Go and read this post called: Royal Jelly, and come back for my comments here.
Okay. Here goes.
The problem with housing is that we’re unrealistic, and we’re fueling this housing “boom” or bubble because we see the prices rise higher and higher each year.
Instead of buying a house in our 20s or even our 30s, waiting until our 40s (if at all), makes a lot more financial sense.
This is not the 1950s.
Housing prices, incomes and expenditures have all changed drastically, and it’s pretty dumb to keep thinking it’ll stay the same as before.
Now to dissect that letter to Garth:
“We are busting out of our rental apartment and need to move to at least a 3 bedroom home with 2 bathrooms.”
We need AT LEAST 3 bedrooms here, folks.
Never mind that people used to live with a lot less space than before, and that children these days can *gasp* share a bedroom apart from their parents, but they NEED 3 bedrooms and 2 bathrooms.
I get wanting space.
Trust me, I do.
But maybe the solution is not to want MORE space, but to get rid of all the crap you’re probably not using, to make the space.
Not to get more space and fill it up with even more junk.
Just get rid of your junk. You’ll feel lighter, make some money in the process and most likely never even miss it.
“…. I cannot find a 3 bedroom, 2 bathroom rental in our area for less than $2,500 which would be more money than a mortgage payment.”
I think Garth debunked this lovely myth of renting being more expensive than a mortgage payment pretty well.
He came up with the numbers in his post that renting would be $73,000 cheaper.
He didn’t even add in furniture and renovation costs, which will inevitably happen because NO ONE can seem to leave a purchased house alone, if HGTV (Home and Garden Television) is to be believed.
“We need to be a min. of 10 min walk to the Bloor subway between Spadina and Lansdowne. We are not willing to re-locate by the way.”
Hey Garth, while you’re granting ridiculous fantasies, can you also please find time to get me a pretty unicorn, and an investment that returns 100% every year, that is 100% risk-free, and requires no work?
BAM! 10-minute walk to the subway station.
WHAM! Between Spadina and Lansdowne (it’s true, all the other stations suck.)
KER–BLAM! Not willing to relocate!
….. err yeah.
I made a little chart for you non-Torontonians so you can scoff along with me:
It’s a little convoluted, but here’s the breakdown:
YELLOW SQUARE: DOWNTOWN TORONTO
This is the heart of “downtown Toronto”. It’s where all the action kind of happens, even though there are pockets of neighbourhoods spread out around the city as well.
RED RECTANGLE: WHERE SHE WANTS TO LIVE
She wants to pretty much live RIGHT BY the subway line, and only those specific ones, which are spaced decently apart and a very good line to live by.
And 10 minutes away, no less.
That means NO BUS-TAKING to the areas that don’t have a subway station nearby, those little black hole areas where only buses or streetcars go.
PURPLE ARROWS: RICH FOLKS LIVE HERE
When you have money and you don’t want to live in the downtown core, you buy a home in these areas — Eglinton, Davisville, Summerhill, Rosedale, etc.
BLUE CIRCLES: HOMES THAT WON’T COST $700,000 TO MILLIONS OF DOLLARS
Basically anywhere there’s a black space with a good berth from the subway line, or at the ENDS of each subway line, lies houses that cost about $300,000 – $400,000.
Anything close to the subway line is not going to cost $300,000 – $400,000 unless you’re buying a studio apartment.
COMPARISON OF LOCATION TO MANHATTAN, NYC
Just to put it into perspective for you non-Torontonians, it’s like asking to be on the island of Manhattan, about a block or 5 away from Central Park, right by one of the subway lines that runs through New York City, for less than $700,000 for a 3-bedroom 2-bath home.
For the record, I lived in NYC, and I paid $5000 a month in rent to be a block away from Central Park.
I was pretty much on beans and rice, but my dislike for commuting extends that far that I will pay for location.
AND THEREIN LIES THE PROBLEM WITH US…
People who don’t want to pay $700,000, and don’t want to live in the boondocks, are exactly like Laura. (Poor Laura, I’m not trying to single you out, but .. you’re just like every other person I meet.)
People who are willing to move away, live in the boondocks, take the GO train and live in the suburbs, can get what Laura wants, but will have to commute.
People who don’t want to do either, but still want to be centrally located, move back in with their parents. Just kidding.
They pay rent, at $2500 a month, or $1500 a month for a tiny cubicle of a false bedroom to be right on the subway line near the downtown core.
What’s wrong with all of the above?
We all think that we need a bigger place.
We all think that we HAVE TO BUY a house to build equity (a forced building of equity by way of interest payments on a mortgage, more like)
We all think we need a house in our 20s, even our 30s, and aren’t willing to wait until our 40s, or rent forever.
We all want to live in the big city of Toronto, Vancouver or Montreal, mostly because that’s where the jobs are, but the cost of living is right up there with it.
We’re all willing to go into debt into the near-$1 million-dollar mark, just to get a piece of this real estate.
So who’s to blame for high housing prices?
‘BUT WHAT ABOUT THOSE EVIL BANKS’, YOU CRY!
They aren’t forcing us to take mortgages 6X our income that we can’t afford, now are they?
They aren’t forcing us to buy a place..
.. or to NOT save 20% for a down payment…
…or to want to live downtown within 10 minutes to the subway station NO LESS, but not willing to give up on space.