What's a millennial to do in this housing market?
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Thread: What's a millennial to do in this housing market?

  1. #1
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    What's a millennial to do in this housing market?

    Living in Toronto... interest rates at an all-time low for a long time, semi-detatched and detached houses hard to come by, real estate inflated and overpriced, "bubble" is becoming more and more realistic... Vancouver is shambles. Market is crazy hot! But eager to leave home and start fully embracing the challenges and growth associated with being fully independent and responsible... no debt, in a long-term relationship... mid 20's with marriage in the near future, making good income (100k+ combined) but still in our mom's basements, living apart still after 5 years of dating (very frugally and no issues continuing to be frugal), unsure about waiting out the real estate storm...

    When do you draw the line between "stay at home and save" and "leave the nest, learn to fly and start your life" when the real estate market is on FIRE? Buying a home is still the ultimate goal, but not if it means a $600k mortgage in this inflated market... Thoughts on renting if your income allows you to save a good amount for a future home while renting? Sure savings grow faster when you're living at home than they would if you're dropping $1700/month for an apartment, but there's something to be said about independence and truly being a self-sustaining adult in your mid-20's...

    Second-guessing everything before taking the next big step in life! Advice and tips for the millennials who are watching the real estate market go crazy in the GTA?

    Last edited by DollaWine; 2017-02-14 at 10:31 AM.

  2. #2
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    Interesting post. Sometimes I find myself in this boat as well - granted i'm not even sure if I fall in the millennial generation while being 31.
    For me, its a matter of a few things (which you have suggested). Good stable jobs with decent incomes, available capital (down payment), and the view of whether the real estate purchase is an "investment or a home".

    If you have good incomes (which yours looks appears to be maybe just above average combined) with stable jobs, but more importantly a decent down payment (20%), then possibly it 'may' be okay for you. And if you view the Real Estate purchase more as a home than an investment purchase i believe you'll be more inclined to ride out the waves than looking and wondering at the value of your purchase is; not only that, your more incline to live there longer....the longer you live there, the more likely you will lose 'less' money, and the price becomes less of a concern. Having said that I live in Edmonton, where home prices are not as inflated as Toronto. If I were living in Toronto, I'd probably be more inclined to rent than purchase at this point of the RE cycle in Toronto. You are still very young, and time is on your side. And if you don't even have the 20% down, i probably wouldn't even consider purchasing at this point in time.

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    Save up money for your wedding first - as that is not cheap either.

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  5. #4
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    What CrazyEights said 1000%.

    All I have to add is you should not feel pressured to leave your folks' place. You can learn to live independently without necessarily leaving the nest. Remaining frugal is key and saving your money should be your top priority. I come from european parents and leaving the nest in your mid to late 30s or only when you marry is a very common thing. I still learned to be independant and built a hefty savings portfolio by the time I left. I was way ahead of my peers - first one to; own a car, own a house, own RE investments, own a business.

    Good luck and continue on the right track!

  6. #5
    Senior Member My Own Advisor's Avatar
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    re: "When do you draw the line between "stay at home and save" and "leave the nest, learn to fly and start your life" when the real estate market is on FIRE?"

    Ugh, unless you are making a few hundred thousand per year, and that job is stable, taking on a $600k mortgage is not smart. Just my take!

    The best thing that can happen in Canada is an interest rate spike, at least 25 basis points. It won't happen but it would be a great wake-up call.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

  7. #6
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    Thanks for the tips guys. CrazyEights you're definitely right about saving for a wedding. She has a huge family (And loves to plan ahead even though I haven't even proposed yet.. haha), we expect it to cast upwards of $20k. We're in no rush to buy a house because she hasn't broken into her field yet (teacher), so she doesn't know which part of the city she'll end up working in. So it would be a bad idea to buy a house in Ajax for example only to find out in 2 years she gets offered a full-time position in Mississauga...

    Mortgage u/w, we don't necessarily feel pressure to move out. None of our friends really have. But they're also all either not making good money, in student loan debt, or both. We're making pretty good money for our age, both very frugal and both debt-free with emergency money saved up. We want to rent - this real estate market isn't attractive at all. We're just unsure about rent + save a good amount or stay home + save a GREAT amount. Ontop of that, there's the whole social/emotional side of it. Like I mentioned, we've been dating for 5 years but have never lived together... there's certain strains and things we haven't been able to fully experience yet because we live apart.

    Quote Originally Posted by My Own Advisor
    Ugh, unless you are making a few hundred thousand per year, and that job is stable, taking on a $600k mortgage is not smart. Just my take!
    Agreed... we have no interest in taking on a massive mortgage so early in our lives/careers. It's scary that so many young people are eager to rush into houses when they're overvalued and can barely squeak in with 5% down. I wake up every morning with fingers crossed that interest rates went up a bit... a market correction is sooooo needed right now. We have NO interest in signing up for that... our dilemma is more renting vs stay at home.
    Last edited by DollaWine; 2017-02-14 at 11:39 AM.

  8. #7
    Senior Member tygrus's Avatar
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    Why are you so anxious to own a house. I didnt buy my first home until I was 31.

    Govt wont let this market go on forever, it will either correct on its own or be done forcibly like Vancouver.

    Until you are actually married and your career looks stable, dont worry about. Save and invest, then you will be ready to pounce when it does turn.

    Or else move out of Toronto.

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    Well, if I look back at my life at that time, housing prices were indeed much lower, but the interest rates were much, much higher, making payments almost the same. Job prospects were nearly non-existent, unemployment was high...of course, nothing like the problems being faced today.

    Personally, I would have loved to move into a nice house, or at least a prime apartment located in a great area...but that wasn't in the cards. I started off with a good apartment in an okay area, and got roommates. I started my first company and worked hard to build it. Eventually, as things started to take off, I upgraded apartments, but still needed roommates. Then I bought a small house, also with roommates...all while working on building my company.

    Eventually, things started getting traction, company made money, married one of my roommates, still had another roommate for a few years and did whatever it took to make it work.

    Too many people seem to want their cake and eat it too, instead of finding a way to gather the materials and learning to cook for themselves.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  10. #9
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    Quote Originally Posted by DollaWine View Post
    Mortgage u/w, we don't necessarily feel pressure to move out. None of our friends really have. But they're also all either not making good money, in student loan debt, or both. We're making pretty good money for our age, both very frugal and both debt-free with emergency money saved up. We want to rent - this real estate market isn't attractive at all. We're just unsure about rent + save a good amount or stay home + save a GREAT amount. Ontop of that, there's the whole social/emotional side of it. Like I mentioned, we've been dating for 5 years but have never lived together... there's certain strains and things we haven't been able to fully experience yet because we live apart.
    I hear you.
    The best advice I can give is to buy an average property that has a rental income suite. This will offset your payments and provide a good income supplement down the line.

  11. #10
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    A lot of people have feelings very strongly on home ownership.

    Especially in Canada we have insanely high levels of home ownership and many see it as an absolute failure for an adult not to own a home at some point. That said there are some very great advantages of owning a home. While there are many good landlords, I'd argue that there are probably more bad ones. And the good landlords tend to keep people a very long time, so they can be hard to find.

    Still in places like Toronto and Vancouver the home prices are ridiculous. If you are millennial unless you have parents giving you a boatload of money or you have an extremely high paying salary (doctor, dentist, successful business owner) buying a home probably shouldn't be a priority, because it's a lot of risk, and it takes up too much of a percentage of your salary to the point where you could be working to pay your mortgage for the rest of your life.

    If you can save money by renting I would highly recommend that route.


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