Thinking about buying a home? You might want to read this first. Vv Magazine’s Allante Von Cathe talks home ownership and if, as millennials, it’s the right move.
When it comes to the question of whether or not you should buy a home, for millennials it depends on what you value. My mother’s home tripled in value from the time of completion in 2000 ’til the time it sold in 2015 – the house literally paid for itself twice in the end. The housing market in the Greater Toronto Area has been on a steady rise in value since the 90s.
I spoke with luxury real estate agent Sepideh Moazzani of Chestnut Park Real Estate Limited to see if she thought it was wise for millennials to buy a home today, even though most can’t afford it. “Prices will go up another 5-6% and will remain stable, so it’s better to buy sooner than later. Also, mortgage rules will change, becoming more difficult for people to qualify. Since Canada is accepting 250,000 more immigrants, the first thing those people will buy is a house and a car so prices will remain high. If demand is higher than supply, prices will go even higher. Eventually, Toronto will be as expensive as New York City.” I also asked if she foresees that homes purchased today will increase like those have from 1999 to 2015, to which she replied, absolutely.
“Prices [of homes] will go up another 5-6% and will remain stable, so it’s better to buy sooner than later.”
But what happens if millennials decide to go the other way? Moshe Milevsky, a professor of finance at the Schulich School of Business at York University, told Vice, “I don’t think we’re going to see the collapse that worries people. We have a valuable natural resource in housing and so many groups of people around the world who would love to have that and are gaining access to the money to do that—they’re always going to want to take this off our hands. I don’t think they’re going to give up on it.” Basically, if we, the youth and millennials don’t buy homes, foreign investors will take advantage of this, which is something we’ve seen with the housing market in Vancouver and are seeing here in Toronto. A problem of this being foreign investors buying multiple properties only with the intent to maintain ownership renting to tenants, driving up costs.
Is it shameful to live with your parents beyond 25? Are your priorities mixed up?
In an article for Toronto Life titled Young, Rich, and Totally Not Buying A House, a 31-year-old male pharmacist, who still sleeps in his childhood bedroom, says: “I make $130,000 a year, and I spend the vast majority of it on experiences—wild, rare, unforgettable experiences… unlike just about everyone 25 and older in this city, I don’t want in on the real estate craze. It’s not that I can’t afford a house or a condo. I follow the market closely and could hitch myself to a $600,000 mortgage tomorrow if I wanted. But when I consider what I’d be giving up just to own a few hundred square feet, I am convinced: the Toronto real estate market is for suckers, and I want no part of it. Neither should you.”
This man fits the profile of a parasite single, something Japan is all too familiar with. The term parasite single (derivative of parasaito shinguru) was coined in Japan and is a single person who lives with their parents beyond their late 20s or early 30s in order to enjoy a carefree and comfortable life. In Japanese culture, the term is especially used when negatively describing young unmarried women. From what I’ve witnessed, the Greater Toronto Area possesses the same demographic who mimics the aforementioned. Pertaining to whether it is shameful to live with your parents beyond 25, in our defense, the cost of living is much higher today than when our parents were our age, and the dollar no longer goes as far as it once did. But I do know girls who skip lunch in order to buy a Chanel bag. Decent two bedroom apartments in decent neighbourhoods at $850 a month in the Greater Toronto Area are a thing of the 90s.
“With the surge of the real estate market and no foreseeable sign of the housing bubble popping anytime soon… Houses are one of the best investments a person can make.”
Real estate agent Tyler Wyles of RE/MAX Hallmark Realty Ltd., Brokerage, mentioned on the subject of whether millennials should buy homes or not: “With the surge of the real estate market and no foreseeable sign of the housing bubble popping anytime soon… Houses are one of the best investments a person can make, especially with the projected 8% increase next year of the real estate bubble expanding (ex. $400,000 condo would make you $32,000 in one year). The past year was a 16.2% increase, so a $750,000 home would have made you $222,000.” Essentially, the sooner you buy the house the better, as the housing market has been rising in price for over 20 years. Sadly, the cost of living rises and we citizens of the world increasingly get less and less for our dollar – what $100 warranted in 1999 only warrants what $55.69 does now since $100 in 1999 had the same buying power as $144.31 today.
When I began this piece I was of the mindset that we millennials should not buy into the housing market, largely, because growing up as a child seeing brand new townhomes sold by builders for $150,000 in 2000 in safe respectable suburbs of Toronto seemed normal, feasible, and incredibly tangible whereas now these exact same homes not worth their current value, old and withered command three times their initial cost, and that is frustrating. Hundreds of thousands of dollars for an old withered and, excuse my tone, lived in home with a foundation about to crack, old pipes, and a roof that needs to be re-done costing $15,000 minimum?! Get the fuck out of here. But, after doing my due diligence, I just see buying a home in this inflated housing market as a necessary evil. It saddens me that unlike some societies, North America possesses a recyclable market, in how things are produced, builders often don’t let the concrete of foundations of homes set for 40 days but usually less than 18 days to save on time and costs, or how cheap wood is used in construction of homes, all of this working to stimulate the economy by forcing us to constantly repair our homes – this would not be the case if quality materials were used and proper practices were employed. You know, it’s kind of like pharmaceutical companies not releasing cures but instead medicating people.
Start now. Start where you are, with what you have. Start with hands shaking. Start with voice trembling. Start and don’t stop. Just start.
I think what it means for many in Canada, which sees the costs of everything go up except income, is that we will have to prioritize living on less, it means not acquiring a new $3,000-$6,000 item every month as a new graduate living with your parents, it means that the fruits of our labour are likely to pay off and that the sooner we tackle this incredibly daunting task of buying a home, the easier it will be than if we start in 10 years. Like that over-posted Instagram quote says: “Start now. Start where you are, with what you have. Start with hands shaking. Start with voice trembling. Start and don’t stop. Just start.”
What do you think of the (North) American dream? Let Vv Magazine know in the comments below or tweet us @ViewtheVibe.
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- The (North) American Dream: Homeownership, is it Worth it? - January 13, 2017