Quote:
Originally Posted by moon
I am confused. Your "smart" friends bought homes they couldn't afford long term and now may be in "severe debt", which is a very menacing sounding term I hope I never face severe debt, and you are blaming this on the housing market? And saying they should have rented for another 12 months?
Maybe I have been given different financial advise than others but from the successful people that I know, owning is always preferable to renting in the long term and buying a house that you can't afford long term isn't a good idea anytime whether in a boom, bust or in between.
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"Long term" is not a very specific term, but if this market tops out the way it is looking to be topping it out and you were one of those buying at the top of the market last summer, then the 'long term' necessary to have been better buying than renting is VERY long term.
Outside of purchasing at the top of the bubble, i do agree though, it is generally better to buy then rent. The problem of course is that we have just gone through a major bubble in pricing so...
As for "affording" what they purchased. Yes, by stretching young professional-type power-couple friends were able to buy their suburban dream homes. Of course they were willing to stretch because they hoped or were told that the price appreciation would take the long term pressure off and make it all worth while - and that inversely, if they didn't stretch now they would be priced out of the market 'FOREVER'. When that $440,000 starter home or $310,000 560sq-ft condo drops even a few precent in value, all the sudden they are stretching for nothing. Even this coming year, where prices should stay flat, that means a ~4%+ drop relative to inflation.
If you purchased in Calgary at the height of the 1980 bubble how long until you broke even on your 'home investment'? 15 years? more?
Claeren.