Why owning a home is bad for you

Home ownership has troubling side effects, distorting the economy and taking a toll on our minds and bodies


Photo illustration by Levi Nicholson

Saying no wasn’t easy. Harpreet Pandher had spent more than a month casing apartments in Toronto’s frantic condominium market, and the one-bedroom gem at Queen’s Quay seemed custom-made for her lifestyle. The pool was cool, the gym would save her the cost of a health-club membership and the view of Lake Ontario was downright sublime. The $500,000 price tag was not unreasonable—not, at least, by the giddy standards of her adopted hometown. And the low-rise complex was within walking distance of Pandher’s new banking job in the Bay Street financial district. Everything seemed to fit.

But the more Pandher pondered that price, the more she felt a chill in the region of her shoes. “I would have been going paycheque to paycheque,” acknowledges the 23-year-old. “I’d be giving up a lot of recreational things, even just going out with co-workers, because everything in Toronto costs a little bit more.” And she didn’t need her economics degree to understand the financial risk: Even a modest bump in Canada’s rock-bottom lending rates could send the market into a tailspin, she knew, leaving her stuck with a home she wouldn’t be able to sell at the price she’d paid.

So Pandher demurred, retreating to live with her grandparents in suburban Brampton. “Everybody wants to own a place, and you hate to throw money at rent,” she says. “It was very discouraging.” But her experience reflects that of many a young Canadian these days, and gives rise to a heretical idea: Maybe home ownership isn’t all it’s cracked up to be. Maybe people like her—property neophytes being egged into massive purchases by cheap credit—don’t belong in the housing market. Maybe there’s such a thing as too much home ownership.

When the numbers from Statistics Canada’s 2011 household survey came out last week, they revealed, much as expected, that home ownership in Canada had soared close to the 70 per cent level, meaning nearly three-quarters of households own the properties they live in. That’s a 13 per cent jump over 1990s levels, reflecting the frenzy of purchasing that’s gone on in the low-interest era of the 2000s. More than one-quarter of the approximately 9.2 million owner households moved into their dwellings in the five years prior to the survey, and today, fully 82.4 per cent of what StatsCan calls “couple families”—households with two adults—own their own homes.

A decade ago, when faith in house ownership reached its apogee, this might have elicited cheers. In 2004, then-president George W. Bush heralded the arrival of an “ownership society,” offering up what might be the purest formulation of the buy-at-all-costs mentality. “The more ownership there is in America,” he said, “the more vitality there is in America.” By then, the ownership rate in the U.S. stood about where Canada’s does today, and it would keep climbing for four years until the subprime mortgage crisis pushed it off a cliff, triggering the financial meltdown that devastated the global economy. It’s been falling ever since, and currently stands at about 65 per cent—the lowest level in 18 years.

The fears these parallels raise are well understood: Everyone from the Organisation for Economic Co-operation and Development (OECD) to Paul Krugman, the Princeton University economist, have drawn comparisons between Canada’s housing bubble and that of the U.S. before the fall, warning of a sell-off that would erase tens of thousands from the net worth of the average Canadian family. But even if the mania continues, other downsides to the dream are starting to come clear. Owning houses, a growing body of research suggests, adds to labour imbalances by making us less willing to move to areas where there is job creation, while all that debt we’re racking up may be taking a toll on our minds and bodies. Studies have linked it to disorders ranging from anxiety to poor eating. On a macro level, meanwhile, decades of efforts to promote home ownership as an economic cure-all have distorted the economy, to the point that housing accounts for almost a third of GDP.

That’s not a healthy ratio, says economist Ben Rabidoux, president of North Cove Advisors and one of the country’s leading pessimists on the housing market. “Our love affair with home ownership has gotten dangerous,” he says bluntly. Yet we’re nowhere close to ending the romance. With other sectors of the economy in neutral, the business of building, selling and fixing houses is something we can’t do without. Our national and personal fortunes are tied to it, and there’s something elemental—atavistic, you could say—about our desire to own the space we live in. Indulging it has been easy enough in recent years, thanks to cheap money. But now we are trapped, literally and figuratively, by the four walls around us.

The idea of home ownership as a social good has deep roots in the economic and political life of North America. Walter Lippmann, the American public intellectual, famously mused that “private property is the original source of freedom,” while countless commentators have lauded pride-of-place as a virtue with power to uplift communities. In Canada, the federal Conservatives have touted home ownership as the solution to all kinds of socio-economic challenges, most notably poor living conditions on First Nations reserves. House payments, they argued, are a form of saving, since they allow people to build equity against which they can borrow to launch businesses.

If the U.S. crash failed to shake our faith in this picket-fence idealism, it should have, says William Strange, a real estate and urban economics specialist at the University of Toronto’s Rotman School of Management. “It was an epic disaster for the economy, for the banks and most of all for the people,” he says. “There are reasons why some people in the past didn’t buy houses. Maybe they weren’t financially prudent. Maybe they had uncertain employment prospects and didn’t want to be on the hook for mortgage payments. To take that person and say, ‘You’ll be better off if you own a house,’ well, it’s just wrong.”

To be sure, most experts doubt a real estate downturn in Canada would trigger a U.S.-style banking crisis. They point to our tighter lending rules, and less forgiving bankruptcy laws that discourage Canadians from walking away from their homes if their mortgages go under water. Yet, in 2009, central bankers and political leaders here faced a Hobson’s choice: loosening access to credit might produce a housing bubble; but if they didn’t they risked strangling badly needed business investment. So, in March 2009, the Bank of Canada lowered its overnight rate to 0.25, and that year the federal government added incentives aimed at getting more people into houses. It upped the amount first-time buyers could borrow from their RSPs to $25,000, while providing $750 in tax relief to help with closing costs. To put it mildly, Canadians bought in. By 2011, the mortgage debt of a typical Canadian household amounted to 100 per cent of its disposable income—reflecting a sharp uptick in the pace of borrowing from that of past generations. All signs suggested young people were leading the way. A report published last year by the central bank showed that between 1999 and 2010, the average household debt of people between 31 and 35 had ballooned by more than 60 per cent.

The effect has been to transform housing from a key sector of the economy into its main engine. Rabidoux, who spends a lot of time trying to bring attention to this warp, has taken to quizzing people about Canada’s leading industry. “It’s not manufacturing, not resource extraction,” he says. “It’s real estate services. I think a lot of people would find that shocking.”

Indeed, the sector accounted for $196 billion of GDP in April, compared with a combined $131 billion for oil and gas extraction and mining. That includes rental and leasing. But the lion’s share derives from the buying and selling of houses. Add in the $111 billion generated by construction, and wealth created by the financial side of the business, and you have a juggernaut accounting for more than 27 per cent of the country’s GDP (the historical average: about 23 per cent). “That doesn’t sound like an alarming increase,” says Rabidoux, “but consider the impact of a four-point reduction in GDP. I mean, the U.S. industry was at about 24 per cent when it peaked. It fell back down to 20, and look what happened. We’re way ahead of where they were. This is major.”

You wonder now if we could kick the addiction. Our preoccupation with house buying, after all, has gone cultural, as daily newspapers dine on condo ads and red-hot urban markets become settings for reality-based programs such as Property Virgins and W Network’s Love It or List It: Vancouver. There’s little room in the genre for pessimism. In 2009, HGTV aired a Canadian-made program called House Poor, featuring young families who had plunged over their heads into expensive Toronto homes. It folded after one season.

Perhaps it was ahead of its time, because these days, our romance with home ownership leaves a lot of us unhappy. A recent report by the Conference Board of Canada found that one in five first-time homebuyers meets the technical defintion of “house poor,” shelling out more than 30 per cent of pre-tax income on housing costs, while polls suggest some 60 per cent of first-time buyers wish they had amassed a bigger down payment. Anecdotes abound of people laid low by the unexpected costs of ownership. Heidi Eisenhauer, 39, thought she and her partner had stumbled on a gem when they shelled out $369,000 for a semi-detached Victorian in an up-and-coming Toronto neighbourhood. The house even had two apartments, the income from which would help cover their $250,000 mortgage. But their first minor renovation revealed jaw-dropping flaws their home inspector didn’t see, including an absence of beam work to support extensions added to the house. “We drained every financial resource we had,” Eisenhauer says ruefully. “Our in-laws had to remortgage their home, which they’d paid off, so we could do our renovations.”

Suddenly, the couple’s seemingly manageable $1,700 monthly mortgage payment became a burden to meet. “We never thought we’d be house poor,” Eisenhauer admits. But after three years of struggling—even with income from the two suites—they gave up and sold the house last February.

It would be easy to dismiss these as uptown problems. But the relative wealth of new homebuyers doesn’t make their stress any less real, says Diana MacKay, director of health and education programs at the Conference Board of Canada. MacKay wrote the board’s report on housing affordability, and believes giant mortgages have left a sizable portion of house owners living lives of quiet desperation, their distress overlooked because they appear to have good jobs and high incomes. One of the few studies done on the psychological effects of home ownership, a 2004 paper by academics at McMaster University in Hamilton, reached the unsurprising conclusion that mental stress is higher for those who owe on their mortgages than those who don’t. “While they may feel more secure than those who do not own their own homes,” it noted, “[they] still feel the pressures associated with rising housing costs that outpace increases to personal and household incomes.” Another study, released in May, found a correlation between a rise in U.S. mortgage deliquency and Google searches that point to mental health concerns.

In many cases, says MacKay, children end up paying the price. “They live in good-quality homes in nice neighbourhoods, yet they’re being compromised through slow and steady deprivation. They stop signing up for sports programs. They don’t go out. And you’d be amazed how quickly things like good-quality food get sacrificed.” At the height of the past recession, for instance, U.S. grocers reported a rise in sales of what they call second-rate-brand food products—even in stores located in upper-middle-class neighbourhoods.

What happens to families if interest rates rise is a growing preoccupation of economists, because a slowdown of Canada’s disproportionately large housing sector would likely unleash havoc in the rest of the economy. It would cast many new homeowners out of work, Rabidoux and others warn, at which point their houses would become boat anchors. They’d become reluctant to sell because, highly leveraged as they’d be, they’d know they will take a financial bath.

This effect—which economists have long suspected—was borne out in May by a joint British-U.S. study that found high levels of home ownership in a given state are a precursor to sharp rises in unemployment. Put simply: property owners are loath to uproot and move to where the work is. “This suggests that high home ownership may gradually interfere with the efficient functioning of the labour market,” wrote authors David Branchflower of Dartmouth College, and Andrew Oswald of the University of Warwick in England. To make matters worse, the study found, high home-ownership levels might discourage business start-ups—a possible result of NIMBY-minded residents blocking the establishment of plants and industrial parks through zoning restrictions.

In this country, with its diverse regional economies, the risk of reduced labour mobility is a growing concern. Home ownership rates are, tellingly, highest in Atlantic provinces, where unemployment is highest, and lowest in B.C., Alberta and Saskatchewan, where jobs are more plentiful. Frustrated in their efforts to lure workers from other parts of Canada, companies in the West have been taking advantage of Ottawa’s Temporary Foreign Worker Program, hiring outsiders willing to forsake homes in favour of income. Yet, it’s the torrid pace of residential construction that is creating many of those jobs, with Saskatchewan, Alberta and B.C. leading the recent growth in per capita housing starts. In these places, we’re building the homes that might someday discourage families from pursuing better opportunities.

It’s hard to ignore the absurdity of the entire predicament. Buy a house, we’re told, because it’s good for the economy. But don’t get rooted—it’s bad for the economy. For young people like Pandher, that kind of contradiction is enough to scare them out of the market. She’s got a decent-paying job, and a friend willing to go halves with her on a rental suite this fall. She can invest whatever money she saves, and while the allure of ownership has not quite dissipated (“I’ll wait a year and see how things look,” she says), Pandher’s taste of the home-buying experience has equipped her with useful wisdom for her next foray into the market. Home might be where her heart is. But it’s not necessarily where one’s best interests lie.

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Why owning a home is bad for you

  1. What a load of balderdash. Owning your own home is why people immigrate. We aren’t over extended because we don’t have a Fanny Mae or Freddie Mac extending loans to insolvent people. Let’s face it. The OECD does not want people owning homes because it does not provide mobility in labour and does not allow the state to control your destiny.

    • OECD doesn’t want people to own in Canada because they know that Canadian housing bubble is LARGER than the US. OECD charts here! http://bit.ly/154O6dZ

      • The OECD is another UN agency. They don’t believe in personal property period. Read the UN’s Agenda 21. Their top argument against it is that is breeds inequality. Got that? Owning your own home is unfair to those people who can’t afford one. Give me a break.

        • Capitalism does breed inequality. In soviet union everyone had a free housing and yet nobody owned anything. Not saying I am agree with the way it was in USSR.
          And how about the IMF, which says Canada’s real estate is overvalued by over 40%? Another UN agency?

          • It is. The UN, the IMF, OECD and the World Bank were all put together at Bretton Woods after WWII.

          • So the above mentioned organizations conspired against people owning property? And now they are trying to engineer a crash? I dont get yout point!

          • He doesn’t have one. Just confused conspiracy theory.

          • What an odd thing to say.

            Emily I’m sorry to tell you but that mess you posted to James Tran looks to me like a “bot” response.

            You seem to have some bad code in your deinitialization function.

          • No, they are not conspiring against people owning property. They disapprove of people owning property and think this is a good time to bang the drum and sound the alarm. It says right in the article that it prevents the labour market from shifting to find new jobs. OECD = Organisation for ECONOMIC Co-operation and Development. Taken right from their website “Our main concern in this quest is the urgent need to fight poverty and rising levels of inequalities.” Owning a home, in their lights, is an inequality. Also from their website “Our countries need to design whole-of-government strategies to reduce
            inequalities. Any of these strategies should rest on three main pillars:
            The first challenge is to create more productive and rewarding jobs.” Ergo if owning a home prevents you from finding a good job in another part of the country, then this is bad. Don’t forget, the better job we have, the more taxes we pay and the more money flows to organizations like the OECD from our governments. If we are all stagnating and happy in our homes, taxes are flat.

          • “Our main concern in this quest is the urgent need to fight poverty and rising levels of inequalities.” does not translate into preventing home ownership.

            ‘Create more productive and rewarding jobs’ does not translate into making you move.

            That’s just daft. I told you that you have an age-related problem here.

          • The “tell” in wallmart’s comment is his mention of “Agenda 21”.

            What it tells you is that he’s a Teabag kook who believes that there is a conspiracy by 178 signatory nations (including the US under Bush) to (fill in blank with evil objective).
            Although Teabaggers are predominately old white guys, this isn’t evidence of senility.

          • This comment was deleted.

          • I was actually proving to Lenny that there is such a thing as Agenda 21. Nor do I watch Alex Jones. That was an official website. If you people are so low information, why do you sit on these comment boards? As for Miss Emily, she is the one that is barking mad. Macleans must pay you guys extra for the low brain power.

          • I assume you meant to prove there is such a thing.
            Though I don’t know why you feel the need to do so – I didn’t claim otherwise.

          • And sustainable development to you means everybody loses their house because of some plot??

          • The third world countries I follow are doing really, really well. Chile, Columbia, Peru, Panama, Costa Rica… even Mexico is starting to attract Mexicans to come back from USA.

            We fail to realize our economic issues are about G8 banking debt fraud, and not all countries subscribe to money print for debt and pyramid debt borrowing like we do.

          • Senility with a side of paranoia…..we have a lot of them nowadays.

          • Two problems exist in society today. At the top you have the back room money controlling the banks and governments, bailout buddies, corporate welfare, money for nothing and lining buddies pockets with taxpayers wealth. All want more slave taxes from middle class producers, tax more and pay less in value as they depreciate money fraud (inflation).

            At the bottom there is another problem, millions of people that are able and not taking jobs as they are too good to clean chickens, work in mines and medical or science jobs are too hard to get degrees and they want arts, BA and MBA…soft jobs at government where the demand of work are pretty slack. They love procrastination and whining. Too busy a whining to be a winning. They think other people should pay for it all, free education, free iPads and no idea how to hold a job they get a G12 diploma…looking for governemtn to manage them like sheep.

            And why the middle class is shrinking, everybody steals their money via modern day slavery, high taxation of little value to the people who make it work.

          • You bet this economic crash of J CU PIIIGGGS in debt countries and currencies engineered the crash.

            Back room powers that be are using government taxation for bank, corporate, union welfare on the backs of workers and kids and grand kids with debt-tax slavery. CRA even cuts mafia cheques.

            Until ethical people get back control of governments and force ethics back into governments, the governments will continue to buy media, buy elections and buy the politicians. They will manage people with deception, fraer, envy and greed, all used to manage the so called democratic elections.

            Yes, I just said democracy is a ruse, as back room money buys the leader, and your MP doesn’t answer to you. You and I only have the ruse of democracy.

            Ask yourself why no one on the ballot will promise and deliver lower taxes? As they rig it with only statism options, government always wins and you always get less.

            Yep, debt-tax slaves had too much governemtn money so they fixed it.

          • Just more unelected dysfunctional politics to repress people. If UN can’t convince you, if IMF can’t extort you, we use NATO to bomb you. All for bankers acceptance of fiat US/Euro, debt offsets and cheap resources.

          • Yes, because productive people get wealth and whiners for other people money and self pity keeps them down. You need to reward good behavior and productivity before you put too much in habitual consumers of wealth or society fails.

            No ethical reason for my productive family to do without to feed losers that only know how to whine for other peoples money.

        • Wow, Glen Beck said Agenda 21 is bad so it must be true. Quite obviously, you’ve not read a word from it if that’s the tripe you’re pushing.
          Read a book or something, yeesh.

      • Great article.
        The current price of housing is simply not reasonable if you compare what average people are making. It needs to go down much much further. At least 40% off.

        • Exactly the reason why I plan to rent for the forseable future.

          • Did anybody ever stop to think that maybe incomes will rise instead of housing collapsing?

          • dude, incomes are below 1989 level in Toronto. Incomes grow for the top 1% but not for the rest of us. Just do some basic research at statistics canada and chug a keg of beer to keep yourself from becoming depressed!

          • I stopped thinking that years ago.

        • This comment was deleted.

          • A ‘Chinaman’? And what is G1? Is this Eisenhower-speak or what?

          • G1 is the beginner level driver’s license in Canada

      • Often wrong OECD is a political organization pretending to be economists.

        As long as Canada is a tax inflated economy, can’t freely migrate out of Canada we are in a closed economy like Europe.

        It is true, we are highly overvalued when you consider a $600,000 Vancouver or Toronto small condo could be a 10 acre 3500 sq/ft upscale home in Costa Rica or China…..the reality is many can’t migrate to Costa Rica or China, and their over paid high paying jobs will not be there.

        You are, as a debtor and worker kind of locked into the tax inflated Canadian economy. As long as Ottawa lets in too many people, and keeps tax inflation a live, we will be a high cost country to live in.

        Location freedom, local cash flow (wages after taxes and food expenses), and taxes define home prices. Can’t move out of Canada with the over paid job and want ocean and warmth, Toronto and Vancouver are it. Homes are cheap in Northern Ontario as only good jobs are governemtn and taxes are high, so local cash flow is low like home prices.

        But I don’t see Canada’s bubble breaking that far. If anything, the pending hyper-inflation may make this a good time to buy. Imagine 1970 buying a home for $14,500 and selling it in 1979 for $79,000. Always factor inflation into your economic futures and investments.

    • Canada has the CHMC, which garantees mortgages for people who otherwise would not qualify at the bank . In other words, the CHMC allows borderline financial cases to get a mortgage. So far the CHMC has about $600 billion dollars of garanteed loans. And the average Canadian has a 160% debt load. And you say we are not over extended?
      BTW, when an American gets a house mortgage, the interest rate for the loan is typically fixed for the entire life of the mortgage. The type of mortgage Canadians get, where the rate is garanteed for only typically 1-5 years, is considered a risky mortgage by Americans. Geez, I wonder why?

      The BEST way to control people’s destiny is to enslave them to a 30 year servitude of debt, ie: a mortgage.

      • Mortgage interest is tax deductible in the US, so it doesn’t matter to them

        And the CMHC does not do ‘borderline’ anything.

        • The CMHC does do borderline financial cases. People wouldn’t need CMHC insurance if there wasn’t risk to the banks. No bank will touch you without CMHC insurance if you come to them with less than a 20% down payment.

          • CMHC has been around since the war, and works through the banks.

            Be serious

          • I am serious and I also happen to be right. No bank will touch you with less than a 20% down payment. The banks offload the risk of a bad mortgage to the Canadian taxpayer via CMHC. Is that what you mean when you say CMHC “works through the banks?” CMHC were insuring 0 down 40 year mortgages until very recently. CMHC was set up to allow lower income people the opportunity to own their own homes. It did the opposite, as people who would (and should) never have bought a home flooded the market and spiked RE prices – thereby making homes unaffordable.

          • It changes. It has also been 10% and 0%.

            And even so, that’s hardly a bad risk

            In the US people were buying 400K homes while working as strawberry pickers….THAT is a bad risk

            Houses went up in price….because so did everything else. Cars, clothes, appliances, travel…..people are always amazed when that happens. They want their wages to rise, but not prices….and that’s not possible.

            On edit:


          • House price increases outstripped inflation and wages for 15 years, and by quite a large margin. That is the concern.

          • Capitalism doesn’t do things in an orderly fashion….it’s whatever the market will bear.

            The youngest boomers are only 48 so it’ll go on for awhile yet.

          • If it’s not a bad risk, then why don’t we have 0 down 40 year mortgages anymore? It’s because of the very risk which you deny exists. In Canada we have our own version of sub-prime, it’s called non-prime and it comprises almost 10% of the Canadian market. That’s very bad risk in a market full of risk.

            The wikipedia link you posted proved my point on how CMHC operates and is contrary to your assertion that it “works through the banks.” If there’s no “bad risk” then why don’t banks self-insure these very mortages? It’s because they know there’s too much risk involved for them to even look at them without third-party insurance.

            Home price increases far outpaced inflation, and wages didn’t even keep pace with inflation in recent years. The result is far too big a percentage of the average person’s income goes to housing. The end result is a mountain of debt and ticking time bomb when interest rates climb.

          • I didn’t say all mortgages are safe, just that most of them are. And gawd knows, our banks have made sure THEY are safe. Govt backs them anyway.

            Monthly payment should be one week’s income under the old rules. Now people don’t think about the overall cost….just the monthly one

            Stop panicking about everything….goodness knows we’ve been through all this before.

            I remember when ‘credit’ itself came in…..you’da thot it was Armageddon….yet here we are.

          • Credit is what got the world into the financial mess it is today. There’s too much borrowing and consumption and not enough savings and production.

            The banks have not made sure mortgages are safe. They don’t care, they do not insure them and are not liable for default.

            You say we’ve been through this before? No we haven’t. We’ve never had a sustained period of artificially low interest rates and debt to income ratios of 160%. Nor have home prices ever risen so dramatically. Spain, Greece, USA, Portugal, Japan, Ireland, Iceland, Russia, et al have all had housing meltdowns. Only the naive think it’s different here.

          • LOL yeah well you save up 400K before you buy a house, and another 30K before you buy a car.

            See you in the next century.

            PS.Yeah we’ve been thru tough times financially many times before. You must be a kid.

          • I’m no kid, and I’m old enough to remember interest rates at 21% to combat runaway inflation. We’ve never been through times like these with astronomical government and personal debt levels that are being sustained through artificially low interest rates. Before it was savings levels that carried people through hard times. Now all people have are lines of credit and massive mortgages.

            Before house prices got so out of whack and we had interest rates that encouraged savings, people used to save up for large down payments on homes that weren’t overpriced or oversized.

            P.S. I bought my home for under $75,000 in 2006. A very nice place with a huge garage in a rural area. That same home would be $400,000 in most any major city in Canada. It costs me next to nothing to own – so who’s laughing? Not you…

          • We didn’t have ‘runaway inflation’…..Germany did between the wars

            If you want to live in a rural area, that’s up to you. 80% of Canadians live in urban areas

            I own my home outright….bought it last year for cash…in a city.

            Any more questions? Didn’t think so.

          • Years of double digit inflation that wasn’t brought under control until interest rates hit 21% counts as runaway inflation. Hyperinflation like what the Weimar Republic in Germany had is a possibility again due to the orgy of central bank money creation worldwide.

            You didn’t buy your home for cash either, nice try though. Those who buy homes outright with cash do not concern themselves with the health of the mortgage market nor are they in denial there is a problem. The fact you referenced CMHC is likely due to you needing them to qualify for a mortgage. Those who are most at risk of insolvency are the ones who are in denial the most about the pending correction in Canadian real estate.

            You were oblivious in your previous post how home prices outstripped other consumer items. It would be wise to educate yourself on the facts.

          • No it doesn’t. And I lived through it.

            Yes, indeed I bought my home for cash….cheque actually.

            And I pay attention to the economy because it’s part of my job. One I make a very good living at. Now settle down.

          • “No it doesn’t” what exactly? I lived through the high inflation 70’s and 80’s as well. If your job means paying attention to the economy, you’d actually have an idea as to how the CMHC works. You’ve been corrected on it several times in this thread and even posted a wiki link that contradicted your statements.

            I make a very good living too – and I’m not house-poor or in denial.

          • This comment was deleted.

          • I can back up what I say with data. You on the other hand couldn’t even grasp the basics of how CMHC works and posted a link that contradicted everything you said.

            I’m not panic stricken as my finances are well in order. If interest rates spiked to 21% overnight I could easily withstand it. How about you? I didn’t think so…

          • You aren’t saying anything. You’re just nattering.

          • “Nattering” refers to mindless comments like “panic stricken miserly Con” and sweeping generalizations like “lots of foreigners are buying homes here.”

            You still have not owned up for making statements that were fundamentally wrong about CMHC. Care to own up to what you said or will you continue to spew mindless rhetoric?

          • Well nattering is what you’re doing….you dropped the phony ‘financial whiz’ gimmick some time ago.

            Look, Rick is back….we don’t need a Fall temp. Sorry. Try down the street. I hear they’re hiring baristas.

          • “Phony financial whiz gimmick” would apply to someone who falsely claims they paid $400,000 cash for a house. You are either lying or obtained the house by inheritance. That doesn’t make you a financial guru.

            Judging by your comments you are likely under-employed and university educated, and very bitter about your lot in life. 8400 comments and counting on Disqus, that’s very telling to your state of mind and station in life. Those who are comfortable in their own skin tend to have other pursuits to fill their time.

          • I’m tired of these constant gimmicks….logical fallacies pretending to be discussion or arguments.

            You couldn’t even be bothered to research ahead of time.

            Like I said….you’re dismissed. Ciao

          • Actually I’m well read, which is why every argument you made was easily destroyed. You clearly are not well read, it’s apparent with every post you make. You still haven’t addressed your fallacies on CMHC – just admit you’re wrong and people might stop making fun of you. Failing to do so just shows cowardice and emotional immaturity.

            “You’re dismissed” – you’ve heard that a lot in your life haven’t you?

          • Cashed out your RRSPs? Downsized from a mortgage-free (or almost free) property? Or saved your whole life to finally buy a place for your retirement?

          • Nobody is saying you should save up 100% the value of a house (thought it’s not a bad idea for a car, although not entirely necessary). But 20% down as a minimum is a pretty good rule of thumb. And guess what, you don’t need mortgage insurance if you’ve got 20% down. Therefore, the CMHC is ONLY there to backstop those marginal cases (and marginal is now the majority, since we’ve become so accustomed to carrying debt) who cannot save for a few years to come up with 20%. This makes purchasing a home much easier, drives up demand, and along with low interest rates, drastically inflates the price of homes way beyond other assets. And we will pay a very dear price for this.

          • LOL are you still rubbishing on about this?

          • You just used the word ‘rubbish’ as a verb, likely for the first time in the history of the English language. Is that what you meant by “reaching for the stars”?

          • Why yes I did….it’s a British expression. I used ‘rabbiting’ today as well.

            Is this all you have to do tonight?


          • Until the bubble popped. Fact is the US Fed printed money for debt to lower interest rates when they really should have raised interest rates.

            But could not as the governemtns were bankrupt and no one was buying US Treasuries at rates below inflation+taxes.

            USA really went bankrupt in 2006/7. But via the illusion of solvancy, Bernake has been electronic counterfeiting money to buy US debt no legitimate lender would touch. A fraud really, as this is like pall of us paying our bills with photocopied money. Completely unsustainable as money loses value. And people with less value money get less goods and that is less jobs.

            USA really cooked its goose with Bernanke Doctrine and Keynes fraud economics.

          • You are talking nonsense again

          • No, he’s talking basic economics which you obviously cannot comprehend. You’ve posted well over 50 times today, sad…

          • Only corrupt and fools with other peoples money would lend money for 0 down. Its insane for both parties. Tax slavery for the borrower, and taxpayers eat the high rate of defaults.

            If banks want 0 down, then banks shoudl eat the risk, not the taxpayers.

          • Well said. CMHC shouldn’t even exist.

          • Em, love you to death, but the CMHC does not work THROUGH the banks. CMHC is there as a government agency to basically convince the banks to take on high index mortgages (i.e assume the risk). That they have, in spades, and it’s not pretty right now.

          • Did you read the link’s contents before posting? It says what Peterborough Dave said. Except with more words.

          • That’s quite common. She frequently posts links that disprove her own words. Then she denies any such thing and calls you crazy for pointing it out. Great fun as always.

          • You love her do you Dave?

            Well that’s definitely the Gladiator spirit we like to see. But if I were you I’d quickly throw a pail of cold water on myself and go for a ride on the Lift Lock instead.

          • Nope, taxpayers fund CHMC losses, not the banks. Banks use CHMC to lose the bad paper, while keeping the profits for the banks. In reality, there should be a mortgage tax to cover CHMC losses but banker lobbyists like it one way, taxpayer ultimately eats the loses.

          • Our banks are govt backed Dave. It’s how we’ve been avoiding bank crashes and Depressions.

          • GONG
            Sorry Emily, you yappy old atheist, banks are not backed by the government.

            So crack crack crack of the whip and back to the Wikipedia with you to get your story straight.

            Confused half truth and misinformation doesn’t work here Emily.

          • You are correct. Deposits up to $100,000 are backed by the CDIC. Mortgages are backed by the CMHC. But the banks themselves are supposed to be backed by their own reserves, not directly by the government.

          • That’s right and if I might just add to your comment, CDIC is a crown owned insurance company, but it operates without cost to the government. In fact it makes a profit.

            It collects mandatory insurance premiums from the chartered banks to insure deposits and cover administrative costs. And it maintains reserves against estimated losses.

            And as you pointed out, in addition to that the banks must maintain reserves determined by statute.

            I believe the result of all this is that if there is a bank failure, any deposit loss up to your stated maximum is covered by all the banks themselves as a shared risk.

            Poor old Emily, such a loser.

          • You are wrong once again. The banks are not government backed. Mortgages with less than 20% down are CMHC insured, deposits up to $100,000 are insured through CDIC. Both are arms-length insurance programs. The banks are not backed by anything other than their own reserves which are far too small for them to withstand a crash.

            Reaching for the stars, yet achieving nothing again Emily

          • CHMC is really about socializing losses while banks get 100% of the profit.

            Me, I saved like squirrel to get enough that I didn’t need CHMC. As why kick them the money when you are going to have to pay them 20+ years interest on it? Worse, in Canada that is tax paid money, not gross earnings money.

        • “Mortgage interest is tax deductible in the US” – Yes but you will eventually have to pay a capital gains tax on your primary residence usually when you downsize. Don’t worry. The government will get their tithes.

          • If govt doesn’t get taxes….society falls apart.

          • Government gets plenty of taxes, but by taking too much they don’t leave a healthy economy. Sort of like cutting the grass so short it doesn’t’ grow back right. Too much tax and debt greed of government caused the economic problems, more taxes will just make it worse.

            Which leaves cuts to governemtn because you can’t keep printing no value money for government bloat forever. Every governemtn in history, including tin money Roamn Empire has fallen when they debase the value of money.

            USA government isn’t too big to fail, its too expensive to save.

          • Your taxes again….yada yada

            Dave I don’t care about your taxes, or your weirdo views on economics.

      • The CMHC guarantees mortgages for people who don’t have a down payment or first time buyers. That doesn’t mean they don’t have money. Fannie Mae and Freddie Mac were politically encouraged to loan mortgages to people who were insolvent. A bit of a difference. Also the fact Americans are allowed to write off their mortgage interest for income tax purposes also encourages them to buy bigger and bigger houses. Because we don’t have fixed rate mortgages, and tax write-offs are two reasons why Canadian mortgages are healthier than the US and always have been. There is no free ride. People think twice about buying a house.

        • CMHC guarantees mortgages for people who don’t have a 20% down payment – that’s also a bit of a difference.

          • Once again though – it doesn’t mean they don’t have money.

      • CHMC is essentially bankrupt and not included in Ottawa’s stated debt. There is a lot bad paper in CHMC especially after the bank and ABCP bailouts over $125 billion or more.

        Best benefit US debtors get is mortgage interest is tax free. But it is also what made them more vulnerable in the melt down of the economy. As far too many had so little equity, it resulted in a housing collapse.

        Part of why Canada did better was because we were using tax paid dollars on mortgage debt, there is a huge benefit of reducing mortgage debt so there was very little panic sell. No need for me to panic sell, I own my home and no mortgage to trigger a debt default in cash flow or in pricing.

        As for rates, yes, Americans generally get better rates but they have 1000+ banks, credit unions, mortgage companies competing. Isn’t like cartel Canada where 5 or so do 99% of the lending.

        Best part of US though is with mortgage tax deductibility you can pay your home off faster if you apply the refund to the mortgage. For those disciplined to do this, they are doing well int he new debt economy. But chronic debtors carry more risk than they know. As banks really own your home until you clear the mortgage.

    • People don’t immigrate to own homes. We are over extended as the banks and credit unions have coveted the non-prime market and given mortgages based on future projections on todays artificially low interest rates. When you see people taking vacations with money borrowed from their HELOC’s, you know the crash is coming.
      Homes are up 160% in 10 years and that is not sustainable. Wages have not kept pace. Any increase in interest rates will pop the bubble and it’s long overdue. Low interest rates have killed savings rates and forced people into speculative ventures such as real estate.
      The indignation of some on this forum is laughable. How dare someone suggest that home ownership isn’t right for everyone!

    • Does that mean your typical 23-year-old should buy a $500,000 1-bedroom apartment? I doubt anyone immigrates so that they can be saddled by a lifetime of debt for the ‘privilege’ of owning an overpriced asset they could rent for much less.

      There are limits to the dream of home ownership, and in Canada we reached them some time ago.

      • Lots of Chinese buy such homes for their university student kids.

        What limits?

        • Ah, another one who bought into the myth of Hot Asian Money driving Canada’s real estate market. 94% of home sold in The Lower Mainland were bought by people born in Canada. Don’t let the facts get in the way of a good story though…

          • What country are you living in?

            Because in Canada and the US there are people buying houses for their kids while in university.

            I was answering something from Michelle….don’t interrupt.

          • And I was correcting yet another fallacy you write. Very few homes get bought by foreigners for their children. Let’s see some actual data on your part, not fairy tales concocted by real estate agents.

          • I live in Ontario….lots of homes are bought by ‘foreigners’ here.

            265 a day come into Toronto alone.

          • By “lots”, how much exactly? What data do you have to support this assertion. Condo marketing firms are notorious for creating false media reports of foreigners buying up properties. Several have been called out on it in BC. In ON you have Brad Lamb, who is the worst offender when it comes to spewing falsehoods on Toronto’s RE market. Foreigners are not the driving force behind RE prices in Canada, just as they were not the driving force behind the RE bubbles in the UK, Ireland, Greece, Iceland, Russia, Japan, etc. The RE bubbles worldwide were driven by low interest rates since 2001.

          • And other such fantasies.

            BCer areya?

          • So do you believe the realtor propaganda that HAM is driving the condo markets? And if that were true ( it isn’t – foreign buyers constitute far less than 10% of the market) would that justify kids borrowing enormous sums at 95% leverage to buy a little box in the sky? And you’re willing to have the government carry the risk of default indirectly through the CMHC? You should get into the habit of acknowledging when others have made a point. Glutino has made several, and all you’ve done is dismiss him as a “miserly CON”.

          • Glutino is simply another Con pushing to lower taxes by trying to scare everyone about ‘debt’.

            They used to use Greece as the boogeyman….they’ve been reduced to using the housing market.

            Yes, lots of foreigners buy in NA….more in the US than here, but here as well.

            I routinely ignore ‘panic.’ It’s just campaigning.

          • No, I don’t live in BC. Speaking of mindless fantasies, you claimed to have bought your house for cash. Those who post online about their alleged wealth and education are the worst liars. I called out one person on Youtube who claimed he retired at 31 and was a Phd in Psychology. It turns out he was a career shelf-stocker with a worthless BA. What’s your real story? Are you a panicked indebted house-poor in denial Torontonian? Any cash you paid for a home was financed by the bank.

          • You can do what you like, but it might help if you’d done some research before rabitting on. Hotshots rarely suceed in the world….no matter what you think Ayn Rand said.

          • This from the same person who couldn’t even grasp the basics of what CMHC does. Unlike you I take the time to read and I’m capable of critical thought. Your 8400 comments and counting on Disqus means you spend your time posting the usual self-important blather of someone who is very unhappy with their lot in life. Nice of you to think I’m a hotshot, and I’ve never bothered to read Ayn Rand.

          • There you go again….. Con hot-dogging.

            Sorry, not interested in fair food…..you’re dismissed. Ciao

          • Not his fault you aren’t bright enough to grasp the concept of CHMC does and that has nothing to do with who he votes for. Why don’t you dismiss yourself Ciao!

          • The internet frequently aids $100,000 to the bogus bank accounts and a couple of university degrees to the resume of trolls like Emily buts adds nothing in way of intelligence or class

    • Yep, they want us slaves of governemtn and banks. As renters do pay mortgages, they just don’t see it as they are economic idiots.

      But when they are 65, body worn from years of tax slavery, they will tray but fail to pay rent on CPP of just $12k. Me, I have no rent, I can use my pension for traveling. Been mortgage and debt free since 1992. All that tax paid cash people usually send to the bank is in my investment account. So I retired early, no need to work for the government and banks without the benefits.

      My reward for being financially conservative and like squirrel, save in good times to get out of the debt-tax slavery of modern government/bank greed.

    • Very good point. I remembered the advice to pay off your mortgage asap because in hard times, you’ll need somewhere to live, to grow food, and maybe run a business. I remembered that when I acquired a lump of cash, and paid off the mortgage. The bank objected, saying I’d have to pay a penalty fee, and I pointed out that the penalty wouldn’t cost me as much as the interest was going to – and the banker just sort of nodded, and I did it. Never regretted it, and would hate to go back to renting. Started a small business, planning a garden — and it’s a good, safe neighbourhood.

    • Yes, but we came here from a communist country (no longer) and we are fine, worked hard, etc .. 40yrs in the BEST country in the world (relatively speaking) and if you ask most of the old folk 98% will agree they were happier then. if you are not sure why then I cannot explain either. Perhaps Lobster fishing is the key?

  2. Plenty of missing information leading readers astray.

    The Eisenhauer family bought their home for $369, 000, although they had unexpected costs, they sold in hree years later after collecting from two suites during that time! Would love to know how much was spent, how much was earned, and most importantly how much their home appreciated in value over those 3 years. At least give us a sold price so we can judge for ourselves if it was the best decision they ever made or the worst.

    At first you paint a picture of Harpreet Pandher and other home owners facing negative health effects from the stresses of home ownership. Of course, buying in the city core is more expebsive than the suburbs thus more stress. Compare that to the hours she will waste everyday travelling to her Bay Street job everyday from Brampton.

    Clearly you are righting to fit the examples in your biased narrative instead of taking a neutral approach and allowing the reader to come up with their own conclusions.

    • Also interesting that they were paying $1,700 a month on a $275,000 mortgage. MacLeans should do an exposé on their lender. That’s a heck of an interest rate for a purchase made within the past 10 years.

  3. Canadians move every 3-5 years. Owning a home is suicidal for most people

    • Well Pierre Trudeau certainly thought so. At 48 years of age on becoming Prime Minister, he was still living at home with his mother. ( I can’t tell you whether or not he was living in the basement)

    • How many of those moving are renters & how many home owners? How many renters move because they are renters & the home is not satisfactory? I certainly moved around a lot when I was renting, but I bought my condo seven years ago & have absolutely no desire to move.

      • You don’t have the kind of job or life that means lots of moving then. It’s common for others though.

        • It’s common for some people but not the vast majority.

          • Based on your personal view of things….not reality.

          • If I was interested in continuing this dialogue I’d say: “Based on YOUR personal view of things … not reality.”
            – but I’m not :-))

          • 28% is a far cry from “Canadians” (which implies all) or the “most” for whom it is supposedly “suicidal”. Kay53 was right – YOU are the one in need of a reality check on this issue. Or a course in stats.

  4. Owning a home is a great thing if you want to settle down and the price is right while you can afford it. At the moment, the price is skyrocketed. The biggest housing crash in Canadian history is not far away.

    • Garth Turner has been saying this for about ten years. So far it hasn’t happened. Chicken little.

      • Does that mean it won’t happen? It has in nearly every country. People in the US, Ireland, Spain, and Iceland also believed their housing markets were robust. And they were right. For years. Until one day they weren’t anymore. We’re not immune. Garth’s main problem is he keeps predicting that it is just around the corner. Nobody ever gets the timing of these things right, and he should know better than to try. But he has his sycophantic blog following to feed (just read his comments section), so he keeps at it. That doesn’t mean we shoudn’t be reading the writing on the wall. RE has averageed 6% gains over the past 15 years. Personal debt levels have sky-rocketed while real incomes have hardly budged. That is not a good scenario.

  5. Awful title. Try “Why owning a home is bad for SOME of you.” I know, not as catchy. Just accurate. I can remember when that quaint notion — accuracy — mattered for a media outlet.

    • For the last ten years we have been bombarded with “home ownership is good for you!”. Shouldn’t that have been “howeowner is good for SOME of you!”? or was your adherence to accuracy not as acute back then? Where you when all the cheerleading was going on?

      • I guess you missed my repetitive complaints about the stupidity of Barney Frank and cronies armtwisting lenders to offer dumb mortgages to awful credit risks who had no ability (or, perhaps for some, inclination) to repay. Perhaps you’d like to try Google?

  6. Because of failing health and the fact my former house was build in the 1940s and was badly worn in some areas made the decision to sell it 4 months ago. Now living in a two bedroom apartment financially stable and headache free

  7. Throwing money away at mortgage interest and property taxes is no better than throwing it away at rent.
    Either way it’s gone. At least with rent it’s not inflating billion dollar bank profits.

    • Yup. I’ve had many people tell me, “You’re just paying someone else’s mortgage when you rent!” It never occurred to them that they also paid off someone’s mortgage when they bought. They either paid off the original owner’s mortgage, or the builder’s loans if it was a new build. I don’t plan on renting forever. But as long as the differential between renting and owning is as high as it is ($800 per month for me if I were to buy a similar 3BR townhome to the one I’m renting, after factoring in insurance, taxes, common fees, and maintenance), I’ll keep renting. I’m socking away at least that much each month. I’ll buy eventually with a massive down payment, but only when the price-rent ratio is a lot less advantageous for renters than it is right now. I was getting tired of all the HELOC junkies boasting about how much money their home was “making” for them, but it no longer bothers me. Just seeing so many of them burning through their phantom profits by blowing real money has me convinced the conditions of the past 15 years will not last.

    • I paid $135,000 for my house in 2000, now it is 2013 and I know my house would fetch between $240,000-$250,000 ( I am a realtor and I am being modest at this price)
      Had I have paid rent at $900/month for the last 13 years I would be out about $140,000, having paid a mortgage and property taxes, I am out $190,000 but my house is worth $100,000 + more than it was when I bought it…still $50,000 + more than renting and we love what we own?
      This is 6 one way and half a dozen the other in my opinion. I have talked to clients and recommended that they rent vs. buy; as in certain cases, renting is the better option. One needs to do their due diligence before committing to purchase a home. Just my 2 cents

      • And do you expect the next 13 years to be the same as the last? Buying a house in 2000, or even 2002, in retrospect, was a great deal. I wish I’d have done it. But, buying one today, after the run-up in prices? After average personal debt levels have jumped to 165% of income? After interest rates have been sitting at rock bottom for 4 years? You don’t need to be a doomer to see how massively risks have increased since then.

        • Yes I agree. I would not buy now. I thought Canadian houses in most urban markets were overpriced years ago. Since 2004 I’ve believed they were overpriced. Rates cannot go lower. Maybe prices can rise some more, but I doubt it.

        • Well, If I could predict the 13 years then I should be able to predict the next weeks lotto. Not every market is overpriced and anyone who read my post would see that I am not promoting 100% of the people should buy a home.
          After 20 – 25 years, the mortgage scenario may cease to exist but without ownership, rent will continue as one needs shelter…… so if a 25 year old buys a home and no longer pays a mortgage after the age of 45 or 50, how is that worse then renting for life? We now live (on average) into our 80’s
          Perhaps I did buy at a great time? Perhaps I should’ve rented but no one knew at the time what the future would hold nor do we now. It worked for me then and it is still working out for me now.
          People often say that buying a home is their greatest investment. I disagree but buying your second and third home might be your greatest investment but your first home isn’t really an investment at all.
          Everyone here can banter back and forth but ultimately purchasing is perfect for some and renting is ideal for others. To each their own, plain and simple.
          I have recommended that some of my clients hold off on buying as it is not a good time for them for many reasons. There are many factors when buying and not everyone needs to borrow 95% or even 80% of the purchase price and pay a percentage to a mortgage insurer. Everyone will however need to fix a roof down the road, replace a window or two…(the list goes on and on…) but for some, it is worth it to own….even with all that goes with home ownership.
          There are valid points from both sides but the fact remains that the title is abrupt and not necessarily accurate for 100% of the people.

      • The best calculator I’ve found is here:
        Unfortunately, with a calculator it is impossible to predict appreciation or depreciation in value. However, a calculator can compare rent vs interest and property taxes along with other assorted fees like closing costs.

        Over the course of history, home prices tend to remove stable. You happened to get lucky, as this graph shows:

        Prior to the year 2000, prices were flat for 25 years. So you bought at a good time. In my opinion, now is a bad time to buy. But what do I know? Maybe prices can rise even more? But they cannot rise forever, over time they must eventually come back down towards the rise in incomes.

        • Granted, things aren’t perfect right now and people who are purchasing need to realize that interest rates aren’t staying low forever. What I know is that people can sell a ‘dump’ in Toronto and buy a gorgeous home in our area and still have money in their bank account. Our market is not like Toronto and Vancouver.
          I agree with many of the valid points against buying but there really needs to be a reality check for many people. Those who make $50,000/yr and think they can afford something for $450,000, still own a car and enjoy a night on the town are sadly mistaken. I wouldn’t sleep well at night if I thought I was helping people make a bad life choice.
          I think homeownership is a great thing…..under the right circumstances.

      • Regarding your claim of making $50,000 in owning over renting. You also need to calculate insurance costs, closing costs, moving costs, and any repairs and maintenance done to the home. You also need to adjust for inflation. That figure of $50,000 more than renting will be significantly smaller if not in the negative. Also, you need to find a buyer to realize those gains. When you move, you will be buying a property that will have appreciated the same percentage of the property you sold. That figure of $50,000 isn’t real. Go to the bank and withdraw $20 from your home equity – you can’t.

      • Your timing was enviable, but as you point out, renting can be the better option.

        Here is my present-day reality: I am renting a nice house in a great neighbourhood in Vancouver for almost ONE THIRD of the monthly cost of owning the exact same home (I pay $2,200/month for a house that would sell for about $1.3 million). I don’t have to worry about replacing appliances, fixing the roof, or the $4,000 my landlord just spent on new flooring.

        If prices were the same as when you bought (which they aren’t, because they have been driven up by ownership mania), I would have gladly, and comfortably, been able to pay the $400,000 the house I live in would have sold for 10 years ago.

        Unfortunately, many first-time buyers in Canada’s more inflated markets seem to be ignoring the math in favour of a social and cultural blindness about home ownership.

        • I sold a house for $134,000 this past Spring and the owners get $900/month and the tenant pays heat and hydro. Not every market is overpriced. I would rather get $900/month on a $134,000 home than own a 1.3 Million home and get only get $2200/month.
          Every market is different and so is every buyer/renter; there is a lot to take into perspective before making any large leap whether it is a new car or a house. You Michelle have not attacked me and I thank you for not doing so. The fact is that both are acceptable. You need to know your situation before making a life altering decision….period.

    • Well put. Renting right now out of choice, and saving upwards of $500-$700 a month. Landlord just installed a new roof ($3500), has repaired the ceiling where the upstair bathtub leaked ($1000-$1500), new dehumidifyer in basement to replace broken one ($350), a new toilet snake (please don’t ask), and reimbursed me $150 on the rent for rebuilding the basement stairs and helping with the demolition after the above-mentioned leak.

      God I LOVE renting!!

      • You’re quite right that people ignore a lot of the “incidental” costs of home ownership and tend to focus exclusively on mortgage costs vs. renting costs. It’s like a form of wilful blindness.

      • I hope there is affordable, comfortable rental accommodation with considerate landlords (with money) in your city for the rest of your life. That’s not the case in my city. I’d rather pay my own way and know I’ll still have the same home when I’m 100 years old and leave it to my heirs.

        • I hope your job, employment opportunities, community, and schools never evolve or change over that 100 years because by god with that 5% equity and mortgage rate that has nowhere to go but up will leave you chained to that house forever.


          • I am retired and leaving the job vacancies to young people who need employment. I have full title and no mortgage and no debts. My contemporaries who have never purchased so much as a broom closet are now in dire straits in this expensive city. I am glad that your city is more amenable to renters and I hope you continue to enjoy your good fortune as I enjoy mine.

            And I didn’t call you names.

          • p.s. I see where you get your manners. You have been corresponding with dear Emily!

  8. More accurate title: Owning a home is bad for you if you buy an over-priced house you can’t really afford.

    • Or buying an older home after awhile they become worn and turn into a money pit

    • Which seems to be about every home in Toronto or Vancouver. Wait to see what happens when interest rate increases start having an impact…. You think we are in a better position than the US? They thought so too, until the bubble burst. The bubble will eventually burst, when the next recession starts. And it will be a lot more painful than last time, due to the level to which most people are extended.

      • When people in the US made $35,000/yr and they were getting mortgages for $350,000 homes….it was only a matter of time before sh*t was going to happen. Banks and credit unions are pretty quick to protect their money I have found when sending my buyer clients to them for preapproval and approvals. The US got sloppy. Overpriced or not, it comes down to whether they are affordable to those that made the purchase in the first place.

  9. Behavioural economists have been saying for years that people are unwilling to cut and run when it comes to underperforming stocks.

    There is a very good point brought up toward the end of this article which bears repeating: home ownership is highest where job prospects are the worst.

    I’ll bet dollars to donuts that all those easterners heading to Alberta do not own their houses back home, and they all know someone who would leave, but cannot because they’d lose a bundle on their house.

    Meanwhile there is no denying that home prices have gone into the unaffordable range. In the past three years I’ve seen 2-3 bedroom apartments on my street selling for more –much more — than the price of my house that I purchased seven years ago. That is insane.

  10. Another thing that this all reflects is the fetishization of home ownership in North American culture. And I think part of this comes from the fact that Canada and the US are large and relatively new countries, with a history of relatively low population densities and abundant developable land. It led to an abundance of relatively cheap land for a long time, and I think only in the last couple of decades have we had major cities get to the point where fee simple real estate matches the kind of unaffordability that places like London and Paris have had for a very long time.
    I think it’s for this reason that a lot of North Americans have this idea ingrained in their heads that if they don’t own real estate, there’s something terribly wrong with their lives.
    In Europe, it’s quite common for relatively wealthy people to rent. It’s very common for middle class people to rent their entire lives.
    I’m not saying home or real property ownership is a bad idea; of course not. But I think that people need to look more rationally at the costs and the alternatives, now that affordability in some of our major cities is a serious problem.

    • You can’t take your home with you when you die. Also, the average Canadian doesn’t pay off their mortgage till 56 years of age. Therefore, do they really ‘own’ anything? Maybe when they’re 56 they can really say they ‘own’ the house. Another consideration in the calculation is this – the savings in the monthly payments one makes for renting vs. buying can be invested. An extra 500 a month for a year can grow with compound interest. I have saved $150,000 and most of my rent is paid for by interest on my savings. This allows me to add most / all of my income to my savings, hence they grow faster with compounding. The difference between borrowing $150,000 vs. investing $150,000 is an 2x the interest on this amount. Even at 3% interest, this is ~$10,000 a year.

      • Where I live the rents on houses (garage, decent size 1100 sq feet) is about 1200 – 1700 for nothing too fancy. Not really sure how one could save the same on top of that, especially with a city wide vacancy rate of 1.2 per cent.
        As well I sold my first place after it doubled in value over about 8 years (while building equity). I simply cannot listen to people telling me that buying my (new)place is a bad investment.

        • You got lucky with timing. Good for you. It can go the other way as well.

          • I guess what I am saying is that with rents of $1700 there is usually something out there that you could buy. It is a quandary where I think in general the costs of living are pretty high. However there is plenty of room for an investor to make money by buying something that will be around what they would need for rent.

    • Depending on the market you’re in and the availability of rental properties, though, the cost of an entry-level property (in terms of mortgage & property taxes) may not be that much different from the cost of renting.
      That was certainly true when we purchased our first home in Brampton almost 20 years ago. And when we split up a couple of years ago, the equity I had made it a good bit cheaper to own than to rent (a good thing too, as with what I can afford per month I’d be stuck in a basement apartment or a real dive).
      The GTA has low vacancy rates and steep rental costs. It will take building more, and more affordable, rental units plus even higher housing costs to see a lowering of ownership percentages around here.

      • I don’t necessarily disagree with anything you’re saying. If, on a RATIONAL financial analysis, it makes sense to buy rather than rent, then by all means do so. But I guess my point is, a lot of people aren’t being rational about it. They’re underestimating the full costs of home ownership, and they have an underlying attitude that somehow, if you don’t own real estate, you’re some sort of deviant loser.
        It may be true, though, that a lot of people are so bad at investing, saving and financial planning that buying a home is the only real “investment” they’ll make, i.e., a form of forced savings. So maybe in that sense, home ownership as investment strategy is better than no strategy at all. Tacked on top of that is the capital gains exemption in Canada for your principal residence which, while encouraging flipping in a hot market, undoubtedly has resulted in many Canadians having substantial untaxed capital gains. I suspect, though, that most of the stupid money has already been made.

        • …and they have an underlying attitude that somehow, if you don’t own real estate, you’re some sort of deviant loser.
          I recently got married. The first question several colleagues asked me when I returned to work was, “So, are you going to take the next step into adulthood and buy a house?” I swear that’s exactly how one of them worded it. Several others asked the same question in different ways. I’m in my early forties. How taking on a mountain of debt to buy into a grossly inflated market makes me more of an adult is something no one can explain to me.

    • You forgot one point. In Europe, the land is very often not available to be “owned” which is why people rent. Half of London is owned by the Duke of Devonshire. You can lease a property but never own it and a lot of the UK is like that. Part of the big attraction to home ownership in North America was actually owning your own dirt.

      • That’s an interesting point and thanks for pointing that out. I still maintain, though, that a big part of our cultural obsession with owning real esate in North America is that a big part of the North American Dream was premised on the promise of abundant, cheap land. And thus the promise that anyone and everyone could — and should — own land. It also goes to the North American sense of egalitarianism — everyone can and should be a landowner. And egalitarianism like that is nice in theory, but not necessarily sensible in practice. The whole subprime mortgage phenomenon in the US was a perfect example of this thinking — even really poor people should own their own homes! Let’s make it happen! As a matter of social policy! What could possibly go wrong?

        • That is exactly right. Home ownership is more than owning a home. it is being a responsible neighbour and citizen. If I go out of my depth I drag me down and you too because the state has to support me. However, the whole land thing. What would you be willing to pay for? $250,000 for a tiny one bedroom suite on the twentieth floor of a condo or a plot of land with a house? Let me tell you my reaction. I rented on the 11th floor of an apartment building in Toronto during the big black out in the 1980’s. The power was out for 10 hours or so. Ever tried climbing 11 flights of stairs in the dark? What would you do if it were twenty? What if there was a food shortage? Can you grow your own in an apartment? Give me my fraction of an acre every time.

  11. In Montreal, apartment buildings are no longer built. It is a condo or nothing.
    Many buy condos and rent them out.

    • Another angle that I don’t think was mentioned in this article (I read it quickly) is that sometimes rentals are simply not available. I’m old enough to remember several times in Vancouver when there was a zero or minus zero vacancy rate on rentals and you had to find a friend’s living room to sleep in, or leave! To state the very very obvious, if you own your home you always have a place to live.

  12. Good post admin. Yes it right that owning a home is little bit bad for us.

  13. Houses are investments that can be hard to sell, but you should benefit from owning.

  14. Home ownership is about pay now or benefit later. I haven’t had mortgage debt since 1992. In that time, my rent hasn’t changed a bit, I pay myself to live in my own home. Allowed me to save huge for a early retirement 55.

    I could have rented, but rent would have gone up with inflation and interest. But I have no risk in my paid off home as even if interest rates and inflation hit 25%, my rate to live here stays the same on my cash flow. No mortgage but having clear title to a home is priceless to cash flow.

    Best part too is the capital gains on my home are tax free and no tax paid cash going to banks via mortgage or rent.

    And if governemtn keeps printing no value money to depreciate our incomes, our future homes will be worth more tax free as your principle residence isn’t capital gains taxable like a RRSP, LIRA, or other investments.

    Depends how long you want to live to pay taxes too, as I don’t have the income needs to drive me to be a wage earning tax slave.

    Quality of life later on depends on you up front investing in your own home. Beats any bank investment in all of Canada. So unless you plan to live only for the day without any future considerations, you should buy a home with good capital appreciation value.

    Or pay later.

    • Have you seen the price of homes lately? Sorry, but I don’t buy “investments” at the top of the market.

    • My experience is about the same as yours. Buying a home (a condo in my case) was the best financial decision I ever made. Continuing to rent all my life would have been a disaster and I sure wouldn’t be retired in comfort!

      • Buying a place 15 or 20 years ago was, in retrospect, a no-brainer. I wish I’d have done so. Buying a place now, after a 15-year boom, when interest rates are at rock bottom and can therefore only go up, is fraught with the kinds of risk that didn’t exist back then. Taking your experience of purchasing a home years ago and paying it off, and extraplating that experience to today, would be a mistake.

        • This is the thing that slays me: people who have done well buying a place taking the position that, because they did well, everybody else will too. If you can’t see the flaw in that line of reasoning, you’re rather dense.

        • Yes, of course I am relating my own experience and that of most people I know, of all ages, in my city. I thought the headline of this article was so general and blunt it was misleading; I didn’t intend to say it was totally wrong. In my case there was good luck involved too. I could have bought into a new building that turned out to be one of Vancouver’s infamous leaky condos.

    • Bought an average bungalow in Calgary in 1982. Sold in in ’86 at a 25% loss. That was the down payment we put up. The price of oil had dropped 60% by then.

      At the high school reunion some years later, there were many who admitted to just walking away from their homes. You can do that in Alberta.

      The condo in Calgary was appraised in 2006 before being rented. It was sold this spring for 12% less than that. Everything has been cleared by Revenue Canada now, so I feel free to post this as a real world, market-value fact.

      Real estate, even a family home, can be a tricky investment. There are lots of people who have been lucky, but they see it only as wisdom.

      The reality is that home ownership does pin you down. The banks can bleed you. They will. BEWARE.

      • Your example is instructive. My sister also bought a condo in 2007 in dt Calgary. Sold it last January and got just enough to pay off her mortgage and closing costs. 5% down, and almost 6 years of mortgage, taxes, condo fees, and about $18,000 in kitchen renos, and a zero dollar balance to show for it. Those who claim “buying my own place was the best thing I ever did” should always add the disclaimer because I got lucky with the timing, and surfed a wave of interest rate reductions and price appreciation that lasted for nearly 2 decades.

  15. The more I think about it, the more I see major economic problems, over-priced housing being one, as directly related to culture. I recently bought a home, the bank approved up to 400K, we did have 20%, and decided instead to buy something small, 1200sf, that we bought for 270K. The whole time the bank, our parents, friends, co-workers thought we were crazy not to purchase something bigger, for when we start a family. The house we bought, built in the 50s, used to house a family of 5, now 2 or three member families need 3000sf. I am not saying I’m a hero here, or everyone should follow my lead, but at the same time, culturally, as a society, Canada, and the West in general, for the most part cannot self-regulate consumption anymore. We see a free doughnut stand and instead of taking one, we eat 6 and then get sick later. The same goes for housing here. I lean to the left, don’t mind paying taxes and funding government services, but in this instance, government cannot play a role, it should be personal responsibility to be able to say no to something, even though in the short-term the gain is obvious

    • I hear you. True story: at least one major Canadian chartered bank is willing — in fact eager — to give me a $1 million mortgage. It would be the height of financial irresponsibility for me to take that on. But the bank doesn’t seem to care. The only thing preventing me from saying yes to that is me.

      • It’s funny how you go and see a financial “adviser” thinking that they are an expert, that they are there working to provide you with advice yet many times, when negotiating my mortgage, I found that I was asking them the tough questions, not the other way around. I spoke with a couple of banks just to better inform myself about the financing process, since this was our first home, and with each adviser I had to request re-calculations of payments based on likely increases in interest rates. To me, it would be common sense and logical to provide these without any questions, especially given our interest rate climate. The same principle for their behaviour that I raised in my point above applies – a culture of overconsumption. The banks will gorge themselves today on potential commissions knowing full-well that tomorrow, more than likely, they will be sick, or insolvent…

        • As long as you remain skeptical and willing to do the digging and ask the hard questions, and have some basic math skills, you are your own best financial expert. I find the vast majority of advisers, loan officers, mortgage specialists, etc., have a vested interest in getting you into debt, (or getting you invested in high-risk, high-fee mutual funds) with very little insight as to how you can get out again.

  16. I think if you speak to those many people who bought up real estate, residential homes a well as those strip malls 50yrs ago or so and you will see them but mostly their 30 something kids in Mercedes 63 series AMG’s driving by once a month to collect rent from the shop owners and tenants they might not agree totally with this. Just Saying. and I will take a bag of what ever you smoked before writing this.

    • So because people made money doing something 50 years ago, young people today should do the exact same thing, and they will all make out like bandits. Thanks for coming out.

      • Not exactly, the real estate mkt is not anywhere as close as where it was and the opportunities (job, industry, etc..) as you know I presume are much different today than they were in 1960. And so on. Canada was growing aggressively and prior to the advent of the PC and other new age industry real estate may actually be a terrible investment , my example: homes built near Brampton, Hwy#7 and Gore Road, that builder made thousands that were half done and very cheaply and made poorly. I have a friend or 3 who bought. there are many other examples. too bad I was not born, and my parents spent their cash on us, traveling the globe and assimilating us into the world. But they still squeezed out a super home. work ethic, oil and grease.

        • The other thing is, you’re moving beyond the real scope of the article, which was really focused on home ownership. You’re talking about something different and beyond that, which is commercial real estate investment, i.e., investing in real estate for business purposes which are separate from the whole matter of whether or not to buy a principal residence. To me, that’s a completely different kettle of fish, whether you wish to make that part of an investment and business strategy.

  17. Quantitative easing was planned by governments and financial institutions offering very low interest rates.This caused the price of homes in all the “have” nations to inflate rapidly with buyers selling their homes to each other and rebuying another , all with inflated dollars. The only ones who won, didn’t rebuy.Every rebuyer and new buyer ended up much deeper in debt today and for usually longer terms becoming the cerfs of the 21st century.Big debts owed to banks and now on the treadmill for a lifetime of property taxes, utility payments and work at meanial jobs to make the payments.Thats where the governments , federal, provincial and municipal wanted you to be all along. Welcome to 21st Century Cerfdom!

    • Garth Turner? He’s been repeating the same message for years.

  18. Great Article. Growing up in Canada in the eighties, I never felt pressure to “OWN” a house, or more accurately, to OWE on a mortgage. Now, living in the USA, I feel more pressure to do so, since it’s almost an American standard and custom.
    However, having no children, I feel no demand to do so at all, especially with the low rent that I pay.

  19. I just bought a house. The examples given in the article, in my opinion, are of people living beyond what is reasonable for them and/or their income. Case in point: Pandher looking at a property worth half a million dollars, at age 23. Likely, a property suiting the same description in Pickering would be half that, or less – and there are some really lovely homes in Pickering. Sure, now you have to commute, but if you’re already driving (or taking transit to and from your job) to get around, it’s not a huge difference. It’s like shopping for anything else – you pay more for milk when you buy it at the 24-hour convenience store that’s around the corner from where you live rather than wait to get it at the grocery store because you’re paying for the convenience factor. The difference here is largely one of scale. And for what it’s worth: I have a full-time minimum wage job, and I’m a single male. I bought a home in Oshawa that was within my budget. The mortgage is for 25 years, but I can do this easily. The commute is about an hour by transit (I don’t drive – if I did, it would be around 15 minutes). Moral of the story: Buy smart, learn to shop.

    • AHA a voice or reason. Home ownership is affordable and beneficial in Canada. I’m 72 years of age and have bought, lived in, maintained and sold a number of houses – NEVER TOO BIG FOR THE FAMILY NEEDS – and always ramped up the payments to retire the mortgage early. One current main residence house bought in 1996 and paid off ten years later has been PAYING ME BACK WITH FREE RENT since 2006. The current internal rate of return on the original down payment, adjusted for inflation, is about 46% annual, based on current value rent equivalent for a comparable dwelling. Live within your means is a lesson drummed into our heads by parents and grandparents who lived through the ’30-‘s in Canada. A house is a place to shelter and learn personal enrichment – not a flip flop and fly investment. A house is a living in use benefit investment. Mind you, trips to Vegas and dinners out every week were de-prioritized to make this work. In other words, value invest in tangible assets for your own future, rather than fantasy experiences and stuff not really essential to shelter and personal enrichment.

  20. People today don’t realise how fast prices will fall when interest rates start to increase. I bought a house in Calgary in April 1981 for 300K. By december it was worth 100k if I could have sold it. Interest rates climed from 15 to 21%. The market was so bad the government stepped in and pated down mortgages to 15% to try and keep people in their homes.

  21. Owning a home needs serious financial realism or you can get burned. But very few get rich renting their home as over time, rent will always go up. For that reason owning your own home for locked in value and no capital inflation gains taxes on a primary residence means home ownership is king as a general rule as when the mortgage is paid off, you start paying yourself to live in your own home while renters just get increases.

    But that being said, there are conditions where it is not good to buy. If you don’t plan on living in the area for 3++ years, rent is prudent as home ownership in/out costs are high. Other considerations are employment and local economy. Interest rates and cash flow are more important than costs, what happens to cash flow if 6% (historical average) rates came back? Or say 10% rates? Can you afford the cash flow?

    In 1982 I bought a place that had a 18.5% mortgage on it. The capital cost price was 40% below what they paid for it as local average cash flow defines prices. I got a big discount as I had 20% down and cash flow. Interest rates dropped and the property appreciated tax free by 60% when I sold it 6 years later.

    Cost of debt and local economy net average after taxes cash flow define home prices. Be sure to realistically evaluate it or you could be getting into a hole. Timing a buy, like a cat on the prowl knowing when to hold, can help boost a persons economic development.

  22. Just what I needed to read before buying my first home (sarcasm). I think its more about what you can afford. You need to factor in all the costs and what you would be paying before you decide to buy one. And the months leading up to it, be able to save as much as you would have to pay. Of course in that one instance where there was unforeseen renovation costs I guess you can’t do much about that

  23. Time to change this perception, constantly reinforced by the media, that having a mortgage and ‘home ownership’ are the same thing.

    If you have a mortgage, or are using your house as collateral for a loan or line of credit, you do not ‘own’ your home. You may partially own it, but it can be called in by the bank at any time.

    If you do not have a mortgage, and are not using your house as collateral, congratulations! You are a homeowner! But how many of you are there? How many today versus last year? Why are these true indicators of wealth not gathered or reported?

  24. All the pro-rent hecklers in this thread are among the most risk-averse knuckleheads I’ve ever seen!

    • My girlfriend and I make just over 150k a year in Toronto. Even with our decent income, we can’t afford to buy in this city without being house-poor mortgage slaves. Sure we could buy a home in Raccoon Trail by Minto Developments located 1 hour hour each way from work, but we’re not interested in burning though cars, gas and our souls. Instead we rent (my commute involves a 10 minute walk to work) and put more than half of our income into savings each month. We don’t worry about job loss, the neighbourhood going downhill, keeping up with the Jones’s etc. Every month we’re more and more secure, could last longer and longer without incomes. We also have money to play while we learn to invest. I guess that makes us risk-averse knuckleheads – but we’re happy ones at least.

  25. mortgage (mort gage) = Death Pledge in French. True Story! Look it up! Coincidence? I think not.

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