It’s safe to say that agents are saying otherwise, and dealing with the chatter head-on.
“I cannot imagine that anyone can argue that a home purchased in Toronto in the last, oh, 100 years has been a stupid move, with the exception of a few glitches and even then it was speculators that got caught,” said Dianne Beaman, a real estate agent with iPro Realty Inc.
The news follows comments from Bruce Yaccato, a writer with the Financial Post who said ‘you have to be crazy to buy real estate’. He argues that high house prices have made it almost impossible to carve out a decent return while paying an exorbitant amount of operating costs.
“Those operating costs, such as taxes, maintenance, repairs and in Canada’s case, mortgage interest can add up to hundreds of thousands of dollars leaving the Canadian dream home a money-losing proposition, painted in several coats of red ink,” he writes, arguing that Canadians should instead invest their down-payments in the market.
“Your down payment (let’s say $400,000) is invested in the market (at a conservative five per cent return), which gets you about $1.34 million, call it $1.25 million after fees,” he added. “Another $181,000 is eaten by inflation. Even at an average rent of $2,000 per month, the cost over 25 years would be $600,000 leaving $469,000. You do the math.”
For Beaman, the idea is lunacy. “No one can predict the future and I couldn't disagree more -- that being a renter is the path to financial freedom one can,” she said.
She added that she once had an elderly client who wouldn’t sign an offer for $1,101,000 because she thought the offer was fake. She paid $23,000 for the house years ago.
“I convinced her that the offer was real and she smiled and said ‘you know, when we bought this house, my parents were worried sick because we paid $23,000 for it,’” Beaman told REP.
Talk of high house prices has shaken some into thinking that it’s more cost-effective to rent a home and invest in the stock market to grow wealth as opposed to buying a home.