Calgary Construction XXVI - Page 92

Bad Grizzly · #**1821** Posted **Jun 29, 2018, 3:08 AM**

Quote:

Originally Posted by milomilo

If you want to assume everyone renting is an idiot/poor, go ahead. Although it is frustrating that people who would be financially better off if they didn't buy still keep piling into the housing market, needlessly inflating it.

That’s because they wouldn’t be better off financially. In less than two years my mortgage will be be paid off and I’ll have a $600-$700,000 house that I won’t have to pay to live in. Rents are probably going to be $3000 a month in 15 years, but I won’t have to worry about that.

milomilo · #**1822** Posted **Jun 29, 2018, 3:16 AM**

Quote:

Originally Posted by Bad Grizzly

That’s because they wouldn’t be better off financially. In less than two years my mortgage will be be paid off and I’ll have a $600-$700,000 house that I won’t have to pay to live in. Rents are probably going to be $3000 a month in 15 years, but I won’t have to worry about that.

It's situation dependent, of course, but it's quite possible for someone to save more by renting than buying. I've run the numbers every way I can on my situation and even giving the most generous set of numbers to the 'buy' side, renting still comes out ahead. That may change in the future, and may have been different in the past, but it is true for me now.

Your posts give an aura of arrogance indicating you think you have a superior financial knowledge to the rest of us. However, if you cannot comprehend how it is easily possible to generate a bigger investment by renting and investing the money, then I'd suggest you are not as wise as you think you are.

Bad Grizzly · #**1823** Posted **Jun 29, 2018, 3:33 AM**

Quote:

Originally Posted by milomilo

It's situation dependent, of course, but it's quite possible for someone to save more by renting than buying. I've run the numbers every way I can on my situation and even giving the most generous set of numbers to the 'buy' side, renting still comes out ahead. That may change in the future, and may have been different in the past, but it is true for me now.

Your posts give an aura of arrogance indicating you think you have a superior financial knowledge to the rest of us. However, if you cannot comprehend how it is easily possible to generate a bigger investment by renting and investing the money, then I'd suggest you are not as wise as you think you are.

My money is diversified and real estate happens to be part of that diversification. After all, anyone who pays attention to history knows that investments like stocks or mutual funds are hit and miss, and if you’re caught in the wrong down turn you can lose a bundle quickly. Those with insider knowledge do great.

Suburgatory · #**1824** Posted **Jun 29, 2018, 5:37 AM**

Quote:

Originally Posted by speedog

So many of the homeless can be as well, to many of them your wooden box might be viewed as an extravagance as well.

What’s your point?

O-tacular · #**1825** Posted **Jun 29, 2018, 3:35 PM**

Quote:

Originally Posted by Bad Grizzly

My money is diversified and real estate happens to be part of that diversification. After all, anyone who pays attention to history knows that investments like stocks or mutual funds are hit and miss, and if you’re caught in the wrong down turn you can lose a bundle quickly. Those with insider knowledge do great.

Yes, because real estate has never seen a downturn before...

Doug · #**1826** Posted **Jun 29, 2018, 5:05 PM**

Quote:

Originally Posted by O-tacular

Yes, because real estate has never seen a downturn before...

Calgary residential real estate has been a horrible investment other then from about 2002 through 2007. Current prices are about the same as 2006.

jc_yyc_ca · #**1827** Posted **Jun 29, 2018, 5:14 PM**

Quote:

Originally Posted by Doug

Calgary residential real estate has been a horrible investment other then from about 2002 through 2007. Current prices are about the same as 2006.

Umm, no. If someone bought a place back in 1999 like we did, then it's even better than someone who bought in 2002. We bought our place for 178K back in 1999 and by 2002 it was already appraised at around 225K

jc_yyc_ca · #**1828** Posted **Jun 29, 2018, 5:16 PM**

Quote:

Originally Posted by O-tacular

Yes, because real estate has never seen a downturn before...

Apparently you didn't read his message thoroughly, as he said right in his post that his investments were diversified.

All investments have ups and downs, millions have been burned by the stock market as well.

rotten42 · #**1829** Posted **Jun 29, 2018, 5:29 PM**

Quote:

Originally Posted by Doug

Calgary residential real estate has been a horrible investment other then from about 2002 through 2007. Current prices are about the same as 2006.

Ummm...I bought my first house in 1992 for $185k - it sold last year for $525k. My old place in Charlsewood I bought for $135K. WE sold it a year later for $170k. We needed a bigger house with kids on the way. two years ago that house sold for over $700k

So..I think if you've been in the market for a while it is a great investment.

Doug · #**1830** Posted **Jun 29, 2018, 6:10 PM**

Quote:

Originally Posted by rotten42

Ummm...I bought my first house in 1992 for $185k - it sold last year for $525k. My old place in Charlsewood I bought for $135K. WE sold it a year later for $170k. We needed a bigger house with kids on the way. two years ago that house sold for over $700k

So..I think if you've been in the market for a while it is a great investment.

The bulk of appreciation was 2002 to 2007. Since then has been flat to negative.

suburbia · #**1831** Posted **Jun 29, 2018, 10:16 PM**

Quote:

Originally Posted by milomilo

I've run the numbers every way I can on my situation and even giving the most generous set of numbers to the 'buy' side, renting still comes out ahead.

I don't know your scenario, but for me, about 2/3rds of my payment goes against principal and I'll be free and clear in about a decade. Even if there is no appreciation on my home and land (and there should be, but I don't count on it), it would be impossible to find anything comparable to rent for the portion that goes against interest. Of course, there is opportunity cost against what I had put down, but invested elsewhere it would have to fetch a massive return to bridge the gap. A return large enough that it would come with very high risk. If you do the calculation and do not count that half or more of your payment goes against principal, then you can come up with a false equation that leans to the rental side, no doubt. There could be scenarios where it makes sense, however, particularly if a family cannot come up with a down level that precludes the need for CMHC insurance (which can be substantial).

Anyway - this is tangential, and we've all gone over these things before. Some people never count the money going against principal no matter what math that is shown, so no reason to argue.

suburbia · #**1832** Posted **Jun 29, 2018, 10:25 PM**

Quote:

Originally Posted by rotten42

Ummm...I bought my first house in 1992 for $185k - it sold last year for $525k. My old place in Charlsewood I bought for $135K. WE sold it a year later for $170k. We needed a bigger house with kids on the way. two years ago that house sold for over $700k

So..I think if you've been in the market for a while it is a great investment.

I've been successful in my swaps also - though I'm guessing you have a few years on me. About half of my personal wealth (which is modest, I must say) is from appreciation on homes and/or paying down against principal instead of rental outflow.

Ever since I can remember, people would make the rental argument, and while there could be a scenario where the fear of ownership comes out positive, I haven't really seen one since the early 80's. If 1982 happens again, yeah, that's tough if you are over leveraged. But the more recent downturn management examples suggest governments won't ramp up rates like 35 years ago going forward.

milomilo · #**1833** Posted **Jun 29, 2018, 10:33 PM**

And some people refuse to accept that in some (a lot) of situations, it does make more sense to rent, even taking into account appreciation and paying off the principal. As long as you are disciplined about saving and investing the money you saved not buying. The advantage for many of buying a house is it is enforced saving. They have to make that payment to the bank no matter what, whereas if they save $500 renting, they might just spend that instead.

I'm not at all saying that in many situations it is a good idea to buy a house, for the record. I'm single, but if I wasn't things would change dramatically and buying a house would probably come out on top. But the typical boomer/parent advice of buy a house no matter what is often really bad advice for people my age, and it's pretty insulting to be treated as if we're just jealous, when we're actually probably making much more intelligent financial decisions by not buying than we're given credit for.

suburbia · #**1834** Posted **Jun 30, 2018, 1:01 AM**

Quote:

Originally Posted by milomilo

And some people refuse to accept that in some (a lot) of situations, it does make more sense to rent

It can certainly make sense if you are particularly hand to mouth, and don't have enough disposable income to do whatever it is you want to do post your monthly house costs (including saving more if you choose).

If your house costs are 25-30% of net, you're okay and have plenty of flexibility. Further, in ten years, I'll have multiples disposable income as I'll have no mortgage payments or rent payments. There will be zero enforced anything - not even an enforced rental payment! For those who have been renting ten years, you'd be in the same boat as me if owning. For those renting twenty years - well you'd have no payments left with a reasonable plan.

So yeah, if you can't afford to buy (and afford to buy for me is house costs ~30% of your monthly net) then it might be better to rent and save up. Hopefully you're early enough in life and disciplined enough to make a larger down later on.

Quote:

Originally Posted by milomilo

I'm single, but if I wasn't things would change dramatically and buying a house would probably come out on top. But the typical boomer/parent advice of buy a house no matter what is often really bad advice for people my age, and it's pretty insulting to be treated as if we're just jealous, when we're actually probably making much more intelligent financial decisions by not buying than we're given credit for.

Reflecting back, I didn't buy till I was quite a bit older - like 32 or so. So there you go. Fully get it. Talking on a forum is different than in person as sometimes visual cues help (including a quick assessment of age and the like). Can't do that on a forum. Appreciate the convo though.

milomilo · #**1835** Posted **Jun 30, 2018, 2:53 AM**

Well I'm not far off that age. But I bet when you bought houses were a hell of a lot cheaper - which changes the argument a lot. Fair enough, my parents generation probably made a killing on houses. But I truly hope that houses don't go up in price that much again, for the next generation's sake.

suburbia · #**1836** Posted **Jun 30, 2018, 4:27 AM**

Quote:

Originally Posted by milomilo

Well I'm not far off that age. But I bet when you bought houses were a hell of a lot cheaper - which changes the argument a lot.

True - and thus borrowing against my RRSP with the HBP made a significant dent in the down payment required. Now a days the HBP doesn't get you that far. I had that house for about six years and it went up 75%, which was massive given my small down payment. My down was like $32K and the house value went up $159K in six years. I had paid about $30K against the principal when I sold, so in effect, I put in $32K and pulled out $221K net in six years [$32K (original down) + $30K (paid against principal) + $159K increase]. For those years, by mortgage was about $850 per month - less than renting a similar place, which at the time would have been $1100 or so. So that's some return!

I knew people at that time when I bought that "chose" to rent because they felt it was a better bet - and I sincerely felt bad for them, because now they were hooped six years down trying to get into a house.