Thursday, April 12, 2007

Should We Stay Or Should We Go Now

Trevor and I always thought one of the first things we would do when we're out of debt is use our savings (which are growing very quickly, thanks to Budget Guru) to buy our first house. That’s what a couple does, right?

But where? How? What house? Frankly, the whole idea makes me sweat.

I like my job because I'm invited into people's lives, specifically their finances, and I've learned that buying is more complicated than I thought. The suburb life appears to be an attractive alternative to, say, the half-million dollar homes in my city neighbourhood. People are moving away in droves. We’ve seriously considered it.

The unattractive part is that most people who move to the suburbs seem to end up needing two cars. They spend a lot of time driving place-to-place and commuting for work. They also seem to have more debt than they expected from home improvements and property taxes and huge hydro bills.

Then there’s the newly built suburb communities; houses all squished up together, yards like green postage stamps, scraggly teenager trees. Sure, these houses look like veritable mansions compared to our one-bedroom rental. Then the owners mention these weird problems they're suddenly having with the roof. The plumbing. Mold problems. Five years after being built brand-new.

And now I'm reading that renting is not necessarily throwing money away because you're not wasting any more than a homeowner paying property taxes or condo fees. It takes time to build up equity so buying makes more sense only under certain circumstances, as illustrated here.

I like not owning a car. Not being responsible for fixing the furnace. Jumping on transit and arriving in what feels like a different country. I dunno. I guess we’ll be renting for a while longer until we wrap our heads around this whole thing.

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Blogger John ~ 10:57 AM

I'm having the same dilemma for a lot of the reasons you list. I see home ownership as the end result of a lifetime of fiscal responsibility (that, and a big fat retirement income) but I worry that the purchase will create more problems than it would solve.

I'd love to stay where I am. Our neighbourhood is close to the airport and major public transit and downtown so it's ideal. But I know I can't afford a house around here, unless I had a massive down payment. But OTOH, moving to the 'burbs may be cheaper in terms of a mortgage but then you'd spend so much more driving and maintenance and Kerry'd have to give up public transit.

Ideally, I'd love to live in a little townhouse in a semi-urban area for roughly what I pay in rent now. My needs are few: a place to stick my car, a basement to stick my junk and a little backyard to stick my bbq.

Of course, I could have all that if I moved back to the Maritimes...  

Blogger Working From Home Today ~ 12:29 PM

Let's all move to the Maritimes! Seriously. I love it there. Reminds me of home, the Prairies, but with more water.  

Blogger John ~ 5:43 PM

I love Montreal and all but I wouldn't mind a later in life move back, maybe in my 40's. The winters are crappy but once May hits, it's paradise.  

Blogger Chris ~ 10:39 PM

That article is based on the USA -- in Canada the interest on a mortgage isn't tax deductible (unless you can somehow take out an RRSP loan, withdraw the RRSPs and use them to pay for the house, which I've heard recommended - weird) so the situation is a bit different - also, the housing markets aren't parallel. Our friends who own in Arizona have seen their house value drop substantially over the last 2 years. Will this happen in metropolitan Toronto? Hard to say. Returning to Regina, the market is stupidly inflating right now, so we're going to try to buy right away -- cause I don't think it'll stop until it gets closer to Alberta. But what about Ontario? Would a financial planner have some insight? Our plan is to try to do Regina with one car - it'll be paid off in just 2 years :( - live centrally, and hopefully the bus/carpooling works. I was on the skytrain in Bangkok the other day thinking, gee, wouldn't it be great to have a skytrain in Regina, that would take you to downtown from the suburbs. All we'd need then is a bus system to support it...ha! Not likely in our one-car per person car that can fit 5 people or one truck that can haul a huge camper, that is. What have we come to?!  

Blogger Working From Home Today ~ 6:47 AM

Good points, Chris. We've considered the RRSP route. I've heard about Regina. I can no longer boast to my Ontario friends that "houses there are sooooooo cheap...", though I guess, comparatively, they still are.

Trevor went back to Regina on contracts a couple of times. It's gotten so spread out, it cost him $40 worth of cab rides to see a late movie (the bus? forget about it. You'd miss the movie).  

Blogger Naomi ~ 2:38 PM

We're never going to be able to own a house. Dan will never finish his PhD and I will never be employed again. Okay, slightly more realistically, I think house ownership is no longer a reasonable expectation for our generation and I'd better come to terms with it.  

Blogger Chris ~ 7:21 PM

I think you're being a bit pessimistic. If we, in our generation, can't afford housing (we being employable, competent people with University degrees) then what about everyone else? Who will buy houses? There will have to be a swing because otherwise all houses will be sitting vacant, no one able to afford to rent or buy them! It could be, also, that we're looking at the wrong type of houses - big, expensive ones in flashy neighbourhoods. Not sure there's a Broders Annex option in Toronto though :)  

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