[Newsbot]

Title: More Canadians than ever can't afford to buy a home. But is owning always better than renting'
Category: Economics
Posted By: DrCaleb
Date: 2022-03-19 09:10:39
Canadian

[DrCaleb]

Yes. The answer is yes. Even if you could find a place to rent that wasn't the same as the cost to own, if you own it you will get that money back out if you sell.

Generational wealth cannot be underestimated as a source of societal movement.

[Tricks]

The problem is the down payment. If you average house price is 700k, saving for a down payment is virtually impossible unless you live at home.

[DrCaleb]

I hear you man. I've been considering building from scratch, in the boonies, and the best I think I can do is $400k. But I have to put down at least 10%.

My first place I bought for $60k, so $3k for a down payment was easy.

[DrCaleb]

An empty lot across the street from my sisters' place just sold for $395k. That's absurd.

[Tricks]

DrCaleb DrCaleb:

I hear you man. I've been considering building from scratch, in the boonies, and the best I think I can do is $400k. But I have to put down at least 10%.

My first place I bought for $60k, so $3k for a down payment was easy.

And now, that's not enough. Pretty much everyone says you have to do a 20% down payment.

[Tricks]

DrCaleb DrCaleb:

An empty lot across the street from my sisters' place just sold for $395k. That's absurd.

Yep. And at least around here, you can't get a builders mortgage unless you fully own the land. So you have to pay off that 400k entirely before you can even think about building. It's fucking nuts.

[DrCaleb]

Tricks Tricks:

DrCaleb DrCaleb:

I hear you man. I've been considering building from scratch, in the boonies, and the best I think I can do is $400k. But I have to put down at least 10%.

My first place I bought for $60k, so $3k for a down payment was easy.

And now, that's not enough. Pretty much everyone says you have to do a 20% down payment.

I'm getting to the age where that might not be enough. Statistics say I don't have 20 years to pay off the rest.

Tricks Tricks:

Yep. And at least around here, you can't get a builders mortgage unless you fully own the land. So you have to pay off that 400k entirely before you can even think about building. It's fucking nuts.

I'm looking at a small town where I can get 2 properties for about $30k each. The local power plant was powered by the local coal mine, and both recently closed. Most of the town was there to work one or the other.

That's a really strange situation. How could a bank think you'd pay that off, without even living there?

[Tricks]

DrCaleb DrCaleb:

Tricks Tricks:

DrCaleb DrCaleb:

I hear you man. I've been considering building from scratch, in the boonies, and the best I think I can do is $400k. But I have to put down at least 10%.

My first place I bought for $60k, so $3k for a down payment was easy.

And now, that's not enough. Pretty much everyone says you have to do a 20% down payment.

I'm getting to the age where that might not be enough. Statistics say I don't have 20 years to pay off the rest.

Tricks Tricks:

Yep. And at least around here, you can't get a builders mortgage unless you fully own the land. So you have to pay off that 400k entirely before you can even think about building. It's fucking nuts.

I'm looking at a small town where I can get 2 properties for about $30k each. The local power plant was powered by the local coal mine, and both recently closed. Most of the town was there to work one or the other.

That's a really strange situation. How could a bank think you'd pay that off, without even living there?

My thoughts exactly. It also completely eliminates the possibility of people building their own homes. But developers likely have no such issues.

Thought one fun loop hole, buy a property with something virtually condemned on it. Bunch of properties in an area where empty land is 300k+, suddenly at 120-150k. AND you don't need it fully paid off (according to a mortgage specialist at the bank anyways). Because the house on it needs to basically be removed. Well it definitely doesn't cost 150k to demo and remove a house.

[Tricks]

Oh and my favourite part, where I'm looking, what was 300k as little as 4 years ago is now 750k. Unreal.

[xerxes]

Same here. In the condo where I live, last year the highest sale price was $415k. The year before that, $355k.

Last month a unit sold for $600k.

A townhouse my SO and I were looking at a few years ago that was brand new was listed then at $379k and we thought that was too much then. They're selling for over $1m now.

It is absolutely unreal and completely unsustainable.

[Strutz]

xerxes xerxes:

Same here. In the condo where I live, last year the highest sale price was $415k. The year before that, $355k.

Last month a unit sold for $600k.

A townhouse my SO and I were looking at a few years ago that was brand new was listed then at $379k and we thought that was too much then. They're selling for over $1m now.

It is absolutely unreal and completely unsustainable.

In my building a unit similar to mine (slightly different layout and way upgraded), down the hall was just listed at $499k. A little less than 700sqft and not actually a 1 bedroom, but a loft. My current assessment is $397k and I can't see that one being much different. They had an open house yesterday and today and it seems many viewed it so I wouldn't be surprised if it goes for more.

I paid $242k in 2009. The bank still owns a portion of it. The only reason I was able to afford the down payment was because my ex and I sold our townhouse for 2x what we paid for it when we split. That place has probably doubled in value since (LOL)

It's crazy without a doubt. My building is old but the property is on the edge of city centre where land value is ridiculously huge. My dream is for a developer to come along and offer a buyout.

[bootlegga]

I'm going to play devil's advocate here, but I think part of it also has to do with where people want to buy.

Millenials and Gen Z often want to live in the downtown/core, and aren't interested in a suburban lifestyle. I compeltely understand that because suburban living is less sustainable, but the saying in real estate is location, location, location.

When I was looking to buy my first home, I wanted to live in the 'core' as well. But it's hard to justify paying $600+K for an 60 year old house that is half the size of a $400K home a 25 minute drive from downtown.

Granted this is in Edmonton, ranked one of the most affordable cities to live in North America, but the point stands. If someone wants to live in Vancouver near UBC or in Toronto near the waterfront, then it should be expected that that condo is going to cost a lot more than a condo in Port Coquitlam or outside the GTA greenbelt. The commute may not be great, but at least Vancouver and the GTA have decent LRT/transit, not like Edmonton.

Still, I feel for young people living in Vancouver and Toronto simply because they are pretty constricted by their geography, and prices would be higher than most other cities even without real estate speculators and investors.

[DrCaleb]

bootlegga bootlegga:

I'm going to play devil's advocate here, but I think part of it also has to do with where people want to buy.

I was looking at a place, 50 years old, out in the boonies, for $185k. It was on the market 3 days, and was gone. A real fixer-upper. It came back on the market a year later, at $310k, and a slightly more polished turd. New roof, finished basement.

I could have afforded $184k, and done the work on it. I cannot afford $310k.

I want to play devils advocate too, and say it's people who want to flip houses for a quick buck that are a good part of it.

[herbie]

Not the money being the problem here.
Mobile w addition on a city lot $35K+. 1200 sq ft home on city lot sub $200K+. Lakeshore home $400K+

Bring your own job.
That's the real problem....