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Old 08-12-2015, 09:31 PM
 
Location: Toronto
12,581 posts, read 11,168,036 times
Reputation: 3738

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Quote:
Originally Posted by Acajack View Post

But as you say, spending more on fancy cars, nice clothes, trips and restaurants is clearly money thrown out the window, at least compared to money spent on a house.

.
I don't disagree with those who enjoy home ownership and making money in the process as a result of equity in R.E. With that said, for my partner and I renting our apartment works for us.. We don't need to live in fancy digs...

We pay about 1/6 to 1/7th our combined income on rent. We invest quite a bit and and we absolutely LOVE to travel.. I couldn't live without travelling overseas at least two times a year.. It is incredibly rewarding to both my partner and I and we use part of our disposable income to travel when we are still young enough and physically fit enough to truly enjoy it - we are building a lifetime of incredible experiences and memories that for us is worth far more than something physical..

The plan is at retirement - we will spend half the year living somewhere really cheap but also very agreeable weather wise where the dollar really stretches.

What i'm getting at here is for us this plan works and with our investment strategy in place we will be able to meet our goals at retirement. Sure, we could cut down travel to a bare minimum - cut out other things and live with more austerity and buy a shoebox condo for 400-500K in Toronto (we don't want to commute far for work at all and my partner doesn't drive) or 700-900K for a small house, but for us renting is affordable enough in this city where it doesn't bust the bank account. Ultimately the mortgage and other associated costs would be quite a bit higher than the rent we pay. Could we afford a house - sure and would we be happy, probably not because the things we really enjoy in life would be limited for something that isn't really necessary or extraordinarily desirable in our life..

Now I realize down the road we would most probably get what we've invested in R.E back and then some - oh yes and when we retire a combination of owning that home and retirement income from investments would actually put us in a much better financial position than if we kept travel to a minimum throughout our lives.. But and there's always a but - at that point we're what - 60 or 65 and will we enjoy travel as much as we did over the span of 30-40 years before retirement when we were young, probably not.. I know plenty who retired and passed away shortly after that so we never know how long we have on this earth therefore I say do what is best for you and get the most out of the money you make and enjoy your life - if that means living in a nice house with a nice family and thinking about the time where it'll all pay back while watching TV, great but If it means living in an affordable apartment and travelling to as many places the world has on as many adventures as possible and enjoying every minute of it - well that's quite alright too.

AJ - approaching the Great pyramids on a camel and you are you are able to catch your breath by taking in this majestic moment; you crawl into the passageways of this huge ancient pyramid before finally reaching the burial chamber of the Pharaoh Khafre... alone.... Priceless

Last edited by fusion2; 08-12-2015 at 10:19 PM..
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Old 08-12-2015, 09:36 PM
 
35,108 posts, read 40,356,763 times
Reputation: 62071
Quote:
Originally Posted by OZpharmer View Post
?Real Estate? Dreams in ?Toronto? and ?Vancouver? Crushed: Prices Soar; Tenants Renting For Life? : News : Realty Today

The article above got me thinking, "Why do so many people want to own a house even though they know they can't afford it? I mean, why do they not try to go for an apartment/flat instead?"

Are most people not capable of controlling their urge to spend?

Because that is how they choose to live their lives and it really is not the concern of anyone but them and their creditors.

Why would you care how others live if you are not paying their debts?
You are allowed to tend to your life the same way others are allowed to tend to theirs.

Mr. CSD and I feel if we cannot pay for what we want with cash we cannot afford to purchase that item whether it is a new DVD! A vehicle or a home but that thought process only pertains to us and our lives.
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Old 08-12-2015, 10:07 PM
 
Location: Gatineau, QC, Canada
3,402 posts, read 4,457,019 times
Reputation: 4409
I'm not anywhere near a major urban Canadian city, but the attitude up here is that people seem to feel entitled to a decent bit of property, and I don't understand the thinking at all.

Most people seem to want a house, a few vehicles, maybe a boat or ATV, a pet, some kids, ON TOP of a bunch of gadgets like iPhones and a generous data plan.

The difference, in my eyes, between people who invest in property that appreciate its value, or rent out units to make money, is that most people that I know coming up don't have that kind of intent. They just want it all permanently.

All the time I have to explain to people who are obviously dumbfounded that I don't foresee a future of enough financial means to support owning a vehicle, or renting out anything larger than a studio or 1 bedroom. I don't have a licence because I would rather just invest in a small living quarter in a central place close to public transportation.

Why? Because I don't think I'll ever really break making over 40K. I don't think it's possible for a lot of people to live these kinds of lifestyles in the Western world anymore. It's a different economy and people need to realize it might be time to transition out of feeling like you need all this space for yourself, when you can't afford it. The potential of credit living is probably letting that sentiment hang around a lot longer than it otherwise would.
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Old 08-12-2015, 11:12 PM
 
Location: BC Canada
831 posts, read 936,281 times
Reputation: 1119
Vancouver is Canada's most narcissitic and money oriented city where keeping up with Jones is the city's reason for existence. Never was this way but is now, very much a Chinese mentality.
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Old 08-12-2015, 11:26 PM
 
26,178 posts, read 28,581,435 times
Reputation: 24915
Quote:
Originally Posted by OZpharmer View Post
?Real Estate? Dreams in ?Toronto? and ?Vancouver? Crushed: Prices Soar; Tenants Renting For Life? : News : Realty Today

The article above got me thinking, "Why do so many people want to own a house even though they know they can't afford it? I mean, why do they not try to go for an apartment/flat instead?"

Are most people not capable of controlling their urge to spend?
It's a good question. Here's the best answer I can give:

People ARE capable of controlling their urge to spend, but it takes effort. It doesn't come naturally to most people. Here is why:

1. The short version is it's how our brains are wired. More details:

--Humans are herd animals. They compare themselves to what others in their peer group are doing. They don't like being different than the herd.

--Humans compare "up" much more than they compare "down". IE. They compare themselves to people higher on the economic ladder and ignore all the people lower on the ladder than themselves.

--Our brains are wired for "more, different, better". We are always wanting the next newer, nicer thing. It takes effort to control this urge.

--The money game is an emotional and psychological one. People are not rational creatures.

--Our economic system encourages people to spend more than they earn, capitalizing on the above mentioned weaknesses so as to encourage people to spend everything they have and then some. This keeps most people in every socioeconomic group in economic servitude for most or all of their lives. The elite running the show encourage these weaknesses because it keeps us busy and distracted our whole lives, leaving us little time or energy to think about anything else or to pay attention to the reality that power and control is being centralized at a rapid clip all around the world. But if you're caught up in consumerism, you're too busy to notice, or even if you do notice, you're too busy/tired/broke to do anything about it. They've got us exactly where they want us.
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Old 08-13-2015, 12:52 AM
 
625 posts, read 1,189,798 times
Reputation: 569
Quote:
Originally Posted by botticelli View Post
well, I guess every family outside suburban US/Canada/Australia has no life, because you know, most of them don't have a yard, or a room just to play the violin, or a guest room just to friends who visit 5 day a year.How often do you see a family with a huge and expensive kitchen primarily for the show, since most of what they cook is just making burgers, mixing some salads and roasting some beef or chicken in the oven? And for the 12th time, may I ask the child can play in the yard until what age? maybe 2 to 6? You can't expect a 11 year old to play in the small yard without feeling bored, can you?
It's not about whether someone has a life or not, that can be had in many ways. You asked why people buy houses and I simply offered an answer - houses with yards offer qualities many people want. Other people have no desire for the space or see it as an encumbrance, and so choose a different way of living. That's all.

As for houses outside of "suburban" US/Canada/Australia, there are many other places where a home with a yar would be common. Many western North American cities have bungalow neighbourhoods, and many east coast cities as well s San Francisco have rowhouse neighbourhoods in abundance. The "terrrace" is quite common in the UK (a densely populated place) and detached homes (with often tiny yards) are common in Japan both historically and today. I know single family housing is also quite common in Denmark.

As for how often I see a family with a huge yard and kitchen just for show, I have to say in many years I've never seen this. Perhaps we travel in different circles, but I have had many enjoyable dinner parties at friends' houses, sat in the yard with the chimenea going in the winter, or enjoying food from the garden while the kids (maybe 4 and 10 years old?) play. None of them had exorbitant houses, some quite humble. Since we live in a smaller apartment, its mostly been friends who hosted. Yes, people who live in apartments might do these things at a local park, if its available, and that's great too (minus the chimenea and the beer which would not be allowed).

I think your question is conflating two things - why do people overspend, and why do people want houses? People overspend on all sorts of things. Many families with 1.5 or 2 decent incomes are able to afford a decent house and choose to do so. I'm not sure why that is anyone's business.
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Old 08-13-2015, 05:15 AM
 
Location: Canada
5,696 posts, read 6,552,548 times
Reputation: 8203
^^that's what Ithought the thread was about - why people buy houses they can't afford. Not iPhones and all that other stuff, which people also shouldn't buy if they can't afford it but which I didn't realize this thread was about. My response wasn't to disagree with your post - I simply also liked the points put forward by northyorked about some of the ideas behind buying when you can't afford it.

I don't conflate renting an apartment with not wanting/preferring a house. I noticed that even botticelli thinks a nice house with a yard might be nice one day. And I realise that not all people who rent want to own.
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Old 08-13-2015, 07:16 AM
 
Location: Gatineau, Québec
21,962 posts, read 27,422,840 times
Reputation: 8626
Quote:
Originally Posted by fusion2 View Post
I don't disagree with those who enjoy home ownership and making money in the process as a result of equity in R.E. With that said, for my partner and I renting our apartment works for us.. We don't need to live in fancy digs...

We pay about 1/6 to 1/7th our combined income on rent. We invest quite a bit and and we absolutely LOVE to travel.. I couldn't live without travelling overseas at least two times a year.. It is incredibly rewarding to both my partner and I and we use part of our disposable income to travel when we are still young enough and physically fit enough to truly enjoy it - we are building a lifetime of incredible experiences and memories that for us is worth far more than something physical..

The plan is at retirement - we will spend half the year living somewhere really cheap but also very agreeable weather wise where the dollar really stretches.

What i'm getting at here is for us this plan works and with our investment strategy in place we will be able to meet our goals at retirement. Sure, we could cut down travel to a bare minimum - cut out other things and live with more austerity and buy a shoebox condo for 400-500K in Toronto (we don't want to commute far for work at all and my partner doesn't drive) or 700-900K for a small house, but for us renting is affordable enough in this city where it doesn't bust the bank account. Ultimately the mortgage and other associated costs would be quite a bit higher than the rent we pay. Could we afford a house - sure and would we be happy, probably not because the things we really enjoy in life would be limited for something that isn't really necessary or extraordinarily desirable in our life..

Now I realize down the road we would most probably get what we've invested in R.E back and then some - oh yes and when we retire a combination of owning that home and retirement income from investments would actually put us in a much better financial position than if we kept travel to a minimum throughout our lives.. But and there's always a but - at that point we're what - 60 or 65 and will we enjoy travel as much as we did over the span of 30-40 years before retirement when we were young, probably not.. I know plenty who retired and passed away shortly after that so we never know how long we have on this earth therefore I say do what is best for you and get the most out of the money you make and enjoy your life - if that means living in a nice house with a nice family and thinking about the time where it'll all pay back while watching TV, great but If it means living in an affordable apartment and travelling to as many places the world has on as many adventures as possible and enjoying every minute of it - well that's quite alright too.

AJ - approaching the Great pyramids on a camel and you are you are able to catch your breath by taking in this majestic moment; you crawl into the passageways of this huge ancient pyramid before finally reaching the burial chamber of the Pharaoh Khafre... alone.... Priceless
I am not saying that this is a bad choice. As you know, we love to travel as well and we are fortunate in that our house carrying costs (the magic trio of mortgage, taxes and utilities) is only about 10-12% of our household income. So we can afford to travel even with kids in tow. Of course the housing market where we live is not turbo-charged like Toronto and Vancouver, and we also were lucky in that when we were buying our houses we happened to do so just before sudden upsurges in the market. My current house for example increased in price/value by 35% in the year folliowing our purchase.

My point really is the same as BruSan: it's not "foolish" to buy your own home (unless you make yourself house poor), and it certainly isn't more foolish than it is to spend money on luxury items - which is what trips are, let's be honest.
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Old 08-13-2015, 08:30 AM
 
Location: Toronto, ON
564 posts, read 879,553 times
Reputation: 984
Quote:
Originally Posted by Acajack View Post
I've been a homeowner for more than 20 years now, and by market value evolution if I were to cash out now I'd have made about 300-400 k profit on the houses I've lived in, tax-free. Sure there has been (minimal in my case) maintenance and investments but overall I could argue that I have basically been living rent-free for the past two decades. In some pretty nice digs I might add. And you always have to have a roof over your head.
I think you raise a couple good points that some people overlook when deciding whether to rent vs. buy.

The equity gained in a housing purchase does not really "exist" until the house is either sold or it is leveraged for financing. Even though a couple might find themselves sitting on a pile of market value, and are rich on paper, they don't really have that cash unless they sell or borrow against it. And even then, that cash might not be enough to buy something else in their current (or desired) neighborhood.

The other point is time. It normally takes several years to realize substantial gains in real estate, and I don't think many people take that into account. The recent mega-spike in prices has led to folks thinking their houses will double or triple in only a few years, especially younger buyers who have seen their parents profit and who are being urged to follow the same path. However, this is not a normal market.

I don't think the current market is based on true fundamentals. It has been manipulated and artificially boosted with unprecedented low interest rates, an influx of speculative domestic and foreign investment, and an economy that relies far too heavily on housing construction. All while things like oil and our dollar are in a downturn, and wages are stagnant. But household debt continues to climb, and climb, and climb.

As mysticaltyger said, people are being herded into debt at levels never before seen in modern times. It is definitely some sort of "play", and I think the safest bet is to stay out of all major debt right now, including (and perhaps especially) mortgage debt. They are eventually going to pull the rug, and it ain't gonna be pretty.
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Old 08-13-2015, 09:18 AM
 
Location: Gatineau, Québec
21,962 posts, read 27,422,840 times
Reputation: 8626
Quote:
Originally Posted by NorthYorkEd View Post
I think you raise a couple good points that some people overlook when deciding whether to rent vs. buy.

The equity gained in a housing purchase does not really "exist" until the house is either sold or it is leveraged for financing. Even though a couple might find themselves sitting on a pile of market value, and are rich on paper, they don't really have that cash unless they sell or borrow against it. And even then, that cash might not be enough to buy something else in their current (or desired) neighborhood.

The other point is time. It normally takes several years to realize substantial gains in real estate, and I don't think many people take that into account. The recent mega-spike in prices has led to folks thinking their houses will double or triple in only a few years, especially younger buyers who have seen their parents profit and who are being urged to follow the same path. However, this is not a normal market.

I don't think the current market is based on true fundamentals. It has been manipulated and artificially boosted with unprecedented low interest rates, an influx of speculative domestic and foreign investment, and an economy that relies far too heavily on housing construction. All while things like oil and our dollar are in a downturn, and wages are stagnant. But household debt continues to climb, and climb, and climb.

As mysticaltyger said, people are being herded into debt at levels never before seen in modern times. It is definitely some sort of "play", and I think the safest bet is to stay out of all major debt right now, including (and perhaps especially) mortgage debt. They are eventually going to pull the rug, and it ain't gonna be pretty.
It is plausible to some degree, but I'd say the idea that the entire capitalist real estate system is going to have some type of massive collapse in our lifetimes is a fairly remote possibility.

I am not a person who is super gung-ho on real estate investment, but keep in mind those buildings you're living in and paying rent for were built by someone with capital. And you're also paying rent to someone who is making money off of you.
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