting should include all fares for public transit. There are people who has to drive to a public transit station then take transit. 

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