finance, Living

The Madness of the Housing Market in Vancouver

What my current savings could pay for.

Living near Vancouver was not always expensive. My parents moved to the suburbs because it was far more affordable, but even then they were able to pay 20% downpayments with ease. They only rented one property (right after my mom moved over from Toronto) and after that each property was bought. In those days it made sense. Now, not so much.

I grew up with some vague notion of being responsible with money. My dad always warned against credit card debt and my mom encouraged me to put a percentage of my McDonald’s wages into a savings account to travel Europe. Both of those were excellent advice, and I have continued to heed them, but none of it prepared me for the housing market. I’m not sure anything could have. Over the past decade or so prices in Vancouver and the surrounding suburbs have skyrocketed to completely stupid levels. Houses in my parents charming neighbourhood, where huge trees have grown and lawns/gardens are abundant, have sold for 1.5 million dollars, been knocked down, have had huge 9-bedroom monstrosities built to cover the entire lot, and have then resold for 2.5 million dollars. WHO IS BUYING A 9-BEDROOM HOUSE IN THE FRIGGING SUBURBS?! It’s quite sad, really, and unless something drastic happens it will remain that way for a long time.

3 million dollars for this…gem…in my old neighbourhood.

My husband and I would be renting anyway, as we are truly trying to save for a downpayment. Lately though our thinking has changed as we watch our savings grow. For a year we’ve diligently put aside 40% of our monthly pay and we have amassed a lovely amount. The insane part is: it’s not enough. In five years of savings (provided nothing changes) it still wouldn’t be enough, not even for a one-bed condo. If two well-paid people cannot afford a 20% downpayment after five years of savings, it begs the question: is buying a house worth it?

We are already homeowners in Glasgow. There, we were able to buy a gorgeous two-bedroom apartment right in the heart of the city, with floor-to-ceiling windows and square-footage that would make many people weep with envy (just kidding, but it is a lovely place). In Glasgow it made sense to buy, as it cost the same as renting and now we are able to rent it out to cover mortgage costs and then some. That’s working out. Vancouver is not. Don’t get me wrong, we love it here and we’re not moving back any time soon, but the idea of purchasing a house here fills me with dread and anxiety. Instead, we’re very lucky in our situation: we rent in an awesome neighbourhood and have great landlords. Family is nearby if things should ever go tits up.

The crazy part is: so many young people are adamant they need to buy a house! They don’t wait for a 20% downpayment, they don’t save for furniture or immediate repairs. They simply take out an enormous mortgage, tack all the expenses to it or to a credit card, and then bask in the glow of home ownership. For about a month. And then come the bills. I have a friend who is also a teacher and her boyfriend is in construction. They are both hard-working, awesome people. And they have over a million dollars in mortgage debt between the two of them. Is it worth the stress? Probably not. It’s insane to me that even in an obviously over-priced market people are still desperate to get on the property ladder, long-term money consequences be damned. To be sinking almost every penny that you earn into a house may be how you choose to live your life, but it sure sounds stressful – what if you lose your job? What if you can’t remortgage with the new mortgage stress tests? What if the market cools and you can’t sell?

My husband put it best when we were talking yesterday. He says: What do you think would make us feel better? Home ownership or a huge pile of savings? To me it’s a no brainer. Owning my home may be neat down the line, if it ever makes sense financially to buy a house in an area we love, but for me it is no longer a requirement for a successful life. Renting keeps us flexible, allows us to live in the neighbourhood we want to live in, and, perhaps most importantly, allows us to continue saving. Maybe we’ll keep that savings for a downpayment, maybe we’ll decide that it is our ticket to financial independence. We may choose not to shackle ourselves to a job for an extra twenty years to pay off the house, and only then be able to save for our twilight years. Vancouver has taken something that we all took for granted growing up, home ownership, and turned it into a monster. We all owe it to ourselves to decide if it truly is worth it.

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