Calgary Real Estate predictions?

[blankall]

Originally Posted by OMG!WTF!

You can look at owning a house like owning a condo...your condo fee also goes up over time. Your taxes increase, your roof costs more in 10 years than it will now. Rent doesn't always increase either. But if you want to go by the average rent increases, maybe 3-5% a year. The comparison with inflationary costs of housing might be pretty similar. And as interest rates increases, and they certainly will be, your "rent" will cost more as well.

Maintenance costs are typically offset by the actual increase in value in the house.

Even if the costs of maintaining a house vs. rent even out for the first 10 years, that isn't true of the first 20 years...or what about after that when you get to live rent free? Home ownership in the long run has proven to be a very effective way of building wealth in North America.

Also, typically the gap between rent and a mortgage payment is not all that high.

[Weitz]

Originally Posted by Flamenspiel

Haha, no I am not saying that. First of all, why do you say rates were "artificially" low? From a monetary policy perspective, rates reflect the price of money and since the lower rates did not result in any inflationary pressure its an indication that they were appropriate. In fact in US dollars, real estate prices were relatively stable over the last few years. As a particular example in Toronto, the 30% increase in real estate pricing was almost exactly in parallel to the Canadian dollar depreciation.

The danger is that all these methods of tightening up access to financing at the same time could result in an over correction. For example, if you were active in the US real estate market in 2010-2011 you could have seen the banks had gotten so tight with loans that even people who could afford it were sidelined from entering the market. They had over corrected resulting in a deeper valley in the market.

In the case of Canada, the foreign buyer restrictions, the increase in the interest rates, and the buyer qualifications changes all at the same time might just be too much. So really without even approaching a US style crash(yet) the government has gone much further in Canada because the US government never considered the foreign buyer tax that they implemented here.

Certainly, being frugal and patient allows the ability to position yourself to take advantage of these valleys by buying low and the that can certainly be applauded, but characterizing it as a great policy that may drive some our neighbours into bankruptcies is not appropriate(which seemed to be the tone of your original post).

Yes, long winded reply, I think I will leave it at that.

I actually didn't really understand what you were saying, so thanks for the clarification.

[OMG!WTF!]

Originally Posted by blankall

Maintenance costs are typically offset by the actual increase in value in the house.

Even if the costs of maintaining a house vs. rent even out for the first 10 years, that isn't true of the first 20 years...or what about after that when you get to live rent free? Home ownership in the long run has proven to be a very effective way of building wealth in North America.

Also, typically the gap between rent and a mortgage payment is not all that high.

Sure. But the value of capital also increases over time. 100k down payment on a house is money available for other investing. So of course it depends what you're capable of in investing and what your luck is in real estate.

Most importantly.... past performance is not indicative of future returns. I would not be so keen on booking my twenty year real estate return right now.

Once your mortgage is paid off you are certainly not living rent free. Ex mortgage costs your living expenses are anywhere from 50% to 90% of a comparable rent. But even then, you're not living capital free. The 700k you have tied up in your house is worth about $3500 a month to an average investor. It would sadden me to live in a paid off house.

[Jason14h]

Even if the costs of maintaining a house vs. rent even out for the first 10 years, that isn't true of the first 20 years...or what about after that when you get to live rent free? Home ownership in the long run has proven to be a very effective way of building wealth in North America.

Has it though? I have read before if you take the savings in rent vs mortgage and invested in a general stock market index, you would have a higher net worth.

However, a mortgage is like forced savings as you must pay it, where when renting you buy a new car with the savings.

https://www.theglobeandmail.com/real...3/?arc404=true

[I_H8_Crawford]

Originally Posted by Jason14h

Has it though? I have read before if you take the savings in rent vs mortgage and invested in a general stock market index, you would have a higher net worth.

However, a mortgage is like forced savings as you must pay it, where when renting you buy a new car with the savings.

https://www.theglobeandmail.com/real...3/?arc404=true

Discipline is the key - some have it, some don't.
My wife and I rent as the difference in rent vs own where we live was ~$1000/month - we invest the difference (and more) and are well on our way to hitting financial freedom before we hit 40.

[bizaro86]

Originally Posted by I_H8_Crawford

Discipline is the key - some have it, most don't.
My wife and I rent as the difference in rent vs own where we live was ~$1000/month - we invest the difference (and more) and are well on our way to hitting financial freedom before we hit 40.

Fyp. For the vast majority of people, something will come up and they'll spend the savings one month, the eventually every month. If the bank needs it as part of the mortgage, that savings moves to the top of the priority list.

[blankall]

Originally Posted by I_H8_Crawford

Discipline is the key - some have it, some don't.
My wife and I rent as the difference in rent vs own where we live was ~$1000/month - we invest the difference (and more) and are well on our way to hitting financial freedom before we hit 40.

Hmm.. Maybe I need to find better investments. I can't see how investing $15k per year would lead to financial freedom for two people in a dozen years.

[I_H8_Crawford]

Originally Posted by blankall

Hmm.. Maybe I need to find better investments. I can't see how investing $15k per year would lead to financial freedom for two people in a dozen years.

Please note I said "and more"

Not saying that the savings of rent vs. buying is the ONLY reason, it is one of many.

[Tyler]

People are under a bit of an illusion that after you pay off your mortgage, there are no housing costs.

You're still going to be responsible for

Home Insurance
Property Taxes
Maintenance Costs
Utilities
etc

All of this probably still adds up to $1000+ a month for most people, even if they have a paid off mortgage

[OMG!WTF!]

Originally Posted by Tyler

People are under a bit of an illusion that after you pay off your mortgage, there are no housing costs.

You're still going to be responsible for

Home Insurance
Property Taxes
Maintenance Costs
Utilities
etc

All of this probably still adds up to $1000+ a month for most people, even if they have a paid off mortgage

You really do have to add up the value of the money in your house too. Even at 3% your 500k is worth $1250 a month. And there's very little risk to the downside at that rate.

[blankall]

Originally Posted by I_H8_Crawford

Please note I said "and more"

Not saying that the savings of rent vs. buying is the ONLY reason, it is one of many.

Sorry I missed that "and more" part. Did you also mean you invest an additional $10k a month?

[Canehdianman]

Originally Posted by blankall

Sorry I missed that "and more" part. Did you also mean you invest an additional $10k a month?

Maybe he did. Why are you being a jackass?

[blankall]

Originally Posted by Tyler

People are under a bit of an illusion that after you pay off your mortgage, there are no housing costs.

You're still going to be responsible for

Home Insurance
Property Taxes
Maintenance Costs
Utilities
etc

All of this probably still adds up to $1000+ a month for most people, even if they have a paid off mortgage

1. Many renters pay utilities. You need to get renters insurances if you rent.
2. Factor in the cost of moving every few years to renting.
3. Most landlords do not put any kind of upkeep into a place while it has an active tenant. Be prepared to live in a place that becomes increasingly run down as you rent it.
4. The only significant cost of those you've listed is maintenance. That's more of a cost to maintain an asset. Even then, the average owner does not pay $1,000/month to maintain a property, unless it's a very large one, in which case you'd be paying significantly more to rent it.
5. As I stated before, rent always goes up over time.

At the end of the day, all the wealthy people I know (who didn't land it big with some lucky internet site) are people who own multiple properties. Owning property is always a great investment over time, unless you're in the next Detroit.

[Weitz]

Originally Posted by OMG!WTF!

You really do have to add up the value of the money in your house too. Even at 3% your 500k is worth $1250 a month. And there's very little risk to the downside at that rate.

... If house prices go up.

[OMG!WTF!]

Originally Posted by Weitz

... If house prices go up.

Oh no I mean if you have a paid off house the value of the money tied up in your house is significant. So when people say they're living rent free, they often miss the income potential of the money in their house. If they invested that 500k they'd get a decent return even at a safe 3%.

If the value of your house goes up, your 500k would appreciate as well. But real estate returns are not quite as predictable or stable as money markets, GIC's etc. And the true deal breaker is liquidity. You can't sell a house with the click of a button for $9.99.

[blankall]

Originally Posted by Canehdianman

Maybe he did. Why are you being a jackass?

I'm not trying to be, but this thread is really beginning to read like a bunch of investment brokers hawking their business. These shills are getting to the point of sounding like dialogue on the cutting room floor of the Wolf of Wallstreet or some late night infomercial.

There's no way that investing $1000/month between a married couple (who I assume are at least 25) will lead to anywhere close to financial independence before the age of 40 for two people (plus a family potentially).

[Weitz]

Originally Posted by OMG!WTF!

Oh no I mean if you have a paid off house the value of the money tied up in your house is significant. So when people say they're living rent free, they often miss the income potential of the money in their house. If they invested that 500k they'd get a decent return even at a safe 3%.

If the value of your house goes up, your 500k would appreciate as well. But real estate returns are not quite as predictable or stable as money markets, GIC's etc. And the true deal breaker is liquidity. You can't sell a house with the click of a button for $9.99.

Got ya, I read it the other way.

[Canehdianman]

Originally Posted by blankall

I'm not trying to be, but this thread is really beginning to read like a bunch of investment brokers hawking their business. These shills are getting to the point of sounding like dialogue on the cutting room floor of the Wolf of Wallstreet or some late night infomercial.

There's no way that investing $1000/month between a married couple (who I assume are at least 25) will lead to anywhere close to financial independence before the age of 40 for two people (plus a family potentially).

Yeah, you are right, but it wasn't what he said, so what is your point?

[Wormius]

I think the issue is that, at least from my interpretation, the poster suggested it was the $1000/month in savings that was what was mainly what was putting them on the road to financial freedom by the age of 40. Unless the "and more" part is more significant, and/or the couple is super frugal, it seems disingenuous to hint that the difference in mortgage payment vs. renting is what will allow them to stop working at age 40.

[OMG!WTF!]

People don't seem to realize the financial disaster they subject themselves to in real estate and it always comes down to the falsehoods inherent with real estate. Real estate always goes up over time is likely the most costly "truism" I've ever heard.

In 2007 the average house price in Calgary touched 500k. Now it's 475k. Not a big deal but the time factor is absolutely devastating. Your 500k would be worth 900k now if invested at a below market average return of 6%. Your average 2007 house is now approaching a half million dollar hit on your potential net worth. And those numbers will just get worse over time as compound interest really kicks in.

I'm also willing to concede $500 a month to rent in the rent vs own debate. So 6k a year in rent premium for ten years. 60k in ownership savings. Certainly enough to pay the realtor when you go to sell.

Rent now. Buy later.