[kcowan]

Saver777, I would set realistic goals for your family and avoid comparisons to anyone else. Only you can decide what you want and what you can realistically aspire too.

Take the inputs here as possible alternatives to incorporate into your plans.

Good luck with your plans. I think you are on the right track.

 

[AltaRed]

Sure, but I don't really get your point regarding affordability -- That if the high interest rates and terms of '80 stayed that way perpetually, then boomers' mortgages would have been a severe financial burden for 30 long year as well, just like it's shaping up to be for the Gen Zs? So it's all the same I guess?? But that's not what happened!

Even if the outcome was the result of natural market fluctuations, which it's not, the loser is still somewhat entitled to be bitter about his bad luck. When it's the result of manipulation by CBs, governments, and corporations to suppress middle class asset ownership and labor's wages, the bitterness grows. You can't have an entire cohort of financial losers, which is what the 15-25 age bracket appears to be walking towards. And if that IS their outcome, we all better watch the hell out...

It's like if one guy puts his life savings into the stock market at the peak, and then gets a 0% return for the next 20 years, and the next guy puts his in at the low and gets a 15% return for the next 20 years... You can't just say "hey there's no difference there because that's how stock markets work!"

No, you don't get it. CBs do a far better job today of managing interest rates than they did in the '70s and '80s with huge oscillations. My first summer job paid $1.65/hour. My first engineering job post-graduation with Ontario Hydro paid about $630/month in the nuclear power industry. There was no money available to folks in their 20s. I paid $45000 for my first house, a crappy, poorly built duplex in 1974 in Burlington.

Housing prices are no different than any other Econ101 commodity. They rise when financing conditions allow more people to qualify for mortgages and/or larger mortgages and increase demand that outpaces supply. House prices decrease when demand decreases due to inability to carry the financing conditions. Had qualification criteria not changed to allow 2 incomes to qualify for mortgage payments, demand would have never had a step change (or doubled if 2 incomes = twice one income). Likewise demand would have never had a step change if interest rates stayed at 10% rather than fall to 1% and prices would have never increased. Qualification criteria today bears no resemblance to qualification criteria in the '70s and '80s and THAT is why house prices doubled and quadrupled.

Guess what? Increased interest rates the last 2 years have resulted in less demand due to inability to qualify and house prices decreased. Imagine that! It is the laws of supply and demand. When young boomers were trying to buy houses, we all faced qualification criteria of our own. Few of us could buy in the inflation ridden '70s. I had to take on a second mortgage for a high ratio mortgage at a higher interest rate to reduce down payment requirements AND we had to borrow from family for the rest of the down payment. What is different from today? The comparison is not 100% equal because there are too many variables but I have seen analysis a few years ago (never kept the link) that showed how the same metrics are at work.

What really gets me is the bogus comparison of house prices today being 8-10x income versus 3-4x income 40-50 years ago. That is comparing apples with walnuts, not even apples with oranges because the qualifying conditions have been relaxed by at least an order of magnitude and interest rates are half of what they were 40-50 years ago. That, more or less, allows a couple today to qualify for 4 times as much mortgage today as they could 40-50 years ago. So they do and buy a house 8-10x a single income. It is a bogus comparison and those that promote this bullshite comparison are manipulative at best and nefarious at worst.

BTW, I do fully understand that 15-20% interest rates did not last forever so that when 5 year terms rolled over, boomers who had homes already got to reduce their mortgage payments. But when interest rates came down <10%, house prices surged because all the new people in the late '80s and into the '90s looking for houses could qualify for far more mortgage and they drove demand. IOW, house prices followed.

Your same argument could be applied for all those Silent generation folks who bought houses in the '60s at 5-6% mortgages. The young boomers of the '70s were screwed compared to those who bought houses in the '50s and '60s. Those looking for housing today and complaining about the situation have not looked in the mirror at 50-70 years of housing history to find that EVERYONE in the market for their first house, whether in 1970 or 2024 are in the same relative situation. The numbers have changed but the goal posts have not.

Ten years from now, we will hear the same complaints from Gen-Zers and Gen-As trying to buy into housing and Millennials who have been in housing for those 10 years already will have built their equity and if they have not blown their salaries on consumption and instead focus on paying their mortgages will wonder what the complaining is all about.

Repeat after me: Affordability is the equilibrium point at which the ability to buy is matched with the ability to qualify and carry the mortgage for properties at the conditions of the day (income qualification criteria, stress test, wages, interest rates, amortization, LTV limitations, etc). Everything the government does to improve 'affordability' simply increases demand due to more buyers meeting criteria, and by feedback loop, increased house prices. It will always be so absent a complete change in mentality.

Added: I said earlier I wasn't going to engage in this absurd discussion on housing any more. Alas, I did because you brought up this 'woe is me stuff' that young people feel today. It is no different than what young people felt in the '70s and '80s. I can assure you my cohort felt the same issues but I don't think we complained so much about it. At least not from a media coverage perspective. Everyone has to pass through this rite of passage. It is time to recognize that is how it is.

 

[nathan79]

I also think the expectation is higher for the gen x and younger.

I grew up in a 700 sq ft home. My sisters shared a bedroom. My current home is 1900 sq ft @600k or so.

I’ve had younger co workers comment about not wanting to live in a “shoebox” when commenting on a house of my size. Wut??

prices have gone up, but the size of the,house also went up with the prices, and low interest rates.

I also see a lot of youngins travel way more than I did, drink expensive coffee more than I did, and they replace their Apple Watch, and iPhones everyone year. They drive 100k pick up trucks.

I agree with you. PIT = cost of owning a home.

Expectations may be higher, but there's a difference between expectations and reality. I'm sure the boomers had high expectations, too.

Unfortunately, they aren't building 700 sqft houses anymore. On the other hand, you would be lucky to find a condo that "big"... lol. Most people I know are living in smaller homes than their boomer parents. That's because the majority are living in condos or townhomes.

But I think some of you are missing the OP's point. She already said she doesn't have expensive tastes. I don't think she cares about expensive coffee, iPhones, or 100K pickups.

She sounds like she has most things she needs or wants. The only thing she really wants is a nicer house, but that's so far out of reach, so she's not sure what she's saving for other than retirement.

 

[nathan79]

Housing prices are no different than any other Econ101 commodity. They rise when financing conditions allow more people to qualify for mortgages and/or larger mortgages and increase demand that outpaces supply. House prices decrease when demand decreases due to inability to carry the financing conditions. Had qualification criteria not changed to allow 2 incomes to qualify for mortgage payments, demand would have never had a step change (or doubled if 2 incomes = twice one income).

So, basically single people and single income households are screwed now. That's one key difference right there.

 

[AltaRed]

So, basically single people and single income households are screwed now. That's one key difference right there.

Yes indeed. As soon as 2 incomes could be used to qualify for mortgages, that pretty much required everyone buying houses to have two incomes due to increase demand for housing and the price surge. A prime example of the government "improving" affordability and ultimately resulting in nothing, or worse, disadvantages.

The other really big one was allowing 1% mortgage interest rates in recent times. The stress test was introduced to counterweight that some but it didn't apply to everyone, e.g. alternate mortgages, and thus it was/is relatively ineffective. The bank of Mom and Dad came to the rescue for a select lucky cohort.

In hindsight, the qualification criteria of the '70s and '80s should have never changed, but that wouldn't have allowed the asset inflation bubble that governments feed off of as a result either.

 

[saver777]

Saver777, I would set realistic goals for your family and avoid comparisons to anyone else. Only you can decide what you want and what you can realistically aspire too.

Take the inputs here as possible alternatives to incorporate into your plans.

Good luck with your plans. I think you are on the right track.

Thanks for the kind words and encouragement!! Just to be clear, I am mostly comparing to what I expected to be at this point of my life, to the reality now. I grew up thinking I’d be able to afford a lot more than my current lifestyle as a white collar designated professional, and if the past 7-10 years didn’t go the way it did, it would’ve been a reality for me. As the numbers get bigger, I realize more and more that it does not matter as much anymore. My QOL will always be at the level I am now, and nothing will change. I think I will just have to learn to accept this.

And as someone else said in this thread, I think I’ll just start to ramp down my work life in my 40s and work in a slower paced environment.. a government job with a pension maybe.

 

[saver777]

I don't know what the rates are, but I hire a full time (live in) nanny and it was the best thing we ever did. Even with a three bedroom, you should be able to do it. Kids are exhausting. So getting that help if you can when they are young, is worth it.

It's not just the cost of daycare vs a nanny. Ours also, cooked, and ran errands. We also did a part time nanny with someone of the same age, and our kids to this day are still best friends. When I calculated the cost of daycare (if you could find it), the hours that we both worked (over time for daycares), the savings in not having to go out for meals, and cleaning, it was actually pretty close in price. We ended up paying our nannies a lot more than the minimum, and eventually stopped the nanny, but it was still worth it even when my kids started school.

Yes, that would honestly significantly improve our QOL if someone did the chores around the house and I could actually have time to myself and my toddler…

 

[AltaRed]

Thanks, but I still think the point is missed. As the numbers get bigger, I realize more and more that it does not matter. My QOL will always be at the level I am now, and nothing will change. I grew up thinking I’d be able to afford a lot more than my current lifestyle as a white collar designated professional, and if the past 7-10 years didn’t go the way it did, it would’ve been a reality for me. So really, I am mostly comparing to what I expected to be at this point of my life, to the reality now. I think I will just have to learn to accept this.

And as someone else said in this thread, I think I’ll just start to ramp down my work life in my 40s and work in a slower paced environment.. a government job with a pension maybe.

I think it does matter but in more subtle ways than perhaps one expects. QOL may not change without a quantum step change, e.g. a portfolio of $5M instead of $1M, but comfort and security changes with a larger cushion of assets. While I was working, my QOL, or perhaps my Standard of Living, did not vary much regardless of whether the portfolio was $0.5M or $1M, but it made a difference in terms of when I was able to retire and the stress that was alleviated knowing I was not going to have to plod until I was 65.

 

[saver777]

Expectations may be higher, but there's a difference between expectations and reality. I'm sure the boomers had high expectations, too.

Unfortunately, they aren't building 700 sqft houses anymore. On the other hand, you would be lucky to find a condo that "big"... lol. Most people I know are living in smaller homes than their boomer parents. That's because the majority are living in condos or townhomes.

But I think some of you are missing the OP's point. She already said she doesn't have expensive tastes. I don't think she cares about expensive coffee, iPhones, or 100K pickups.

She sounds like she has most things she needs or wants. The only thing she really wants is a nicer house, but that's so far out of reach, so she's not sure what she's saving for other than retirement.

I am driving a 16 year old car at the moment, the one I bought at graduation. We’ve been trying to buy a RAV4 Hybrid or Lexus NX Hybrid for the past year and a bit, and am now reluctantly looking at the Tesla Model Y because that’s the only suitable car readily available.. we’re still going to keep my husband’s 15 year old car because he’s fine with it, but he wants to replace it with Civic Hatchback lol..

 

[cainvest]

We’ve been trying to buy a RAV4 Hybrid or Lexus NX Hybrid for the past year and a bit

Lots of used Rav4s (and some new) around here ... none in your area?

 

[scorpion_ca]

I think it’s because we are not in our forever home, but our forever home in Vancouver feels more and more out of reach no matter how much my net worth increases…

I would think about the climate change in BC before buying a forever home in that province. Here is a good article.

A new reality — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate

www.greaterfool.ca

 

[jlunfirst]

I would think about the climate change in BC before buying a forever home in that province. Here is a good article.

A new reality — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate

www.greaterfool.ca

You will surely get a reaction from someone for breathing the words "climate change".

I believe the technical consultants and reports in past decade, that the shoreline of downtown Vancouver in various areas will slowly disappear over the decades. Frankly, one needs to actually live in VAncouver area or parts of Western Canada...where our glaciers are disappearing far too fast as shown scientific tests, photos and reports. In order, seriously see evidence in front of your face over the years.

Even if not that, is whenever the big earthquake will occur. It will occur --it's whether within our lifetime or later. There will be serious structural bldg. and road/bridge damage..since alot of the bldgs. at least in the downtown area -- precede seismic requirements of bldg. code changes. Or insufficient money to rehab a bldg. for improved seismic mitigation. CAnada lacks major earthquake damage, earthquake disaster response and rehab effort compared to Japan, Taiwan or California. Yea, I get it the engineers learn from each other worldwide for future structural local designs.

Maybe best thing is to a have home on higher land away from ocean or False Creek area in Metro Vancouver.

Another reason to enjoy today.... did Calgary predict their $1 billion flood that damaged homes along river, etc.? There were fuzzy predictions in writing. But it happened anyway..

 

[AltaRed]

I am driving a 16 year old car at the moment, the one I bought at graduation. We’ve been trying to buy a RAV4 Hybrid or Lexus NX Hybrid for the past year and a bit, and am now reluctantly looking at the Tesla Model Y because that’s the only suitable car readily available.. we’re still going to keep my husband’s 15 year old car because he’s fine with it, but he wants to replace it with Civic Hatchback lol..

But why? Because it is politically correct? Because of peer pressure? What is wrong with any one of a dozen CUVs? The category is crowded with options if you are willing to buy an ICE instead. In 5 years when the other old vehicle may be ready for replacement, consider a hybrid then. There will be far more of them available with improved batteries no less.

 

[like_to_retire]

But why? Because it is politically correct? Because of peer pressure? What is wrong with any one of a dozen CUVs? The category is crowded with options if you are willing to buy an ICE instead.

Sheesh - no kidding. Took the words right out of my mouth.

ltr

 

[james4beach]

I would think about the climate change in BC before buying a forever home in that province. Here is a good article.

I agree. Smoke from constant fires could make BC a lot less attractive than it used to be.

 

[Zipper]

In the past whenever I figured net worth it was always done minus the mortgage.
We got rid of the mortgage when I was 50.
I retired at 55 and I'm now 80.
We have been in the same home for 41 years.

 

[cainvest]

In the past whenever I figured net worth it was always done minus the mortgage.

For sure, net worth is assets minus debts.

 

[saver777]

In the past whenever I figured net worth it was always done minus the mortgage.
We got rid of the mortgage when I was 50.
I retired at 55 and I'm now 80.
We have been in the same home for 41 years.

Does that include the house? If yes my net worth would be more like $1.1-1.2m including the mortgage.

 

[AltaRed]

Does that include the house? If yes my net worth would be more like $1.1-1.2m including the mortgage.

That remains confusing for some of us. If you have a $1M house but a $0.5M mortgage, your net worth is only $0.5M. IOW, there is no such thing as 'including the mortgage' in net worth, albeit if you mean it as a deduction, then maybe say it that way.

 

[kcowan]

Same as with stocks on margin and credit card debt. If you have the money to pay it off then net the two or delude yourself!