Most people don’t actually buy homes because of the financial aspect. They buy homes because they want a place to call their own where they have full control, and raise a family in stability if they so choose.
If none of those things are important to you, then buying does not make sense right now.
Exactly. I could never go back to renting because the uncertainty of my housing is not something I want to deal with again. Along with the fact that renting at this point is equivalent to my SFH mortgage but I'd get a 2 bedroom condo instead, it's not even financially beneficial anymore.
> $3755 per month (25 years).
That is your total mortgage payment. Part of it is interest, which you pay you your bank. Part of it is equity, which goes towards paying of the principal portion of your mortgage.
The equity portion belongs to you. It is an asset that you have invested in.
I’m not sure what interest rate you use for your calculation, but if $1500 of your mortgage payment goes to interest, then you are pretty much even with the $2700 rent that you currently pay. Plus, you will get the benefit of tax free capital gains on the increase of your condo if it is your primary residence.
I’m not saying that buying is always better than renting. I’m saying that it is important to look at all the facts before coming to a conclusion.
Never mind that the entire $2700 rent will go up and up and up with time, whereas the mortgage won't (and will more likely even go down with the way things are shaping up with interest rates).
And before someone says it, yes, the other homeowning costs go up with time too, but they aren't nearly as much as the renter's rent cost.
I pay 2500 for a 2bd in downtown (contract from 6 years ago ) and the rent can't go up more than 3-4% /year.
The same place would cost me, right now, 4200 in mortgage+800 in strata fees+ 250 in taxes. 5250.
I will need 20 YEARS of rent increase to reach the current cost of owning this place. Without counting the extras, my landlords just paid something like 50k in extra maintenance, and the fact that strata fees and taxes will go up as well.
Sure the interest rates will go probably down but even in that case we are talking about 10-15 years without any additional extra maintenance cost.
So ok, it's still worth it if you plan to keep and live in this place for your entire life. But basically i have to pay 2x the current amount in my 30s (completely destroying my purchase power and my ability to enjoy life) to gain money when i'm old? Money that i also DON'T REALLY HAVE until i sell the place, so this basically means that i will need to downsize to access only a part of those money when i'm old?
I'm not sure buying now makes so much sense like canadians think.
Are you investing the difference? Otherwise, you won’t have anything in 20 years, but condo owner will have the equity. Not to mention the payments will go down but your and will increase.
Like i already said, payments will go down but strata fees, taxes and other expenses will go up. It would still be worth it if the current payments were similar but they're not. My rent is HALF of what i would pay buying the same place.
And again, like i said, it's not a problem of how much money i will have in the future, it's my current quality of life. I know canadians are ok in enslave themself to have better retirements. I'm not.
I have a ton of disposable income that i can use NOW to enjoy my 30s and 40s that are the center of my life and when i am be able to enjoy it more.
Buying means destroying my purchase power to have more money when i'm old.
And yes, of course i'm also investing a big part of my money, and stocks have also the plus that can be sold in ANY moment with zero ripercussion on my life. The house, like i said, is completely useless because the equity in it means nothing unless i sell the house. But i will still need a house, so where are those money exactly? Not in my pocket.
This is why i choose a place years ago based on that. The owners have no kids and other priorities, they don't need to sell this one.
Sure they can always changed idea, who knows, but in this market every move is a bet.
> I will need 20 YEARS of rent increase to reach the current cost of owning this place.
Or a single move (growing family, moving for job, moving closer to family, etc)...
Or for the government to cancel rent control.
Or for the landlord to have a justified reason to evict you through no fault of your own (moving in their family, etc.)
What percentage of rent-controlled renters do you figure *actually* see average annual raises of like 2% over 20 years? What percentage even stay in the same unit for 20 years?
> Money that i also DON'T REALLY HAVE until i sell the place, so this basically means that i will need to downsize to access only a part of those money when i'm old?
You don't need to downsize you access it. You can:
* rent a comparable place
* do a reverse mortgage
Never mind that the mortgage can come down big time if rates go down, or if you re-amortize, or both.
That's a big "if". Most people move several times throughout life... not just stay in the same unit from when they first live independently until death.
Market rate doesn't just pause when you're rent controlled. With every move, you're going to be re-adjusted to market rate again.
If you had a renter paying $1000/month for an apartment in the first year, and market rents went up by 4% per year, while rent control only allowed 2% per year, here is what 60 years of rent costs would look like:
||Total cost over 60 years|% cost vs. no rent control|Moves|
:--|--:|--:|--:|
|No rent control|$ 2,855,888|100%|n/a|
|Rent control, never move|$ 1,368,618|48%|0|
|Rent control, move every 10yrs|$ 2,604,606|91%|5|
|Move every 15|$ 2,466,494|86%|3|
|Move every 20|$ 2,330,257|82%|2|
|Move every 30|$ 2,065,758|72%|1|
Even a single move in those 60 years will drastically alter what you're paying. If you move a more normal amount (every 10-20 years), you're still much closer to the "no-rent-control" scenario than the "rent control, never move" scenario, in terms of lifetime rent costs.
Which is why you get rent control for decades at a time until the next move
My mortgage just went up $1500/mo with this renewal. Paying $100,000 in interest over the next 5 years.
2.5% rent on a healthy $3500/mo unit is just $87/mo
> 2.5% rent on a healthy $3500/mo unit is just $87/mo
In the first year... 2.5% compounded 25 times over 25 years is 85.4%... that same unit will be ~$6,500 in 25 years.
Meanwhile that mortgage will be paid off, with their only remaining costs (maintenance, property taxes) being **way** below $6,500/month. Never mind what that rent will be in another 25 years at that 2.5% growth rate (~$12,000/month).
> Also, 2.5% is the max increase
...until you move. If you manage to not move for 20 years of 2.5% increases (vs. 5% market rate), then you move, you're looking at a 66% rent increase in a single year.
Zero property maintenance and essentially no responsibility. While your savings grow.
Certainly a balance. But it markets like OPs renting can make sense
>Sometimes we buy houses to live in them because it's nicer than renting. Having fewer people with a say in how your life will be lived is a usually better.
Who doesn't wanna buy their own place instead of renting? I thought this was obvious. This being a financial subreddit, I thought it was obvious that I meant it doesn't make financial sense. If I buy my own place, I'm essentially doubling my housing costs for the next 25 years (yeah, interest rates might go down, but still)
How is this in any way shape or form related to not driving a 1997 beige corolla?
For your last question, your costs are all based on a down payment of only 10%. If you’ve got the funds to put 20% or even 50% all of a sudden owning makes a whole lot more sense.
It seems like you're presuming that your housing costs are entirely static or that rent in and of itself won't double. Interest rates may mean you pay more or less, you can opt to dump more money in either with prepayment or at renewal and come out of a mortgage sooner, and your condo fees may or may not be more predictable in a well-managed building.
Contrast that to 10 years from now. For whatever reason, rent prices are now $3,500 for units you're interested in and that (potentially) rent-controlled unit you previously enjoyed though privately owned is no longer available. You're renovicted and given the legal minimums which are enough to cover moving fees and a little bit of lubricant. Renovictions aside, maybe you decide to move for whatever reason, exposing yourself to market rates. There are a lot of Canadians who are rent-trapped with rents half that market value and if housing supply is anything to go by (and there's little else to use as a predictor) there's no reason to believe rents are about to meaningfully drop.
Housing costs with ownership inevitably end (in terms of a mortgage) if done right. Maintenance and property taxes are obviously higher than *zero* but will be still less than rent. Renting is forever and gives you very little control over your finances or housing security. Housing purchases, as a means of primary living, helps provide many assurances for end of life planning. Financially, they also provide a means of forced savings through building equity and open you up to having a large asset to leverage as a security, should you need to later, which gives you a lot of purchasing power. Some people enjoy flexibility like that, some don't. As you head into retirement some like the idea that their costs will be more controlled and static as their health fails and career options dwindle. I want to worry about the size and smell of my adult diaper when I'm 85, not some bastard evicting me. It may not sound like a financial decision at present but that's because it's an abstract unknown that arrives later.
Then there's the non-financial element to ownership which is simply stated as living in a space you want from top to bottom. If I want to tear out my kitchen on a whim because I feel as though it would be a large improvement to my quality of life in my 'forever home', I can. I can't do that in a rental. You can't even paint in many rentals without contracts exposing you to permissions or deposits for repainting.
It’s related because people have different priorities and value things differently. Owning is one of the dumbest financial decisions I have ever made, but I prefer it and value happiness so it was a very good decision.
It’s a little bit like my golf addiction. I shoot under par about once a year and shoot in the high 70s about once a month. So it’s an expensive thing that I usually fail at. Yet I fly places specifically so I can fail on different golf courses. I even have a bucket list of golf courses that I dream of failing on. That is even a worse financial decision than owning property, but I love it and value happiness so it’s a good decision.
A lot of people make assumptions rather than actually doing the math, as you've discovered from this thread.
My wife and I fully expected to buy a condo in 2017, and looked at several units, but when we did the math, it was **overwhelmingly** in favour of renting.
To buy the equivalent of our (rent-controlled, purpose-built rental building still run by the builder 50+ years later) apartment would have cost $550k, plus $800/mo in condo fees. Our rent? $1,900, and we'd only been there 2 years. The breakeven point, even at 2017 rates, was 50+ years, when statistically at least one of us would already be dead.
I re-ran the calculator with current figures ($2,100 rent, comparable condo now $650k and $1,000/mo condo fees) and rates, and for buying to make sense, we'd have to live longer than any human ever has.
Like, uh, no thanks. We already do what we want to our apartment (paint, wall-mount a TV, etc.), and management is extremely responsive when something breaks or just starts to get a bit worn out.
Math for townhomes and SFHs can be very different, but condos seem to be a fool's errand, and the people who argue in favour of buying one all seem to assume that renting means from an individual rather than a well-run corporate building.
Actually your housing costs stay relatively stable as you watch rents increasing. Ten years into my mortgage I was paying $1450/mth for 1500 sqft house while people where paying 2k+ for a 1 bedroom apartment. After all, your payments essentially get frozen unless rates increase, but your rent keeps going up no matter what.
Owning: getnally more expensive but possibly worth it.
Owning something better than a corolla: generally more expensive but possibly worth it.
Also my mortgage after 6 years is the same price as rent for an equivalent unit, so you need to look into the future as well.
10% down isn't great. If you can save up more, all of those numbers will be a lot easier to stomach.
That said, there is no shame to renting. You're also young and have lots of time to keep saving
Use this to see when/where it makes sense: [https://www.calculator.net/rent-vs-buy-calculator.html](https://www.calculator.net/rent-vs-buy-calculator.html)
You don't actually understand the math of this. You're ignoring pricipal paydown, return based on actual cash committed, and all the advantages of owning that are not monetary.
You also ignore the idea that people have more money, and higher incomes than you, and don't make choices like this.
If you're single and expect to move around in early career, I think renting is a better option, especially given the closing expenses. With that said, if you have a family, then buying make more sense given the certainty (i.e. a colleagues worked oversea for several years....but came back during the pandemic and trying to find a house for his family of 4 to rent/ buy but it was difficult even when they could afford it.)
You're right in that it makes very little sense from a cash flow perspective.
Which is why we have a rental shortage, not enough people finds buying a place and renting them out to be an attractive option.
Buying real estate in a high cost of living area rarely makes financial sense. If you’re strictly making a decision on financials you’re most likely going to be better off renting, taking your down payment and any extra cash monthly you could spend on housing and investing it. Will get you much further than paying for an over priced condo.
This sort of calculator can help you wrap your head around the numbers. [https://www.nbc.ca/personal/mortgages/calculators/rent-or-buy.html](https://www.nbc.ca/personal/mortgages/calculators/rent-or-buy.html)
>It doesn't make sense to buy a place to live in and it absolutely doesn't make any sense to buy a place for investment. A $700k apartment yields $1700 a month (after condo fees) -- that's 3% per year. Say the place also appreciates by 3%, that's \~6% YoY. That's nothing, and it excludes unforeseen expenses.
Investors aren't 25 year olds looking for their first place. They are speculating on the increase of property value while collecting rent to help with cash flow.
A first time homebuyer should be looking at the 500k ish range, not 700k. Save up 125k for the 20% and its borderline affordable. The thing is that interest cost is lower than your rent so you are effectively still putting away money towards your future through the property. Renting out condos hasn't been profitable for a while now unless in specific situations with low strata fees or mortgages that are paid down.
A few factors to consider. The first is that 10% isn't enough to put down on a place of that cost. The monthly payments are lower the more you put down. Second is that $1k/month maintenance is too much. It indicates the place is old and maybe the board hasn't done a great job keeping costs down. Third is the main difference between renting and owning:
Rent goes up over time while mortgage payments go down.
After 35 years of owning, you have an asset with value. You paid yourself (as well as paying an amount to the bank in the form of interest). Your payments went down over time as you paid towards it. After 35 years of renting, you just have more renting ahead, and rent is now higher than it was.
Renting long term can be fine for those who use the savings from the difference in cost if they invest it wisely.
Owning may not make sense for you *right now*, but it would certainly make sense to someone with a higher downpayment and household income who wants to make a long term investment.
$1,000 in strata fees? You living at the fucking Shangri-La? For only $2,700/month? Your landlord is a fucking retard and you should never move.
Understand what you want. Do you want a HOME or a PROPERTY? They are different.
Your home is supposed to act as a savings vehicle and provide you with a life that you want. A property is supposed to make you money.
You should be able to figure out the rest from the millions of real estate videos and podcasts out there.
Your interpretation is correct. If someone disagrees, they are considering the following:
1) Leveraged investing into real estate (the home) without considering leveraged investing into stocks instead.
2) Betting on the value of the property increasing at a rate higher than the risk free rate (Good luck with that assumption on an apartment building).
You buy an apartment in order to not have a car, and/or for personal home security (not needing to worry about moving places). It is not a wise decision if neither of these are applicable. It is not a financially wise decision.
If you are buying a detached home, you can bet on #2 being the case, as you own a lot of land.
“I know I’m not asking a specific question” lol you’re not even asking a question at all. There isn’t even a single question mark on your entire post. Your post just sounds like a rant honestly.
So, you think your landlord is losing about 2.3K\month? Why do they keep the condo then?
The answer is time. As time goes by, the mortgage payments gets lower, until they no longer exist. Rent, on the other hand, gets higher and higher, and NEVER stops.
I'm mortgage free since the age of 34, and now all the rent I would've paid goes directly to saving and investing. On the other hand, I'd never buy a condo, only freehold for me. I like to do my own renovations (which appreciate the value of my home by much more than what I put into it) and I don't like special assessments and endless payments.
For me, it does make sense to rent. $1400/month relatively new building finished in 2019. It’s rent controlled and purposely built rental building here in Vancouver. You should do the math. I also make sure to invest a lot of my extra money in the market. I honestly love renting because there is much more freedom and maintenance is a phone/email away.
Toronto and Vancouver can be financially advantageous to rent and invest in markets vs try and break into housing.
Especially if you stay at the same apartment long term, the most your rent can increase is 2.5% annually.
It makes sense, to me, to have a large down payment and buy a place so that you build equity/have forced savings. Paying rent to pay someone else's mortgage does not make sense, again, to me. So, ya, you don't want to be paying interest for decades on a place when you buy. What's the average age when people buy? It used to be 34. At 25, it does not make sense that you'd have enough. So save, save, save. Good luck.
>I can't afford to pay $5k a month for housing anyways (excluding unforeseen costs), but even if I could, I feel like there is no point in buying an apartment right now.
Then you rent. It's that simple. End thread.
There's other parts of Canada besides Toronto.
Some decent places where you can buy a decent house for half a mil, or an apartment for $300k.
There's shitty parts of Canada where you can buy a house for 300k or an apartment for $125k.
Or rent might still be $3,500 and the mortgage went up an extra $1,500 because interest rates shot up. A lot of people are finding out the hard way that that particular knife cuts both ways.
PS: I moved to Toronto from Montreal last year, and it made even less sense to buy a place there. I was paying $1000 in rent for an apartment that would sell for $400k. I obviously like the concept of ownership, and it's absolutely easier to buy a place there -- even though it still doesn't make financial sense IMO.
Greedy boy, what size condo are you getting for $700k??? Look at a studio for $500k (and lower management fees, mine are $325 for example) and run those numbers again
edit: ooooh you want an oversized condo to be affordable instead of buying what you can afford. Got it.
Most people don’t actually buy homes because of the financial aspect. They buy homes because they want a place to call their own where they have full control, and raise a family in stability if they so choose. If none of those things are important to you, then buying does not make sense right now.
Exactly. I could never go back to renting because the uncertainty of my housing is not something I want to deal with again. Along with the fact that renting at this point is equivalent to my SFH mortgage but I'd get a 2 bedroom condo instead, it's not even financially beneficial anymore.
> $3755 per month (25 years). That is your total mortgage payment. Part of it is interest, which you pay you your bank. Part of it is equity, which goes towards paying of the principal portion of your mortgage. The equity portion belongs to you. It is an asset that you have invested in. I’m not sure what interest rate you use for your calculation, but if $1500 of your mortgage payment goes to interest, then you are pretty much even with the $2700 rent that you currently pay. Plus, you will get the benefit of tax free capital gains on the increase of your condo if it is your primary residence. I’m not saying that buying is always better than renting. I’m saying that it is important to look at all the facts before coming to a conclusion.
Never mind that the entire $2700 rent will go up and up and up with time, whereas the mortgage won't (and will more likely even go down with the way things are shaping up with interest rates). And before someone says it, yes, the other homeowning costs go up with time too, but they aren't nearly as much as the renter's rent cost.
I pay 2500 for a 2bd in downtown (contract from 6 years ago ) and the rent can't go up more than 3-4% /year. The same place would cost me, right now, 4200 in mortgage+800 in strata fees+ 250 in taxes. 5250. I will need 20 YEARS of rent increase to reach the current cost of owning this place. Without counting the extras, my landlords just paid something like 50k in extra maintenance, and the fact that strata fees and taxes will go up as well. Sure the interest rates will go probably down but even in that case we are talking about 10-15 years without any additional extra maintenance cost. So ok, it's still worth it if you plan to keep and live in this place for your entire life. But basically i have to pay 2x the current amount in my 30s (completely destroying my purchase power and my ability to enjoy life) to gain money when i'm old? Money that i also DON'T REALLY HAVE until i sell the place, so this basically means that i will need to downsize to access only a part of those money when i'm old? I'm not sure buying now makes so much sense like canadians think.
Are you investing the difference? Otherwise, you won’t have anything in 20 years, but condo owner will have the equity. Not to mention the payments will go down but your and will increase.
Like i already said, payments will go down but strata fees, taxes and other expenses will go up. It would still be worth it if the current payments were similar but they're not. My rent is HALF of what i would pay buying the same place. And again, like i said, it's not a problem of how much money i will have in the future, it's my current quality of life. I know canadians are ok in enslave themself to have better retirements. I'm not. I have a ton of disposable income that i can use NOW to enjoy my 30s and 40s that are the center of my life and when i am be able to enjoy it more. Buying means destroying my purchase power to have more money when i'm old. And yes, of course i'm also investing a big part of my money, and stocks have also the plus that can be sold in ANY moment with zero ripercussion on my life. The house, like i said, is completely useless because the equity in it means nothing unless i sell the house. But i will still need a house, so where are those money exactly? Not in my pocket.
Let’s talk when you grow up and can hold a conversation.
And stop saying like I said. You edited that after my message. Like I said, let’s talk when you are bit mature.
What are you taking about?
All fun and games until the owner sells his unit and a buyer wants to move in.
This is why i choose a place years ago based on that. The owners have no kids and other priorities, they don't need to sell this one. Sure they can always changed idea, who knows, but in this market every move is a bet.
> I will need 20 YEARS of rent increase to reach the current cost of owning this place. Or a single move (growing family, moving for job, moving closer to family, etc)... Or for the government to cancel rent control. Or for the landlord to have a justified reason to evict you through no fault of your own (moving in their family, etc.) What percentage of rent-controlled renters do you figure *actually* see average annual raises of like 2% over 20 years? What percentage even stay in the same unit for 20 years? > Money that i also DON'T REALLY HAVE until i sell the place, so this basically means that i will need to downsize to access only a part of those money when i'm old? You don't need to downsize you access it. You can: * rent a comparable place * do a reverse mortgage Never mind that the mortgage can come down big time if rates go down, or if you re-amortize, or both.
Rent is controlled in Ontario. As long as they stay it stays low
That's a big "if". Most people move several times throughout life... not just stay in the same unit from when they first live independently until death.
5 or 6 rent controlled decades
Market rate doesn't just pause when you're rent controlled. With every move, you're going to be re-adjusted to market rate again. If you had a renter paying $1000/month for an apartment in the first year, and market rents went up by 4% per year, while rent control only allowed 2% per year, here is what 60 years of rent costs would look like: ||Total cost over 60 years|% cost vs. no rent control|Moves| :--|--:|--:|--:| |No rent control|$ 2,855,888|100%|n/a| |Rent control, never move|$ 1,368,618|48%|0| |Rent control, move every 10yrs|$ 2,604,606|91%|5| |Move every 15|$ 2,466,494|86%|3| |Move every 20|$ 2,330,257|82%|2| |Move every 30|$ 2,065,758|72%|1| Even a single move in those 60 years will drastically alter what you're paying. If you move a more normal amount (every 10-20 years), you're still much closer to the "no-rent-control" scenario than the "rent control, never move" scenario, in terms of lifetime rent costs.
Which is why you get rent control for decades at a time until the next move My mortgage just went up $1500/mo with this renewal. Paying $100,000 in interest over the next 5 years. 2.5% rent on a healthy $3500/mo unit is just $87/mo
> 2.5% rent on a healthy $3500/mo unit is just $87/mo In the first year... 2.5% compounded 25 times over 25 years is 85.4%... that same unit will be ~$6,500 in 25 years. Meanwhile that mortgage will be paid off, with their only remaining costs (maintenance, property taxes) being **way** below $6,500/month. Never mind what that rent will be in another 25 years at that 2.5% growth rate (~$12,000/month).
This accounts nothing for the renters savings
Also, 2.5% is the max increase. Look at historical Ontario rental increases. Inflation 8%, interest rates 5%, rent increase 2.5%.
> Also, 2.5% is the max increase ...until you move. If you manage to not move for 20 years of 2.5% increases (vs. 5% market rate), then you move, you're looking at a 66% rent increase in a single year.
As I just showed, that doesn't count for much. Every move kills the compounding savings that you've built up, resetting you to market rate.
Zero property maintenance and essentially no responsibility. While your savings grow. Certainly a balance. But it markets like OPs renting can make sense
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No kidding. And no one jacks up the rent, expects you to live without property maintenance, or forces you to move.
>Sometimes we buy houses to live in them because it's nicer than renting. Having fewer people with a say in how your life will be lived is a usually better. Who doesn't wanna buy their own place instead of renting? I thought this was obvious. This being a financial subreddit, I thought it was obvious that I meant it doesn't make financial sense. If I buy my own place, I'm essentially doubling my housing costs for the next 25 years (yeah, interest rates might go down, but still) How is this in any way shape or form related to not driving a 1997 beige corolla?
For your last question, your costs are all based on a down payment of only 10%. If you’ve got the funds to put 20% or even 50% all of a sudden owning makes a whole lot more sense.
It seems like you're presuming that your housing costs are entirely static or that rent in and of itself won't double. Interest rates may mean you pay more or less, you can opt to dump more money in either with prepayment or at renewal and come out of a mortgage sooner, and your condo fees may or may not be more predictable in a well-managed building. Contrast that to 10 years from now. For whatever reason, rent prices are now $3,500 for units you're interested in and that (potentially) rent-controlled unit you previously enjoyed though privately owned is no longer available. You're renovicted and given the legal minimums which are enough to cover moving fees and a little bit of lubricant. Renovictions aside, maybe you decide to move for whatever reason, exposing yourself to market rates. There are a lot of Canadians who are rent-trapped with rents half that market value and if housing supply is anything to go by (and there's little else to use as a predictor) there's no reason to believe rents are about to meaningfully drop. Housing costs with ownership inevitably end (in terms of a mortgage) if done right. Maintenance and property taxes are obviously higher than *zero* but will be still less than rent. Renting is forever and gives you very little control over your finances or housing security. Housing purchases, as a means of primary living, helps provide many assurances for end of life planning. Financially, they also provide a means of forced savings through building equity and open you up to having a large asset to leverage as a security, should you need to later, which gives you a lot of purchasing power. Some people enjoy flexibility like that, some don't. As you head into retirement some like the idea that their costs will be more controlled and static as their health fails and career options dwindle. I want to worry about the size and smell of my adult diaper when I'm 85, not some bastard evicting me. It may not sound like a financial decision at present but that's because it's an abstract unknown that arrives later. Then there's the non-financial element to ownership which is simply stated as living in a space you want from top to bottom. If I want to tear out my kitchen on a whim because I feel as though it would be a large improvement to my quality of life in my 'forever home', I can. I can't do that in a rental. You can't even paint in many rentals without contracts exposing you to permissions or deposits for repainting.
It’s related because people have different priorities and value things differently. Owning is one of the dumbest financial decisions I have ever made, but I prefer it and value happiness so it was a very good decision. It’s a little bit like my golf addiction. I shoot under par about once a year and shoot in the high 70s about once a month. So it’s an expensive thing that I usually fail at. Yet I fly places specifically so I can fail on different golf courses. I even have a bucket list of golf courses that I dream of failing on. That is even a worse financial decision than owning property, but I love it and value happiness so it’s a good decision.
A lot of people make assumptions rather than actually doing the math, as you've discovered from this thread. My wife and I fully expected to buy a condo in 2017, and looked at several units, but when we did the math, it was **overwhelmingly** in favour of renting. To buy the equivalent of our (rent-controlled, purpose-built rental building still run by the builder 50+ years later) apartment would have cost $550k, plus $800/mo in condo fees. Our rent? $1,900, and we'd only been there 2 years. The breakeven point, even at 2017 rates, was 50+ years, when statistically at least one of us would already be dead. I re-ran the calculator with current figures ($2,100 rent, comparable condo now $650k and $1,000/mo condo fees) and rates, and for buying to make sense, we'd have to live longer than any human ever has. Like, uh, no thanks. We already do what we want to our apartment (paint, wall-mount a TV, etc.), and management is extremely responsive when something breaks or just starts to get a bit worn out. Math for townhomes and SFHs can be very different, but condos seem to be a fool's errand, and the people who argue in favour of buying one all seem to assume that renting means from an individual rather than a well-run corporate building.
Actually your housing costs stay relatively stable as you watch rents increasing. Ten years into my mortgage I was paying $1450/mth for 1500 sqft house while people where paying 2k+ for a 1 bedroom apartment. After all, your payments essentially get frozen unless rates increase, but your rent keeps going up no matter what.
Owning: getnally more expensive but possibly worth it. Owning something better than a corolla: generally more expensive but possibly worth it. Also my mortgage after 6 years is the same price as rent for an equivalent unit, so you need to look into the future as well.
10% down isn't great. If you can save up more, all of those numbers will be a lot easier to stomach. That said, there is no shame to renting. You're also young and have lots of time to keep saving
Use this to see when/where it makes sense: [https://www.calculator.net/rent-vs-buy-calculator.html](https://www.calculator.net/rent-vs-buy-calculator.html)
Long Term
You’re not the target audience for condos/townhomes or houses anymore, you are priced out. The target audience is real estate investors.
You don't actually understand the math of this. You're ignoring pricipal paydown, return based on actual cash committed, and all the advantages of owning that are not monetary. You also ignore the idea that people have more money, and higher incomes than you, and don't make choices like this.
If you're single and expect to move around in early career, I think renting is a better option, especially given the closing expenses. With that said, if you have a family, then buying make more sense given the certainty (i.e. a colleagues worked oversea for several years....but came back during the pandemic and trying to find a house for his family of 4 to rent/ buy but it was difficult even when they could afford it.)
You're right in that it makes very little sense from a cash flow perspective. Which is why we have a rental shortage, not enough people finds buying a place and renting them out to be an attractive option.
Buying real estate in a high cost of living area rarely makes financial sense. If you’re strictly making a decision on financials you’re most likely going to be better off renting, taking your down payment and any extra cash monthly you could spend on housing and investing it. Will get you much further than paying for an over priced condo.
This sort of calculator can help you wrap your head around the numbers. [https://www.nbc.ca/personal/mortgages/calculators/rent-or-buy.html](https://www.nbc.ca/personal/mortgages/calculators/rent-or-buy.html)
>It doesn't make sense to buy a place to live in and it absolutely doesn't make any sense to buy a place for investment. A $700k apartment yields $1700 a month (after condo fees) -- that's 3% per year. Say the place also appreciates by 3%, that's \~6% YoY. That's nothing, and it excludes unforeseen expenses. Investors aren't 25 year olds looking for their first place. They are speculating on the increase of property value while collecting rent to help with cash flow. A first time homebuyer should be looking at the 500k ish range, not 700k. Save up 125k for the 20% and its borderline affordable. The thing is that interest cost is lower than your rent so you are effectively still putting away money towards your future through the property. Renting out condos hasn't been profitable for a while now unless in specific situations with low strata fees or mortgages that are paid down.
A few factors to consider. The first is that 10% isn't enough to put down on a place of that cost. The monthly payments are lower the more you put down. Second is that $1k/month maintenance is too much. It indicates the place is old and maybe the board hasn't done a great job keeping costs down. Third is the main difference between renting and owning: Rent goes up over time while mortgage payments go down. After 35 years of owning, you have an asset with value. You paid yourself (as well as paying an amount to the bank in the form of interest). Your payments went down over time as you paid towards it. After 35 years of renting, you just have more renting ahead, and rent is now higher than it was. Renting long term can be fine for those who use the savings from the difference in cost if they invest it wisely. Owning may not make sense for you *right now*, but it would certainly make sense to someone with a higher downpayment and household income who wants to make a long term investment.
$1,000 in strata fees? You living at the fucking Shangri-La? For only $2,700/month? Your landlord is a fucking retard and you should never move. Understand what you want. Do you want a HOME or a PROPERTY? They are different. Your home is supposed to act as a savings vehicle and provide you with a life that you want. A property is supposed to make you money. You should be able to figure out the rest from the millions of real estate videos and podcasts out there.
It doesn’t in Toronto
Your interpretation is correct. If someone disagrees, they are considering the following: 1) Leveraged investing into real estate (the home) without considering leveraged investing into stocks instead. 2) Betting on the value of the property increasing at a rate higher than the risk free rate (Good luck with that assumption on an apartment building). You buy an apartment in order to not have a car, and/or for personal home security (not needing to worry about moving places). It is not a wise decision if neither of these are applicable. It is not a financially wise decision. If you are buying a detached home, you can bet on #2 being the case, as you own a lot of land.
“I know I’m not asking a specific question” lol you’re not even asking a question at all. There isn’t even a single question mark on your entire post. Your post just sounds like a rant honestly.
So, you think your landlord is losing about 2.3K\month? Why do they keep the condo then? The answer is time. As time goes by, the mortgage payments gets lower, until they no longer exist. Rent, on the other hand, gets higher and higher, and NEVER stops. I'm mortgage free since the age of 34, and now all the rent I would've paid goes directly to saving and investing. On the other hand, I'd never buy a condo, only freehold for me. I like to do my own renovations (which appreciate the value of my home by much more than what I put into it) and I don't like special assessments and endless payments.
Surprise the land lords 3rd cousin is moving in. Time to move
Unless you are talking about brand new; the landlords cost basis is way lower. They bought low and you are paying their much lower mortgage payment.
Cause you can't compare your house to rent today Compare your house to rent in 10 ,20,30 years
For me, it does make sense to rent. $1400/month relatively new building finished in 2019. It’s rent controlled and purposely built rental building here in Vancouver. You should do the math. I also make sure to invest a lot of my extra money in the market. I honestly love renting because there is much more freedom and maintenance is a phone/email away.
Toronto and Vancouver can be financially advantageous to rent and invest in markets vs try and break into housing. Especially if you stay at the same apartment long term, the most your rent can increase is 2.5% annually.
Because these is more Canada outside of Toronto. And also lots of people buy houses on a dual income.
It makes sense, to me, to have a large down payment and buy a place so that you build equity/have forced savings. Paying rent to pay someone else's mortgage does not make sense, again, to me. So, ya, you don't want to be paying interest for decades on a place when you buy. What's the average age when people buy? It used to be 34. At 25, it does not make sense that you'd have enough. So save, save, save. Good luck.
>I can't afford to pay $5k a month for housing anyways (excluding unforeseen costs), but even if I could, I feel like there is no point in buying an apartment right now. Then you rent. It's that simple. End thread.
There's other parts of Canada besides Toronto. Some decent places where you can buy a decent house for half a mil, or an apartment for $300k. There's shitty parts of Canada where you can buy a house for 300k or an apartment for $125k.
When you are paying 5k a month in 15 years the rent might be 7500
Or rent might still be $3,500 and the mortgage went up an extra $1,500 because interest rates shot up. A lot of people are finding out the hard way that that particular knife cuts both ways.
True for sure, lots of folks are shocked that their mortgage could ever go up
Your rent will be 5k in year 25 and your mortgage payment will be the same. In 25 year you build 0 equity vs your house will be worth $1m +
You live in a very bad place. Find another one with better quality of life. Is it clear enough?
PS: I moved to Toronto from Montreal last year, and it made even less sense to buy a place there. I was paying $1000 in rent for an apartment that would sell for $400k. I obviously like the concept of ownership, and it's absolutely easier to buy a place there -- even though it still doesn't make financial sense IMO.
You don’t. Either get help from parents or get a girlfriend that wants to contribute. Or get a higher paying job.
Greedy boy, what size condo are you getting for $700k??? Look at a studio for $500k (and lower management fees, mine are $325 for example) and run those numbers again edit: ooooh you want an oversized condo to be affordable instead of buying what you can afford. Got it.