“I was recently ambushed by my family and endured what can only be described as a financial intervention. I got the “cheaper than rent!” lecture, followed by “get on with your life” and “it’s part of growing up”.
I am the lone holdout among my siblings, all of whom recently purchased “cheaper than rent” strata units in the suburbs that cost far more than their old rental units in town. Their mortgages alone cost more than they used to pay in rent. And of course this does not include strata fees, insurance, property tax, repairs, maintenance and any potential future increase in mortgage payments if interest rates go up in the next 3 decades.
When I pointed this out I got a blank stare followed by “but we don’t want you renting forever”. There’s a real blind spot when it comes to understanding the true cost of owning vs. renting. It’s impossible to have a rational, informed discussion when the people you’re talking to have their own set of imaginary facts. Like when they told me that “real estate doesn’t go down in price”, which is demonstrably false. When I mentioned that it had in fact gone down many times in the past and we happened to be witnessing the greatest global real estate correction in living memory I was met with more blank stares. They were clearly embarrassed for me that I had such an odd set of beliefs and eventually just gave up and talked amongst themselves about their futures flips and dream houses they would build with their imagined profits.
It should be noted that all of them purchased in the last 18 months, and none of them have sold or profited. Two of them arrived in cars gifted by my parents, as they can’t afford a car now. The fact that they can’t afford basic transportation now that their “cheaper than rent” condos are draining their bank accounts is lost on my parents who rewarded them for “getting on with their lives”. Two of them also spent most of the last year without functioning kitchen appliances and could not cook and/or store perishable food items to feed their families because again, the “cheaper than rent” condo cost so much they couldn’t even afford a $100 craigslist special. And again, they were bailed out when Santa Claus delivered shiny new appliances. I guess that’s also “part of growing up”.
I never myself bring up the subject of real estate around them, but it is THE topic when we’re all in the same room together. It didn’t used to be this way. And most of the people in the room have worked or did work for a financial services company so they should be able to do the basic math and realize their error.
I’m not against owning, and I don’t believe that real estate needs to be cheaper than rent to be worth buying. Sometimes when you pay more you get more. And I understand that they’re building equity so long as the prices stay high and they do the required repairs and maintenance to at least keep the place worth what they paid for it. The problem right now is that the home equity being built up is more than cancelled out by the drastically higher costs of owning. They’re betting on indefinite price increases because in reality they can’t afford these places and will need to sell sooner rather than later. They’re all talking about selling even though they only bought in 2009. And they all imagine they’ll buy something bigger and better with their profits.
As for my parents, I don’t know what they’re thinking. This is an emotional issue for them and they feel like realty savants because their modest home is worth more than they paid for it in the 80s. They’re financially bailing out their kids who borrowed house-sized mortgages for their starter condos, and pressuring their other kid to do the same. I don’t get it.
A wonderful account; many thanks ‘nobody you know’.
It takes an immense amount of personal fortitude to keep your head when all about you are losing theirs.
You eloquently describe what other Vancouver housing bears have experienced in various forms of social interactions.
You also describe the inherent speculation in all purchases (“They’re betting on indefinite price increases”).