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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.
I am being honest - i'd rather travel than invest money in a home that would cost us an arm and a leg here. Everyone has different priorities and goals in life - if my preference is to travel than so be it - heck owning an overpriced home can be considered a luxury vs renting where we live.. A lot of people are having a hard time carrying a mortgage on a 700K to 1 Million dollar home in Toronto..
If I lived in a market where it cost me 250 or 300K for a home that would be an entirely different story. My partner and I could carry the mortgage and travel to the extent we want.. We're not going to commute an hour and a half each way and live far outside the city for a house that is reasonably priced - no way..
I'm not going to judge anyone for buying a home but would also expect the same from homeowners. Some people are fortunate enough to make enough money to own a home and do all the other things they would like to, in our case though its pretty tough because it is so darned expensive to buy a home in Toronto and we refuse to live in a small condo box or commute long distances. Enjoying life isn't a luxury.
To give an idea how expensive it is for a mortgage in Toronto for an average house.. I used TD Mortgage Calculator using the following:
700K dollar mortgage
Payment frequency: monthly
interest rate: 3 year closed: 3.39 percent
Amortization period: 25 years
Monthly payment is 3456 dollars... That is almost 3X what my partner and I pay for rent in Toronto and we live in a 1000 sq ft apt within a 5 minute walk to a subway station - not a bad size or location for an apartment much bigger than your avg condo box.
So 3456 bucks for a mortgage and that is just for a roof over the head not including food, car payment, insurance, clothing, basic entertainment and some miscellaneous costs - hardly luxuries most people need wheels, to eat and to cloth themselves and enjoy life while living.. With a mortgage like that it would be exceedingly difficult for us to travel as much as we like.. So for us anyway the choice is pretty clear.. Rent and invest in order to afford what we want to do in life. Unless we want to commute over 1.5 hours each way back and forth to a house in the boons plus my partner doesn't even drive so umm yeah..
The problem with the linked article is that, for some bizarre reason, this generation incorrectly believes that they are the first in the history of the planet to face a challenge in buying a home. They are not. Just like every generation before them, people have to save, sometimes pay 18% interest on mortgage (see 1980 Canada), suck it up, quit whining, and fulfil whatever dream they have for buying a home. It's not news ... it's enabling the whiner.
The problem with the linked article is that, for some bizarre reason, this generation incorrectly believes that they are the first in the history of the planet to face a challenge in buying a home. They are not. Just like every generation before them, people have to save, sometimes pay 18% interest on mortgage (see 1980 Canada), suck it up, quit whining, and fulfil whatever dream they have for buying a home. It's not news ... it's enabling the whiner.
Well that is if your dream is to buy a home... In any event I'd say if you have to pay 700K dollars for a roof over your head that is pretty damned expensive for most people.. I certainly couldn't drop that in cash so a mortgage would be the only way to go and the monthly on 700K is pretty high.
Well that is if your dream is to buy a home... In any event I'd say if you have to pay 700K dollars for a roof over your head that is pretty damned expensive for most people.. I certainly couldn't drop that in cash so a mortgage would be the only way to go and the monthly on 700K is pretty high.
Sure it is, but it's all relative. We bought our first house in Vancouver for $120,000 in 1980. Salary was about $20k. The interest rate for a mortgage was 18%. Life is much better today with very low interest rates and comparable house price/salary.
Parent's have been co-signing mortgages for generations - how else could anyone put a roof over their heads? Owning a house isn't a right, it has to be earned with hard work. So many people today think that when they leave their parent's home, they should suddenly own their own home with the same quality of life that they had under their parent's roof. That is not how it works.
Sure it is, but it's all relative. We bought our first house in Vancouver for $120,000 in 1980. Salary was about $20k. The interest rate for a mortgage was 18%. Life is much better today with very low interest rates and comparable house price/salary.
Parent's have been co-signing mortgages for generations - how else could anyone put a roof over their heads? Owning a house isn't a right, it has to be earned with hard work. So many people today think that when they leave their parent's home, they should suddenly own their own home with the same quality of life that they had under their parent's roof. That is not how it works.
Well i'm certainly not going to be paying 3500 bucks + per month for a mortgage I can tell you that, simply for a roof over my head when I can pay almost a 1/3 simply to rent. Its certainly not my dream to own a house but if it is for others all the power to em.. Our dream is to enjoy our life - have a comfortable nest egg and buy a place in a third world country for next to nothing when we retire.. In the meantime we'll rent, travel, invest so for us we're living the dream we want.
I don't disagree that people have to work hard to achieve a goal but for some i'm sorry - carrying a 3500 + dollar per month mortgage is just too much! My partner and I could afford that but our discretionary spending would take a major hit.. No thanks - there's more to life than a roof!
Well i'm certainly not going to be paying 3500 bucks + per month for a mortgage I can tell you that, simply for a roof over my head when I can pay almost a 1/3 simply to rent. Its certainly not my dream to own a house but if it is for others all the power to em.. Our dream is to enjoy our life - have a comfortable nest egg and buy a place in a third world country for next to nothing.. In the meantime we'll rent, travel, invest so for us we're living the dream we want.
I don't disagree that people have to work hard to achieve a goal but for some i'm sorry - carrying a 3500 + dollar per month mortgage is just too much! My partner and I could afford that but our discretionary spending would take a major hit.. No thanks - there's more to life than a roof!
That's the choice every generation makes: scrimp now for a pay off later, or live the high life now and come what may later? I like the story about the grasshopper and the ant. I have many friends who chose to live high today and worry about tomorrow later. Several of them have approached me in the last few years pointing out that I have a roof over my head, and they don't. Naturally, they say, I should provide a place for them to store their things, perhaps park a bed in a bedroom, give them a house key (they will only pop in when it's convenient to them) ... because they don't have a roof over their heads. It's true, today I have the house that's worth ... what was it again ... 3/4 of a million ... while they had fun. It's all about choice. Who was happier in the end: the ant or the grasshopper?
Paying rent makes someone else rich, paying a mortgage makes you rich.
That's the choice every generation makes: scrimp now for a pay off later, or live the high life now and come what may later? I like the story about the grasshopper and the ant. I have many friends who chose to live high today and worry about tomorrow later. Several of them have approached me in the last few years pointing out that I have a roof over my head, and they don't. Naturally, they say, I should provide a place for them to store their things, perhaps park a bed in a bedroom, give them a house key (they will only pop in when it's convenient to them) ... because they don't have a roof over their heads. It's true, today I have the house that's worth ... what was it again ... 3/4 of a million ... while they had fun. It's all about choice. Who was happier in the end: the ant or the grasshopper?
Paying rent makes someone else rich, paying a mortgage makes you rich.
Not really... As I mentioned we pay about 1/3rd what we would pay for a mortgage on rent.. I also have a pension plan through work and they match what I pay dollar for dollar up to 8 percent of my income.. That means every month i'm putting away 16 percent of my income (diversified portfolio) into retirement for the cost out of my pocket of 8 percent of my income. This isn't exactly chump change. I also invest outside of work as well so that is adding to the nest egg - compound interest is a wonderful thing! This doesn't include my partners investments (he just bought a house in Venezuela - CHEAP and we plan on taking advantage of that in time - in the meantime his sister will live in it with her kids).
The fact is, i'm more readily able to invest without having an oppressive mortgage payment along with the flexibility of enjoying life with my partner and travel for most of our young life.. Once we retire we'll actually physically want to take it easy a bit.. We'll still travel but not as much..
To be honest, if a house cost 300 - 350K dollars in Toronto we would be more open investing in that house.. We could afford to carry the mortgage and enjoy our life throughout our living life but 700K plus no way too too much.. Plus even with a 300K home you still have to pay the myriad of additionally costs associated with owning a home - on 700K+ its even that much more...
We won't be rich when we retire with our investments but we'll be able to afford the quality of life that is within our goals through our investments.
As for grasshoppers and ants - there's no guarantee a human won't come along at any time and just step on either one so a balanced approach to life isn't necessarily a bad idea! Deferring enjoyment of life too long too late well there are many tragic tales to be told there and we really don't know how much time we have.
Sure it is, but it's all relative. We bought our first house in Vancouver for $120,000 in 1980. Salary was about $20k. The interest rate for a mortgage was 18%. Life is much better today with very low interest rates and comparable house price/salary.
So back in 1980, your housing cost was 6x your annual income in Vancouver.
And what about today? A house in Vancouver proper easily goes for $1,000,000 or more, while the average annual income in Vancouver today is what, $70,000 if you are lucky with a white collar job. That equates to 14x one's annual income, a much higher cost ratio than 1980, and I'm already being quite generous here with housing costs. Most single family homes in neighboring Surrey or Richmond already go for $1,000,000 to $2,000,000 range while income growth has clearly stagnated.
Paying rent makes someone else rich, paying a mortgage makes you rich.
Let's just say that at the end of the day, very few people can get rich rich simply by the merit of owning or renting. People become rich because by starting and owning businesses or have ultra-high paying jobs. So you own a house or two now, but does that make you truly high net worth person with millions upon millions in liquid assets?
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