It’s part of life to want things we flat out can’t afford. Unfortunately for young adults, home ownership is increasingly in this category. One of the best things I’ve read on the unaffordability of housing was written by a 30-something colleague here at The Globe and Mail, audience editor Jessie Willms. In a piece for the Globe’s Amplify newsletter, she explained her cost-based decision to opt out of home ownership. Here’s a Q&A we did by e-mail on her decision to remain a renter:
Q: You’re opting out of the housing market as a single millennial. How much pushback are you getting about that?
A: Like many Millennials living in the city, home ownership and rent prices are common topics of conversation (and/or rage, depending on the day). But in my friend group, only two couples have made the leap to ownership. Both sets of friends will highlight the long-term financial benefits to ownership. But, as couples, they also see the massive gap in opportunity between us. It’s meant very little pushback for choosing to opt out.
Q: Can you describe your neighbourhood a bit in terms of amenities? What’s the cost of houses there?
A: My neighbourhood is wonderful! I live in Little Italy, next to lush tree-lined side streets. It’s a 15-minute city – at least for my needs. It’s full of all necessities of urban life: small bodega-style grocery stores, multiple parks, the good coffee place (and the serviceable, closer coffee spot), walking distance to the gym and yoga studio AND close to two of my favourite music venues (post-pandemic perks). In my mind, anything forty minutes or less is a short walk – so I’m near everything I could possibly need. I’m also less than five minutes from the infamous Little Italy bungalow, which last year sold for $800,000 over asking. The average home in this area sold for $1.5-million (for the period Sep 21 – Nov 16) – well beyond what I would even imagine being able to afford. I could maybe swing a down payment on a porch.
Q: A lot of renters worry about their landlords selling the property, especially in today’s hot market. What’s your sense of how long term your rental is?
A: I worry about this too, a lot. Every e-mail sparks a moment of total panic: ‘Oh no, it’s happening.’ My rental is so cheap and spacious when compared to other studios currently for rent in the city that having to move would mean a significant increase a rent, which is a big worry. I’m comforted that in our low-rise, one tenant has been in her unit for at least a decade, and my landlord, who inherited his multiple rental properties from his family, seems in no rush to sell and retire. I hope it’s long-term, I’m banking on the money I’m able to put into saving because of cheap rent being available for years to come.
Q: How much has your rent gone up annually over the years, and what happened during the pandemic?
A: In five years since I moved in, my rent has gone up about $100 per month, total, not including the pandemic. My lease starts in spring and, in both Mays of the pandemic, no increase was made.
Q: What’s the Number One thing you love about renting, and the top drawback?
A: My neighbourhood is the reason I continue to rent. If you think about housing in moral terms, as I often do, and consider what aligns most with your values, renting feels like the only option. Buying a single-family or detached home, especially in Toronto, is a vote against density and a city that works for everyone. Renting is still participation in a broken system, but one that feels closer to something I can accept long-term. The top drawback is purely individual. I’m opting out of lottery-like gains that are conferred on some other homeowners in Canada. My personal financial future could be more secure with massive investment in a house, but it’s both out of reach and out of sync with my reality. Renting also sucks when you spend too much time on DIY Instagram and think, ‘my kitchen would be so much better if I could re-tile the backsplash.’ That control is a less meaningful downside.
Q: Tell us about the saving and investing you’re able to do as a renter rather than a homeowner with major additional costs?
A: To buy a home, my monthly expenses would increase by several hundred dollars per month. Right now, that’s money that can fill a savings account (I finally have an emergency fund), and I maxed out my TSFA contribution. I also opened a robo-adviser account and squirrel away money each month.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
What happens to your loyalty points when you die?
RewardsCanada.ca on how points and miles from a variety of loyalty programs are treated when the account holder dies. Points are often transferrable, but consider this advice: “Use up your points and miles – try not to hoard them.”
Enough with the joys of renting
A renter says he’s sick of being told how great renting is by people who own homes.
Manage your time like you manage money
To improve your work-life balance, take a budgeting approach to how you spend your time. The author suggests tracking things like screen time, TV watching and time with family. Reallocate as required, just as you would with a budget covering household spending.
Don’t fear inflation
The Nobel-winning economist Joseph Stiglitz plays down worries about inflation. He says much of the inflation we’re now seeing is a result of short-term bottlenecks in the industrial supply chain.
Watch this
An economist explains why used cars are so expensive these days, and whether airline fares will stay as low as they are right now.
The money-free zone
I’ve played this strangely hypnotic instrumental song a dozen times lately – Weekend Wind, by a band called Woods. A seven-minute trip.
What I’ve been writing about
- Renters, here are seven financial advantages over homeowners
- How the pandemic renovation boom will raise your home insurance premiums again
- Bond ETFs for investors who fear both higher rates and a stock market crash
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
