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Marco.911 · 07-22-2014, 08:50 PM

Being a home owner is an acceptance piece in culture. This is the American dream, own your own home.

For many Asian cultures it is much the same. It is a sign of power and stability and wealth.

At the end of the day, what makes sense with dollars and cents may not make someone feel good at the end of the day.

This is a car forum. I'm pretty sure most people would be better off taking transit or driving a used piece of shit car in order to improve their financial picture and yet, so many of us know buying a car is a money pit but it makes us happy.

It's something that we enjoy and we want and it is also a status symbol as well.

After all is said and done, I make very good money and could afford to buy a home in Vancouver with no mortgage (yes I'm talking about a SDH, albeit not a high end example) and yet I decide to rent.

Look at my example

Residence: Rent
Rent: $2000 per month
SQ/FT 1300 2 bd 2 bth

Cost per year to live $24,000

If I wanted to live in the same place as an owner

Residence: $960,000 (similar unit just sold on the floor below)
Tax $4,000
Strata (per year) $9000
Assuming I had no mortgage the $960,000 can earn 2.5% in a GIC for $24,000

Total cost per year is $37,000 per year.

So to own where I live is 54% more expensive than renting. To make matters worse, I earn a lot more than 2.5% in a year on my money. This last year was a bit of an exception to the rule due to market activity but I can very safely average 10% per year making the choice blatantly obvious, even after taxes in the highest bracket.

The downside is that I'm not a home owner and I can't be a part of that group (which is ironic since I actually do own a small condo in White Rock that I rent out which has dropped in assessed value from last year.).

The only reason people have been so gaga over real estate is the capital appreciation on the property. Prices will no doubt go up over the long term and the crash that many of us thought would happen, may or may not happen. The point is if you buy expecting prices to double in a few years, don't buy.

Like the stock market, be well diversified, don't over-leverage, and keep investing over the long haul over a mix of asset classes.

I was bullish on real estate back in 2002 all the way up to 2008. I since said no thank-you.

Again up to you. Run the numbers but just remember something:

Vancouver is a real estate town.
Banks, mortgage brokers, realtors, builders, the media, Rennie marketing, and many others in construction need the constant fuel of people buying real estate otherwise they're out of work.

Keep that in mind. Too many people have a vested interest in keeping things as they are and encouraging home purchase that is unwarranted and bias.

If you like owning a home and it makes you happier, all the power to you!

07-22-2014, 08:50 PM	#37
Marco.911 NOOB, Not Quite a Regular! Join Date: Nov 2012 Location: Richmond Posts: 43 Thanked 82 Times in 19 Posts Failed 37 Times in 8 Posts	Being a home owner is an acceptance piece in culture. This is the American dream, own your own home. For many Asian cultures it is much the same. It is a sign of power and stability and wealth. At the end of the day, what makes sense with dollars and cents may not make someone feel good at the end of the day. This is a car forum. I'm pretty sure most people would be better off taking transit or driving a used piece of shit car in order to improve their financial picture and yet, so many of us know buying a car is a money pit but it makes us happy. It's something that we enjoy and we want and it is also a status symbol as well. After all is said and done, I make very good money and could afford to buy a home in Vancouver with no mortgage (yes I'm talking about a SDH, albeit not a high end example) and yet I decide to rent. Look at my example Residence: Rent Rent: $2000 per month SQ/FT 1300 2 bd 2 bth Cost per year to live $24,000 If I wanted to live in the same place as an owner Residence: $960,000 (similar unit just sold on the floor below) Tax $4,000 Strata (per year) $9000 Assuming I had no mortgage the $960,000 can earn 2.5% in a GIC for $24,000 Total cost per year is $37,000 per year. So to own where I live is 54% more expensive than renting. To make matters worse, I earn a lot more than 2.5% in a year on my money. This last year was a bit of an exception to the rule due to market activity but I can very safely average 10% per year making the choice blatantly obvious, even after taxes in the highest bracket. The downside is that I'm not a home owner and I can't be a part of that group (which is ironic since I actually do own a small condo in White Rock that I rent out which has dropped in assessed value from last year.). The only reason people have been so gaga over real estate is the capital appreciation on the property. Prices will no doubt go up over the long term and the crash that many of us thought would happen, may or may not happen. The point is if you buy expecting prices to double in a few years, don't buy. Like the stock market, be well diversified, don't over-leverage, and keep investing over the long haul over a mix of asset classes. I was bullish on real estate back in 2002 all the way up to 2008. I since said no thank-you. Again up to you. Run the numbers but just remember something: Vancouver is a real estate town. Banks, mortgage brokers, realtors, builders, the media, Rennie marketing, and many others in construction need the constant fuel of people buying real estate otherwise they're out of work. Keep that in mind. Too many people have a vested interest in keeping things as they are and encouraging home purchase that is unwarranted and bias. If you like owning a home and it makes you happier, all the power to you!