Real Estate

How will the next generation buy real estate?

  • Last Updated:
  • Oct 14th, 2019 12:06 pm
[OP]
Member
Jan 2, 2011
452 posts
314 upvotes

How will the next generation buy real estate?

Thought I'd get a good discussion going. The property ladder many have climbed in the past 10yrs have mostly been to dumb luck. Lower interest rates and lax lending as well as government pumping. Why luck I say? Well someone who bought 10yrs ago in USA doesn't feel the same.

The next generation getting in now don't have equity.
Taxes are much higher both income and land transfer taxes
Property taxes higher
Etc etc.

I personally think Canadian prices are beyond realistic because to afford homes at today prices you need a high salary.... but taxes in Canada are insanely high. You pay for your house in after tax dollars!

Also the boomers I believe haven't quite figured out how expensive senior care is!

Lastly....the government thinks someone who earns a high salary is rich. They might have ZERO net worth. However someone who won the property lottery sitting on millions of equity but very small income... is poor when it comes to taxation...

When will the millenials wake up and realize they are being duped?
87 replies
Sr. Member
Jun 28, 2018
906 posts
642 upvotes
Toronto
Depends, I guess, what are you trying to do and what you're willing to go through?

Pool resources with a few trusted and reliable friends to buy property for income. People have been doing this for a long time. In fact a buddy asked me relatively recently to get in on some foreign property, but I don't have time/un-committed resources at this time.

Alternatively, financial instruments like REITs parcel out investment properties into affordable chunks traded on the stock exchanges.

For a home to live in, makes for some potential awkwardness, but same deal. If motivated some could snag a place with multiple families living in one home.

Everybody's situation is different, and probably in many cases a single person has things much more difficult compared to someone partnered up. I can only provide an anecdote. A friend went from renting a space "in a closet" to buying a few hundred thousand dollar place to live within a few years; after getting their education together and a job lined up. Yes, some assistance from parents such as some loans for education and at times "here's some money so you don't completely starve" with a final safety net of "you can come home if you really fall apart".


As for luck... ask those homeowners a little over 10 years ago how they felt, especially in the US. Some are still homeless after the crash.
The Distracted Investor

Dividends through quality companies 😃 Though I usually lose money with trades :facepalm:
[OP]
Member
Jan 2, 2011
452 posts
314 upvotes
I recently bought a new phone. When I met him I learned he was a realtor. I pretended to be dumb and asked how can I get into the market?

I got him comfortable and he opened up. He told me.... he can get me any size mortgage I want... and with one of the big banks. The fee is $2000. Everything will be made up. I did some further research. Turns out there barely is a check documents you give are verified true. The banks can't even have access to your T4 numbers.

Fraud is rampant in the industry.

Did anyone catch the article from Globe and Mail 2 weeks ago with indebted Canadians?

It starts out talking about a barber (Navin Seepaul) who makes 30k and has a 700k mortgage and a 1 million dollar home. https://outline.com/NKyyDx that is link to article.

How on earth is that possible??? The party will continue as long as houses can keep going up.
Sr. Member
Dec 26, 2005
621 posts
151 upvotes
They can do what eveyone else did and work for it. For years I saved every dollar I made for a house. No new cars, no vacations, no dinners out, no fancy clothes. You have to want it bad enough. Previous generations didnt have it any easier.
Deal Guru
Feb 29, 2008
14418 posts
10680 upvotes
Lol at luck. You have no idea what you’re talking about.
Deal Guru
Feb 29, 2008
14418 posts
10680 upvotes
learsid wrote: I recently bought a new phone. When I met him I learned he was a realtor. I pretended to be dumb and asked how can I get into the market?

I got him comfortable and he opened up. He told me.... he can get me any size mortgage I want... and with one of the big banks. The fee is $2000. Everything will be made up. I did some further research. Turns out there barely is a check documents you give are verified true. The banks can't even have access to your T4 numbers.

Fraud is rampant in the industry.

Did anyone catch the article from Globe and Mail 2 weeks ago with indebted Canadians?

It starts out talking about a barber (Navin Seepaul) who makes 30k and has a 700k mortgage and a 1 million dollar home. https://outline.com/NKyyDx that is link to article.

How on earth is that possible??? The party will continue as long as houses can keep going up.
I always hear these stories and yet have never met anyone like this. I know a lot of realtors. $30K salary on a $1M home? How many people do you think like his exist? I'm still trying to figure out how the immigrant who comes here, goes to school, works hard, lives in less than stellar conditions while saving every penny, doesn't go on vacations, doesn't eat out and pretty much misses out on a social life but earns a very good income is LUCKY. I wouldn't throw that word around so loosely.
Deal Addict
Jan 29, 2010
1188 posts
1125 upvotes
Toronto
Canadian real estate (excl BC) prices are too low if you ask me. Only market outside BC that is high is Toronto, and the high prices are highly justifiable due to high net migration to Toronto leading to high demand for housing there and TO being the only good English-speaking economy in Canada. Everywhere else in Canada is cheap. The high income jobs in Toronto (there are plenty) also support the high housing costs well.

Vancouver on the other hand is way out of its depths. Weak economy despite high housing prices fuelled by retired/rich Asians preferring it over other places due to its proximity to Asia. If one lives there and has income from Canada, I suggest they move elsewhere because they are competing with China and low tax Chinese income for real estate.

Outside Vancouver, Calgary and Toronto, all other 98/99% of Canada are cheap so I don’t understand how millennials will have trouble buying real estate. If they can’t earn enough to live in these 3 cities, they deserve to move. Plenty of people are/will be capable of buying in these 3 cities.
Last edited by jillaryit on Oct 1st, 2019 8:10 am, edited 1 time in total.
Deal Addict
User avatar
Jul 4, 2006
3649 posts
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Shepherd214 wrote: They can do what eveyone else did and work for it. For years I saved every dollar I made for a house. No new cars, no vacations, no dinners out, no fancy clothes. You have to want it bad enough. Previous generations didnt have it any easier.
I don’t agree with that at all. My parents could afford a semi within 60 minutes of downtown toronto taking ttc and it didn’t cost them 10x household income.

Avocado toast isn’t what is stopping people from buying homes.

BUT. I think the good ole days are over and for all the reasons why the next generation wants to stay in Vancouver and toronto, those are reasons why property is expensive. So people that can’t afford what they want should consider what people do when they want greener pastures... move.
Deal Addict
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Jul 4, 2006
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JayLove06 wrote: Lol at luck. You have no idea what you’re talking about.
Well you might be the expert real estate investor but luck does play a lot into it for average folk. But that’s the same for any thing in life like if someone wanted to work at blockbuster or newspapers.

Back to the point about luck and real estate, affordability was better in the not to distant past and people would have bought bc they were a certain age or had the right partner would have been able to afford a low rise family home. Some of my peers are in better areas or detached homes only bc they settled down earlier. It’s not like they made a complicated risk reward discounted cash flow analysis - they just got married earlier.
Deal Guru
Feb 29, 2008
14418 posts
10680 upvotes
poorwingman wrote: Well you might be the expert real estate investor but luck does play a lot into it for average folk. But that’s the same for any thing in life like if someone wanted to work at blockbuster or newspapers.

Back to the point about luck and real estate, affordability was better in the not to distant past and people would have bought bc they were a certain age or had the right partner would have been able to afford a low rise family home. Some of my peers are in better areas or detached homes only bc they settled down earlier. It’s not like they made a complicated risk reward discounted cash flow analysis - they just got married earlier.
As I said, people need to stop throwing that word around because they do not know the struggles of others. If you are born in Canada. You are lucky. If you live in Canada, you are lucky. I can go further but I may offend some people.

You talk about your peers who are in better areas because they married earlier. What was stopping you? What about the people in your age group who a)make more b) live in an even better area? Lucky? Look beyond your circle. I have peers who if I called them lucky would not talk to me because I know their struggle.

No one is keeping you in Toronto or Vancouver. Canada is a great country with plenty of other options. You can find cheap housing outside of these cities. Would it be lucky to do so or sensible?
Newbie
Feb 21, 2012
72 posts
18 upvotes
Richmond Hill
Housing affordability issue is a global problem, lots of countries faces the same problem as Canada. If you travel around the world, you will realize that Canada is a very good country. As a first time home buyer, you just need to purchase a home that you can afford and not to financially over-extend yourself.
Deal Expert
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Apr 21, 2004
54640 posts
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I wonder how many had the financial wherewithal, the 5% down payment and willing parents to help out but chose not to buy a few years ago because renting was cheaper or they had other priorities? Sometimes ego gets in the way.

One can always pay parents back in many different ways for their help. I find many peculiar beliefs about maturity and independence here in North America. Why do people have to move out when they are free to stay and can help around the house or even with the mortgage ? I understand renting if it is more convenient but there's lots of ways to demonstrate maturity besides living out on one's own while saving for a down payment or advancing education (if that even helps) .

I know siblings who didn't get anything until a parent passed away. Not everyone can afford education or housing but if deserving, hoping parents would consider helping out.

I would try to assist my children if need be as soon as they show maturity and financial prudence. Net present value of our assistance tends to be higher than leaving them a few hundred thousands or even a million dollars much later in life.
Last edited by alanbrenton on Oct 1st, 2019 8:51 am, edited 1 time in total.
Deal Addict
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Jul 4, 2006
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JayLove06 wrote:

You talk about your peers who are in better areas because they married earlier. What was stopping you? What about the people in your age group who a)make more b) live in an even better area? Lucky? Look beyond your circle. I have peers who if I called them lucky would not talk to me because I know their struggle.

No one is keeping you in Toronto or Vancouver. Canada is a great country with plenty of other options. You can find cheap housing outside of these cities. Would it be lucky to do so or sensible?
I earn a similar salary as the peers I’m referring to. I am not simplifying based on my graduation year.

I agree that moving should be a consideration which is why I suggested it.

But my point about luck was apples to apples. The only difference was how old people they are or when they decided to settle down.
Newbie
Sep 19, 2019
78 posts
49 upvotes
Save up money for your first downpayment...Buy a condo. Wait a few years build up equity and move up to townhouse. Wait a few Years build up equity and move up to a house..by then you probably have dual income.

It sucks but the days of buying a detach house in your early twenties.even if you are married are pretty much over.
[OP]
Member
Jan 2, 2011
452 posts
314 upvotes
Why is it that just typing Canada Housing in Google News has mostly articles about our housing affordability and bubbly?

Here is another international bank yesterday ranked us 2nd in the world for a bubble. Obviously they aren't going to have bias like Canadian Banks.

https://www.ubs.com/global/en/wealth-ma ... -2019.html
Member
Jul 14, 2009
228 posts
77 upvotes
JayLove06 wrote: I always hear these stories and yet have never met anyone like this. I know a lot of realtors. $30K salary on a $1M home? How many people do you think like his exist? I'm still trying to figure out how the immigrant who comes here, goes to school, works hard, lives in less than stellar conditions while saving every penny, doesn't go on vacations, doesn't eat out and pretty much misses out on a social life but earns a very good income is LUCKY. I wouldn't throw that word around so loosely.
Beauty is in the eye of the beholder. That immigrant thinks s/he's the luckiest person in the entire world. Their perception is different, values are different. What you consider quality life by many immigrants is considered excessive materialism. There's no right or wrong here. Just happiness and I envy those that are happier, regardless of their income.
Jr. Member
Feb 24, 2017
143 posts
204 upvotes
Shepherd214 wrote: They can do what eveyone else did and work for it. For years I saved every dollar I made for a house. No new cars, no vacations, no dinners out, no fancy clothes. You have to want it bad enough. Previous generations didnt have it any easier.
I can agree with most of what you said, but the bolded part is tragically incorrect. Literally every metric available says you are wrong.
Member
Jul 14, 2009
228 posts
77 upvotes
learsid wrote: Thought I'd get a good discussion going. The property ladder many have climbed in the past 10yrs have mostly been to dumb luck. Lower interest rates and lax lending as well as government pumping. Why luck I say? Well someone who bought 10yrs ago in USA doesn't feel the same.

The next generation getting in now don't have equity.
Taxes are much higher both income and land transfer taxes
Property taxes higher
Etc etc.

I personally think Canadian prices are beyond realistic because to afford homes at today prices you need a high salary.... but taxes in Canada are insanely high. You pay for your house in after tax dollars!

Also the boomers I believe haven't quite figured out how expensive senior care is!

Lastly....the government thinks someone who earns a high salary is rich. They might have ZERO net worth. However someone who won the property lottery sitting on millions of equity but very small income... is poor when it comes to taxation...

When will the millenials wake up and realize they are being duped?
I'm a millennial and I am not duped. I am homeowner with a beautiful house that I can proudly say was bought with my own hard earned money. I don't consider luck being a big part of it, but planning, ambition and goals were.

It was my goal -and upbringing- to own a house so everything I did was in that direction. I worked throughout the 4 years of university, got grants, scholarships, OSAP and and saved up. Moved out to a $600 (back then expensive!) university housing with my partner at 22 while both of us studied in programs that 'paid' us during studies. One of our 25K salaries went towards a precon condo we bought in the burbs and one was our living expense. Several years later we sold the condo and used the money as a down payment for our first house. And again, several years after, we sold and moved to a bigger house....I think in the first 3 years that we bought our 1st home, we didn't buy a single pair of socks for ourselves, our wedding had 20 guests and our vacations were Kingston and Niagara falls. We didn't consider ourselves poor but we lived frugally and that was never an issue. It was in the direction we had planned and planning is what many of my same age peers lacked and still do.
Member
User avatar
Jun 28, 2018
273 posts
307 upvotes
Aurora, Ontario
JayLove06 wrote: You talk about your peers who are in better areas because they married earlier. What was stopping you?
You're kidding right?
Deal Guru
Feb 29, 2008
14418 posts
10680 upvotes
mefromparadise wrote: Beauty is in the eye of the beholder. That immigrant thinks s/he's the luckiest person in the entire world. Their perception is different, values are different. What you consider quality life by many immigrants is considered excessive materialism. There's no right or wrong here. Just happiness and I envy those that are happier, regardless of their income.
Exactly.

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