Is it really so bad to get a condo instead of a townhouse if you have a set budget?

[romanticcode]

Hi Everyone,

Me and my wife are looking to purchase our first house in the Metro Vancouver area. Initially, we looked at certain townhouses in the far suburbs i.e. Abbotsford, Chilliwack because that was what in our budget i.e. wanted 3 bed for around 500-550k. We researched a lot and picked a few and when we finally viewed them, those houses didn't feel rite. Some had weird constructions while some others had very less sunlight. We also entertained the idea of moving to Nanaimo and saw some houses there which we liked but I think we can't live in such a quiet and not much to do city.

We have now started looking into condos in our range or lower. We are also willing to entertain 2 bed condos if it feels right for us. Some of my friends and family are dissuading saying that it won't appreciate as much but we plan to atleast live there for next 5-6 years or more. It just makes sense to us to live in a condo that we really like/love than a compromised townhouse where we will not be happy. Will it really be a bad financial decision?

 

[monstersvsmartyrs]

@romanticcode If you are someone who enjoys living in the city then moving out to the suburbs just to move into a house will make your life miserable.

 

[romanticcode]

@monstersvsmartyrs I live in North Van now and it's fine. We are not too much into city life. We'd rather own a place (condo) which we like than keep paying rents which disappears into a hole. We are fine with Abbotsford/Chilliwack. We just didn't like Nanaimo as being dependent on a ferry to take us to mainland will make us miserable.

 

[lovelycamillia]

@romanticcode All the interest I pay also just disappears into a hole. And it’s way more than the rent I used to pay.

 

[richardy]

@lovelycamillia And people don't do this math. Have to add the interest and other costs to appreciation of the property.

 

[mchef]

@lovelycamillia Lol this is so true!

 

[romanticcode]

@lovelycamillia I know this sub is very pro-renting, but the reality is that your income sources keeps increasing over time not decreasing, so it makes it easier in the long run. You get promotions/salary increase, you get more frugal and save more. I have seen friends who have purchased vs who have not and those who have are in a better financial position (net worth wise).

 

[godswillservices]

@romanticcode If i have to be honest i never agreed with that concept.

It's part of the canadian way of "just borrow the maximum amount possible based on a bunch of events that don't even exist yet".

Literally the first lesson in finance is that no one knows what happen in the future but when you talk about borrowing money than we start to consider all sort of things that literally don't exist yet and if you didn't predict the future correctly you end up homeless.

Why?

People should really stop constantly pressing the accellerator on everything.

Just buy things you can pay, it's not that difficult. In case of a house borrow ONLY money that you are 100% certain you can pay back.

 

[searcher24]

@godswillservices Would have to agree, your income doesn't always go up over time. Especially mid to late career, I have seen folks go through layoffs and land on their feet but they end up taking a hit on their earnings, sometimes a substantial one. While it's probably a pretty safe assumption if you're in you mid-20s that you haven't hit your peak income yet, if you're in your 40s or 50s sometimes you might be at that peak income. And even if you're in your 20s, it's not always a straight line. Leave some wiggle room.

 

[deejayh57]

@lovelycamillia About $1100/month of the $2k I pay each month "disappears into a hole". Taxes, utilities, interest, condo fees (insurance) , gone each month. The ratio would actually be much higher but im making double-up payments which goes straight to principle. Its probably about 17% a month that goes to principle, the rest would "disappear into the void"

I did a recent calculation, buying a $400,000 house, with $80,000 down, at 6% over 30 years would cost about $330,000 in interest.

So that $400k house would cost about $730,000 once interest is factored in.

 

[bermellones123]

@deejayh57 What is this $400k house you speak of?

 

[ninjason57]

@bermellones123 590k 1bedroom+den represent yeee-haaaw

 

[abeck0486]

@deejayh57 Yea, but that house might be 800k in 30 years while enjoying 30 years of ownership. Which is a big life improvement for a lot of people. Also, rates are below 5% at the moment.

 

[torah1st2019]

@lovelycamillia But at the end of the day, you own a house. Renters end up with zip, zilch, nada.

 

[anthony16]

@torah1st2019 You’re right, unless renters mindfully invest the delta regularly into other financial assets. I get most people don’t have the discipline for it, but if you do, home ownership actually leaves you behind in the long run.

Important to point out that this is only for the case where your cost of home ownership (interest, taxes etc) are greater than what you pay for rent.

 

[abeck0486]

@anthony16 Maybe on a piece of paper but you are much farther in quality of life. Nobody will convince me that living at the mercy of a landlord in a 4 1/2 or maybe bigger is fun until retirement.

 

[anthony16]

@abeck0486 That’s subjective. Quality of life sure suffers when you have big maintenance expenses come up out of the blue or when you have to commute 90 minutes to work everyday.

 

[abeck0486]

@anthony16 Very subjective indeed! I wouldn't go back to renting but I also wouldn't do 90 minutes of commute!

 

[anthony16]

@abeck0486

 

[laura_10]

@abeck0486 Well those are the options most people have so consider yourself lucky.