The search for my/our first house has been ongoing for years… seriously.
It started out as a pipe dream when I was single and in university to own my own condo. It wasn’t possible then for me to save up a down payment and get approved by a bank for a mortgage loan. I tried though! I tried to convince my parents to co-sign me… but in hindsight, that was a stupid idea and I’m glad they said no.
Why did I want a condo so bad? Because I thought buying your first real estate, especially if you can buy it younger (at all costs) is the right way to “do it”. I believed that renting was throwing money away.
Then I met my partner four years ago and now we’ve decided we want to buy our first house together.
Related Post: Our House Hunt – April, 2016 Progress
We’ve looked and seen several homes. We’ve put offers on many and have lost most of them (except one, but we ended up backing out of that deal altogether). Through the process, we had challenges trying to figure out what’s important to both of us and making compromises so we’re both happy on the one house we pick.
Through the process, I also learned a lot of things about “buying a house” that I didn’t know before. I learned about true value of homes, importance of location versus house design, real estate terminology, what financing looks like, etc… and I’m sure I’ve barely scratched the surface.
But I realize that there’s more to my ‘homelessness’ now than just the plain reason of not having found “the right house” yet.
While in the market for this house we haven’t yet found, I realized the following things. And because of this list, I’ve been reluctant to go “all in”. These are the reasons why we haven’t bought a house:
1. The Calgary real estate market is ridiculously expensive compared to other cities.
While we’re not as bad as Vancouver or Toronto, our real estate market is not that great. Read this report – 6 out of the 7 analyses described here state the Canadian housing market is overvalued (ranging from 3% to as much as 60%). Chew on that!
Also, around the time I was putting this post together, Bridget wrote this gem -> The Income You Need To Purchase A Home In Canada’s 25 Largest Cities. This proves that there are other places in Canada where housing would be much more affordable for us if we wanted to relocate, even Edmonton would be slightly better than Calgary.
(Meanwhile, in House Hunter news, there are parts of the United States where one can buy a house big enough for a family of 8 for around $250,000!)
Okay, to be honest, the expensive Calgary real estate market wasn’t news-flash to me. What was though was that I read Alex’s post on why he’s relocating to a new city to reach financial independence earlier. And one of the reasons he listed was that there was no way he was paying over $400k for his primary residence in Austin (not until after he’s reached his goal of FI at least!). Hence, one reason to move to Indianapolis which offers more affordable housing and lower cost of living.
From that, I realized I didn’t even blink twice about buying a house for $450k. I just accepted it as fact. I was so attached to living in the same neighbourhood as our families and I am still so attached to my city of Calgary… and $450k is the approximate price I have to pay for it.
2. Signing up for a $450,000 mortgage for 25 years is also expensive.
Have you had $450,000 in cash in your hands? I haven’t but I figured I would have a ton of hard feelings handing that cash over for a house. (I haven’t even made $450,000 in my lifetime yet!)
And the fact is that I won’t be paying $450,000 for that house. I will actually be paying $556,722 by the time I pay it off in 2041 when I’m 50 years old. (Assuming a 10% down payment and 2.49% 5-year-fixed rate… thanks to RateHub for the mortgage calculator!)
Oh and I didn’t even add to that the carrying costs of the house – bills, maintenance over years, furniture, upgrades, etc. I would guess that these costs alone could eat up a good portion of the appreciation of that house.
You know, this is all just sounding depressing. Buying a house seems much more expensive to me now. 🙁