House(s) of Cards?
Posted by Beckie | Filed under Beckie
Over 10 years ago, back when we were DINKs (double income no kids), my husband and I felt it was time to look for a house in various Toronto neighbourhoods. We felt our budget was generous, with substantial down-payment (over 20%). We trudged through open houses, perused MLS listings from our agent, and went to specific listings with most of our wish list features. I didn’t feel like our list was insane…3 bedrooms, 2 bathrooms, no knob and tube wiring. Most places we saw were dilapidated to say the least, and would require huge efforts to renovate. I was shocked to hear that one of these “dumps” (I admit, it had “good bones”) we saw in an Open House sold for well over asking (450K). It needed sooooo many renovations, and didn’t even have a kitchen (we are talkin’ a sink, a hot plate and a few cupboards).
One day my husband suggested buying from a new development in the ‘BURBs (outside of Toronto). In the span of a few hours we walked into some model homes, looked at plans and bought a house. Ok, maybe not that fast, but we mulled things over, investigated the builder, and a few days later we bought a 2400sf, 4 bedroom house (built within 6 months). I had also made the switch to public libraries and the timing was just right to find a job not far from our new house.
Fast forward 10 years to present day, and interest rates are still very low. At least according to MLS and newspapers featuring recent sales, housing prices in big urban centres, mainly Toronto and Vancouver, are now out of reach from all but the top income earners. One would think that was true, given that an average looking house (possibly semi detached but in a nice neighbourhood) can sell easily for 800K.
One of my guilty pleasures is that I watch TV shows on HGTV like “Property Virgins”, and it seems that most people they feature are putting waaaay less than the 20% you would need to avoid having to purchase extra CMHC insurance. So what happens to people after they have kids and their income goes down (or they are paying for childcare=big bucks)? What happens to people if interest rates increase? Is there a POP coming?
I look occasionally on MLS and see my dream house in a dream neighbourhood every so often. The rational part of me knows we made the right decision to buy a house within our means in the ‘burbs. The irrational part of me says we shoulda just upped our budget and bought in the city. In any case, if we were buying a house NOW, well…let’s just say we’d be moving really far away and having to commute a really long time to work. Yet there always seems to be a lot of “For Sale” signs up in every neighbourhood I drive through, so somebody must be buying.
Do tell… How do you think the average young people of today are buying houses?