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Quote:
Originally Posted by westopher
I’m not disagreeing with most of what you said, but the upgrade part is the worst of it.
Ok so he sells his 400k purchase for 700k and has 300k in the bank. Now he has a 300k down payment to upgrade to a 1m place that would have been 600k when he bought his 400k place effectively costing him 150k more than if he were to have purchased that originally. My numbers are an approximation based on a 50k original down payment but you get the idea. It’s a negative proposition for those upgrading. The big winners are those who are downgrading.
As I said, in most instances those who were first time home buyers that got into the entry level market, the increase in value is a negative other than using it as leverage to invest elsewhere.
As usual, the younger generation that wants to live in a city with job prospects to actually afford this, gets fucked by the increases while the older generation profits. There has to be a breaking point as the generation behind us has no chance.
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your example above is really close to what i did myself actually. i'm not disagreeing with you but i'd like to point out reasons why someone would sell an entry level home (purchased 2012) and purchase a larger house (2018). in my case, i needed the space for a family and my priority was to upgrade to a vancouver detach property with standard lot size for flexibility (consistent density policies to maximize value of the land: laneway, duplex, ??) and mortgage helper downstairs. in your exact example, i did actually end up selling for close to those numbers you listed but have cut my current mortgage by 1/3 just by having a mortgage helper downstairs. warranted i am paying more than before but that is relative to the size of home and space i have now so cant compare there. but i agree with you, if i didnt need to upgrade, i would not upgrade to a better/larger property but rather use the equity to invest in something else.
as for your last point on younger generation not being to catch up, i really cant comment as it seems to be a debate relative to what year we are in. i can only comment to my own experience but ill save that for another post
