Dreams of Home Ownership
Kendrick and I just spent a chunk of this morning reading through this blog on why it's not a good time to buy a house in the US.
(Follow the link at the bottom of the page, and again to the next page - he gives a lot of great points that you know your realtor would never mention)
This leads to the question, how much of it applies to Canada - for example is there a housing bubble in Toronto? We tried one of his equations on the condo that we just sold in Toronto and it figured it was probably 15% overinflated. Not all that bad, but then again, 15% on the price of a house could represent several years of saving.
What about Denmark? People in Copenhagen often complain that the housing prices are overinflated. My coworker is looking to sell his apartment because he calculates that it costs more to rent money (i.e. pay interest on his mortgage) than to rent a home. And the housing prices are starting to fall here as well.
I liked the article - not that it will change anything for us while we are in Copenhagen (we're renting). It just adds more dimensions to my perspective on home hunting and home ownership
(Follow the link at the bottom of the page, and again to the next page - he gives a lot of great points that you know your realtor would never mention)
This leads to the question, how much of it applies to Canada - for example is there a housing bubble in Toronto? We tried one of his equations on the condo that we just sold in Toronto and it figured it was probably 15% overinflated. Not all that bad, but then again, 15% on the price of a house could represent several years of saving.
What about Denmark? People in Copenhagen often complain that the housing prices are overinflated. My coworker is looking to sell his apartment because he calculates that it costs more to rent money (i.e. pay interest on his mortgage) than to rent a home. And the housing prices are starting to fall here as well.
I liked the article - not that it will change anything for us while we are in Copenhagen (we're renting). It just adds more dimensions to my perspective on home hunting and home ownership
posted by Gina at 11:41 AM
5 Comments:
I didn't follow the link but I'll comment anyway. IMHO, renting is often underrated. I think the main reason is that people are usually willing to rent something much more modest than they are willing to buy. Then, as your friend said, "renting money" for ownership is another reason but there are also tax considerations. For example, in Canada and perhaps elsewhere, a landlord gets tax advantages that are passed on to the tenant. In the US but not Canada, interest on mortgage payments come from before tax dollars (but that makes ownership more attractive and drives up the cost of houses).
My friend Jack gave me a nice equilibrium perspective on it. He expects that the non-equity cost of ownership will more or less equal the cost of renting in most housing markets. This of course depends highly on how much you're borrowing in order to own.
YABA-DABA-DOO!
Is dangerman taking too many pain meds?
He did sneak a few sips of StrongBow when I wasn't looking...
the housing crash in the u.s. is being driven by foreclosures in the subprime segment of the market, which doesn't really exist in canada. that doesn't necessarily invalidate what he's saying on that blog, but it's a lot easier to claim that real estate is a fool's investment when the market is crumbling all around you.
as far as toronto goes, from what i've read, the current market is driven by real demand and has been for quite some time. that's no guarantee against a collapse, but i doubt that buying now is any worse of a decision than buying five years ago would have been.
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