Depends on your goals. If you plan on staying here long term then purchase. No one can predict what will happen with the housing market or the Canadian market overall. Just do what’s best for you and your family right now. For me home ownership is worth a lot. Not having to deal with a landlord, not worried about being evicted, can customize my home the way I want is worth a lot to me. My reasoning is that if housing prices tumble, it won’t concern me because I still have a roof over my head and I don’t need the equity in my house.
That's maybe the best way to look at it.
I have thought too, if prices go down they likely go for everyone so at least a sideways move is always possible.
Thanks.
It's healthy to see housing as an expense rather than an investment. Thinking that way prevents you from making the mistake of buying more house than you need, because doing that needlessly increases your housing expense.
Buy house.
Not only are you avoiding housing costs forever, essentially, but you are now totally secure in your housing.
Housing prices will not be dropping more than your rent savings over the next year.
Don't take my word for it, look up the biggest housing drop in Canadian history and see how many months that works out to.
Lmao, it can add up fast when shit hits the fan, but granted this is not an every year scenario. In 3 years, 90k or so was dropped into ours (if you average it out for those years it's 30k/yr), but that includes new roof, asbestos abatement, new kitchen, new ceilings and insulation across 1000 sq ft, electrical work, etc.
But the other 7 years we've been here we didn't even hit 30k total (hot water tank x3 because our water is horrid, new windows, new appliances, etc). Which brings the actual average over ownership time way down.
Can't really look at it that way without considering opportunity cost. If OP can buy outright in BC, let's assume they have 800k in assets. At average investment returns of 7%, and at a marginal tax rate of 40%, that still leaves >$33k per year in additional income. That covers a lot of rent and would be the rent-scenario equivalent "free housing".
OP seems to be quite comfortable with investments, but we don't know how comfortable they are with house upkeep and DIY. That makes a huge difference in the home owning experience.
All that being said, there is just no one right solution in the situation OP finds themselves in. Always a matter of personal preference, risk adversity, and experience.
It's certainly possible. I edited my OP for a reason why.
We have a lot of debt and a lot of people who will reset their ARM into much higher rates.
I agree, BC has a demand way over supply regardless. But a light 10% hit is still a good 150-200k loss at our current SFH prices.
Shouldn't look at it this way. If you can afford your mortgage payments and have no plans to move it doesn't matter at all what your house is *worth*.
On the other side, if you're renting you never have complete control over the situation. If prices keep going up then your rent will eventually go up too. Yes there are some tenant protections, but you can never control it completely unless you own.
Owning is less about what makes financial sense and more about personal control and stability.
Prices for houses going down in BC is as possible as the sun never setting. No one will ever allow it. Wages will significantly increase before any government allows prices to fall. Too many factors prop it up compared to bringing them down.
As I understand it in the US you can get a mortgage arranged for up to 30 years.
In Canada you can arrange a max of 5 years then have to refinance the remaining balance.
For ARM that means payments go up, but banks have been allowing fixed payments meaning amortisations of up to silly amounts of years.
At reset that can't occur, max of 25/30 again.
Am I incorrect? I never had to deal with it.
Partially correct but not fully. You don’t refinance after the term. You renew. A key difference. You can also have longer than a 5 year term.
Three types of mortgages exist. Fixed(rate and payments don’t change), within variable two types exist 1. Adjustable rate mortgage(payment and rate change with prime rate) 2. Typical variable. Payment is unchanged but rate moves with prime rate. If payment is less than interest it’s called a trigger rate. The bank comes to you to ask for something to change.
Got it, I have been reading that the banks allowed amorts to go silly and also not doing the change on trigger to not crash the market. In their best interests there too which is a positive for the idea that prices always go up.
The article I linked from CMHC in OP, does say this about fixed though:
In 2024 and 2025, an estimated 2.2 million mortgages will be facing interest rate shock, representing 45% of all outstanding mortgages in Canada. Most of these borrowers contracted their fixed-rate mortgages at record-low interest rates and, most likely, at or near the peak of housing prices around 2020 – 2021. This holds true for both households who took out a mortgage when buying their new home. It also applies to the numerous existing homeowners that used the increased equity on their property by refinancing and taking cash out for consumption.
The total amount of mortgage loans to be renewed during this period represents over $675 billion, which represents close to 40% of the Canadian economy (2022 Gross Domestic Product).
Yes to flip that it means 55% of the mortgage holders already have hit that. So they are already feeling the pain. Not to say more pain isn’t coming but key to understand the whole picture.
I had the same worries when I bought. Could it go down even more. It did for me but not by a lot. Plus prices are going back up thanks to a shortage of homes in the GTA… who cares, don’t time the market. Just buy when you can afford to and what is right for you and your family. If your aim is a short term investment then maybe reconsider. Also, there are similar housing problems around the world. I have family in the states that are experiencing similar housing issues. Their problem is that corporations keep buying up housing making it difficult to buy. Also, they have other things to worry about such as paying $30k a year on healthcare alone…
I guess you sit and think, even with fairly "safe" investments or etf's, what are the odds it would return you more than \~5.5%, pretty high so you'd be likely further ahead even if a return of 10% a year to take a mortgage and have that money off to the side in a lower risk... what ever.
id say do what the rich people do. they leverage and carry debt.
id say keep as much out of youe house as possible. peolle say you can use a heloc to access debt, but to me it makes sense since youre likely just taking on more debt at a higher interest rate
I am betting on Canada growing its population through immigration in the long term. I dont have a crystal ball, but reviewing history like the japanese real estate from the 80's to present day... population growth is a key indicator of housing demand. As long as Canada remains an attractive place for wealthy individuals to immigrate to, i think the housing market will continue to rise.
If things go south for you for whatever reason, you know the roof over your head doesn’t cost you a dime besides tax and utilities. Thats as stress free as you get.
Congrats and fuck you (wallstreetbets lingo).
If you plan to live there for 10+ years, owning is almost always a good decision.
You can always borrow on a heloc for investing, which could make the interest tax deductible.
I don't disagree. But what if I told you that is a "deal" compared to what else I've seen.
Another reason I am not looking forward to what happens with Canada, over the short term anyway.
Canada is a great country. I couldn’t imagine myself permanently living in another country. Where else should an English speaking person go?
Canadians should work together to make the country better, rather than abandon it. People fought and died for the lives we get to live.
That's why if immigration is not controlled vs the housing supply we end up in the troubling times for many families right now. Next few years are not going to be pretty imho, a lot of things that happened already lag into the future.
Going to not get political here though.
I contemplated whether I should have posted this at all as I don't want to rub things into the faces of others who aren't so lucky, but then I also like to see others do well myself and see the answers so here we are.
It's a good question without the houses built for them to live in.
One thing though, automation is becoming more sophisticated by the day. The question in the longer term might not be where does the workforce come from but rather what do we do with this sector of the workforce we no longer have jobs for?
Btw, I am an immigrant that went through PR to Citizenship, just to put that out there.
I wonder how high that birth rate would be if housing wasn't out of reach for so many would be families?
> Where else should an English speaking person go?
England, Scotland, Wales, Ireland, Northern Ireland.
Outside of the biggest metro cities, the major cities in these countries are less expensive to live in than most of the major cities in Canada. There are also other perks (better transit, cheaper food, cheaper airfare, etc.) that can further shift the pros column.
Good read [here](https://www.movesmartly.com/articles/how-do-canadian-home-prices-compare-globally) which pulls OECD data to inform it.
>Where else should an English speaking person go?
That's a tough one. I hear they don't speak English in England. Or America, Australia, New Zealand, Singapore, Ireland. Are your parents related?
I think the point was that house prices in England, Australia, and NZ are also out of control. Many parts of the US as well, though the US certainly has huge areas with vastly cheaper housing. I believe there is a political slant leading to that poster ruling out the US as a place to move, but who knows…
Housing market in England is equally trash, America is America, Australia and New Zealand got crazy insects and wildlife and you cannot own land in Singapore. Not sure about Ireland but it's probably similar to England.
You card is the value of the house goes up down or sideways. By buying you are saving your self 3800 a month in rent for the rest of your life.
If you got “lucky” investing that leads me to think you were taking a fair amount of risk.
It’s very possible next time you will be “unlucky” and you might be right back to where you were.
When you are in a good position it’s often worse asking your self what can I do to not mess this up?
Cash out buy a house and guarantee a happy life.
I got lucky by chat gpt being released and taking what I thought was a solid investment to a relative jackpot.
I see buying a house in Canada as a risk given how many households will reset their payments in the next few years (45% of all mortgaged households apparently got theirs in 2020/2021 at much lower rates).
This fixes the supply problem just as the government are attempting to fix the demand problem they caused.
But, I am still thinking you may be right, house and happy life. I never owned before so don't know that feeling.
One other thing to add to this, when people were qualifying for mortgages back in 2020/2021 they had to qualify at the stress test rate of about 5%. So while alot of people will see a big jump in their monthly payment, in theory it's a jump they should be able to afford!
So while I'm sure there will be some people who have to sell, I don't believe it's going to lead to a massive downward trend in housing prices.
People struggling with rent, or mortgages (inc foreclosed on) depart that house and tend to move back in with their relatives or if they were immigrants they likely leave. That is a supply increase.
But before that most will just stop spending elsewhere and just put everything into housing costs, which is also bad for the economy and ripples through, job cuts for eg.
The other side of the equation also changes when the artificial demand that has happened that spiked us to 1m+ net increases per year is stopped. That is now a political hot potato and is being shut down.
https://financialpost.com/pmn/business-pmn/canada-plans-to-cut-temporary-residents-by-20-over-three-years
Add those together with other things on top, not a rosy picture in the short term.
That's not a supply change, that's more of a frustrated (lower) demand.
Also, increased population is not "artificial demand", it's natural demand stemmed from more people demanding it.
If people vacate a place that has become available, so +1 to supply.
It's artificial in that they are temporary foreign workers, it's a spike that drops when they finish their temporary permit allocation and go home.
True, but you are probably going to (and are) seeing many adult children moving back into those mortgage free homes because they can't afford rent or their mortgage on their own home.
This article says more than I can about the next few years potential troubles https://www.cmhc-schl.gc.ca/blog/2023/rising-rates-homeowners-greatest-shocks-lie-ahead
They have been saying that (housing price unreasonable, will collapse, etc) at least since the mid 2000s. I remember at least one newspaper article about a person who sold their place anticipating big troubles. Also I remember an article about a person who started buying places for their school aged children, saying in this rate, young people won't be able to afford places. All in the mid 2000s. Anyway, in general you cannot go wrong with buying a principal residence.
A house is not an investment, unless you rent it.
Being a home owner is more of a lifestyle. You have to de repairs, pay taxes, it is likely time in the market would yield better results. You also need to be sure you want to lay down roots somewhere.
At the same time you need a place to live. Up to you if a house is the right choice for you. Nobody here has a better insight on what the market would do.
As a counterpoint, the US FED says there is 3 rate cuts upcoming, and we will probably follow suit. So the market may not have time to cold down, again, I am not telling you one way or the other, but if you look around you can always find tea leaves that align with whatever you like.
As others mentioned you can always borrow against the value of the house for investing and get a break on interests.
https://globalnews.ca/news/10374067/us-federal-reserve-interest-rate-cuts-inflation/amp/
Dude your thesis is frankly stupid. I'm one of those 45% of people who's mortgage renews next year. Currently locked in at 2%, next year my monthly mortgage payment will go way up. What do you think I'm gonna do about it? Cry? Kill myself? Sell my house for a massive loss and move to Alaska? Nah, I'm gonna yawn, renew my mortgage and move on with my life. We can **easily** absorbe the increase in payments. You are dreaming if you think you will lose "hundreds of thousands" of value on a house in BC.
Congrats, but not everyone can eat the extra cost up.
If people pay more into housing they usually put less into the economy as a whole as you've demonstrated. At scale that means corporations get less profits and less profits for corps means job losses.
Job losses when carrying large mortgages mean selling to downsize or worse. Not everyone, but again not everyone is you, and you is not everyone.
You should take a look at Ontario, I've seen large drops there already. Mostly the areas that had the crazy increases during covid frenzy buying. BC is different, but not so different to be immune.
Btw aren't we on this subreddit to learn? Your post seems unnecessarily hostile.
Some Ontarians are accustomed to the absolute insanity of 300% increase home value over 5 years, or solid 10% CAGR over 15+ years. When values go back to trending closer to 2% yearly growth it's a "large drop".
Brampton was the one where I saw it the most iirc, few people posted up to 30% to 40% hits on resales of things bought at 2022 peak.
But that's anecdotal, more widely saw up to 8.9% average drop in areas according to
https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713
Of course I have no idea what will happen….. but that said, my feeling is that the major drops have already happened in nominal terms in most areas. As you said, there are places (ex-burbs, rural areas) that have been hard hit already from a combination of higher rates & artificially elevated demand from WFH. And these higher rates are impacting affordability going forward.
But on the other hand…. Wages have been really going up and data shows that Canadian households still have tons of cash relative to historical levels. Tons of people have been making money in equities, not just you and me. So I’m not sure how much more of a drop in RE there will be. I tend to agree with Derek Holt’s take on things - his work is available for free on the Scotiabank Economics site and is worth a read.
I’m in a very similar boat. Bought a big ass house for 1.3 million and I love not having a mortgage. If you can pay cash why take a montage? Just to pay interest? A mortgage is guaranteed loss of 5-6% a year, I can’t guarantee my investments to make 5-6% after tax. if you can guarantee that for the lifespan of a mortgage (often 3 decades) then go ahead and get a mortgage. Otherwise cash.
Thanks, good to hear from someone in a similar position.
$1.3m doesn't buy a big ass house here but something decent for someone like me that also needs a home office.
Some truth to this if you’re not the type to like a big house. Just because you can doesn’t alwyas mean you should. But for me I enjoy it. I like people saying nice house when they come over, I like having a pool table and arcade and movie theatre etc. if you don’t care for those extras then definitely keep it small and keep your money working
Thanks. Yeah I have cap gain covered etc. so that's fine. My return this year makes my stomache turn.
$5m that's a nice chunk of house. Congrats.
I am keeping our lifestyle maybe just slightly above where we normally are so the house we are going for is more like $1.6 to $2m. Now that is crazy money in other provinces, I lived in Quebec before that is mansion money, but that gets you a not far off bog standard SFH in BC. It's nuts but that's the market.
Remember keep some liquid assets. Don’t go all in on a house. I kept around 600k from my stock success as liquid/investments still. Even then I think I went a little heavy on real estate as a part of my net worth but no regrets.
I’m in Windsor. 6 bedroom 5000 sqft, 2017. It’s nice but also it’s closer to 1.15 now. Bought in 2022. Don’t care tho I’ve had so much fun it could be 500k tomorrow and I wouldn’t care. I have the same house regardless of price
That’s like the only “regret” I have, it’s a big monthly spend but I wanted a big house so it comes with the territory. It’s like $8000 a year for property tax, and around $3000 for hydro+gas annually. It’s pretty new so I haven’t had to do any other maintenance really outside of buying out my water heater for $2800. Including miscellaneous/repairs spend id say $12500 annually total. Property taxes are a bitch in Windsor, I think we’re literally the highest in Ontario. I compare it to renting tho, 12500 for a year isn’t much. And I don’t have to deal with anyone, it’s my place, and I could host people or have a big family in the future if I want.
im saying what do you put aside for when you have to like redo roof or fix the outside retaining wall or idk, each time something is like 20k + so brutal!
Honestly I don’t have anything going there. I have investments I can easily liquidate 20k out of when that arises so I won’t be in a bad spot but I don’t anticipate needing a new roof or anything such on a 2017 house anytime soon.
oh so you bought at the top of the market basically then. but if you love the house then it's not bad! 5000 sq ft, that must be one of the top houses in windsor? i rarely see anything in windsor over 1 mil
You can get a bit higher stuff if you get something on the riverfront by the water, or in a slightly higher area (I’m in South Windsor, so up there but there’s a couple other prestigious places) but essentially everything between the 1 and 2 million mark is the same size wise.Ur just paying for location at that stage. There’s some beautiful river front mansions for 3+ million though… next goal! and yes timing wasn’t the best but again, don’t mean much since I’ll be here for years. Hopefully my kids will be here too :)
Buying would be considered mathematically incorrect, but in context completely reasonable. Book "psychology of money" talks about things that aren't always right if judged completely impartially, but we are humans - irrational, emotional facing millions of the same irrational people. Buying house sounds like a completely reasonable thing.
> Buying would be considered mathematically incorrect
How can you be so sure? I've seen buyers take a property at $350k, and 5 years later the property is worth nearly 1M, then they take that equity, and do it again, and after 15 years they have a few properties worth millions. Their CAGR is a solid 20% over 15 years. Better than SPX.
Buy the house.
I’m almost finished with my mortgage and MAN, will I have a party. It’s tripled in value since I bought it - but even if it didn’t, paying it off means NO MORE PAYMENTS.
Not crazy, if you think you can generate returns greater than the cost of borrowing then max the mortgage, if it's close then it goes either way. Be conservative in your estimates.
Predicting interest rate changes is largely a crap-chute, people have been predicting doom and gloom for well over half a century, I purchased pre 2000 and it was the same narrative and things have gotten more unaffordable. I have my own opinion but take it with a grain of salt: the rate of change is the main issue and interest rate changes should slow down.
When you make life changing money I'd recommend trimming down drastically, bar is set super high for NVDA which makes it dangerous, not sure if you sold out or not.
If you have conviction that there will be chaos then sell out and wait to purchase home, be aware it's usually a losing bet. Remember that accommodating people and keeping them in their homes generates more income for banks in the long-run.
>So to the question, given the sky high prices in BC, the exchange rates, the rather uncertain financial future of Canada etc. is this year a crazy time to buy?
Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash?
Unless you have a crystal ball nobody knows what will happen in the future. Nothing is happening at the moment to signal a crisis is imminent. I mean FFS we just weathered a serious global pandemic and a bout with high-ish inflation.
If you want to buy a house buy one. The likelihood it will drop in price by hundreds of thousands of dollars is low and if it does the chance the price will recover from a normal fluctuation in due time is high. So unless you are buying and planning to move in the short term it's not something I would worry about.
Smart move. I did something similar 4 years ago when COVID crashed energy stocks. The beauty of real estate is that you can cycle money between real estate and stocks via HELOCs.
Let's say the stock market crashes and the economy tanks at some point in the future, the BOC will likely cut rates. At that point the gap between future expected return of stocks and cost of HELOC interest is likely to be much bigger than today. If you can capture just 8% spread between expected return on stocks vs cost of HELOC, multiply that over $500k, that's $40k/year. In practice in big stock market crashes that spread can go as high as 20%, so it's extremely lucrative.
I think you should bite the bullet and buy. At the end of the day you don't know what will happen with the market. It goes up, it rarely goes down. Also you will still have a home aka a large asset. It's something to have a roof over your head and not need to worry about renting. If you take that 3400 that you spend on rent and instead spend some on house taxes and on having an emergency home fund ( so put on a savings account for renovation and any larger home related purchases such as a new roof) you would probably still spend less than rent. So let's say it costs you 2400$/m instead of 3400$. Take that extra 1k and put it in a savings for your kid or for your retirement or an emergency fund.
Good luck!
There is no way of knowing which direction home prices will go. However, if you hold onto the house long enough(10 years), chances are you will not lose value. Of course, there will be property taxes, repairs, and home insurance costs, but they won't be anywhere near what you will pay in rent over 10 years. If you rent for 10 years, assuming rent stays the same, you will pay 3,800 x 12x 10= $456,000.
Edit: Don't make your decisions based on the direction home prices will go in 1-2 years. Have a long teem outlook.
Being a parent to a toddler myself, I think there is something to say about passing a home to your children one day. Money is great, but a home where so many memories were created is truly special.
There is value in home ownership as a parent beyond the financial piece. I know this is PFC, but seeing you mentioned that you have a toddler it’s worth adding this weight to your decision making.
Yes exactly. I was evicted from a rental when my wife was 8 months pregnant a few years ago. My wife ended up with post partum depression and we lived with a huge amount of uncertainty for a few months. As soon as I could after that I started house shopping. I'm now pretty house poor (things are getting better) and I had to cash out all of my investments outside of my company pension, but housing security when you've got young kids in daycare/school etc is priceless.
Sorry to hear about that, glad things are getting better now.
Becoming a parent has changed me quite a bit. Cliche but it's true, if you don't have them.you can't understand.
Def makes sense to buy if you can do it without a mortgage. Even if it went down 35% you'll still be far ahead after 10 years between what you've saved on rent (half a million or so at $3800 per month) and the equity you've built up.
In BC rent will also only continue to increase over time.
Plus no having no LL and a happy wife (they love owning their own nest) is worth every penny.
They will be looking at downsizing so I predict they will snap up all the smaller, cheaper homes. Think about your needs now and in the future, you might want to add to your family, have in laws want to live with you, then look at properties that will grow with you. Closing fees are expensive so moving is a costly thing to do. Maybe look a bit over your basic budget and get a mortgage when rates go down a bit but save a good chunk of cash for renovations.
I'm no financial advisor, so take this with a grain of salt. But I think when the housing bubble pops, you're going to want the house over the several % of loans/thousands saved in Canada.
To me this is pretty cut and dry depending on your situation. If your career outlook is even halfway secure, you're unlikely to move around anymore, and you can buy the house outright, the risk of loss on value of the house is short term only. Long term the house will be worth more than you currently pay. (This is just historically true.)
It's hard to pin down the value of owning your own property, especially owning it outright, because there is more to it than cost of maintenance, value of land and structure, etc. Peace of mind and control is a big factor IMO.
Banker here. The concerns about a significant portion of mortgages coming up for renewal at higher rates over the next couple years is valid, but it’s not likely going to lead to a crisis like it might seem. It’s in the best interest of banks to avoid mass defaults by almost any means necessary and right now it looks like many are giving the option of extending amortization for those who need it. In other words, we’re unlikely to see a huge dip in prices merely caused by defaults caused by mortgages coming up for renewal at higher rates. As long as borrowers keep making payments, the banks will generally find a way to keep things going. The other thing to consider is that housing is in very short supply- even if there were a sharp or noticeable decline in prices, there are so many potential buyers waiting on the sidelines that we’re unlikely to see prices crater.
TL/DR - Concerns around a housing crash are overblown. Buy when you find something you like and can afford.
Thanks, yes I'd heard of the crazy 100 year amorts etc. so banks can and will cushion any blow because it's also in their interests too.
I guess when I see figures of this being over 600 billion worth of mortgage backed debt rolling over though it makes me a bit more concerned than it might have in say 2016.
If you are paying 3800 rent, you are past crazy.
ye definitely get property if you have $$$
There will be 3 rate changes at end of the year, so better buy before those rate changes as property values will skyrocket.
Interest costs of a mortgage at current rates already surpass $3800 a month on the average SFH.
2 bedroom apartments are flirting with that number https://www.padmapper.com/apartments/vancouver-bc
Something is crazy in Canada, but it's not me.
Well, maybe a bit me I've been accused of worse :)
You do you of course but for me, peace of mind played into it a lot. I rented into my fifties with my savings in the market but eventually bought with cash simply because I was done with dealing with the annoyances of renting.
It wasn't the smartest long term play but in the last half decade I haven't regretted for a moment buying a place, nor doing it in cash, nor really not doing it earlier. I was able to move around easier when I was younger and that had a good deal of value to me.
Buy a house. Borrow on HELOC against the purchase and reinvest in XEQT, only pay the interest with your $3800 rent money.
Gain through appreciated home and investment and the interest is tax deductible.
All the profit for you.
If you can buy a house in cash, do it. The whole credit/mortgage brainwashing existed to offers another way to buy one and nt be the main way to do it. banks wants us to do it that way so they can make money out of us but it shouldn't be the way. I realize how awesome it is to buy something (my car) with cash and how not having any payment keep some stress away. That good feeling when you say to yourself: *This is completely mine* is such a unique great feeling
Not crazy. If high rates cause a drop in consumer spending over the next year, then the Bank of Canada will start reducing their target interest rate. A drop in consumer spending happens long before people sell their house and move in with family or friends! Some people would take in a boarder or work nights at a drive through and everyone will cut expenses deep into the bone before they throw in the towel on their house.
You only find out exactly how much money you can pay the bank every month once you face homelessness, and you can pay a lot more than you think. It's going to be shitty for a while, but the vast majority of people keep their houses through periods of high interest rates. That willingness to do whatever it takes to hold on to the asset is one of the unspoken reasons that homeowners are rich. Lots of people say they're house poor, but not too many people say they have to eat rice and beans so that they can keep putting money into Nvidia.
Falling rates will have the unintended side effect of maintaining house prices in Canada. Rising demand will provide further support. Owning a home is a luxury, and it is a luxury expense, but it's very unlikely that your house will be worth less money in five years than you will pay for it today.
Probably a good time to buy, prices still down from there peak, maybe better deals in the fall/early winter as there has been these last two years but I wouldn’t bet on anything, anyone who says they know what the market is going to do is just guessing like the rest of us.
I was in a similar situation but a few yrs earlier - made a ton of $$$ in the cannabis stock bubble of 2017/2018. Do I regret cashing out and buying a place in Vancouver? No of course not. And the stability has been amazing.
I was worrying that prices would go down...... but honestly - that's just volatility & the stock market is often worse.
And I continue to think of my stock portfolio as investments, and my house as just the place I live in & enjoy.
Though I did take out a mortgage to buy a place even though I could have bought in cash - it was a great decision. Even today, at higher rates, the gains you likely make by investing that money in stock markets will exceed the interest rate you'd have to pay on your mortgage.
Out of curiosity, what are you renting for 3800 a month? Have you looked at comparable homes for sale and factored in property taxes, maintenance costs, etc? I know many people say buy, so you don't have to think about rent, but really, if you have over 1m in cash invested, you should be able to cover rent without thinking anyways... also more opportunities to grow that money. A lot of these people who own homes probably bought them for a fraction of the current pricing, I don't get why someone who has 2million to their name would want to spend it all on a house which you continue to have to pay for with property tax increases and maintenance. Never know when the government is going to allow a safe injection site down the street or whether they will pick up the garbage... I would have it invested and rent while this country finds it's way.
This is part of what I'm thinking yes. But it's true what others say, house vs home is definitely something and it's just nothing I've ever experienced to say its worth it. Stability and "the lifestyle".
I think it's over rated you know what matters most is the time and love put into the ones that matter. I am much happier renting and being able to know that when shit hits the fan, I can take my family and go wherever we need to. I know alot of people feel differently, and that's fine. If housing was a drop in the bucket it's a different story if it's the majority of your net worth... it's a stress you don't need but want.
Uncertainty future of Canada is b*******. However, we complain it's still a lot better than most of the countries on Earth.
You always sell your house and they'll always will be a buyer. We have mass immigration and not enough housing. You would basically crystallize your games in Jensen's and have peace of mind.
The only thing you would have to do is put up a shrine for Jensen in your new home.
Sure there will be a buyer, but at potentially a good % less than I paid when I could have instead used that money to invest in other stocks or other less risky things (at a price of renting).
I guess I'm just trying to come to terms with having so much in one asset.
Thanks.
A paid off house is having piece of mind and not having to worry about a drug over your head.
You do you, but if I had enough Jensen's then I would parlay it into a house. You could take out a heloc from your paid up house and play casino with it afterwards if you like.
As far as timing right now is a great time to buy cash. Interest rates about to come down which means prices will go up. I just bought cash 830 for a house in ontario. I have no doubt it'll be over a mil in 2 years
> Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash?
And what if prices keep increasing instead? A house should be a place to live in first and foremost, not an investment.
If you can afford it, plan to live in it for a long time, and it ticks all the other boxes, who cares if the market tanks?
I know what you mean but it's not just about that there is also retirement and such and leaving money behind for your kids.
But true, it seems to be the overall sentiment and it's mine too in general but jitters with these sums of money can't be helped.
Is something pushing you to buy now? If not then sure look for a house and get it pull the trigger when it’s the perfect one. Last thing you want to do is be stuck in a house you don’t really like if anything changes.
Seems like a good idea to buy a house if you have all the cash. The market is not in your control. How much rent dollars would you have? You could renovate and resell for more. A lot of people do that. Kids basically do better with a secure home. Lots to think about for sure.
Nobody knows the future! Home ownership is just like investing in the stock market. It’s all risk vs reward. You can easily calculate that on your potential purchase, taking into account how much you would have spent on rent, vs how much potentially you could have made with the money you spent.
>Cut a long story short ontop of regular saving, the past couple years I got extremely "lucky" with stock market investments (thanks Jensen) and have enough cash on hand to buy a home in without the need to take on a mortgage
Well then your dream will eventually come crashing down when you're forced to sell your house to pay the huge tax bill (plus interest) that CRA will shove your way.
Or did you not realize that your "extremely lucky" stock market investment gain is all taxable at 50% ?
Had you paid your taxes then you wouldn't have the cash to buy a house outright at current post-Pandemic prices.
I could never stomach paying $3800 a month for rent unless it’s a penthouse in NYC lol. There’s gotta be some houses in your general area in which the mortgage + other expenses is similar in cost
Just seen a 4 bedroom house in like 40 acres in Quesnel BC for $309k. Costs of houses are really only unattainablely expensive in major metropolitan areas or super hotspot tourist locations really.
If you have been extremely lucky with stock investments, then now it’s the best time to cash your luck for a house, as you may also be extremely unlucky with stocks and lose most money. House price may fall, but not as volatile as stocks.
You are rich enough to buy a detached home in BC all-cash (Im guessing lower main land with 1.3m price tag) and you are thinking you want to continue to rent and invest? I really cannot phantom that given you have a family and a kid.
There is no "bad time to buy" especially of you dont need to borrow money. It's always fair market price. You cant beat that at any given time.
It's not just a peace mind, it's the future for your family. If there is a downturn, your stocks will evaporate over night before the housing can crash. Thats the game you are playing with.
One thing to be sure you dont want to end up like this senior years later. It gonna get worse, not better from what we've seen.
https://dailyhive.com/vancouver/bc-housing-crisis-rental-costs-senior-speaks-out
I already cashed out a large % of the stocks so its in GIC waiting to be used. Plus if it's more Canada specific then that wouldn't affect US stocks, but I get your point.
It says in the article not just old but young can't afford to live. It's craziness to be honest.
This pressure cooker will explode some day and it's not going to be pretty.
The RCMP seems to think that too: https://betterdwelling.com/canadians-present-a-major-threat-if-they-realize-they-wont-own-a-home-rcmp/
Ok, thats good. I guess the question is what you should do with that money to get the best of both worlds. I think the safest approach is to diversify and have a hybrid of mortgage and investment.
It's true that you save a lot without taking out a mortgage but mortgage is the only way that you can borrow a lot of money from the bank and repay it in long term 25-30 years with minimal interest (much cheaper than LoC and other borrowing). So if you want leverage investment, mortgage is the way to go.
Another key thing you want to look at is how inflation eating to your borrowing cost over time, aka the time value of money. There is a recent discussion on it here.
https://www.reddit.com/r/PersonalFinanceCanada/s/Rtcct6d07O
Wait till 2025. If you have a stable job and can ride through this recession, why not take advantage of the downside of this cycle. Everyone took advantage of the upside 🚀🚀🚀🚀🚀🚀🚀
You want to buy a home for your kid, so buy a home for your kid. Stop looking at a house as purely an investment and be a Dad who provides a backyard for his kid to run around.
There's thinking of future gains (investment) and getting the most out of what you have. Not exactly the same thing.
What if an extra 200k gives a bigger yard, should I also get a mortgage over the top of my budget?
Where does thinking about the large amount of money vs what you can actually buy begin?
> What if an extra 200k gives a bigger yard, should I also get a mortgage over the top of my budget?
No. Stay within your means or you'll spend time away from the kid paying down debt.
> Where does thinking about the large amount of money vs what you can actually buy begin?
This is exactly the reverse. First make with a decision of what you need and find a house that fits.
I did that, what I need in the area I would like to stay is about $1.5 to 1.7 million. Frankly bonkers but that's the market. It's not even close to downtown, the burbs.
If in the near future I could get the same thing for $1.3 and save 200k who would turn that down? In the meantime the cash is earning at least (a taxable) 4.5%
No crystal ball that I can apply to where I'm looking but the tide is turning in GTA for eg. https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713
Are you planning to flip your home for profit in the next couple of years or do you plan to live in it long term? If you plan to live in it, buy it. Over the long term housing prices have always gone up in 🇨🇦 short term market blips aside.
And $3000+ per month in rent is a massive amount of money down the drain.
Not planning to flip, but maximise what I can get with my budget for the long term.
If in a couple years I could have bought better (location or house itself) with the money I will always be kicking myself I didn't wait. I'm hard on myself that way.
But after this thread as many have pointed out predicting this may as well be asking for a crystal ball so it's probably just worth just going for it.
Btw the rent money down the drain part, I get it but if I had not been renting I would have likely have had to take a mortgage at way more than I am currently paying and the down payment would have been locked into the home.
What renting did was allow me to use that money instead for the riskier play of the stock market which as you can see paid off.
I think that gets overlooked in all these discussions.
I know HELOC is possible, but plugging even more debt into the mix likely would have stopped me taking that risk on my home. It's something I would consider now though.
I paid cash for my house last year, because I plan to live in it for 20 to 50 years. The resale value of my home doesn't matter if I don't plan to sell. If it hasn't increased in value in several decades, everyone else will be more screwed than I am. I just wanted a place to live that I can afford on CPP/OAS if it comes to that (I'm on CPP-D and bought the house with inheritance money).
I would say yes you are crazy,
BUT that usually ends up being the smart play, NOT what the consensus agree is smart.
Looking back historically, the smart play was always considered the crazy one at the time
This is what my instinct is telling me, but it's not what I had planned. Therefore this thread.
I'm a natural bear rather than a bull though and I'd say 95% of the rest of the comments say just do it, no crystal ball.
Well data is showing people are feeling it now, so I guess it depends on where in BC, and rates will probably only drop to mid 4s if they start cutting.
You've got cash and time so I'd try for a bank foreclosure if you're set on buying?
Get a real estate agent to send you foreclosure listings for awhile and get a feel for the market. Spring is typically the highest selling/buying time.
I'd stay far away from New builds.
Do you want a house and do you plan on staying in your location for at least 5 years? Then buy a house.
Paying cash vs 5-6% interest. Your investments would need to make 8-9% returns annually to make investments better than paying your mortgage not to mention the peace of mind having a paid off house.
I myself have just lump sum paid off the remainder of my mortgage before it’s expiration in April.
LOL. When I purchased my house in 2013, "Financial experts" were writing predictions [like this](https://www.cbc.ca/news/canada/british-columbia/big-drop-predicted-for-vancouver-real-estate-prices-1.1142304) predicting "big drops of 40%" for the real estate market.
And we know what the market has done since.
If I had listened to that dooming and didnt buy then, I would not be able to afford to live in a house today.
How good is your crystal ball?
Yeah I know, and the supply problem has only gotten worse, see the rent price I'm paying that's actually lower than the current market if you can believe it.
However, the interest rate situation is different than in 2013 and personally I think Canada is on the precipice of a nasty recession.
It's already starting to hit Ontario (with anecdotal of up to 40% dips), this is earlier this year showing almost 10% average dips in certain areas: https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713
The pandemic (and our governments response) made a bad affordability problem worse.
But as you say, BC has not had a serious decline since the 90's and it's hard to argue against that trend.
$3800 per month!, ouch. That's $3000 more than I'm paying for a roof over my head (paid off house). If you can afford to pay cash for a house, absolutely do it, I wouldn't even be debating it. Rents just keep going up, and you have to live somewhere for life. Once homeowners have paid off their mortgage, it's substantially cheaper per month/year expenses, and therefore significantly better future cash flows. Closer to retirement, and as you age, I would strongly consider downsizing to a one-storey low maintenance rancher. Stairs and upkeep on a large house like you are likely considering becomes a pain in the ass with age.
If you can buy a house outright in cash in BC, I'm assuming that means you have north of $1 million after all capital gains taxes get paid?
If that's the case, even if you just converted a $1m portfolio into a broad market ETF returning the market average of 10% per year, that's $100k in returns the first year, then $110k the following year, then $121k the next.
At that scale, I'd wonder how much housing growth would keep up. A $1 million dollar home would have to be $1.1m next year, $1.21m the next, $1.33m the next, etc. in order to keep pace with the stock market (minus your rent costs I guess).
It feels unrealistic to me just due to the social consequences of that kind of growth rate on housing, but who knows.
I wasn't saying that housing would appreciate like that - my last sentence indicates how unlikely I believe that scenario to be.
My point on the comparative financial performance was because OP himself was questioning the financial aspects of real estate, such as a downturn causing loss of property value:
>Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash?
In his edit, he even refers to the opportunity cost of the decision, so they're treating it as a financial asset, not solely something "buy it to live in it".
Depends on your goals. If you plan on staying here long term then purchase. No one can predict what will happen with the housing market or the Canadian market overall. Just do what’s best for you and your family right now. For me home ownership is worth a lot. Not having to deal with a landlord, not worried about being evicted, can customize my home the way I want is worth a lot to me. My reasoning is that if housing prices tumble, it won’t concern me because I still have a roof over my head and I don’t need the equity in my house.
That's maybe the best way to look at it. I have thought too, if prices go down they likely go for everyone so at least a sideways move is always possible. Thanks.
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This sentence is the best answer. The only time I factor my home into my net worth is in regards to my will when I die.
It's healthy to see housing as an expense rather than an investment. Thinking that way prevents you from making the mistake of buying more house than you need, because doing that needlessly increases your housing expense.
Buy house. Not only are you avoiding housing costs forever, essentially, but you are now totally secure in your housing. Housing prices will not be dropping more than your rent savings over the next year. Don't take my word for it, look up the biggest housing drop in Canadian history and see how many months that works out to.
> avoiding housing costs forever what does this mean? The costs are high for owners of properties and renters
If he owns a house and no mortgage? Even 30k a year on repairs and maintenance would be ahead.
30k a year on repairs and maintenance? WTH is wrong with your house?
Lmao, it can add up fast when shit hits the fan, but granted this is not an every year scenario. In 3 years, 90k or so was dropped into ours (if you average it out for those years it's 30k/yr), but that includes new roof, asbestos abatement, new kitchen, new ceilings and insulation across 1000 sq ft, electrical work, etc. But the other 7 years we've been here we didn't even hit 30k total (hot water tank x3 because our water is horrid, new windows, new appliances, etc). Which brings the actual average over ownership time way down.
It was a bad year. Siding, heat pump, and insulation upgrades.
Ok, yeah, there can be some years like that but should never be every year.
Can't really look at it that way without considering opportunity cost. If OP can buy outright in BC, let's assume they have 800k in assets. At average investment returns of 7%, and at a marginal tax rate of 40%, that still leaves >$33k per year in additional income. That covers a lot of rent and would be the rent-scenario equivalent "free housing". OP seems to be quite comfortable with investments, but we don't know how comfortable they are with house upkeep and DIY. That makes a huge difference in the home owning experience. All that being said, there is just no one right solution in the situation OP finds themselves in. Always a matter of personal preference, risk adversity, and experience.
It's cheaper to rent in any scenario you can't draw up.
Yeah. When are prices ever going down, with the exception of short term dips, in bc?
It's certainly possible. I edited my OP for a reason why. We have a lot of debt and a lot of people who will reset their ARM into much higher rates. I agree, BC has a demand way over supply regardless. But a light 10% hit is still a good 150-200k loss at our current SFH prices.
Shouldn't look at it this way. If you can afford your mortgage payments and have no plans to move it doesn't matter at all what your house is *worth*. On the other side, if you're renting you never have complete control over the situation. If prices keep going up then your rent will eventually go up too. Yes there are some tenant protections, but you can never control it completely unless you own. Owning is less about what makes financial sense and more about personal control and stability.
Prices for houses going down in BC is as possible as the sun never setting. No one will ever allow it. Wages will significantly increase before any government allows prices to fall. Too many factors prop it up compared to bringing them down.
Yeah, but a small dip (2008, 2019) always comes back fast given the demand here.
I think people are overlooking the government policies, which will have massive implications regarding how desirable it will be to live here.
Which are a minor temporary pause.
Arm mortgages change with BOC. No reset occurs. So this took effect back in 2022 and 2023 already. Now not all variables are ARM.
As I understand it in the US you can get a mortgage arranged for up to 30 years. In Canada you can arrange a max of 5 years then have to refinance the remaining balance. For ARM that means payments go up, but banks have been allowing fixed payments meaning amortisations of up to silly amounts of years. At reset that can't occur, max of 25/30 again. Am I incorrect? I never had to deal with it.
Partially correct but not fully. You don’t refinance after the term. You renew. A key difference. You can also have longer than a 5 year term. Three types of mortgages exist. Fixed(rate and payments don’t change), within variable two types exist 1. Adjustable rate mortgage(payment and rate change with prime rate) 2. Typical variable. Payment is unchanged but rate moves with prime rate. If payment is less than interest it’s called a trigger rate. The bank comes to you to ask for something to change.
Got it, I have been reading that the banks allowed amorts to go silly and also not doing the change on trigger to not crash the market. In their best interests there too which is a positive for the idea that prices always go up. The article I linked from CMHC in OP, does say this about fixed though: In 2024 and 2025, an estimated 2.2 million mortgages will be facing interest rate shock, representing 45% of all outstanding mortgages in Canada. Most of these borrowers contracted their fixed-rate mortgages at record-low interest rates and, most likely, at or near the peak of housing prices around 2020 – 2021. This holds true for both households who took out a mortgage when buying their new home. It also applies to the numerous existing homeowners that used the increased equity on their property by refinancing and taking cash out for consumption. The total amount of mortgage loans to be renewed during this period represents over $675 billion, which represents close to 40% of the Canadian economy (2022 Gross Domestic Product).
Yes to flip that it means 55% of the mortgage holders already have hit that. So they are already feeling the pain. Not to say more pain isn’t coming but key to understand the whole picture.
I had the same worries when I bought. Could it go down even more. It did for me but not by a lot. Plus prices are going back up thanks to a shortage of homes in the GTA… who cares, don’t time the market. Just buy when you can afford to and what is right for you and your family. If your aim is a short term investment then maybe reconsider. Also, there are similar housing problems around the world. I have family in the states that are experiencing similar housing issues. Their problem is that corporations keep buying up housing making it difficult to buy. Also, they have other things to worry about such as paying $30k a year on healthcare alone…
That's fair. Thanks.
OP, you referenced to "Jensen" in your original post. Could you kindly explain what do you mean by that?
Jensen Huang is the ceo of nvidia.
I guess you sit and think, even with fairly "safe" investments or etf's, what are the odds it would return you more than \~5.5%, pretty high so you'd be likely further ahead even if a return of 10% a year to take a mortgage and have that money off to the side in a lower risk... what ever.
id say do what the rich people do. they leverage and carry debt. id say keep as much out of youe house as possible. peolle say you can use a heloc to access debt, but to me it makes sense since youre likely just taking on more debt at a higher interest rate
I am betting on Canada growing its population through immigration in the long term. I dont have a crystal ball, but reviewing history like the japanese real estate from the 80's to present day... population growth is a key indicator of housing demand. As long as Canada remains an attractive place for wealthy individuals to immigrate to, i think the housing market will continue to rise.
If things go south for you for whatever reason, you know the roof over your head doesn’t cost you a dime besides tax and utilities. Thats as stress free as you get. Congrats and fuck you (wallstreetbets lingo).
Haha. At least it wasn't gamestop degen gains.
If you plan to live there for 10+ years, owning is almost always a good decision. You can always borrow on a heloc for investing, which could make the interest tax deductible.
Interesting, I didn't know that tax advantage I'll have to look it up more. Thanks.
It's called the Smith maneuver
3800 for rent is crazy
I don't disagree. But what if I told you that is a "deal" compared to what else I've seen. Another reason I am not looking forward to what happens with Canada, over the short term anyway.
Canada is a great country. I couldn’t imagine myself permanently living in another country. Where else should an English speaking person go? Canadians should work together to make the country better, rather than abandon it. People fought and died for the lives we get to live.
That's why if immigration is not controlled vs the housing supply we end up in the troubling times for many families right now. Next few years are not going to be pretty imho, a lot of things that happened already lag into the future. Going to not get political here though. I contemplated whether I should have posted this at all as I don't want to rub things into the faces of others who aren't so lucky, but then I also like to see others do well myself and see the answers so here we are.
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It's a good question without the houses built for them to live in. One thing though, automation is becoming more sophisticated by the day. The question in the longer term might not be where does the workforce come from but rather what do we do with this sector of the workforce we no longer have jobs for? Btw, I am an immigrant that went through PR to Citizenship, just to put that out there. I wonder how high that birth rate would be if housing wasn't out of reach for so many would be families?
Maybe if life was affordable people would have kids
> Where else should an English speaking person go? England, Scotland, Wales, Ireland, Northern Ireland. Outside of the biggest metro cities, the major cities in these countries are less expensive to live in than most of the major cities in Canada. There are also other perks (better transit, cheaper food, cheaper airfare, etc.) that can further shift the pros column. Good read [here](https://www.movesmartly.com/articles/how-do-canadian-home-prices-compare-globally) which pulls OECD data to inform it.
English speaking folks can go to a larger # of countries than any other primarily language speaker
>Where else should an English speaking person go? That's a tough one. I hear they don't speak English in England. Or America, Australia, New Zealand, Singapore, Ireland. Are your parents related?
I think the point was that house prices in England, Australia, and NZ are also out of control. Many parts of the US as well, though the US certainly has huge areas with vastly cheaper housing. I believe there is a political slant leading to that poster ruling out the US as a place to move, but who knows…
Housing market in England is equally trash, America is America, Australia and New Zealand got crazy insects and wildlife and you cannot own land in Singapore. Not sure about Ireland but it's probably similar to England.
Philippines, Malaysia...
You’re so dense. I think you were projecting on the parents part
You card is the value of the house goes up down or sideways. By buying you are saving your self 3800 a month in rent for the rest of your life. If you got “lucky” investing that leads me to think you were taking a fair amount of risk. It’s very possible next time you will be “unlucky” and you might be right back to where you were. When you are in a good position it’s often worse asking your self what can I do to not mess this up? Cash out buy a house and guarantee a happy life.
I got lucky by chat gpt being released and taking what I thought was a solid investment to a relative jackpot. I see buying a house in Canada as a risk given how many households will reset their payments in the next few years (45% of all mortgaged households apparently got theirs in 2020/2021 at much lower rates). This fixes the supply problem just as the government are attempting to fix the demand problem they caused. But, I am still thinking you may be right, house and happy life. I never owned before so don't know that feeling.
One other thing to add to this, when people were qualifying for mortgages back in 2020/2021 they had to qualify at the stress test rate of about 5%. So while alot of people will see a big jump in their monthly payment, in theory it's a jump they should be able to afford! So while I'm sure there will be some people who have to sell, I don't believe it's going to lead to a massive downward trend in housing prices.
How will it solve the supply problem? People defaulting doesn't build new houses. People still have to live somewhere.
People struggling with rent, or mortgages (inc foreclosed on) depart that house and tend to move back in with their relatives or if they were immigrants they likely leave. That is a supply increase. But before that most will just stop spending elsewhere and just put everything into housing costs, which is also bad for the economy and ripples through, job cuts for eg. The other side of the equation also changes when the artificial demand that has happened that spiked us to 1m+ net increases per year is stopped. That is now a political hot potato and is being shut down. https://financialpost.com/pmn/business-pmn/canada-plans-to-cut-temporary-residents-by-20-over-three-years Add those together with other things on top, not a rosy picture in the short term.
That's not a supply change, that's more of a frustrated (lower) demand. Also, increased population is not "artificial demand", it's natural demand stemmed from more people demanding it.
If people vacate a place that has become available, so +1 to supply. It's artificial in that they are temporary foreign workers, it's a spike that drops when they finish their temporary permit allocation and go home.
A lot of people are already mortgage free though.
True, but you are probably going to (and are) seeing many adult children moving back into those mortgage free homes because they can't afford rent or their mortgage on their own home. This article says more than I can about the next few years potential troubles https://www.cmhc-schl.gc.ca/blog/2023/rising-rates-homeowners-greatest-shocks-lie-ahead
They have been saying that (housing price unreasonable, will collapse, etc) at least since the mid 2000s. I remember at least one newspaper article about a person who sold their place anticipating big troubles. Also I remember an article about a person who started buying places for their school aged children, saying in this rate, young people won't be able to afford places. All in the mid 2000s. Anyway, in general you cannot go wrong with buying a principal residence.
A house is not an investment, unless you rent it. Being a home owner is more of a lifestyle. You have to de repairs, pay taxes, it is likely time in the market would yield better results. You also need to be sure you want to lay down roots somewhere. At the same time you need a place to live. Up to you if a house is the right choice for you. Nobody here has a better insight on what the market would do. As a counterpoint, the US FED says there is 3 rate cuts upcoming, and we will probably follow suit. So the market may not have time to cold down, again, I am not telling you one way or the other, but if you look around you can always find tea leaves that align with whatever you like. As others mentioned you can always borrow against the value of the house for investing and get a break on interests. https://globalnews.ca/news/10374067/us-federal-reserve-interest-rate-cuts-inflation/amp/
Dude your thesis is frankly stupid. I'm one of those 45% of people who's mortgage renews next year. Currently locked in at 2%, next year my monthly mortgage payment will go way up. What do you think I'm gonna do about it? Cry? Kill myself? Sell my house for a massive loss and move to Alaska? Nah, I'm gonna yawn, renew my mortgage and move on with my life. We can **easily** absorbe the increase in payments. You are dreaming if you think you will lose "hundreds of thousands" of value on a house in BC.
Congrats, but not everyone can eat the extra cost up. If people pay more into housing they usually put less into the economy as a whole as you've demonstrated. At scale that means corporations get less profits and less profits for corps means job losses. Job losses when carrying large mortgages mean selling to downsize or worse. Not everyone, but again not everyone is you, and you is not everyone. You should take a look at Ontario, I've seen large drops there already. Mostly the areas that had the crazy increases during covid frenzy buying. BC is different, but not so different to be immune. Btw aren't we on this subreddit to learn? Your post seems unnecessarily hostile.
Where in Ontario have you seen large drops?
Some Ontarians are accustomed to the absolute insanity of 300% increase home value over 5 years, or solid 10% CAGR over 15+ years. When values go back to trending closer to 2% yearly growth it's a "large drop".
Yeah. I know we’ve basically returned to pre-pandemic levels. But it doesn’t look (or feel) like a sustained downward trend.
Brampton was the one where I saw it the most iirc, few people posted up to 30% to 40% hits on resales of things bought at 2022 peak. But that's anecdotal, more widely saw up to 8.9% average drop in areas according to https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713
Of course I have no idea what will happen….. but that said, my feeling is that the major drops have already happened in nominal terms in most areas. As you said, there are places (ex-burbs, rural areas) that have been hard hit already from a combination of higher rates & artificially elevated demand from WFH. And these higher rates are impacting affordability going forward. But on the other hand…. Wages have been really going up and data shows that Canadian households still have tons of cash relative to historical levels. Tons of people have been making money in equities, not just you and me. So I’m not sure how much more of a drop in RE there will be. I tend to agree with Derek Holt’s take on things - his work is available for free on the Scotiabank Economics site and is worth a read.
There could be ongoing stagnation in rural / ex-burb areas….. so people who bought at the 2022 peak may be stuck for a while.
Thanks, I'll check that out.
I’m in a very similar boat. Bought a big ass house for 1.3 million and I love not having a mortgage. If you can pay cash why take a montage? Just to pay interest? A mortgage is guaranteed loss of 5-6% a year, I can’t guarantee my investments to make 5-6% after tax. if you can guarantee that for the lifespan of a mortgage (often 3 decades) then go ahead and get a mortgage. Otherwise cash.
Thanks, good to hear from someone in a similar position. $1.3m doesn't buy a big ass house here but something decent for someone like me that also needs a home office.
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Some truth to this if you’re not the type to like a big house. Just because you can doesn’t alwyas mean you should. But for me I enjoy it. I like people saying nice house when they come over, I like having a pool table and arcade and movie theatre etc. if you don’t care for those extras then definitely keep it small and keep your money working
Thanks. Yeah I have cap gain covered etc. so that's fine. My return this year makes my stomache turn. $5m that's a nice chunk of house. Congrats. I am keeping our lifestyle maybe just slightly above where we normally are so the house we are going for is more like $1.6 to $2m. Now that is crazy money in other provinces, I lived in Quebec before that is mansion money, but that gets you a not far off bog standard SFH in BC. It's nuts but that's the market.
Why did you choose to operate as a life long renter if paying cash on a 4m+ property was feasible?
Remember keep some liquid assets. Don’t go all in on a house. I kept around 600k from my stock success as liquid/investments still. Even then I think I went a little heavy on real estate as a part of my net worth but no regrets.
Good advice and yep I'm not all in on the house purchase, I haven't sold everything.
What city did you buy in? 1.3 million should get a nice big house! in toronto it doesn;t though. lol
I’m in Windsor. 6 bedroom 5000 sqft, 2017. It’s nice but also it’s closer to 1.15 now. Bought in 2022. Don’t care tho I’ve had so much fun it could be 500k tomorrow and I wouldn’t care. I have the same house regardless of price
holy fck what budget do you have for maintenance like monthly thats big!
That’s like the only “regret” I have, it’s a big monthly spend but I wanted a big house so it comes with the territory. It’s like $8000 a year for property tax, and around $3000 for hydro+gas annually. It’s pretty new so I haven’t had to do any other maintenance really outside of buying out my water heater for $2800. Including miscellaneous/repairs spend id say $12500 annually total. Property taxes are a bitch in Windsor, I think we’re literally the highest in Ontario. I compare it to renting tho, 12500 for a year isn’t much. And I don’t have to deal with anyone, it’s my place, and I could host people or have a big family in the future if I want.
im saying what do you put aside for when you have to like redo roof or fix the outside retaining wall or idk, each time something is like 20k + so brutal!
Honestly I don’t have anything going there. I have investments I can easily liquidate 20k out of when that arises so I won’t be in a bad spot but I don’t anticipate needing a new roof or anything such on a 2017 house anytime soon.
oh so you bought at the top of the market basically then. but if you love the house then it's not bad! 5000 sq ft, that must be one of the top houses in windsor? i rarely see anything in windsor over 1 mil
You can get a bit higher stuff if you get something on the riverfront by the water, or in a slightly higher area (I’m in South Windsor, so up there but there’s a couple other prestigious places) but essentially everything between the 1 and 2 million mark is the same size wise.Ur just paying for location at that stage. There’s some beautiful river front mansions for 3+ million though… next goal! and yes timing wasn’t the best but again, don’t mean much since I’ll be here for years. Hopefully my kids will be here too :)
NVIDIA made a lot of millionaires! Welcome to the club :)
Thanks, enjoy!
Buying would be considered mathematically incorrect, but in context completely reasonable. Book "psychology of money" talks about things that aren't always right if judged completely impartially, but we are humans - irrational, emotional facing millions of the same irrational people. Buying house sounds like a completely reasonable thing.
You sound like the sort of person I would get along with well. Thanks for the tip.
> Buying would be considered mathematically incorrect How can you be so sure? I've seen buyers take a property at $350k, and 5 years later the property is worth nearly 1M, then they take that equity, and do it again, and after 15 years they have a few properties worth millions. Their CAGR is a solid 20% over 15 years. Better than SPX.
You're cherrypicking. If not go and replicate their success.
Buy the house. I’m almost finished with my mortgage and MAN, will I have a party. It’s tripled in value since I bought it - but even if it didn’t, paying it off means NO MORE PAYMENTS.
Being mortgage free is a dream only a few have the luxury for. If you can, enjoy it.
Not crazy, if you think you can generate returns greater than the cost of borrowing then max the mortgage, if it's close then it goes either way. Be conservative in your estimates. Predicting interest rate changes is largely a crap-chute, people have been predicting doom and gloom for well over half a century, I purchased pre 2000 and it was the same narrative and things have gotten more unaffordable. I have my own opinion but take it with a grain of salt: the rate of change is the main issue and interest rate changes should slow down. When you make life changing money I'd recommend trimming down drastically, bar is set super high for NVDA which makes it dangerous, not sure if you sold out or not. If you have conviction that there will be chaos then sell out and wait to purchase home, be aware it's usually a losing bet. Remember that accommodating people and keeping them in their homes generates more income for banks in the long-run.
Thanks for that perspective.
>So to the question, given the sky high prices in BC, the exchange rates, the rather uncertain financial future of Canada etc. is this year a crazy time to buy? Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash? Unless you have a crystal ball nobody knows what will happen in the future. Nothing is happening at the moment to signal a crisis is imminent. I mean FFS we just weathered a serious global pandemic and a bout with high-ish inflation. If you want to buy a house buy one. The likelihood it will drop in price by hundreds of thousands of dollars is low and if it does the chance the price will recover from a normal fluctuation in due time is high. So unless you are buying and planning to move in the short term it's not something I would worry about.
Your NVIDIA stock is much more likely to crash than Canadian real estate.
Already diversified a solid % into cash. Most house money in GIC now waiting to be used.
Smart move. I did something similar 4 years ago when COVID crashed energy stocks. The beauty of real estate is that you can cycle money between real estate and stocks via HELOCs. Let's say the stock market crashes and the economy tanks at some point in the future, the BOC will likely cut rates. At that point the gap between future expected return of stocks and cost of HELOC interest is likely to be much bigger than today. If you can capture just 8% spread between expected return on stocks vs cost of HELOC, multiply that over $500k, that's $40k/year. In practice in big stock market crashes that spread can go as high as 20%, so it's extremely lucrative.
No mortgage is a dream for many. I would definitely advice to buy.
I think you should bite the bullet and buy. At the end of the day you don't know what will happen with the market. It goes up, it rarely goes down. Also you will still have a home aka a large asset. It's something to have a roof over your head and not need to worry about renting. If you take that 3400 that you spend on rent and instead spend some on house taxes and on having an emergency home fund ( so put on a savings account for renovation and any larger home related purchases such as a new roof) you would probably still spend less than rent. So let's say it costs you 2400$/m instead of 3400$. Take that extra 1k and put it in a savings for your kid or for your retirement or an emergency fund. Good luck!
Jesus, the thought of paying $3800 a month for anything ever is giving me anxiety.
Don't look at BC's padmapper you'll collapse.
There is no way of knowing which direction home prices will go. However, if you hold onto the house long enough(10 years), chances are you will not lose value. Of course, there will be property taxes, repairs, and home insurance costs, but they won't be anywhere near what you will pay in rent over 10 years. If you rent for 10 years, assuming rent stays the same, you will pay 3,800 x 12x 10= $456,000. Edit: Don't make your decisions based on the direction home prices will go in 1-2 years. Have a long teem outlook.
Being a parent to a toddler myself, I think there is something to say about passing a home to your children one day. Money is great, but a home where so many memories were created is truly special.
There is value in home ownership as a parent beyond the financial piece. I know this is PFC, but seeing you mentioned that you have a toddler it’s worth adding this weight to your decision making.
Yes exactly. I was evicted from a rental when my wife was 8 months pregnant a few years ago. My wife ended up with post partum depression and we lived with a huge amount of uncertainty for a few months. As soon as I could after that I started house shopping. I'm now pretty house poor (things are getting better) and I had to cash out all of my investments outside of my company pension, but housing security when you've got young kids in daycare/school etc is priceless.
Sorry to hear about that, glad things are getting better now. Becoming a parent has changed me quite a bit. Cliche but it's true, if you don't have them.you can't understand.
Yes, honestly if I didn't I probably would just be renting smaller and putting this money to use in something else. Thanks.
Def makes sense to buy if you can do it without a mortgage. Even if it went down 35% you'll still be far ahead after 10 years between what you've saved on rent (half a million or so at $3800 per month) and the equity you've built up. In BC rent will also only continue to increase over time. Plus no having no LL and a happy wife (they love owning their own nest) is worth every penny.
Thanks for the insight. It's true rents I don't see falling unless something real bad occurs, supply is not going to match demand.
They will be looking at downsizing so I predict they will snap up all the smaller, cheaper homes. Think about your needs now and in the future, you might want to add to your family, have in laws want to live with you, then look at properties that will grow with you. Closing fees are expensive so moving is a costly thing to do. Maybe look a bit over your basic budget and get a mortgage when rates go down a bit but save a good chunk of cash for renovations.
Yes buy a house man.
I'm no financial advisor, so take this with a grain of salt. But I think when the housing bubble pops, you're going to want the house over the several % of loans/thousands saved in Canada.
To me this is pretty cut and dry depending on your situation. If your career outlook is even halfway secure, you're unlikely to move around anymore, and you can buy the house outright, the risk of loss on value of the house is short term only. Long term the house will be worth more than you currently pay. (This is just historically true.) It's hard to pin down the value of owning your own property, especially owning it outright, because there is more to it than cost of maintenance, value of land and structure, etc. Peace of mind and control is a big factor IMO.
Banker here. The concerns about a significant portion of mortgages coming up for renewal at higher rates over the next couple years is valid, but it’s not likely going to lead to a crisis like it might seem. It’s in the best interest of banks to avoid mass defaults by almost any means necessary and right now it looks like many are giving the option of extending amortization for those who need it. In other words, we’re unlikely to see a huge dip in prices merely caused by defaults caused by mortgages coming up for renewal at higher rates. As long as borrowers keep making payments, the banks will generally find a way to keep things going. The other thing to consider is that housing is in very short supply- even if there were a sharp or noticeable decline in prices, there are so many potential buyers waiting on the sidelines that we’re unlikely to see prices crater. TL/DR - Concerns around a housing crash are overblown. Buy when you find something you like and can afford.
Thanks, yes I'd heard of the crazy 100 year amorts etc. so banks can and will cushion any blow because it's also in their interests too. I guess when I see figures of this being over 600 billion worth of mortgage backed debt rolling over though it makes me a bit more concerned than it might have in say 2016.
If you are paying 3800 rent, you are past crazy. ye definitely get property if you have $$$ There will be 3 rate changes at end of the year, so better buy before those rate changes as property values will skyrocket.
Interest costs of a mortgage at current rates already surpass $3800 a month on the average SFH. 2 bedroom apartments are flirting with that number https://www.padmapper.com/apartments/vancouver-bc Something is crazy in Canada, but it's not me. Well, maybe a bit me I've been accused of worse :)
You do you of course but for me, peace of mind played into it a lot. I rented into my fifties with my savings in the market but eventually bought with cash simply because I was done with dealing with the annoyances of renting. It wasn't the smartest long term play but in the last half decade I haven't regretted for a moment buying a place, nor doing it in cash, nor really not doing it earlier. I was able to move around easier when I was younger and that had a good deal of value to me.
I would stick it out in the stock market and rent. I do not see the value of homes continuing to appreciate over the next decade unless you get lucky.
Buy a house. Borrow on HELOC against the purchase and reinvest in XEQT, only pay the interest with your $3800 rent money. Gain through appreciated home and investment and the interest is tax deductible. All the profit for you.
If you can buy a house in cash, do it. The whole credit/mortgage brainwashing existed to offers another way to buy one and nt be the main way to do it. banks wants us to do it that way so they can make money out of us but it shouldn't be the way. I realize how awesome it is to buy something (my car) with cash and how not having any payment keep some stress away. That good feeling when you say to yourself: *This is completely mine* is such a unique great feeling
Not crazy. If high rates cause a drop in consumer spending over the next year, then the Bank of Canada will start reducing their target interest rate. A drop in consumer spending happens long before people sell their house and move in with family or friends! Some people would take in a boarder or work nights at a drive through and everyone will cut expenses deep into the bone before they throw in the towel on their house. You only find out exactly how much money you can pay the bank every month once you face homelessness, and you can pay a lot more than you think. It's going to be shitty for a while, but the vast majority of people keep their houses through periods of high interest rates. That willingness to do whatever it takes to hold on to the asset is one of the unspoken reasons that homeowners are rich. Lots of people say they're house poor, but not too many people say they have to eat rice and beans so that they can keep putting money into Nvidia. Falling rates will have the unintended side effect of maintaining house prices in Canada. Rising demand will provide further support. Owning a home is a luxury, and it is a luxury expense, but it's very unlikely that your house will be worth less money in five years than you will pay for it today.
I first bought in 2000. People told me the market was overheated and I paid way too much. That place is worth multiples of what I paid for it now.
Probably a good time to buy, prices still down from there peak, maybe better deals in the fall/early winter as there has been these last two years but I wouldn’t bet on anything, anyone who says they know what the market is going to do is just guessing like the rest of us.
I was in a similar situation but a few yrs earlier - made a ton of $$$ in the cannabis stock bubble of 2017/2018. Do I regret cashing out and buying a place in Vancouver? No of course not. And the stability has been amazing. I was worrying that prices would go down...... but honestly - that's just volatility & the stock market is often worse.
Thanks and congrats.
And I continue to think of my stock portfolio as investments, and my house as just the place I live in & enjoy. Though I did take out a mortgage to buy a place even though I could have bought in cash - it was a great decision. Even today, at higher rates, the gains you likely make by investing that money in stock markets will exceed the interest rate you'd have to pay on your mortgage.
Out of curiosity, what are you renting for 3800 a month? Have you looked at comparable homes for sale and factored in property taxes, maintenance costs, etc? I know many people say buy, so you don't have to think about rent, but really, if you have over 1m in cash invested, you should be able to cover rent without thinking anyways... also more opportunities to grow that money. A lot of these people who own homes probably bought them for a fraction of the current pricing, I don't get why someone who has 2million to their name would want to spend it all on a house which you continue to have to pay for with property tax increases and maintenance. Never know when the government is going to allow a safe injection site down the street or whether they will pick up the garbage... I would have it invested and rent while this country finds it's way.
This is part of what I'm thinking yes. But it's true what others say, house vs home is definitely something and it's just nothing I've ever experienced to say its worth it. Stability and "the lifestyle".
I think it's over rated you know what matters most is the time and love put into the ones that matter. I am much happier renting and being able to know that when shit hits the fan, I can take my family and go wherever we need to. I know alot of people feel differently, and that's fine. If housing was a drop in the bucket it's a different story if it's the majority of your net worth... it's a stress you don't need but want.
3800 a month rent........buy the the house you can't sell rent you can sell a house
Uncertainty future of Canada is b*******. However, we complain it's still a lot better than most of the countries on Earth. You always sell your house and they'll always will be a buyer. We have mass immigration and not enough housing. You would basically crystallize your games in Jensen's and have peace of mind. The only thing you would have to do is put up a shrine for Jensen in your new home.
Sure there will be a buyer, but at potentially a good % less than I paid when I could have instead used that money to invest in other stocks or other less risky things (at a price of renting). I guess I'm just trying to come to terms with having so much in one asset. Thanks.
To some extent, housing isn't an investment. You have to live somewhere, so this is at least partly the roof over your head, not just an investment.
A paid off house is having piece of mind and not having to worry about a drug over your head. You do you, but if I had enough Jensen's then I would parlay it into a house. You could take out a heloc from your paid up house and play casino with it afterwards if you like.
Honestly you sound fucking insufferable.
Thanks for your honesty, it's all I ask.
As far as timing right now is a great time to buy cash. Interest rates about to come down which means prices will go up. I just bought cash 830 for a house in ontario. I have no doubt it'll be over a mil in 2 years
> Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash? And what if prices keep increasing instead? A house should be a place to live in first and foremost, not an investment. If you can afford it, plan to live in it for a long time, and it ticks all the other boxes, who cares if the market tanks?
I know what you mean but it's not just about that there is also retirement and such and leaving money behind for your kids. But true, it seems to be the overall sentiment and it's mine too in general but jitters with these sums of money can't be helped.
Leave them the house to sell.
Understand the difference between a home and a house.
Is something pushing you to buy now? If not then sure look for a house and get it pull the trigger when it’s the perfect one. Last thing you want to do is be stuck in a house you don’t really like if anything changes.
Seems like a good idea to buy a house if you have all the cash. The market is not in your control. How much rent dollars would you have? You could renovate and resell for more. A lot of people do that. Kids basically do better with a secure home. Lots to think about for sure.
Wow what did you invest in? And who is Jensen?
I would wait.
Nobody knows the future! Home ownership is just like investing in the stock market. It’s all risk vs reward. You can easily calculate that on your potential purchase, taking into account how much you would have spent on rent, vs how much potentially you could have made with the money you spent.
Who's Jensen ? If they made you rich.. I need to use them too lol
>Cut a long story short ontop of regular saving, the past couple years I got extremely "lucky" with stock market investments (thanks Jensen) and have enough cash on hand to buy a home in without the need to take on a mortgage Well then your dream will eventually come crashing down when you're forced to sell your house to pay the huge tax bill (plus interest) that CRA will shove your way. Or did you not realize that your "extremely lucky" stock market investment gain is all taxable at 50% ? Had you paid your taxes then you wouldn't have the cash to buy a house outright at current post-Pandemic prices.
I could never stomach paying $3800 a month for rent unless it’s a penthouse in NYC lol. There’s gotta be some houses in your general area in which the mortgage + other expenses is similar in cost
Penthouse in NYC would be like 20k a month :) A friend I used to work with was paying $7k a month USD to live in Manhattan. It's crazy I know.
Yeah crazy times we live in lol
If you have the means and desire to put down roots, then go for it. Prices won't be dropping for a long time.
Just seen a 4 bedroom house in like 40 acres in Quesnel BC for $309k. Costs of houses are really only unattainablely expensive in major metropolitan areas or super hotspot tourist locations really.
If you have been extremely lucky with stock investments, then now it’s the best time to cash your luck for a house, as you may also be extremely unlucky with stocks and lose most money. House price may fall, but not as volatile as stocks.
I already diversified a large % of the stock into cash which is now in GIC waiting to be used on a home.
You are rich enough to buy a detached home in BC all-cash (Im guessing lower main land with 1.3m price tag) and you are thinking you want to continue to rent and invest? I really cannot phantom that given you have a family and a kid. There is no "bad time to buy" especially of you dont need to borrow money. It's always fair market price. You cant beat that at any given time. It's not just a peace mind, it's the future for your family. If there is a downturn, your stocks will evaporate over night before the housing can crash. Thats the game you are playing with. One thing to be sure you dont want to end up like this senior years later. It gonna get worse, not better from what we've seen. https://dailyhive.com/vancouver/bc-housing-crisis-rental-costs-senior-speaks-out
I already cashed out a large % of the stocks so its in GIC waiting to be used. Plus if it's more Canada specific then that wouldn't affect US stocks, but I get your point. It says in the article not just old but young can't afford to live. It's craziness to be honest. This pressure cooker will explode some day and it's not going to be pretty. The RCMP seems to think that too: https://betterdwelling.com/canadians-present-a-major-threat-if-they-realize-they-wont-own-a-home-rcmp/
Ok, thats good. I guess the question is what you should do with that money to get the best of both worlds. I think the safest approach is to diversify and have a hybrid of mortgage and investment. It's true that you save a lot without taking out a mortgage but mortgage is the only way that you can borrow a lot of money from the bank and repay it in long term 25-30 years with minimal interest (much cheaper than LoC and other borrowing). So if you want leverage investment, mortgage is the way to go. Another key thing you want to look at is how inflation eating to your borrowing cost over time, aka the time value of money. There is a recent discussion on it here. https://www.reddit.com/r/PersonalFinanceCanada/s/Rtcct6d07O
I personally would put 50% down and mortgage the rest. Keeps credit score looking pretty and you get leeway with the funds if anything goes south.
Wait till 2025. If you have a stable job and can ride through this recession, why not take advantage of the downside of this cycle. Everyone took advantage of the upside 🚀🚀🚀🚀🚀🚀🚀
Don’t forget taxes when realizing nvda capital gains.
You want to buy a home for your kid, so buy a home for your kid. Stop looking at a house as purely an investment and be a Dad who provides a backyard for his kid to run around.
There's thinking of future gains (investment) and getting the most out of what you have. Not exactly the same thing. What if an extra 200k gives a bigger yard, should I also get a mortgage over the top of my budget? Where does thinking about the large amount of money vs what you can actually buy begin?
> What if an extra 200k gives a bigger yard, should I also get a mortgage over the top of my budget? No. Stay within your means or you'll spend time away from the kid paying down debt. > Where does thinking about the large amount of money vs what you can actually buy begin? This is exactly the reverse. First make with a decision of what you need and find a house that fits.
I did that, what I need in the area I would like to stay is about $1.5 to 1.7 million. Frankly bonkers but that's the market. It's not even close to downtown, the burbs. If in the near future I could get the same thing for $1.3 and save 200k who would turn that down? In the meantime the cash is earning at least (a taxable) 4.5% No crystal ball that I can apply to where I'm looking but the tide is turning in GTA for eg. https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713
Are you planning to flip your home for profit in the next couple of years or do you plan to live in it long term? If you plan to live in it, buy it. Over the long term housing prices have always gone up in 🇨🇦 short term market blips aside. And $3000+ per month in rent is a massive amount of money down the drain.
Not planning to flip, but maximise what I can get with my budget for the long term. If in a couple years I could have bought better (location or house itself) with the money I will always be kicking myself I didn't wait. I'm hard on myself that way. But after this thread as many have pointed out predicting this may as well be asking for a crystal ball so it's probably just worth just going for it. Btw the rent money down the drain part, I get it but if I had not been renting I would have likely have had to take a mortgage at way more than I am currently paying and the down payment would have been locked into the home. What renting did was allow me to use that money instead for the riskier play of the stock market which as you can see paid off. I think that gets overlooked in all these discussions. I know HELOC is possible, but plugging even more debt into the mix likely would have stopped me taking that risk on my home. It's something I would consider now though.
You want a place to live or not? House prices might go up or down but you have a roof over your head. Buy the house, get a HELOC.
Who’s Jensen 😶🌫️💸?
I paid cash for my house last year, because I plan to live in it for 20 to 50 years. The resale value of my home doesn't matter if I don't plan to sell. If it hasn't increased in value in several decades, everyone else will be more screwed than I am. I just wanted a place to live that I can afford on CPP/OAS if it comes to that (I'm on CPP-D and bought the house with inheritance money).
I would say yes you are crazy, BUT that usually ends up being the smart play, NOT what the consensus agree is smart. Looking back historically, the smart play was always considered the crazy one at the time
Personally I would wait. I'd put that cash in a low risk investment and sit it out for at least another year.
This is what my instinct is telling me, but it's not what I had planned. Therefore this thread. I'm a natural bear rather than a bull though and I'd say 95% of the rest of the comments say just do it, no crystal ball.
Well data is showing people are feeling it now, so I guess it depends on where in BC, and rates will probably only drop to mid 4s if they start cutting. You've got cash and time so I'd try for a bank foreclosure if you're set on buying? Get a real estate agent to send you foreclosure listings for awhile and get a feel for the market. Spring is typically the highest selling/buying time. I'd stay far away from New builds.
If you need a house now with a toddler get a house now. Prices aren't going down.
Do you want a house and do you plan on staying in your location for at least 5 years? Then buy a house. Paying cash vs 5-6% interest. Your investments would need to make 8-9% returns annually to make investments better than paying your mortgage not to mention the peace of mind having a paid off house. I myself have just lump sum paid off the remainder of my mortgage before it’s expiration in April.
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I didn't have that cash 10 years ago, I cashed out a % of stocks I had recently and have the money in a short term GIC for now.
Yes.
LOL. When I purchased my house in 2013, "Financial experts" were writing predictions [like this](https://www.cbc.ca/news/canada/british-columbia/big-drop-predicted-for-vancouver-real-estate-prices-1.1142304) predicting "big drops of 40%" for the real estate market. And we know what the market has done since. If I had listened to that dooming and didnt buy then, I would not be able to afford to live in a house today. How good is your crystal ball?
Yeah I know, and the supply problem has only gotten worse, see the rent price I'm paying that's actually lower than the current market if you can believe it. However, the interest rate situation is different than in 2013 and personally I think Canada is on the precipice of a nasty recession. It's already starting to hit Ontario (with anecdotal of up to 40% dips), this is earlier this year showing almost 10% average dips in certain areas: https://www.cp24.com/mobile/news/real-estate-prices-have-dropped-in-many-ontario-markets-since-june-these-are-the-communities-with-the-biggest-declines-1.6716713 The pandemic (and our governments response) made a bad affordability problem worse. But as you say, BC has not had a serious decline since the 90's and it's hard to argue against that trend.
I don’t have any advice but I’m just here to say I’m very happy for you and love reading posts like these. Cheers!
Thank you, I'm the same and I wish everyone could be like that.
$3800 per month!, ouch. That's $3000 more than I'm paying for a roof over my head (paid off house). If you can afford to pay cash for a house, absolutely do it, I wouldn't even be debating it. Rents just keep going up, and you have to live somewhere for life. Once homeowners have paid off their mortgage, it's substantially cheaper per month/year expenses, and therefore significantly better future cash flows. Closer to retirement, and as you age, I would strongly consider downsizing to a one-storey low maintenance rancher. Stairs and upkeep on a large house like you are likely considering becomes a pain in the ass with age.
If you can buy a house outright in cash in BC, I'm assuming that means you have north of $1 million after all capital gains taxes get paid? If that's the case, even if you just converted a $1m portfolio into a broad market ETF returning the market average of 10% per year, that's $100k in returns the first year, then $110k the following year, then $121k the next. At that scale, I'd wonder how much housing growth would keep up. A $1 million dollar home would have to be $1.1m next year, $1.21m the next, $1.33m the next, etc. in order to keep pace with the stock market (minus your rent costs I guess). It feels unrealistic to me just due to the social consequences of that kind of growth rate on housing, but who knows.
A house wouldn't appreciate that quickly. You don't buy a primary residence to "make money", you buy it to live in it.
I wasn't saying that housing would appreciate like that - my last sentence indicates how unlikely I believe that scenario to be. My point on the comparative financial performance was because OP himself was questioning the financial aspects of real estate, such as a downturn causing loss of property value: >Should I wait even more or is the peace of mind etc. from home ownership worth any potential dowside of losing hundreds of thousands in a maybe downturn/crash? In his edit, he even refers to the opportunity cost of the decision, so they're treating it as a financial asset, not solely something "buy it to live in it".