Hawk13

Exactly

dbd33

The context is the buying and selling of property in Canada. A business sector in which it's customary to stretch the truth to the absolute limit and to advertise falsely. To say that "false advertising is an offence" suggests that the technical truth of this claim has some bearing on the behaviour of people in the business. I suggest that it does not. I further suggest that the sentiment is hollow due to the lack of prosecutions.

If, of course, you can point to a list of jailed estate agents and directors of property companies, jailed for claiming you can be downtown in 20 minutes from Oakville, and the like, then I'll mellow in my position. As it is I think property is acknowledged to be one of those dodgy trades in which it's usual to peddle any sort of line to the punters. That's alright so long as everyone knows that it is.

Aviator

Your math is a bit off, gold in 1982 was $376USD an ounce, $120000USD buys you 319oz. (3000oz would have cost just shy of $1m). The last time it was $40oz ($40.62) was in 1971, 41 years ago. Today it is $1664.13, which 319oz would yield $530857, not bad at all, but a long way off 5m.

If their house has only gone from $120 to $280k in 30 years, they must have overpaid or something drastic happened to affect the value. $120k for a house in 1982 was a big and expensive house. I bought a property around then, in rural SE England for $40,000 USD and sold 10 years later for something like $180000USD, today it is going for around $660000USD. My FIL bought a mansion in the SE for $120k in early 80s and he has it on the market right now for $5m.

Why don't I have rental properties, because I would have to deal with renters!

Almost Canadian

Doesn't that depend upon the cost of purchase and the local rental market? The rent one could obtain for my property would not cover a mortgage for 50% of its value.

If posters on this board are to be believed, properties in Vancouver are very expensive but the rents are very low. How do you square that circle?

fletcher m

Either way, gold, assuming they had the cash to purchase outright, does not keep the rain off your head. You still would have had to rent if you did not buy.

Hawk13

Crap, your right I missed a decimal point but still not a bad return.

Not all areas, especially in little communities in Canada, appreciate like London or Vancouver. You can still buy a house in Trail, BC for under $100K. And there are places in BC that your house is worth nothing if the local mill shuts down and you lose your job to boot.

Haha - there is that to consider.

Exactly, depends on where you work and live.

True, true but you're still missing the point, I'm being devil's advocate and trying to get people to think of all the the costs that are associated with owning a house unless you don't have any maintenance costs or yearly property taxes, etc.

London Mike

We abide by this a little bit, and we're inbetween a number of posters on here. We rent out our house in London which allows us to pay off our mortgage and provide a profit of some sorts p/month (which the CRA taxes us on of course). We then rent out our house in Toronto. Ordinarily it would be foolish to keep paying rent to our landlord in Toronto for a long period of time, except for the fact that we're also having this done for us in the UK in parallel. We'll be done in 10 years - we're now at that lovely time where capital is coming down nicely.

If we bought the house we were in at the moment, our outgoings would rise (slightly) and without the rental income from the UK our standard of living would go down somewhat. We'd then be paying tonnes more interest to some bastard bank again for the next 8-10 years. When you buy anywhere, anytime you have to remember that the amount you actually 'invest' is comparable to renting (i.e. zilch) for the first 7-9 years of any mortgage. You are purely betting on property rise which, truthfully, will likely occur over that time. But, what will exchange rates be like in 2020 etc too?

It's a conundrum and I am sympathetic to the OP. I am literally schizophrenic on what we should do and go back and forth. It's probably not helping reading this thread either. Anyway, good luck!

lmartin999

I sit on the fence re renting v buying having bought at least two properties that I have sold for less than I bought and having lived in a rental place where the rent was about a third of what I would have paid in a mortgage.

However, unless you have a very long term I don't think the zilch part holds. I took a mortgage of $321,000 under 3 years ago (got to love Toronto condo prices) and now seem to owe about $280K. I think I overpay a bit though. For me, at least this makes me 'save'. As for price rises, it might have gone up in value but any increase would be wiped out with the bastard realtor fees if I want to sell. 5% + HST, yeah right.

London Mike

Yes, of course zilch is an exaggeration. However its's interesting that you've 'made' $41k in 3 years on your condo. I wonder, had you rented and invested the difference in rent vs own over 3 years whether you'd have saved the same? Hard to say I guess.

I can think of a bastard realtor if you want one. He keeps writing to me and asking me to 'like' him on Facebook...

You swinging back the other way towards MBTTUK?

Novocastrian

Very hard, especially in a Toronto condo. But you've got to have a longer perspective, say 30 years, which might be the period between "getting on the ladder" and retirement.

Simple solution. Stop using Facebook. HTH.

lmartin999

I suspect not much difference. For me the only difference is I have to make my mortgage payments whereas with savings I am so crap that I would probably have spent it on a Maserati or something.

Yes, I haven't liked him either. He is persistent, though I think they all are.....

Hawk13

We all do the "right" thing and make the mortgage payments. Show of hands - who really wants to spend it on the Maserati instead?

My hands way up.

Hawk13

A friend sent me these - a little doom and gloom but an interesting perspective nonetheless.

http://www.youtube.com/watch?v=8_AyO...feature=relmfu

Part 2

http://www.youtube.com/watch?v=-7O9R...feature=fvwrel

dgagitw

Anyone who thinks they know the definitive answer to this one is kidding themselves. Think about all the factors that could sway the balance one way or another:

- interest rates
- capital value of the house
- maintenance costs
- removal expenses (renters move more often than owner-occupiers)
- life expectancy of the renter
- insurance
- rental yields

Sometimes it's cheaper over the long run to be a renter, sometimes it isn't.