Dearest readers, ever since the year started, there have been plenty of news about Canadian real estate and the boom in the Greater Toronto Area that just won't stop. Inventory of homes for sale in places like Burlington is extremely low. Bidding wars in places like Brampton are netting home sellers even $200,000 above asking price. Toronto is full of million dollar run down homes that one might blow up and build a new home in their place. Finally, a recent news article revealed that Canadian banks have relaxed mortgage qualification criteria for foreigners in order to get them to invest in real estate here. None of this is fake news lol- all real. Now, while home sellers, builders and foreigners who can afford our prices are super happy, there are a lot of Canadian millennials out there who cannot afford a home in GTA any more due to the slowdown of economic growth in the entire country. Many people with good jobs and very little debt with some savings fear they will be renting until the end of their lives here. In this ostensibly dire situation, many people are turning to the tiny home movement (a movement supporting tiny, affordable houses) and small one bedroom condos as viable real estate options in a lava hot market with never ending price increases. I think these alternatives are bad, should not be supported by struggling millennials or any other groups of people, and make very little sound financial sense.
First, let's briefly get into why people love tiny houses and condos. The idea is to get yourself a tiny living space that you can afford so you stop renting and start accumulating equity through property ownership. Your home is an investment and a sort of a piggy bank, and real estate is still touted as one of the best ways to invest. Sure, you cannot entertain or have a large family in these places, but that's what city infrastructure or a condo building's amenities are there for. Oh, and if you ever get a house down the road, you can still rent that condo out to someone and have two properties. Awesome? No, not awesome.
First, any movement or approach that makes people settle like this and get less by paying more is feeding into the dark side of any market. If we begin to collectively accept tiny dwellings and compromises that come with them, developers will be building those only because they can make more money with tons of these small units on a smaller plot of land. In addition, there will be less new real estate developments with large homes, and they may become even more expensive as only the rich elite will be going for them when everyone else settles for less. This is how you end up with townhouse complexes in the middle of nowhere, where land is cheaper and a detached home would make a lot more sense. We as a society should therefore never allow tiny dwellings to become the norm, especially in a country with so much unused land and potential for all sorts of growth.
Second, it is a well known fact among real estate buffs that, in a country still filled with larger homes, tiny dwellings are very sensitive to market corrections and crashes. If a market correction is more severe, units like junior one bedroom or bachelor units could depreciate so much that, if an owner of such unit had to sell in the middle of said correction, they would incur a horrible financial loss. The price could crash even more if many such units flooded the market all at once, with supply far outstripping demand. So again, here's a good reason to not give developers reasons to build too many of these and sell them to people.
Third, getting attached to such small units may impede one's ability to settle down with someone and get married. If your first purchased home is tiny, and even worse close to downtown of any cities in the Toronto area, you will likely not be motivated to find someone to settle down with and move on with your life. Tiny units where you can't entertain guests or keep a mate in long term are notorious for pushing you out into the nightlife. There you are going out all the time and partying because you can't entertain, and since your small place is only good enough to get laid once or twice with any same person, all you want to do is live like a bachelor until you're old and grey and young girls don't want you any more because they don't have daddy issues and, well, you look like a dad. Sure, that one bedroom condo bachelor lifestyle is fun for a while, but it tends to eat people up and spit them right out. Sure, by the end of it you're wiser, but no amount of wisdom can turn back the clock. This is a real issue and a life waster for many.
Finally, would you want to spend your life living in a cage, fooling your self that cage is anything but? We are not in an age, or on a continent, where people are allowed to settle for less. North America is the continent of opportunity, and if you don't push for more you'll miss out on the opportunity of a lifetime that billions of immigrants would kill for. It is expected of us to turn tremendous potential into reality. A home the size of a third world country hut just won't do.
So, dearest readers, I know you wouldn't let me off the hook if I just criticized something without offering an alternative solution. Now, while I don't have a total and complete solution because it would take a team of some very special people to find a solution that would take years to complete, I have a few really good ideas. One is to opt out of buying real estate if all you can afford is a tiny one bedroom condo and you plan to live in it; also, I would couple this with a very strict long-term investment plan so I have enough money saved up without using the real estate ownership option for a secure retirement. If you rent and save properly, you can end up with almost as much money as a homeowner who sells in their old age, but without dealing with this insane real estate market. Another solution would be to buy a small unit in a building that allows renting the unit out through a company like AirBnB. You do this, and you can make a lot more than the monthly mortgage and expenses since one day rent for an entire unit can cost as much as a very nice hotel room downtown; you do the math. My final advice is to aggressively pursue ways to make more money. You get a truly money making education, you get a moneymaking job, and you make it clear you're pushing forward and upward big time as you're totally in it for money and success and you don't apologize for it; alternatively, if you're a born entrepreneur focus on building a successful business that'll make you some serious money. That way, you won't have to look at those tiny properties at all and have that choice mark the rest of your life.
Hope I made you think, dearest readers. Enjoy the rest of your week. :)
First, let's briefly get into why people love tiny houses and condos. The idea is to get yourself a tiny living space that you can afford so you stop renting and start accumulating equity through property ownership. Your home is an investment and a sort of a piggy bank, and real estate is still touted as one of the best ways to invest. Sure, you cannot entertain or have a large family in these places, but that's what city infrastructure or a condo building's amenities are there for. Oh, and if you ever get a house down the road, you can still rent that condo out to someone and have two properties. Awesome? No, not awesome.
First, any movement or approach that makes people settle like this and get less by paying more is feeding into the dark side of any market. If we begin to collectively accept tiny dwellings and compromises that come with them, developers will be building those only because they can make more money with tons of these small units on a smaller plot of land. In addition, there will be less new real estate developments with large homes, and they may become even more expensive as only the rich elite will be going for them when everyone else settles for less. This is how you end up with townhouse complexes in the middle of nowhere, where land is cheaper and a detached home would make a lot more sense. We as a society should therefore never allow tiny dwellings to become the norm, especially in a country with so much unused land and potential for all sorts of growth.
Second, it is a well known fact among real estate buffs that, in a country still filled with larger homes, tiny dwellings are very sensitive to market corrections and crashes. If a market correction is more severe, units like junior one bedroom or bachelor units could depreciate so much that, if an owner of such unit had to sell in the middle of said correction, they would incur a horrible financial loss. The price could crash even more if many such units flooded the market all at once, with supply far outstripping demand. So again, here's a good reason to not give developers reasons to build too many of these and sell them to people.
Third, getting attached to such small units may impede one's ability to settle down with someone and get married. If your first purchased home is tiny, and even worse close to downtown of any cities in the Toronto area, you will likely not be motivated to find someone to settle down with and move on with your life. Tiny units where you can't entertain guests or keep a mate in long term are notorious for pushing you out into the nightlife. There you are going out all the time and partying because you can't entertain, and since your small place is only good enough to get laid once or twice with any same person, all you want to do is live like a bachelor until you're old and grey and young girls don't want you any more because they don't have daddy issues and, well, you look like a dad. Sure, that one bedroom condo bachelor lifestyle is fun for a while, but it tends to eat people up and spit them right out. Sure, by the end of it you're wiser, but no amount of wisdom can turn back the clock. This is a real issue and a life waster for many.
Finally, would you want to spend your life living in a cage, fooling your self that cage is anything but? We are not in an age, or on a continent, where people are allowed to settle for less. North America is the continent of opportunity, and if you don't push for more you'll miss out on the opportunity of a lifetime that billions of immigrants would kill for. It is expected of us to turn tremendous potential into reality. A home the size of a third world country hut just won't do.
So, dearest readers, I know you wouldn't let me off the hook if I just criticized something without offering an alternative solution. Now, while I don't have a total and complete solution because it would take a team of some very special people to find a solution that would take years to complete, I have a few really good ideas. One is to opt out of buying real estate if all you can afford is a tiny one bedroom condo and you plan to live in it; also, I would couple this with a very strict long-term investment plan so I have enough money saved up without using the real estate ownership option for a secure retirement. If you rent and save properly, you can end up with almost as much money as a homeowner who sells in their old age, but without dealing with this insane real estate market. Another solution would be to buy a small unit in a building that allows renting the unit out through a company like AirBnB. You do this, and you can make a lot more than the monthly mortgage and expenses since one day rent for an entire unit can cost as much as a very nice hotel room downtown; you do the math. My final advice is to aggressively pursue ways to make more money. You get a truly money making education, you get a moneymaking job, and you make it clear you're pushing forward and upward big time as you're totally in it for money and success and you don't apologize for it; alternatively, if you're a born entrepreneur focus on building a successful business that'll make you some serious money. That way, you won't have to look at those tiny properties at all and have that choice mark the rest of your life.
Hope I made you think, dearest readers. Enjoy the rest of your week. :)