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

[rrf07170]

@juliia You are literally giving your money away to a landlord instead of investing that money in a home. After I sell my house I will get all my money back and more.. and will have lived in my house for 20 years for free!

 

[akimbastark]

@rrf07170 You can do the same if you throw your funds into the market instead while renting. You just happened to buy during a time of low property prices compared to rent and historically uncharacteristic real estate gains

Those days are gone and the math is now much closer for the average person.

 

[rrf07170]

@akimbastark That's an idiotic suggestion!

Gambling your money away in the stock market instead of investing in a house?

 

[akimbastark]

@rrf07170 Buying a house on leveraged debt is somehow a safer bet? The math suggests otherwise right now for many.

 

[rrf07170]

@akimbastark It's a MUCH safer bet!

The housing market will not crash!

There might be slight corrections but there's really no signs of the housing bubble crashing anytime soon.

 

[akimbastark]

@rrf07170 Neither does the stock market. It returns over 10% annually if you average over the last 50 years.

Genuinely concerned this is the quality of intelligence we have in our public service.

If you’re trying to 5x leverage into housing today, you’re absolutely taking on outsized risk if your income drops, not to mention the limited returns available from that risk.

 

[hiskid8883]

@xmountainx The First Principles on the numbers you are “running” are completely wrong.

Rent and mortgage interest are what you should compare. Not mortgage interest and zero.

 

[pomegran]

@hiskid8883 We looked at buying a house seriously for the first time yesterday. Single family Homes in our area are around 650,000 for a handy man special to 1.2 mil for a regular run of the mill home. I saw the payments to borrow over the five year term were approx 200,000 with 50,000 going to the principle. Thats 150,000 in interest in th first 5 years. Unless we were paying 2,500 for rent per month (we don't) it wouldnt be worth it. Investing is investing. Betting on house prices or the stock market are both gambles. Like is this right? I want a home, but I don't want it to drag me down financially.

 

[hiskid8883]

@pomegran You’re on the right track, but remember with a mortgage, the amount going to interest decreases every payment, so your “rent” goes down every month, and you’re moving a bit more from one pocket to another. Real rent goes up and up and up.

And it’s portable savings, ignoring transaction fees (which are HUGE, and can’t really be ignored). Your equity position moves with you from home to home.

 

[authormargaretrosefrancis]

@xmountainx You only really come out ahead in renting if you're in a rent controlled apartment with a nice landlord who will never renovict you. My mortgage is about $1400 a month, but similar homes in my area are now renting for about $2400 a month, and climbing.

 

[dualsportvet]

@authormargaretrosefrancis Deciding not to buy now is not the same as deciding not to buy forever, though. If the math doesn't make sense today, there is no sense going and buying a place so that hopefully it makes sense in 10 years.

 

[juliia]

@authormargaretrosefrancis Rent-controlled, or just a very low-rent area like Saskatoon or Edmonton that has zero rent control.

 

[pekasig345]

@juliia Rental prices increased in Alberta by 17% in the last year. We are currently being fucked for not having any form of rent control

 

[romanticcode]

@authormargaretrosefrancis Exactly this. I moved 2 times in 2 years because greedy landlords wanted to get us out and then maybe get new tenants at higher prices. . We are tired of this.

 

[solienminh01]

@authormargaretrosefrancis No rent increase cap where I am and or landlady just bumped rent from 2400 to 3600... Was cheaper for us to buy our own place.

 

[k_ann]

@authormargaretrosefrancis Amen. Finally someone who makes sense

 

[gcjohnstone]

@xmountainx You're correct on that sense in regards to home ownership that has a cost, but there a tremendous benefits towards home ownership. For one your costs are hedged, meaning you basically lock in your "rent" for the next 25 years. For instance i bought a precon in 2020 closing this year and I am paying $2000/month mortgage. In the meantime rent from a similar unit in 2020 has gone from $1900 to $2500. Thats a 30% increase in just 3 years.

Also at the end of 25 years (life of mortgage) you'll have an asset thats paid off. So the security of having a 800k condo (pretty sure it'll go above 1 mil in 25 years) in your retirement ages is also priceless verses you still needing to pay market rent when you no longer have income.

 

[nackyy02]

@gcjohnstone That's it right there. People forget that after 25 or 30 years they get to live for nearly free. Just the cost of property taxes, a bit more on insurance perhaps, occasional capital repairs. But that's offset by owning hundreds of thousands of dollars of capital.

If you don't want the house in your old age, and aren't concerned with leaving an inheritance, sell it and use the capital to rent later on in life, ie. live for free.

 

[mozarella]

@xmountainx Just fyi realtors aren’t 6%. It’s usually 6% on the first 100k and something like 2% on the remainder

 

[resjudicata]

@xmountainx Interest rates are only going down from here and rent always goes up every year. For us buying was way way cheaper than a lifetime of rent. If you are handy home maintenance cost is minimal.