Housing Market in Canada and US - Is it time to listen to the warnings?

[Dmy0013]

:D

[UnleashHell]

If I knew the answer to that I’d be a multi millionaire!

You have a housing expense. And you’ll carry on having one. The question you are asking is “am I going to make money”. Well if you buy and hold long enough then the answer is… maybe.

I don’t think it’s a bad move to buy a house with a rental unit. But would you really be better served by that? How about one without? Or keeping the condo.  Maybe your real advantage would be to rent out the condo and then rent a house. I’m reading it that you don’t have kids – so school district isn’t an issue. Is there a fiscal advantage to be had now by selling the condo and renting somewhere really small? Stacking as much away as possible? Could you then buy the house you want – or find a Job in a lower COL area?

I think you are looking at buying a house and having a rental within it without considering the other options. Worth going through in detail.

[Bob W]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.   You buy it to live in and it owns you. 

My basic advice is to always have enough money to buy outright,  then put 10% down and invest the difference.   You won't take that advice.  So what I think you want to know is the house with the rental potential better than the ones with no garage.

Yes it is. 

[UnleashHell]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.   You buy it to live in and it owns you. 

My basic advice is to always have enough money to buy outright,  then put 10% down and invest the difference.   You won't take that advice.  So what I think you want to know is the house with the rental potential better than the ones with no garage.

Yes it is.

especially if you live in the rental and let the house for MORE money.

[frugaliknowit]

Don't buy a home depending on appreciation.  A home is a place to live.  It is a way to lock in a good part of your costs.  Count on living there 10 years or longer; otherwise don't do it.  Do NOT try to time the market.  If you can't get comfortable with this type of thinking, then keep your condo or rent instead.

[Mr. Green]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.   You buy it to live in and it owns you. 

My basic advice is to always have enough money to buy outright,  then put 10% down and invest the difference.   You won't take that advice.  So what I think you want to know is the house with the rental potential better than the ones with no garage.

Yes it is.

Yeah I'm amazed to see the home prices in our area have largely recovered from the bubble burst that was 2008. The prices still don't accurately reflect what they're worth. If I couldn't find a "value buy" today then I wouldn't buy at all. Too many people have already forgotten what 2008-2010 looked like and we've seeing the same mistakes made. 0% interest purchases, etc.

[Telecaster]

So this turned into half rant / half question - Is the housing market going to go down?  Is there a bubble?  is now as good a time to buy as any?  Should I hold back and watch from my nice little condo that is easily affordable on one of our wages?  Federal election is coming up, and I think the country is in for some changes.  could a change in federal power cause a ripple?

Your advice is much appreciated!

All real estate is local.   

[mozar]

I think it is somewhat of a bubble. But people in Canada don't have as much access to "liar loans" where the mortgage is approved with fake or non existent paperwork from people who could never afford to pay in the first place. So Canadian mortgages are more conservative, so less likely to collapse. But the bubble could go on decades. That's why you can't time the market. And by then it could be that the Zombie Apocalypse happened and the living dead don't pay mortgages. So I don't wish for prices to collapse, I hoard cash in case there is an drop and an opportunity. I think it's better to consider what you can afford now with your long term goals in mind.

You could say I timed the market myself, but I was willing to buy when the media was screaming "capitalism is over, the end is nigh, the economy will never recover!" And that's hard to do.
So my opinion is that yes it's inflated, but I doubt you'll lose your shirt. But if it were me I would ride it out in the condo.

[daverobev]

Canada and US are completely different, mortgages are totally different (alas for us in Canada, no 30 year fix).

IF you measure in USD, Canadian housing HAS just corrected by ~30% in the last couple of years.

Transaction costs are high in North America (outrageously so IMHO). Do not buy if you are going to stay for less than 5 years.

I would suggest selling the condo before buying a house unless you are DAMN sure it is a good investment. I doubt it, most condos do not seem to be. YMMV.

If you need a house, and owning is cheaper than renting, and you think you'll be there 5+ years, go for it.

[Retire-Canada]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.  You buy it to live in and it owns you.

I tried to rent when I moved to a new city. Because I wanted a detached house with a garage, no landlord living on the property and I had a cat my options were limited.

I eventually just bought a house. My mortgage, property taxes and maintenance is approximately equivalent to rent of a similar house. I'm getting ~$9K of equity each year out of the deal based on the purchase price.

Our local housing market seems pretty stable. Prices are not booming, but I don't see a lot of risk for them dropping either.

Given I have to live somewhere and that my rental costs are similar to what I pay to live in this house it doesn't feel like the house owns me.

[music lover]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.   You buy it to live in and it owns you. 

In many cases that's true, but I was extremely lucky...I bought my house for $80k in 1997 and then the market exploded and 5 years later it was worth $300K. Today, it's worth about $350k. I'm an avid DIY'er and amateur musician that needs space for a drum kit, PA, amps, several musicians, and the ability to play music until late at night. So, for me, home ownership is a lifestyle choice that worked out perfectly. I even like shovelling snow!

I can't fathom being young and looking for a house with today's prices.

[JLee]

I just hate to see housing prices around the US and Canada.  Makes me sick to imagine.   Sorry but a house is the worst investment ever imagined.  You buy it to live in and it owns you.

I tried to rent when I moved to a new city. Because I wanted a detached house with a garage, no landlord living on the property and I had a cat my options were limited.

I eventually just bought a house. My mortgage, property taxes and maintenance is approximately equivalent to rent of a similar house. I'm getting ~$9K of equity each year out of the deal based on the purchase price.

Our local housing market seems pretty stable. Prices are not booming, but I don't see a lot of risk for them dropping either.

Given I have to live somewhere and that my rental costs are similar to what I pay to live in this house it doesn't feel like the house owns me.

Same here; monthly housing costs are a few hundred a month less than renting an equivalent house in my area, and property values are slowly climbing (have been ever since the bubble burst in Phoenix).

[mozar]

Is it wrong to expect this to increase my Condo Price?

Maybe

We are getting a library in one year 2 blocks away a brand new elementary school 5 blocks away in 2 years
A public "splash park" next summer, and tons of commercial just finished 3 blocks away which has bars and restaurants a major grocery story, doctors / dentist / chiro / vision

This sounds like a fantastic place to raise kids. I don't understand why you would leave.

[BigBangWeary]

Interesting to see the difference between the average American homeowner's current view on this compared to the average Canadian's.

Well, obviously I am biased (see profile), but I think there are two truths here:

1. If it walks like a bubble, talks like a bubble, then ...

2. Markets will stay irrational longer than you can stay solvent.

Those riding any economic bubble up are always right. Until they aren't. Personally, I agree with other posters here that homes should be seen as a place to live and not a commodity to trade for short-term profit. But again, obviously I am biased and swimming against the current Canadian mainstream. 

[mozar]

How about wait until you get the promotion, then reconsider?
Also for the wife, tell her that when you have kids its better to have life to be as convenient as possible. If you move, she'll have to spend extra time having to drive everywhere as opposed to having a pleasant walk with kids 2 blocks, which translates to spending more time with them and not behind a wheel.

[Jschange]

I'm in the GTA, and housing prices that I'm researching show that condo ownership works out better than apartment rentals; but house rentals work out better than house buying (unless you can pay cash, and it is a lot of cash). Not sure where townhouses are falling.

If you like the condo, why not stay there to start the family, and save like crazy until you outgrow your number of bedrooms?

[Learner]

When you look at the house costs as well, don't forget to factor in the extra costs and time (property tax, reno/maintenance, etc.  Even with everything DIY, maintenance can chew up more than expected.  More than doubly so if you contract it out.  If the housing market were to continue to rise, you might lose out on some appreciation costs.  But, if your condo costs are consistently less than the house operating costs, invest the difference and you may come out ahead anyway.

Our family of 5 (3.5 yr-old twins, 15 month-old) recently moved from a house about 1500 sqft to an apartment that's about 700 sqft.  Still working on downsizing a few things, but I actually prefer the apartment.  The benefit of a smaller space is it focuses you to live without a lot of "bloat".  I like the ideal of minimalism in the sense of everything has a purpose, and is used frequently.  It also prevents buying (or receiving as gifts) unnecessary crap.

In the house, most of my non-work time went to reno or maintenance projects (replace the front steps, reinforce a deck, etc, etc).  Throw in routine maintenance (yards, snow), and there wasn't a ton of time to actually do stuff with the wife and kids.

[daverobev]

When you look at the house costs as well, don't forget to factor in the extra costs and time (property tax, reno/maintenance, etc.  Even with everything DIY, maintenance can chew up more than expected.  More than doubly so if you contract it out.  If the housing market were to continue to rise, you might lose out on some appreciation costs.  But, if your condo costs are consistently less than the house operating costs, invest the difference and you may come out ahead anyway.

Our family of 5 (3.5 yr-old twins, 15 month-old) recently moved from a house about 1500 sqft to an apartment that's about 700 sqft.  Still working on downsizing a few things, but I actually prefer the apartment.  The benefit of a smaller space is it focuses you to live without a lot of "bloat".  I like the ideal of minimalism in the sense of everything has a purpose, and is used frequently.  It also prevents buying (or receiving as gifts) unnecessary crap.

In the house, most of my non-work time went to reno or maintenance projects (replace the front steps, reinforce a deck, etc, etc).  Throw in routine maintenance (yards, snow), and there wasn't a ton of time to actually do stuff with the wife and kids.

3 children in 700 sq ft is pretty cool. I guess you spend a lot of time out, esp. in winter? Is it 3 bedrooms?!

Our ~1000 sq ft house is fine for 2 adults + toddler, but not configured optimally - upstairs not as big as down, second bedroom small, etc. I can't imagine fitting two more in here!

[Dee18]

Stay in the condo!  I bet that new library will have great work spaces.  i frequently go work in one in my town---they even serve free coffee all day, have beautiful furnishings, and even conference rooms if you want to have a meeting.  And I don't have to pay for it or clean it or repair it.  Sounds like you could also work in the master bedroom.  When you have little kids they are with you pretty much all the time anyway.  I'd wait and see how it works.  Having a walkable life is the greatest luxury of all---you have it, why give it up? 

[Learner]

When you look at the house costs as well, don't forget to factor in the extra costs and time (property tax, reno/maintenance, etc.  Even with everything DIY, maintenance can chew up more than expected.  More than doubly so if you contract it out.  If the housing market were to continue to rise, you might lose out on some appreciation costs.  But, if your condo costs are consistently less than the house operating costs, invest the difference and you may come out ahead anyway.

Our family of 5 (3.5 yr-old twins, 15 month-old) recently moved from a house about 1500 sqft to an apartment that's about 700 sqft.  Still working on downsizing a few things, but I actually prefer the apartment.  The benefit of a smaller space is it focuses you to live without a lot of "bloat".  I like the ideal of minimalism in the sense of everything has a purpose, and is used frequently.  It also prevents buying (or receiving as gifts) unnecessary crap.

In the house, most of my non-work time went to reno or maintenance projects (replace the front steps, reinforce a deck, etc, etc).  Throw in routine maintenance (yards, snow), and there wasn't a ton of time to actually do stuff with the wife and kids.

3 children in 700 sq ft is pretty cool. I guess you spend a lot of time out, esp. in winter? Is it 3 bedrooms?!

Our ~1000 sq ft house is fine for 2 adults + toddler, but not configured optimally - upstairs not as big as down, second bedroom small, etc. I can't imagine fitting two more in here!

It's a three bedroom.  One of the bedrooms is set up as a playroom.  Once the baby gets bigger (probably within the year), we will aim to move him into the other bedroom with the twins.  We went with the mindset that it's only recently that children "need" their own room - my parents had at least three to a room growing up.

We haven't gone through a winter in the new place yet, but the idea is lots of outdoors time (the apartment backs onto a playground), and free-play activities like science centres, museums, library, etc.  We have a couple of annual passes that will get us into most paid activities that we'd want to do.

I wouldn't have considered this 5 years ago.  MMM and these forums have been a gold mine of information.