{"id":907,"date":"2010-11-11T21:10:11","date_gmt":"2010-11-12T02:10:11","guid":{"rendered":"http:\/\/www.holypotato.net\/?p=907"},"modified":"2011-10-20T00:47:42","modified_gmt":"2011-10-20T05:47:42","slug":"tvos-the-agenda-the-case-against-homeownership","status":"publish","type":"post","link":"https:\/\/www.holypotato.net\/?p=907","title":{"rendered":"TVO’s the Agenda – The Case Against Homeownership"},"content":{"rendered":"

I don’t watch the Agenda on TVO as often as I should. Last week was an episode on the case against home ownership<\/a>. It’s a nice program, the host basically just asks a few questions from time to time and lets the guests hash it out.<\/p>\n

Some points:<\/p>\n

Home ownership rates in Canada, from starting at a lower level than the US before the recent boom, are now higher than even the peak in the US. The guests don’t make too much hay over this, except to point out that it’s been driven in large part by younger people (especially young women) buying homes sooner, while they’re still single (perhaps with the intention of remaining single). I of course have to ask how long this increased demand can last for before falling back to historic (or lower) levels? We can’t start selling homes to high school kids…<\/p>\n

The Royal LePage guy then pulls out the results of a survey that suggest that people who got into home ownership earlier in their lives did better financially later in their lives. That might support the increased levels of home ownership and the notion of buying younger, but I’d say instead that it’s confusing correlation and causation, or at least ignoring the changing landscape. Those who bought younger may simply have been the ones who were more financially savvy, and not that the early purchase of a home caused <\/em>them to be on better financial footing for the rest of their lives. Also, for most periods of the past few decades, owning your shelter has <\/em>been the better option, financially… it’s only when real estate prices rise to ridiculous levels that renting becomes cheaper, so those results may not apply to someone buying today.<\/p>\n

“When a venture capitalist invests, they have one criteria in mind: exit<\/strong>. If you’re in a career which requires you to be mobile… if you think you may have to move around… Americans are facing the fact that they have to move around, Canadians less so, but Americans have to move around for their jobs. My dad had one job in a factory for his entire life; Americans are now switching jobs quite a bit. So I think about exit. I wouldn’t even worry that much about ‘am I gonna take a little hit’… that’s bad, but it’s not terrible. What terrifies me is these people who can not sell their homes<\/strong>, who cannot exit. So I think renting — there’s a financial comparison — but if you’re in a labour market where you may need to move, that question of exit I believe becomes paramount.”<\/p><\/blockquote>\n

He says in another point of the program that job mobility hasn’t been as big of an issue in Canada as in the US — often people will switch jobs or switch careers here, but stay within the GTA for example, so being able to sell their home to change jobs has not been as critical, so far. But I also worry about those small condos I was talking about last week. What’s going to happen to those people that bought condos barely large enough for one person when these people want to get married and have kids? If they’re underwater on their condo, will they have to put off having a family? Will their fears of being “priced out” and rushing to “get on the property ladder” backfire completely? Needing to move is not always career-driven.<\/p>\n

One of the panel members is a renter in Toronto, but they didn’t go into the details of how she came to the figure that it cost her $2000 to rent or nearly double to own her condo, or how this is a recent phenomenon (that IMHO, may not last) which is of course one of my favourite bugbears.<\/p>\n

Speaking of which, here’s an excellent comparison for you all: a house for rent near the Danforth and Pape in Toronto. They did a fantastic <\/em>job on the website advertising it, namely being full <\/em>of pictures not just of the house as it is, but also of the renovations to bring it to its current state. We would not be worried about water coming in the basement of this place. <\/p>\n

Here’s the Craigslist ad<\/a>, from which you can find their dedicated site<\/a>. <\/p>\n

This house is up for sale or for rent, here’s the homefinder<\/a> and MLS listing<\/a> for the sale side.<\/p>\n

To continue to beat that dead horse of mine, at $2700\/mo, it’s a much better deal to rent than buy this house for $680k. That’s a rent multiple of 252X, or if you prefer to think in percentages, the annual rent is only 4.8% of the purchase price — an amount easily eaten up by mortgage interest\/opportunity cost, insurance, and property taxes, let alone closing costs or a margin of safety.<\/p>\n","protected":false},"excerpt":{"rendered":"

I don’t watch the Agenda on TVO as often as I should. Last week was an episode on the case against home ownership. It’s a nice program, the host basically just asks a few questions from time to time and lets the guests hash it out. Some points: Home ownership rates in Canada, from starting […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"_links":{"self":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/907"}],"collection":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=907"}],"version-history":[{"count":0,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/907\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}