Real Estate

"Forever Home" Now or Later - Save & Invest or Biggest Home Possible?

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  • Jul 18th, 2020 1:21 pm
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"Forever Home" Now or Later - Save & Invest or Biggest Home Possible?

House shopping (Durham). Found a house that's $100k-150k below what would be our "forever home" and the question becomes, do we want a home that saves us money but ultimately, leaves us wanting to move in 10-years
OR
Purchase $100k-150k more, get the "forever home" but be left with far less money.

We are a 30-something young family where incomes will not change in any foreseeable future. On one-hand, the GTA seems to always be "lucky I got in when I did" scenario. In 10-years time, who knows what the climate will look like but it likely won't be at this price point (will be higher). On the other hand, we have an opportunity in front of us of many years of investing and maybe turning something small into something far greater ... but will this outpace the home in 10-years, who knows?

Data: $30,000 down payment difference
$400-500 a month difference in mortgage

I'd love to hear from those who have done it. Glad you invested or glad you got your 'forever' home when you did?
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For the difference between the two, I'd pick the forever home option without a second thought as long as it is affordable and within reasonable reach.

If it'll make me live off ramen for the next 10 years, obviously don't do it but I'm pretty sure you'll be fine.
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Is the "forever home" bigger in square footage than the "for now" home? Personally, I would buy the smaller home over the bigger one, assuming both are freehold and of similar age. The way I think of it, buying a home is an investment -- you're renting money from the bank and then renting the house to yourself, being your own landlord. Living in a house, however, is consumption - you're giving up the equivalent market rent of the house, in return for the utility of living in the house. If the "forever home" has a higher market rent than the "for now home", you're probably spending more money on housing than you otherwise would need.

The only exception would be, if you can buy a big house but only live in part of it, renting out the other part of the house to a tenant, during the time when your housing needs are not as big.
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BlueSolstice wrote: Is the "forever home" bigger in square footage than the "for now" home? Personally, I would buy the smaller home over the bigger one, assuming both are freehold and of similar age. The way I think of it, buying a home is an investment -- you're renting money from the bank and then renting the house to yourself, being your own landlord. Living in a house, however, is consumption - you're giving up the equivalent market rent of the house, in return for the utility of living in the house. If the "forever home" has a higher market rent than the "for now home", you're probably spending more money on housing than you otherwise would need.

The only exception would be, if you can buy a big house but only live in part of it, renting out the other part of the house to a tenant, during the time when your housing needs are not as big.
For $100,000 more, I think every home will be a little bit bigger. Bigger bedrooms, probably a bigger basement. Bigger garage. Living room / kitchen is the same.
Which is why there would be any consideration to move at all - for more space / more amenities.

While renting out a portion may be an option for some, it will never be viable for me / prefer not to.

I guess my decision is whether $400 a month and 30k is worth the downsize or just go all out now and deal.
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In my mind, I'm not sure if it's worth it to shell out 100k for bigger bedrooms; on the other hand, if you were getting an extra bedroom/bathroom or library/den or much bigger kitchen/living space (walk in pantry) then I'd suggest to go for it.

Usually, extra sq. footage in the bedrooms, basement, garage - you are increasing operational costs without significant positives. That being said, if you and your family feels that the more expensive home will be a much better fit then you should go for it!
Last edited by tmostafiz on Jul 17th, 2020 5:55 pm, edited 1 time in total.
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if you can manage, do it now. We were in your situation before, the $150K we couldn't stomach 10 years ago, turns to be a difference of $400K 10 years later
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rogerrabbit168 wrote: if you can manage, do it now. We were in your situation before, the $150K we couldn't stomach 10 years ago, turns to be a difference of $400K 10 years later
And that's my biggest worry lol
That any "savings" won't equal to how fast prices jump

Edit: I think we are going to wait it out.
Wait for something else to come up and go from there!

Thanks for the perspective everyone!
Last edited by DaVibe on Jul 17th, 2020 7:23 pm, edited 1 time in total.
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Would be helpful if you showed/described more the 2 homes to see the differences.
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tranquility922 wrote: Would be helpful if you showed/described more the 2 homes to see the differences.
Wasn't really relevant for what I had in mind but ...

I believe this home will sell for $650 - https://www.zolo.ca/ajax-real-estate/20-field-crescent
Homes in Ajax with similar stats, detached, little bigger, would be $750-800k (and up)

So, that's where I get the $100 difference from

Here's a house that sold for $780, very similar IMO but detached - https://www.zolo.ca/ajax-real-estate/18 ... l-crescent
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DaVibe wrote: Wasn't really relevant for what I had in mind but ...

I believe this home will sell for $650 - https://www.zolo.ca/ajax-real-estate/20-field-crescent
Homes in Ajax with similar stats, detached, little bigger, would be $750-800k (and up)

So, that's where I get the $100 difference from

Here's a house that sold for $780, very similar IMO but detached - https://www.zolo.ca/ajax-real-estate/18 ... l-crescent
One would've thought it is relevant *shrug* Anyway, those links have paywalls.

If you could afford it w/i reason and are sure that it's your dream/forever home, go for it. Who knows what the future holds?
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>
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tranquility922 wrote: One would've thought it is relevant *shrug* Anyway, those links have paywalls.

If you could afford it w/i reason and are sure that it's your dream/forever home, go for it. Who knows what the future holds?
Fortunately, what we can "afford" I have no interest in spending - and we won't be. Sorry Zolo is a free site but I guess if you aren't in the market, you aren't signed up.
https://www.homechannel.ca/listing-view ... ntario.cfm

The sold listing is in the past, I can't pull it up without being signed into something
I didn't want to put up the listing at the time because if I WAS interested in it, I don't want to advertise for it for free an invite more bidders. I've already lost out to something that sold in a day - this month.

Basically boils down to a decision of investing in the market / other things, in hopes of really getting out of your current path or spending the $100k-150k into your house and obviously investing far less.

Hoping to find a happy medium, until then, still searching.
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DaVibe wrote: Fortunately, what we can "afford" I have no interest in spending - and we won't be. Sorry Zolo is a free site but I guess if you aren't in the market, you aren't signed up.
https://www.homechannel.ca/listing-view ... ntario.cfm

The sold listing is in the past, I can't pull it up without being signed into something
I didn't want to put up the listing at the time because if I WAS interested in it, I don't want to advertise for it for free an invite more bidders. I've already lost out to something that sold in a day - this month.

Basically boils down to a decision of investing in the market / other things, in hopes of really getting out of your current path or spending the $100k-150k into your house and obviously investing far less.

Hoping to find a happy medium, until then, still searching.
No one's asking you to ID the 2 homes, just something general like, e.g. the 'better' home is x sqft bigger, has more bedrooms, in preferred location, etc.

Anyway, GL, there will always be opportunity costs.
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>
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tranquility922 wrote: No one's asking you to ID the 2 homes, just something general like, e.g. the 'better' home is x sqft bigger, has more bedrooms, in preferred location, etc.

Anyway, GL, there will always be opportunity costs.
A lot of these homes don't give square footage. Asking for square footage these days, I get it probably 6/10 houses I look at. Many are not putting it, so that's not exactly something I can put up (coincidentally, BOTH homes do not list square footage).
And these were examples.

Homes are identical EXCEPT
$100,000 more gets you detached, 1.5/2 car garage and larger bedrooms (2 feet) and a full basement as opposed to a fraction of that. Upkeep would be the same.
$100,000 less probably gets you the single car garage, likely semi-detached or town home (Freehold), 3 to 4 bedroom still, rooms are a little smaller. This particular home has a living room, dining room, functioning kitchen, another front-room space, small basement with a +1 and is a 3-bedroom, all of which are livable sizes.

Again, it was just a little more specific than I wanted to get into because this is a Canadian group, not a Toronto group so when you say 3-bedroom for $800,000 someone is going to say what a rip off and the other person is going to say oh go for it, which is not the conversation I want to have. The conversation I want to have is from home owners who had to make this decision, probably 10-15 years ago or are living this decision right now.

I'm essentially at a crossroads. You can change your lifestyle by this alone. Is my entire family going to Disney every few years? Or are we going once in our lifetime?
Am I driving a brand new leased car or am I driving the used one I drive now?

Just looking for opinions on 'to spend' and 'not to spend' but more importantly (to me) is probably the idea of investing that money and the long-term effects/gains of that $100,000 I didn't spend on the home and invested instead, as I have another 20 years at least until retirement. I've since posted a similar question in the investing section because at the core, this is an investment question as well.
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I would spend a bit more and get a house you will be happy in. IMO 100-150k difference isn't even that big these days - many times this is how much houses go over asking in Toronto.
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DaVibe wrote: A lot of these homes don't give square footage. Asking for square footage these days, I get it probably 6/10 houses I look at. Many are not putting it, so that's not exactly something I can put up (coincidentally, BOTH homes do not list square footage).
And these were examples.

Homes are identical EXCEPT
$100,000 more gets you detached, 1.5/2 car garage and larger bedrooms (2 feet) and a full basement as opposed to a fraction of that. Upkeep would be the same.
$100,000 less probably gets you the single car garage, likely semi-detached or town home (Freehold), 3 to 4 bedroom still, rooms are a little smaller. This particular home has a living room, dining room, functioning kitchen, another front-room space, small basement with a +1 and is a 3-bedroom, all of which are livable sizes.

Again, it was just a little more specific than I wanted to get into because this is a Canadian group, not a Toronto group so when you say 3-bedroom for $800,000 someone is going to say what a rip off and the other person is going to say oh go for it, which is not the conversation I want to have. The conversation I want to have is from home owners who had to make this decision, probably 10-15 years ago or are living this decision right now.

I'm essentially at a crossroads. You can change your lifestyle by this alone. Is my entire family going to Disney every few years? Or are we going once in our lifetime?
Am I driving a brand new leased car or am I driving the used one I drive now?

Just looking for opinions on 'to spend' and 'not to spend' but more importantly (to me) is probably the idea of investing that money and the long-term effects/gains of that $100,000 I didn't spend on the home and invested instead, as I have another 20 years at least until retirement. I've since posted a similar question in the investing section because at the core, this is an investment question as well.
I get what you're saying and at least to me it gives a better indication. Detached and having >=2 car garage is huge to me if I'm choosing freehold but everyone is different. Since you're looking at investing and opportunity cost, you really ought to determine how much you could realistically gain/risk investing vs putting that into the better home, and then there's the mortgage ramifications so it's not as clear-cut as it's not a lump sum difference of $100K.
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>

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