Real Estate

What's the point high priced residential property?

  • Last Updated:
  • Apr 21st, 2020 9:51 am
[OP]
Newbie
Sep 18, 2019
91 posts
29 upvotes

What's the point high priced residential property?

What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
38 replies
Deal Addict
Mar 2, 2017
1385 posts
2525 upvotes
Toronto
Piece of mind.
Realtor, Investor, CPA
Banned
Jul 8, 2017
628 posts
699 upvotes
NA
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
To pass it to the next generation so that they will have the advantage against the other who doesn't have what you have.
Deal Guru
Feb 29, 2008
14165 posts
10482 upvotes
Silver1234 wrote: To pass it to the next generation so that they will have the advantage against the other who doesn't have what you have.
Especially if you don’t come from money. It’s the one great equalizer.
Deal Addict
Nov 24, 2013
1374 posts
728 upvotes
Toronto
Sentimental value as well if home has been in the family a long time.
Deal Addict
User avatar
Jun 15, 2005
1473 posts
883 upvotes
Rental property with high demand (99% rented rate)
Newbie
Sep 23, 2017
85 posts
39 upvotes
Can only imagine how much easier life would get if my property was paid off.

Just some of the benefits:
1. More free time with family
2. Sense of financial security
3. Stress relief
4. Retire sooner
Member
Aug 22, 2016
458 posts
256 upvotes
That equity lets you have higher buying power too. Can you not get huge HELOC and use that money for more investments and keep multiplying wealth?
Deal Addict
Jul 3, 2007
3314 posts
3641 upvotes
Toronto
I enjoy my mega mansion in the bridle path, I invite Drake over all the time to show him what a real crib looks like....
Deal Guru
Feb 22, 2011
10126 posts
12528 upvotes
Toronto
It pays out every month when you don't have to pay rent and can't be evicted. The latter is priceless to many people, especially if you are raising a family.
Deal Addict
Jan 15, 2017
3898 posts
3354 upvotes
It's a place to live, and you gotta live somewhere.
Member
User avatar
Oct 31, 2019
427 posts
555 upvotes
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
To live in a comfortable environment without the headache that comes along with having debt or rent. Sometimes there really is more to life than money
Deal Guru
User avatar
Mar 23, 2008
12070 posts
8360 upvotes
Edmonton
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
"High priced residential property" is priced that way for a reason. Typically a combination of location and other features like finishes, size, etc. Those things appeal to an owner just like they do to a prospective buyer (thus increasing the price).

As far as "never plan on selling", most people buy a house to live in and enjoy. Materializing the value isn't an issue until you want to move for whatever reason (empty nesters, move to somewhere warmer, relocate for work). And if nothing else, you can leverage the value in the house through a HELOC, if needed.

C
Deal Fanatic
Mar 27, 2004
5327 posts
3250 upvotes
Toronto
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
says who? ever heard of a heloc?
Full-time Realtor
Banned
Apr 14, 2020
172 posts
201 upvotes
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
ummm a HELOC? LOL....
Deal Fanatic
Jul 3, 2011
5781 posts
2953 upvotes
Thornhill
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
Well, it's not like everyone can afford high priced property.

it's also a subjective amount.

Someone sitting on a property valued at say $800,000 may never plan on selling it but that is all they can afford.

Whereas, I would argue, t mhe higher up you go in the (personal use) property ladder the more likely the property's ratio to all assets decreases which is the opposite to most.
Sr. Member
Jun 19, 2007
780 posts
735 upvotes
Halifax
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
If I could point to one post that demonstrates the problem with today's market, this would be it.

You buy a home to live in. Much like you buy a car to get you around, or a sandwich to fill your belly. There fact that you're taking issue with someone "merely living in it" is the problem. Why would you materialize it? Why buy it in the first place if you're not looking for a place to live? You could have just sat on the cash. No no, you're implying that the *real* reason you buy RE is to sell it for more. The current attitude is along the lines of: "Doesn't matter if you're a single person, buy a 7 br home if you have the income to support it. It will appreciate well above rents/inflation/salaries, and then you can sell it for more!

People talk about a dearth of supply, but if anything I've seen the exact opposite. Homes are way bigger than 50 years ago, more people are living alone, or smaller families and anecdotally (if anyone has actual data I'd love to see it - searched but haven't found) the square ft per capita has only gone way up - along side prices which doesn't make sense. So if it's not a true need for more space, what is the reason for such demand? It's the above. People buying as much real estate as the bank will let them. Not because they need it for them and their 7 kids, but rather because sitting on as much real estate as possible has been a good way to make speculative money.

What's the point of sitting on a 3 BR home for you and your family of 4? Uh so you can live their and grow your family in a nice safe secure place? Why would you buy way more home than you need in the first place? It's like someone who lives within walking distance to work (as an accountant) buying an 18 wheeler. But if 18 wheelers had been doubling in value every 5 years, you can bet that would be the most popular vehicle out there.
Deal Fanatic
Jul 3, 2011
5781 posts
2953 upvotes
Thornhill
seadog83 wrote: . Why would you materialize it? Why buy it in the first place if you're not looking for a place to live? You could have just sat on the cash.
Why would anyone choose to own a $7 million dollar Rosedale or $10+ million dollar Bridal Path property as a tax free principal residence that they can afford to carry through instead of dumping their funds into cash that barely returns 2% interest if they're lucky, where all of it is taxed at income level?

Why would many of those choose to use their principal residences as a means to either swap or rent it out short-term to other wealthy people for an per diem amount that would pay for a month's mortgage?

Because the majority can and because it builds wealth far faster and more efficiently.
Last edited by licenced on Apr 15th, 2020 10:58 pm, edited 2 times in total.
Member
Feb 7, 2018
313 posts
408 upvotes
GuddaKaka wrote: What's the point of sitting on high priced residential property (fully paid out) when you never plan to sell it? This is kind of money that can never be materialized.
Counter-argument here

Why sell your paid off residential property when you will have to pay more for a new house or have to live further outside your established neighbourhood?
Deal Addict
User avatar
Dec 13, 2016
3704 posts
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Silver1234 wrote: To pass it to the next generation so that they will have the advantage against the other who doesn't have what you have.
I disagree with this statement.

This works well in countries that don't impose taxes on property, but in Canada most of this real estate will be sold within 1 generation.

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