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Luckycharm

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

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On 1/16/2019 at 1:36 PM, TheScientist101 said:

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. 

 

Not to pry too much, but does your partner have a similar income? I think it's probably impossible to do on your own, but do you think two Bay salaries could do it?

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1 hour ago, easttowest said:

Not to pry too much, but does your partner have a similar income? I think it's probably impossible to do on your own, but do you think two Bay salaries could do it?

To save a $200K down payment is the tough part. 

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18 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.

Amazing that we are discussing investing in an asset that dropped, on average, 100k in value in a year. I'll stick with my index funds, than you very much. 

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11 minutes ago, Luckycharm said:

To save a $200K down payment is the tough part. 

Are you just having it sit in a bank or do you have a long term plan / financial horizon with the money? 

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22 minutes ago, setto said:

Amazing that we are discussing investing in an asset that dropped, on average, 100k in value in a year. I'll stick with my index funds, than you very much

It's terrifying how many people assume that real estate is a guaranteed winner for investing. The situation in Toronto and Vancouver is not normal and sooner or later will come to a grinding halt. It's already starting with sales numbers dropping. Real estate also has a stupid transfer cost and holding costs compared to other investments. Real estate purely as an investment is not a great idea.

 

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5 hours ago, BlockedQuebecois said:

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. 

Prince George isnt in the interior, its northern BC. Kamloops isn't too far behind Kelowna for real estate prices. Revelstoke is rapidly approaching unaffordable levels. If you want to look at the small communities in BC, those are not an option for most people. They have a serious lack of job diversity and most familys that move there only one partner can find work in their field. These are towns of less than 10k people and they are hours away from any major urban centers. It's not like you can just commute from these places into a bigger city for work. So while prices may be lower its just not feasible for most people.

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6 minutes ago, lawstudent20202020 said:

It's terrifying how many people assume that real estate is a guaranteed winner for investing. The situation in Toronto and Vancouver is not normal and sooner or later will come to a grinding halt. It's already starting with sales numbers dropping. Real estate also has a stupid transfer cost and holding costs compared to other investments. Real estate purely as an investment is not a great idea.

 

Agreed. I can understand non-investment reasons for investing in RE, like the consumption of housing, and the psychological satisfaction of owning your own home. 

However, people who have owned houses in Metro Vancouver have made out like bandits since the early 2000’s. House prices have gone up about 6-7x on average since then, and once you factor in the use of leverage, many, many multimillionaires have been minted by the Vancouver real estate market. I guess that’s what happens when you’ve become a dumping ground for ill-gotten money. I don’t think we’ll ever see a run-up like this in residential Vancouver real estate again. Although commercial and industrial are booming here as well right now. They’ll probably stay hot until the next recession, which I’m guessing will be in the next two or three years.

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4 minutes ago, hitman9172 said:

Agreed. I can understand non-investment reasons for investing in RE, like the consumption of housing, and the psychological satisfaction of owning your own home. 

However, people who have owned houses in Metro Vancouver have made out like bandits since the early 2000’s. House prices have gone up about 6-7x on average since then, and once you factor in the use of leverage, many, many multimillionaires have been minted by the Vancouver real estate market. I guess that’s what happens when you’ve become a dumping ground for ill-gotten money. I don’t think we’ll ever see a run-up like this in residential Vancouver real estate again. Although commercial and industrial are booming here as well right now. They’ll probably stay hot until the next recession, which I’m guessing will be in the next two or three years.

It's going to be interesting to see the impacts of the speculation tax and the transparency legislation both coming into effect this year.

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15 minutes ago, lawstudent20202020 said:

Prince George isnt in the interior, its northern BC. Kamloops isn't too far behind Kelowna for real estate prices. Revelstoke is rapidly approaching unaffordable levels. If you want to look at the small communities in BC, those are not an option for most people. They have a serious lack of job diversity and most familys that move there only one partner can find work in their field. These are towns of less than 10k people and they are hours away from any major urban centers. It's not like you can just commute from these places into a bigger city for work. So while prices may be lower its just not feasible for most people.

"The British Columbia Interior, BC Interior or Interior of British Columbia, usually referred to only as the Interior, is one of the three main regions of the Canadian province of British Columbia, the other two being the Lower Mainland, which comprises the overlapping areas of Greater Vancouver and the Fraser Valley, and the Coast, which includes Vancouver Island and also including the Lower Mainland (from the perspective of the Interior)."

https://en.wikipedia.org/wiki/British_Columbia_Interior

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Just now, BlockedQuebecois said:

"The British Columbia Interior, BC Interior or Interior of British Columbia, usually referred to only as the Interior, is one of the three main regions of the Canadian province of British Columbia, the other two being the Lower Mainland, which comprises the overlapping areas of Greater Vancouver and the Fraser Valley, and the Coast, which includes Vancouver Island and also including the Lower Mainland (from the perspective of the Interior)."

https://en.wikipedia.org/wiki/British_Columbia_Interior

I've lived in BC my whole life and everyone I know considers Prince George, ft st John and other towns around there to be northern BC, not the interior. 

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Just now, lawstudent20202020 said:

I've lived in BC my whole life and everyone I know considers Prince George, ft st John and other towns around there to be northern BC, not the interior. 

Me too. It's still the interior of BC. Northern interior, but the interior nonetheless. 

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4 minutes ago, BlockedQuebecois said:

Me too. It's still the interior of BC. Northern interior, but the interior nonetheless. 

Huh, that's new to me. Guess I should have specified southern interior in my response

Edited by lawstudent20202020

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56 minutes ago, lawstudent20202020 said:

Huh, that's new to me. Guess I should have specified southern interior in my response

Having lived a long time in BC, I'm with you. PG is up north. Interior is not.

Edited by easttowest
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21 hours 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.

Ya, I've started watching Love it or List it Vancouver while doing Saturday chores and I'm floored by what I see lol. It puts what I was paying in Toronto to shame...

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2 hours ago, setto said:

Are you just having it sit in a bank or do you have a long term plan / financial horizon with the money? 

I was talking about young professionals in general but not myself.

 

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21 hours ago, easttowest said:

Not to pry too much, but does your partner have a similar income? I think it's probably impossible to do on your own, but do you think two Bay salaries could do it?

My wife doesn't have a similar income but she also doesn't have similar debt. 

 Remember - if you are a new call (without family help) you are also saddled with a lot of debt during those first few years and it's difficult to justify saving when you're also trying to pay down the debt at a fast pace. If you both come from that situation then yes, your household income has increased but so have your debt payments. 

Also - let's put this into context, I agree that if you are two new calls looking for a 1 bedroom condo downtown that you could probably pull together the down payment and purchase that between year 3-6 of lawyering. Condos are still outrageous right now though (especially when you consider condo fees). However, for myself, I'm not talking about buying a condo and from what I've seen, most lawyers looking to settle down and buy are also not interested in tying themselves to a tiny condo for the 5 year fixed mortgage.

No, I'm talking about buying an actual house in Toronto (townhouse, semi, detached). It is very, very rare to find one even in the surrounding outskirts of the city (Vaughn, Markham, Richmond Hill, Thorn Hill, Mimico) for under $1M. As soon as you cross that $1M threshold the minimum down payment you can put down is 20%. We are now talking at minimum $200K (plus all of the additional fees which will probably come to $35-50K). 

SO - if you're asking me whether i think that two new calls could together save $200K so they can buy a house between 3-6 years out. It could be possible but I think still very, very difficult. 

 

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