Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. 0 Even with expectations that Bank of Canada will keep cutting rates in the coming months, the issue of home affordability - which has strangled Prime Minister Justin Trudeau’s poll numbers - is unlikely to fade before the next election.
The mandate for the Liberal minority government ends at the end of October 2025, but an election could come well before then, with the Conservative opposition spoiling to end Trudeau’s nine-year run at the top.
“You won’t get back to an affordable range for housing on a sustained basis for a decade,” Tony Stillo, director at forecasting and analysis group Oxford Economics, said last week at a conference.
The home you live in is not an investment if you aren’t willing to downgrade. If you live forever in your home, you can’t spend the money you’d get if you sold it because you won’t sell it till you die. If you decide to sell it, and decide you won’t downgrade, that you want an equivalent home, that home will cost approximately the same as what you sold yours for as it would have appreciated in value just like yours. In fact you’d lose the transaction fees. If you wanted to make money you have to buy a cheaper home. That typically means some form of downgrade. Size, type, location, etc. Yet many people don’t understand this and believe that the home they own is an investment and that it going up in price is good for them. All the while their taxes go up with its price along with everything else they buy because everyone else also has to pay higher housing costs. It’s irrational to believe this because it’s simply not true. Therefore I say people believe this due to indoctrination. The process of learnint to believe something without critical examination of its validity. I’m just using the term because I think it fits the bill.
The home you live in is only an investment if you’re willing to downgrade and you can only collect the upside on the difference in price between what you sell and what you move into. Secondary units are an investment proper. The scenario with classic games is like a secondary property because you don’t need to buy an equivalent in price cartridge when you sell one you have.
That’s not true at all. If you own your home outright (paid off your mortgage) or even if you’ve only paid off part of it, you can use it as leverage to borrow money you otherwise would not have access to. A common loan of this type is called a home equity line of credit.
Another thing you can do is what is called a reverse mortgage. This is where you effectively sell your house back to the bank but continue to live there rent-free. In exchange, the bank gives you a monthly payment based on the value of the home. You can often see TV ads for this sort of financial instrument. They’re very popular with retired folks who would like some extra money to travel or take up new hobbies.
Is the HELOC free? Are the reverse mortgages free? Aren’t they just swapping downgrading your living conditions with making less money than you could have? I think you’re just presenting another alternative to capitalize some of your primary home, not really disproving the general point.
You said you had to buy a cheaper home to make money from the equity in your home. That is not true, and the examples I have showed how.
As for “free”, what is free is the increase in value of your home over time. That’s the investment part. There are people who bought homes in San Francisco back in the 1970’s who are now multi-millionaires simply due to the many-fold increase in the value of their home. With a HELOC or a reverse mortgage they can gain access to some or all of that money without needing to move to a cheaper house.
That’s not true at all. A house owned in an appreciating neighborhood or that is thoughtfully invested in (appropriate upgrades) can increase in value over time. Moving to a different neighborhood or selling and buying under different market conditions can allow regular people to realize real gains.
If the market conditions are different, your house is very likely going to be subject to them as well. Different neighbourhood falls under downgrade.
That’s a ridiculous oversimplification but it seems to make you happy.