Save. Spend. Splurge.

The high prices of homes in Canada is our doing and our fault

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.

  • Read: How much space do you really need?

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.)

KERBLAM! 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:


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.


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.


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.


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.


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.


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?

We are.


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.

C’mon now.


  • LAL

    What drives the most nuts is that the woman acts all high and mighty when in reality she jealous of everyone else. Nor will she see that she is just rushing again. And hwe short sale is not because they were dead beats liker other people but rather a job loss.

  • LAL

    Here’s the classic example of a person desperate to buy.

    She had a short sale 2 years ago and now in September as soon as she’s allowed she’s desperate to buy a house because housing prices are going through the roof. AND it’s not her fault they had a short sale. They lost their job, they aren’t dead beats.

    This is the type of mentality that drives bubbles.

    • saverspender @ save. spend. splurge.

      People are nuts but they also can’t see the forest for the trees. They’re focused on THEIR situation.

      Saw an episode the other day of a woman “needing” a luxury gourmet kitchen and willing to pay $700K for a house with one when their budget was $600K. His parents ended up giving them the money to buy it by selling their house, presumably to move in with them.

  • jeweliette23

    We’re buying and it’s costing us much less than renting! Here’s how (sorry so long):

    – Condo in NJ instead of Manhattan – more space for less money. But still a 2 bdroom, 2 bathroom in a doorman building with views of the city from our balcony.
    – We “downgraded” by looking in a different town that’s still commutable into NYC but has less expensive apartments available. So we essentially halved how much we intended to spend on a condo.
    – BF is a super saver so he’s putting 30% down payment and his parents are “loaning” us the rest of the money (versus having to get a mortgage if we bought a more expensive home). No PMI, no title insurance for a lender, no interest rate on mortgage payments. But according to our calculations, even if we did take out a mortgage, we would break even after 2-3 years.
    – We looked at several units in the same building and chose one where the owners had done renovations just a few years ago. Another unit in the same building was priced higher and the owners had taken such poor care of it that it would have definitely needed some renovating.
    – In addition to the monthly maintenance, the building had a special assessment due every month until the end of 2017 due to extensive repair work that had been done on the roof and garage. We negotiated to have the assessment paid upfront at closing in a lump sum by the sellers (not to mention, shaving like 15k off the original purchase price).
    – So in the end, our monthly cost will be $671 for maintenance and around $500 for property taxes, split between us, which will be tons cheaper than paying rent in our HCOL area.

    In all fairness, yes, I know we’re lucky that his parents are financing us. Also I do this as part of my job so I knew what due diligence to conduct when buying a home, negotiating certain terms, and how much everything would cost on top of the purchase price. Plus BF saves on legal fees b/c I’m doing it for free obviously. Overall, we’ll be able to use this condo as a rental property and upgrade to a bigger/nicer home after 5 yrs or so.

    I would love to live in Manhattan but it wouldn’t have been smart or affordable. It does get annoying having to ride 45 mins to 1.5 hrs on public transport to see my friends but we’re getting old and it’s time to be more grown up, haha.

    PS – We’re already making money off it too! Sellers are renting the condo from us after closing, for 2-3 months, at twice the fair rental market value (they don’t wanna move while their new house is being built).

    • saverspender @ save. spend. splurge.

      As long as you’re doing the math it makes sense!

      It also helps to have financing from your parents, and you are doing it for free to save on legal fees. I think you’re making a good choice.

      I myself, can’t justify buying anything, let alone even renting anything with my mobile job.

  • fabulouslyfrugirl

    They say there is the real estate triangle, location, price and quality. Something has got to give (unless you’re really, really rich!).

    I really think that owning is over rated these days. People say that renting is “throwing away money”, but those people have likely not done the math. I think you wrote it best a while back, you’re either renting space or renting money (via a mortgage), but you’re still paying someone for somewhere to live. I love being downtown, and being able to walk to work, walk to groceries, walk to the beach. Maybe one day, I’ll want more space, but I’m not sure if I can put up with the commute. Hopefully, I’ll be at a point in my career where I can have more options!

  • SarahN

    I bought something ‘tiny’ (66sqm) with a 3 blocks to the train, and a bus outside. Other think it’s too small for a couple (though most of my neighbours live in similar sizes and are couples). I settled on less space for the location – as then I don’t ‘need’ to own a car, as I have things walking distance, if not then there’s public transit.

    Also, I’m 28, about the age people in my demographic buy (ie, uni educated, working, no kids). I know for the same money I could live in a big house and commute, and if I had a few kids, I’d likely do that. For now, living in the ‘burbs wouldn’t really make as much sense.

  • The Asian Pear

    I live in those blue areas and it’s pricey regardless. It’s more affordable than the reds and yellows but still pricey. As prices goes up in the core, the peripheral goes up too. I live in a fairly small home which friends have nicknamed it as the “Mushroom House.” Yet, it’s been valued by the city to be worth X sum amount of dollars while it shouldn’t be. It’s a lil dumpy house! ^__^;;

  • Sara

    Our (future) problem is going to be balancing the commutes of professionals who work in very different parts of a city. While I’m likely to be in the city center, he’s going to either be in the collar counties or the roughest parts of the city. The trick will be finding something affordable with reasonable (and safe) commutes.

  • Jane Savers @ The Money Puzzle

    There are nice homes for sale in my neighbourhood for just over $200,000 that would meet all of her wants. Of course I live about 90 minutes from Toronto but we do have access to Go.

    I guess that is probably a little far outside her target area.

  • MelD

    Interestingly, it seems that in non-English-speaking countries there is less pressure to buy property at a very young age. Here it is quite normal to be in your 40s before being able to buy, unless you inherit a large sum. My friend’s daughter is considered extremely unusual for having bought an apartment aged only 22, though it will be a great investment for her. Young families will almost always rent (unless they don’t start having kids till their 40s, of course!).
    We feel like we hit the jackpot living in the middle of a small town on a direct railway line to all the larger Swiss cities (50km from Zurich and airport) – ok, so Switzerland is small but nothing is more than 4 hours away by rail 🙂
    (Paris is 5 hours away…!)

    • saverspender @ save. spend. splurge.

      Here it is a big deal thing of pride to own a home of your own. I can understand that.

      My friend bought her first house at 19 in a bad area of town and fixed it up, all from her retail savings on the side. I was totally impressed with her budget savvy!! Then she sold it and bought a nicer one with the proceeds for her growing family.

      That is unusual however, most people don’t buy a home that young, let alone save the way she did.

      What isn’t unusual here, is envy at people having their own place, but we don’t see the cost and the real maintenance fees — we just see it as having OUR place and all rationality disappears.

      People also don’t like renting because it seems like they’re throwing money away but they haven’t done the numbers to see if it is the case or not. It is all emotion and that can be a big reality check once they realize what being on your own means.

      • MelD

        In England, (until recent astronomical rises in house prices!) it was perfectly normal for a young couple to marry around 20 and immediately buy their “starter” home, working their way up through the ranks, depending on their careers. Of course, now that the trend is for the most mundane of jobs to require some kind of further education, that has altered somewhat, but around my daughter and her husband (married unusually young by Swiss standards, now 22/23 and living in England), there seems to still be the expectation that they should buy as soon as they can “get a foot on the first rung”, an attitude not seen here at all… Here, young people live together from a young age, there is less further education and you rent for a looong time. I do find it interesting to compare “cultures”!

        • saverspender @ save. spend. splurge.

          That is fascinating how the views on homeownership vary by culture.

          You know what, perhaps it’s an English influence as you mentioned — England, North America, all very English-centric kind of countries, although in Asia, having your own home is also a big deal as well.

  • StackingCash

    Nice. I’m such a huge fan of real estate as of late because we are currently looking for a new home. As such there are many pros and cons to figuring out where to live. Just like personal finance can be complex once you get into the nitty gritty of it all. In regards to our situation, we have a small home in an ok area. We WANT a bigger home in a premium area. As much as I hate to spend so much money on housing, I do enjoy living better. Forever, I have had such struggles on how to balance saving and spending. I would say from 2001 to 2009 we lived frugally. I think that has backlashed into living extravagantly since 2009. I do believe it is culminating into a house purchase that I might regret. However as I get older and life gets shorter, I do feel the need to live a little. Life can be so complex…

    In regards to those “evil” banks, I ultimately hold them responsible for the housing bubble and subsequent recession that hit our country. Banks should restrict loans to qualified people like pharmacists restrict drugs to qualified people. However, banks are greedy and will sell loans to anyone just like a drug dealer would sell crack to anyone. Except drug dealers get sent to jail, while banks get bailed out…

    • saverspender @ save. spend. splurge.

      Hmm.. Same argument could be made for people selling guns and the rise in school shootings too!

      I will say that you’re right in their greedy natures as bankers to have ignored the risks and pretended it could go on like that forever. They knew better, however there is an onus on buyers to also do their research to see if the house should be 2-3X their income or 10X, then with no down payment it exacerbates the problem as they may not even know there is a mortgage insurance below 20%! 🙂

      Sometimes people really do just see the house itself and assume things will magically work out somehow, rather than doing the numbers and knowing how realistic it is or isn’t.

      • StackingCash

        Wow, gun control. I am probably one of the few oddities in America that believes in that. The reason I feel many things need to be regulated tightly because given the opportunity to do stupid things, most people will. I hate to say it but I feel 80% of the world’s population is stupid and must be herded in the right direction. With recent and past events, too much freedom is a bad thing. Like anarchy. Look at what corporations get away with these days! Didn’t you have a word or two regarding greedy shoe companies earlier?

        • saverspender @ save. spend. splurge.

          My response to greedy corporations is simply not to give them my money.

          I don’t need to buy shoes.

          I have plenty. I vote with my cash, and others should too if they want to see a different kind of world.

          You are right however about the majority of folks who can’t make good decisions to save their lives, but the problem is they don’t want to be told that they should do A and not B.

          … which is why politicians were invented, to herd them en masse in a believable way, although that has been all screwed up to be for their interests as well.

          The good news is that most people have no idea that they hold the power — the power of the DOLLAR. 🙂 As mentioned above, you vote with it.

          People listen to people with money, no matter how little of it you have, if you band together, it can be a force to be reckoned with. Just need a good ringleader.

  • Morgaine

    Could not agree with you more! As a fellow Torontonian who has lived near the area that she is looking at (Lansdowne and Dupont) what she’s looking for is going to cost $700-$800K easy.

    We are currently renting in South Etobicoke (lower left circle :)) and are looking to buy in Mississauga and take the GO train in. We will also have 20% saved 🙂

    When the government loosened the mortgage rules (40 year mortgages, 0% down, no cap on CMHC) Canada went into a house buying frenzy which was only exacerbated by low interest rates. Then of course you add everyone who decided to use their house as an ATM and get HELOCs to put in new kitchens and spend on crap. No wonder the debt to income ratio is 164%. Gotta wonder what’s going to happen to these people when the interest rates rise?

    • saverspender @ save. spend. splurge.

      I’m a bit of a freak for checking real estate prices when I see them on a streetcar or bus. A home near the west end of Queen/King St facing the water was going for more than a million.

      Granted it had a great view of the water but it was nowhere close to downtown and the streetcar was at least a good half hour to and hour to get to Osgoode Station.

  • eemusings

    LOL, love the chart.

    What I really resent is paying crazy high prices for really crappy properties. I’ve had enough indoor mould and damp to last a lifetime.

    I’ve always lived in the burbs and am happy to live even further out in order to be able to eventually buy, though with our chronic shortage and growing population I fear prices are going to outpace us. Hoping the council’s new urban plan will be able to help stem the problem.

    • saverspender @ save. spend. splurge.

      I can only assume in NZ that since it is rather isolated, the prices are naturally high, just like everything else you have to pay for.

      For me, a reality check is needed in Canada because we don’t have US home prices here in mid-sized cities. I’ve seen homes in the US go for $200K and they are immense.

      Here you give up on location or space.

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