Those who say renting is great, read this. Renting sucks, especially when you are on a fixed income. Stupid Millennials that travel he world, live in Air BnB/s and live off 6% of a million dollar portfolio... when you get to be 60, you will be fucked like this guy, as you never invested in real estate, and now spend 80% of your fixed income on rent, and the rest on Health care.
I have long said "Real Estate is a Hedge against Inflation" Here is my story. When i was young, I rented as it was simple, and cheap. But once I had a wife and 2 kids, it was not so simple, but still relatively cheap. But as we saved to buy, it started to get more and more expensive with inflation. In 1996 we rented a small 3 bdr house in Victoria for... holding your hat... $400 a month. Yes, an entire house. And we were laughing. Until the day we got the boot... doesn't matter why, ok owners needed money and wanted to sell. It was a shit box anyway and even if we had the money, there was no way I would have bought it. Next house, I used my Great Renter persona to negotiate a rent of $1200 a month... wow, big jump, but it had 2 room we rented out. And then we got the boot... Next was 1450, this was about 2007, and my wages were not increasing. And we got the boot.. see a pattern emerging here? You are not in control when you rent, and the cost keeps going up. It was time to knucke down and get off this rental roller coaster, so for the next 4 years we took a small 3 bedroom upper, shared with other tenants in the basement, and saved, saved, saved.
2012 rolled around, housing was in a bit of a slump, we had missed the drop in 2008, but things were still soft, not crashing, but not booming. We landed an estate sale, fixer upper, and strained to finance it, but we got in. The ask was $450, and we got it for the previous accepted bit of $440,000 Hurray, no more renting. But now we were not only looking at paying taxes each year, insurance, and a water bill, but the payments were close to $1800, not the $1450 we had paid years previous, and in the first winter discovered it needed a roof pronto, as water was streaming into the stairwell, but it was managable... somehow. We did a lot of 0% credit card deals to get thru some tough times.
Fast forward to 2023... what has changed, what stayed the same. In a mortgage, you are paying on the cost of a house, that was fixed at the value in the year you bought. And we all know Real Estate appreciates at about 7% per year, compound. So inflation is actually working in reverse. The value of your house is going up, and you are paying on 2012 prices, in 2023. Neat isn't it?
So now lets get back to Mr GotOver60 and screwed... for his whole life, he's been the victim of inflation, constantly having to put out more from his
pocket just for a place to live, but income has not kept up with inflaton, and who knows about savings for this guy.
"I think it's very sobering to realize that, you know, a third of our seniors are living on less than $26,000 or $27,000 a year" - wow... this is sick... In Langley and area, this is eaten up in rent alone.
So the message here is, don't get screwed later in life because you believed owning is a pact with the Devil. Its the complete opposite. Even now when a SFH is above a million, it will be higher in the next decade, the key is how long can you safely say you will like in one city? If your horizon is less than 10 years, renting is probably better, but if not. Buying will always win in the end. And nobody, but nobody can kick you out.