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Baby, we got a bubble!?

If you can't save a 20% down payment, can you really afford the house?


20% downpayment for the average price of a house is well over $100K. That is a huge barrier for anyone who doesn't already have property. The costs for home ownership are way too high for 20% mandatory downpayment. It's not just the downpayment, the other costs that come along with it are ridiculously high as well. Do they plan on reducing or removing one of the land transfer taxes? Nope. Good luck to those young people out there who will need a minor miracle to purchase a home.
 
Good luck to those young people out there who will need a minor miracle to purchase a home.

My daughter is one of those people. She's already asked about help making that down payment -- and they do have a lot saved, just not $100,000

My son, on the other hand, lives outside of the city, where house prices are much less and so too are the down payments, making it possible to have saved a good sum on their own. But in Toronto at the price of houses these days? Different story.
 
20% downpayment for the average price of a house is well over $100K. That is a huge barrier for anyone who doesn't already have property. The costs for home ownership are way too high for 20% mandatory downpayment. It's not just the downpayment, the other costs that come along with it are ridiculously high as well. Do they plan on reducing or removing one of the land transfer taxes? Nope. Good luck to those young people out there who will need a minor miracle to purchase a home.

If the costs are too high, is the answer to enable people to borrow more? It makes me cringe when I see the size of mortgages some people take on relative to their income. They're house poor at record-low interest rates. When rates rise, they will have serious lifestyle adjustments to make or they will default.
 
My daughter is one of those people. She's already asked about help making that down payment -- and they do have a lot saved, just not $100,000

My son, on the other hand, lives outside of the city, where house prices are much less and so too are the down payments, making it possible to have saved a good sum on their own. But in Toronto at the price of houses these days? Different story.

Why buy something that is unaffordable? Canadians have this idea that everybody is entitled to own a home. That may not be the case anymore in major cities like Toronto and Vancouver.
 
Because they're tired of paying rent and have nothing to show for it. And they don't feel entitled. They feel frustrated that they work hard and save money, but it's never enough.
 
Because they're tired of paying rent and have nothing to show for it. And they don't feel entitled. They feel frustrated that they work hard and save money, but it's never enough.

They have a place to live, the same as if they bought a house.

They won't get anything back for all the taxes and interest they pay when they buy. Buying a home is just renting from the bank.
 
Buying a home is a lot more than just renting from the bank. You are not at the mercy of a landlord who decides to sell and then you have to move. If you want to make changes, you can. I've owned a home for a lot of years and have never regretted it. (And I've also benefitted financially from real estate transactions, with net gains, not just gross)
 
Because they're tired of paying rent and have nothing to show for it.

I pay rent and have plenty to show for it. Such as a well-diversified investment portfolio that receives bi-weekly cash infusions that would otherwise be going towards mortgage interest, property taxes, and the endless stream of maintenance and renovation projects. How is that any different than building equity?

We also have the freedom to easily move anywhere we like. Bad neighbours or building management? Move. New job? Move. Find a better neighbourhood? Move.

Yes, there are trade-offs and compromises. There are with everything. But it's not fair to say that renters have nothing to show because some of them do. I pay much less to live here than I would with a mortgage, and the difference gets saved and invested. The only difference is I will never own this unit, and to be honest, that's just fine by me. They aren't worth it.
 
It is a choice, and in their case, their choice is to own -- not because they feel entitled as per the OP, but because they choose. My point is that choice shouldn't be so far out of reach -- owning a home shouldn't be a luxury afforded to only the few.

You can sell and move when you own, just as you do when you rent -- and moving doesn't solve bad neighbours -- they're everywhere. And it's easy to say just move, but let's face it, moving is a PITA.

And they don't want to own the unit where they are either -- too small. So yes, while the rent they pay does allow them to save and invest, to find a place that better suits their needs (an actual kitchen, an office because they work from home, a second bedroom for a child) will cost them much more in rent. Believe me, they've done the math -- I've been impressed at how much thought and research they've put into this -- and in their situation, buying is a sensible decision for them based on their needs and future plans.

At any rate, we can go around in circles all day on this, but I'm happy to withdraw the "nothing to show" comment.
 
Why buy something that is unaffordable? Canadians have this idea that everybody is entitled to own a home. That may not be the case anymore in major cities like Toronto and Vancouver.

I said none of that. Relax.

Has nothing to do with affordability. The costs are still insane even for those who can afford it.
 
...owning a home shouldn't be a luxury afforded to only the few.

It isn't. There are plenty of cities and towns in Canada where the average (and in some cases, below average) earners can afford a home. If Toronto is out of reach, them's the breaks. I agree, it sucks, but it's the reality we live in.

You can sell and move when you own, just as you do when you rent -- and moving doesn't solve bad neighbours -- they're everywhere. And it's easy to say just move, but let's face it, moving is a PITA.

Agreed, but moving is easier when you only need to serve notice and pack. When you have to sell, it can be much more difficult. I'm not against home ownership, but I think it gets overplayed, especially given the rapid rise in values over the past several decades. I don't think people live the way they used to anymore. Times are changing, and perhaps the ownership model needs to be more carefully evaluated, especially by younger buyers, who have seen their parents make out like bandits and expect the future to be more of the same. I'm optimistic about the future, but given the relentless gorging by the 1%, wage stagnation, and the feeling among the peasantry that debt=wealth and Kardashians=role models, I'm approaching with caution.

And they don't want to own the unit where they are either -- too small. So yes, while the rent they pay does allow them to save and invest, to find a place that better suits their needs (an actual kitchen, an office because they work from home, a second bedroom for a child) will cost them much more in rent. Believe me, they've done the math -- I've been impressed at how much thought and research they've put into this -- and in their situation, buying is a sensible decision for them based on their needs and future plans.

That's cool. My reason for not buying is mostly due to lack of real-world value. Builders are just throwing these things up to make a buck; there is no intent to be there when the places inevitably start to crumble. A Stradivarius violin from the 1600's is easily worth half-a-million bucks. The care and craftsmanship and rarity of the instrument cannot be argued. A concrete skybox sloppily encased in cheap glass and materials is not, even if people are lining up to bury themselves in debt to have one. Market value is only what people are willing to pay, and they can just as easily decide not to pay these crazy prices once they realize they've been sold The Emperor's New Clothes.

Not sure I see how renting can cost more than owning, especially if they plan on staying in their preferred neighbourhood. Ownership almost always involves a compromise on location. And with much of the "high-value" housing stock in this city being mostly decrepit, rotting, moulding, peeling, crumbling, or laced with asbestos, I'd argue that buying one would almost certainly be the most severe financial burden they will ever encounter in their lives. Fantasy, meet Reality.

Young people have been told by their parents that renting is a waste of money and that they haven't truly arrived until they buy property. This is nonsense. And in a world where people often shed jobs, relationships, and locations every few years (much more different than how our parents typically lived), the ownership model might not be the most practical or efficient way to live.
 
As we truck along in this recession....I figure less home purchases and the market cooling off....right? It just has to happen.
 

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