Hands-down, best decision I ever made was not treat my house like a bank account. None of the speculative value of my home (bought mid 2000s, now apparently quadrupled in value even after inflation is factored in) is even real money until the house is sold and the money has cleared escrow. Using home equity to buy lifestyle (luxury cars, trips, etc) is absolutely insane.
Thank you Santo. This is a very refreshingly honest take from a realtor. This country's obsession with real estate needs to end. Too much of our consumption and capital is tied to high real estate prices (and the expectation of continued growth) that it is literally ruining our economy and screwing over the next generation of Canadians. Any investment product comes with the disclaimer that past performance may not be indicative of future performance. Unfortunately, Canadians have not really learned this lesson when it comes to real estate, and current valuations are simply not sustainable. The government is trying to do everything it can to prop this market up through irresponsibly stimulative measures, but this old trick can only work so many times until you have to face reality. The wealth effect driven by high real estate prices can easily reverse direction the second things turn south, as financial leverage works both ways.
what should happen and what will happen are two different things. yes the market is being jump started, and yes prices are going up, because its the only retirement most the country has. to think things will change for those who cannot afford to buy is crazy thinking. the politicians are homeowners, the policymakers are homeowners, and their constituents are (mostly) homeowners.
I've never seen a mainstream article in favour of renting. They make people think home ownership is an expected and important part of being a successful adult.
Good analysis. There are many homeowners who cannot save and owning a house and paying a mortgage forces them to save. But this is the first time a real estate agent , as yourself who points out what you have observed , with years of experience , the situations where homeowners are in a negative equity environment compared to some renters. Most real estate agents and people say “ buy a house as you cannot lose.” Yes you can.
Keeep these types of videos up. being 1000% honest about things does wonders for peoples trust in you. im part of the renting while i could afford to buy group. got nearly 100k in my bank while seeing my freinds complain about their mortgage going up 1000$ a month due to them holding a variable mortgage. and if you minus my car that i financed (in 2 years it will be 100% mine) i have zero 0$ in debt. so with all the rental demand from international students drying up. where do you think rental prices will be going?
Santo, I'm one of those renters. I could buy a new preconstruction detached home in my town in southern Ontario but I haven't chosen to buy since COVID when I moved here from BC. But I haven't been investing wisely too lol.. I only pay 900/month in my part where I share this apartment with 1 more person. This 900/month is less than mortgage interest + utilities+ insurance + property tax+ maintenance if I were to buy a house..
Your analysis is very logical and sound. Indeed, it should be compared to someone who invested his money in the stock markets and someone who paid it as a down payment to buy a house and try wherever it is more profitable in the long run.
It's preposterous how most homeowners could NOT afford the houses they live in today if they had to do it over again today at today's prices. Accidental millionaires.
There was a study done that says you are only better off owning a home versus renting and investing in a diversified portfolio if you don't move, once you move the fees, costs and commissions hitting you again mean you are not better off.
The people who “pull out some equity” from their homes too often don’t fully understand that that money is borrowed and needs to be repaid, with interest! It’s just so easy to get into trouble this way-unless the borrower is able and disciplined enough to pay back the home equity loan or line of credit no matter what happens.
There's one important factor Santos did not mention: TAXES. Principal residence in Canada is a tax free asset when it appreciates and is sold. It is the only non-taxable asset. Other investments are heavily taxed, and because of this, real estate purchased as a principal residence will win over the long term compared to anything else hands down. I believe that's why wealthy investors live in absurdly large homes. They live in their wealth and sell when they're very old to pass on their tax free gains to children.
@dangottlieb5383 people associate wealth at what they see. Not the freedom on what they can do. The wealthiest people are the people are the most content.
I did the exact opposite of what this video is about . I upgraded my home 3 times to a larger one, borrowed the max for a secure line of credit against my house for down payments and invested in real estate . Rented the homes and sold them in 2020/21. I paid Trudeau the capital gains tax after the sale of the properties, paid off my house and cleared the line of credit. Remember for a secure line of credit you are obligated to pay the monthly interest only (expense - tax deductible) and $0 principal.
The term 'house rich, cash poor' comes to mind. I guess that's why there are so many 'Reverse Mortgage' commercials on television nowadays. Many countries around the world consider the home as a place to live/raise a family, etc. Whereas many people in the USA, Canada, Australia, etc. view having a home as a requirement for their financial well-being and net-worth goals. There are studies (particularly recent ones) that show that when you factor in all the extra costs of home ownership (20+ years of interest payments, property taxes, ongoing maintenance/repairs (new roof, furnace, driveway, windows, etc., etc) vs paying rent and investing the delta, you would be close, if not further ahead, financially speaking. Of course this assumes that the individual(s) had the required income to choose either, AND, actually invested the delta vs spending it on fancy vacations/expensive cars. :-)
I don't believe renters are better off in the long run. Home ownership is better if you do it smartly. I know friends and family who rent and have little to no savings, they can't save or don't know how to invest or don't trust the investment risk/profit so they just live month to month and spend what they have. When you have a mortgage you pay it and pay into something concrete literally. People are not disciplined in this day and age to save money when renting, they want the fancy clothes and cars and travel. Home ownership is an investment that is tangible.
What about the interest they had to pay for 20 yrs along with their mortgage payments. Did they subtract those interest payments which are just like rent, down the drain.
Canada's favourite pass time/obsession is REAL ESTATE and AGENTS have way to much power , without doing the work/homework with no accountability. YOU are different and caring, so your clients are well looked after.
historically buying sp 500 index has out performed the housing market. The benefit of housing is you get to use leverage with the banks money if the market is increasing but those days are gone for now. I think its best to do both, place your eggs in many baskets if you can.
im thinking about this myself - i dont see the value in putting my life savings into a property in the gta/canada thats depreciating currently , and it comes with alltime high monthly mortgage payments
the only challenge rn is the fact that rentint in gta is also very high currently , but the caveat is u keep ur downpayment amount for investment elsewhere
Never really believed in using my house for generating wealth as I got better returns on other investments. Rented for most of my adult life and bought real estate well within my means. Then compounding really kicks in and your friends are shocked when you buy a house 4 to 5 times bigger than your last and no longer need to work. The bigger house was due to family needs, I’d be renting otherwise still and would probably have 2x more net worth. Your house should not make up most of your net worth. Real estate is mostly luck, you’ve made it when you can make money in any asset class.
I could buy a place with cash, but honestly, it’s never made sense as an investment. The return on investment isn’t great, and I can make better returns elsewhere and just keep paying rent.
I normally agree with you but the video isn't reality. Most people don't "join the preconstruction game". Regular people do extremely well in real estate.
I grew up in a family of entrepreneurs. Some of my family members employed more than 5000 people on payroll and were best in their industries, of course not in Canada, but in GCC countries. None of them bought homes before their 50s and all of them live in Mansions now.. They raised their kids in homes they rented. I really dont understand the Canadian theory that homeowners are wealthy. I see spending 1 million or more on a below grade, old, renovated multiple times kind of home a waste of your productive lives. It is a black hole that will suck out your capital, peace of mind and creativity. Canadians really dont understand that home in the city is just for convenience and it should earn you money for the mansion. It is just the basic necessity , a shelter not anything else.
Ok, now go look at the financial position of a renter in Canada. Most Rents today account for 50% of gross income which doesn't leave much for savings. Sure your story is a successful one but in general in Canada, Homeowners have a net worth that's 30x more than renters based on a recent study. The numbers don't lie
Most people are not entrepreneurs so your comment doesn’t apply. Most people will never own a mansion at any age. People that work 9 to 5 are generally better off buying earlier so that the home is paid off at retirement ( assuming they don’t take out equity on stupid material goods per the video).
@@tylerdurden7142 why are those most people who work 9 to 5 willing to overpay for these homes. If you dont overpay, won't the market come down? Don't you have the power when you are buying your "biggest asset?" Do you realize how such "most buyer" are actually not getting their money's worth or contributing to economics growth? Canadians overpay for homes because someone "sold" it to them and they "bought" it . Simple.
@@jasminhabeeb Because there are really only two options 1. Overpay to buy a home 2. Overpay on rent. Doing the former at least builds equity and ensures that you can't get kicked out by a landlord. If you don't overpay, you can't buy.
@@tylerdurden7142 No, the reality is the biggest business in Canada is money lending and the big ticket item is real estate because Canada doesn't have a Silicon valley or startup culture. And this is a created scarcity of homes so that money lenders make money. Nobody is rich buying a home unless that home adds enough value to your life, gives you peace of mind to create your million dollars. It works the other way around in Canada. It's high time Canadians woke up.
Especially in Toronto, everyone’s a millionaire living in houses worth millions so their easy targets for taxation extortion from the mismanagement needed to upgrade city of Toronto. Go figure…..perpetual construction and shrinking commercial real estate revenue.
Paper gains are mercurial, they come and go. Cash in hand is what counts. This real estate market is heading for a big correction. The Trudeau years are a lost decade.
It's absolutely true that homeowners are richer than renters because renters have to part with all of their money every month they get to keep nothing not even the equity but in markets like this it depends what you have and if you don't have something that other people want then you have nothing at all
Hands-down, best decision I ever made was not treat my house like a bank account. None of the speculative value of my home (bought mid 2000s, now apparently quadrupled in value even after inflation is factored in) is even real money until the house is sold and the money has cleared escrow. Using home equity to buy lifestyle (luxury cars, trips, etc) is absolutely insane.
Thank you Santo. This is a very refreshingly honest take from a realtor. This country's obsession with real estate needs to end. Too much of our consumption and capital is tied to high real estate prices (and the expectation of continued growth) that it is literally ruining our economy and screwing over the next generation of Canadians. Any investment product comes with the disclaimer that past performance may not be indicative of future performance. Unfortunately, Canadians have not really learned this lesson when it comes to real estate, and current valuations are simply not sustainable. The government is trying to do everything it can to prop this market up through irresponsibly stimulative measures, but this old trick can only work so many times until you have to face reality. The wealth effect driven by high real estate prices can easily reverse direction the second things turn south, as financial leverage works both ways.
You are 💯 right ✅️
what should happen and what will happen are two different things. yes the market is being jump started, and yes prices are going up, because its the only retirement most the country has. to think things will change for those who cannot afford to buy is crazy thinking. the politicians are homeowners, the policymakers are homeowners, and their constituents are (mostly) homeowners.
4:55 "You need to be a top earner to buy a house today" THANK YOU! You need to say this in every single video!
I've never seen a mainstream article in favour of renting. They make people think home ownership is an expected and important part of being a successful adult.
People who buy a home and hold it for 20 years are generally richer than renters. I don't think there's a coherent argument against that.
It's much more beneficial to own a home...but not if you buy it today or in the last 8 years no equity to be had
@@jaymar1615anyone that bought 8 years ago has equity.
Good analysis. There are many homeowners who cannot save and owning a house and paying a mortgage forces them to save. But this is the first time a real estate agent , as yourself who points out what you have observed , with years of experience , the situations where homeowners are in a negative equity environment compared to some renters. Most real estate agents and people say “ buy a house as you cannot lose.” Yes you can.
Keeep these types of videos up.
being 1000% honest about things does wonders for peoples trust in you.
im part of the renting while i could afford to buy group.
got nearly 100k in my bank while seeing my freinds complain about their mortgage going up 1000$ a month due to them holding a variable mortgage.
and if you minus my car that i financed (in 2 years it will be 100% mine) i have zero 0$ in debt.
so with all the rental demand from international students drying up.
where do you think rental prices will be going?
Santo, I'm one of those renters. I could buy a new preconstruction detached home in my town in southern Ontario but I haven't chosen to buy since COVID when I moved here from BC. But I haven't been investing wisely too lol..
I only pay 900/month in my part where I share this apartment with 1 more person. This 900/month is less than mortgage interest + utilities+ insurance + property tax+ maintenance if I were to buy a house..
Your analysis is very logical and sound. Indeed, it should be compared to someone who invested his money in the stock markets and someone who paid it as a down payment to buy a house and try wherever it is more profitable in the long run.
Its impossible because LIFE happens.
That's not reality though. People don't invest the difference.
Yep. Many living the fake rich life to flex on IG. However, they are just 1 job loss away from disaster!
This is church! Well said Santo!
You really summarized it very well !!
It's preposterous how most homeowners could NOT afford the houses they live in today if they had to do it over again today at today's prices. Accidental millionaires.
A house is like a good stock.
There was a study done that says you are only better off owning a home versus renting and investing in a diversified portfolio if you don't move, once you move the fees, costs and commissions hitting you again mean you are not better off.
The people who “pull out some equity” from their homes too often don’t fully understand that that money is borrowed and needs to be repaid, with interest! It’s just so easy to get into trouble this way-unless the borrower is able and disciplined enough to pay back the home equity loan or line of credit no matter what happens.
There's one important factor Santos did not mention: TAXES.
Principal residence in Canada is a tax free asset when it appreciates and is sold. It is the only non-taxable asset. Other investments are heavily taxed, and because of this, real estate purchased as a principal residence will win over the long term compared to anything else hands down. I believe that's why wealthy investors live in absurdly large homes. They live in their wealth and sell when they're very old to pass on their tax free gains to children.
TFSA is also tax-free.
@grizzlegreezz9696 yeah, I forgot that one. But contribution limits still make your home the better bet over the long term.
@dangottlieb5383 people associate wealth at what they see. Not the freedom on what they can do. The wealthiest people are the people are the most content.
I did the exact opposite of what this video is about . I upgraded my home 3 times to a larger one, borrowed the max for a secure line of credit against my house for down payments and invested in real estate . Rented the homes and sold them in 2020/21. I paid Trudeau the capital gains tax after the sale of the properties, paid off my house and cleared the line of credit. Remember for a secure line of credit you are obligated to pay the monthly interest only (expense - tax deductible) and $0 principal.
The term 'house rich, cash poor' comes to mind. I guess that's why there are so many 'Reverse Mortgage' commercials on television nowadays.
Many countries around the world consider the home as a place to live/raise a family, etc. Whereas many people in the USA, Canada, Australia, etc. view having a home as a requirement for their financial well-being and net-worth goals. There are studies (particularly recent ones) that show that when you factor in all the extra costs of home ownership (20+ years of interest payments, property taxes, ongoing maintenance/repairs (new roof, furnace, driveway, windows, etc., etc) vs paying rent and investing the delta, you would be close, if not further ahead, financially speaking. Of course this assumes that the individual(s) had the required income to choose either, AND, actually invested the delta vs spending it on fancy vacations/expensive cars. :-)
I don't believe renters are better off in the long run. Home ownership is better if you do it smartly. I know friends and family who rent and have little to no savings, they can't save or don't know how to invest or don't trust the investment risk/profit so they just live month to month and spend what they have. When you have a mortgage you pay it and pay into something concrete literally. People are not disciplined in this day and age to save money when renting, they want the fancy clothes and cars and travel. Home ownership is an investment that is tangible.
It’s like govt saying inflation is down but common people don’t agree with that
What about the interest they had to pay for 20 yrs along with their mortgage payments. Did they subtract those interest payments which are just like rent, down the drain.
Agree 100%
Canada's favourite pass time/obsession is REAL ESTATE and AGENTS have way to much power , without doing the work/homework with no accountability. YOU are different and caring, so your clients are well looked after.
historically buying sp 500 index has out performed the housing market. The benefit of housing is you get to use leverage with the banks money if the market is increasing but those days are gone for now. I think its best to do both, place your eggs in many baskets if you can.
If a renter also leases 2 luxury cars and spends money on frivolous things, they will also be poorer.
im thinking about this myself - i dont see the value in putting my life savings into a property in the gta/canada thats depreciating currently , and it comes with alltime high monthly mortgage payments
the only challenge rn is the fact that rentint in gta is also very high currently , but the caveat is u keep ur downpayment amount for investment elsewhere
People now rent and do trades with their money in stock market
Unrealized gains are not guaranteed
Never really believed in using my house for generating wealth as I got better returns on other investments. Rented for most of my adult life and bought real estate well within my means. Then compounding really kicks in and your friends are shocked when you buy a house 4 to 5 times bigger than your last and no longer need to work. The bigger house was due to family needs, I’d be renting otherwise still and would probably have 2x more net worth. Your house should not make up most of your net worth.
Real estate is mostly luck, you’ve made it when you can make money in any asset class.
But but the bank says “You’re Richer Than You Think” 😂
These other things that happens to home owners , can happen to renters , but they can’t buy the things for their kids
I could buy a place with cash, but honestly, it’s never made sense as an investment. The return on investment isn’t great, and I can make better returns elsewhere and just keep paying rent.
older peeps have made lots on real estate.
I normally agree with you but the video isn't reality. Most people don't "join the preconstruction game". Regular people do extremely well in real estate.
I grew up in a family of entrepreneurs. Some of my family members employed more than 5000 people on payroll and were best in their industries, of course not in Canada, but in GCC countries. None of them bought homes before their 50s and all of them live in Mansions now.. They raised their kids in homes they rented. I really dont understand the Canadian theory that homeowners are wealthy. I see spending 1 million or more on a below grade, old, renovated multiple times kind of home a waste of your productive lives. It is a black hole that will suck out your capital, peace of mind and creativity. Canadians really dont understand that home in the city is just for convenience and it should earn you money for the mansion. It is just the basic necessity , a shelter not anything else.
Ok, now go look at the financial position of a renter in Canada. Most Rents today account for 50% of gross income which doesn't leave much for savings. Sure your story is a successful one but in general in Canada, Homeowners have a net worth that's 30x more than renters based on a recent study. The numbers don't lie
Most people are not entrepreneurs so your comment doesn’t apply. Most people will never own a mansion at any age. People that work 9 to 5 are generally better off buying earlier so that the home is paid off at retirement ( assuming they don’t take out equity on stupid material goods per the video).
@@tylerdurden7142 why are those most people who work 9 to 5 willing to overpay for these homes. If you dont overpay, won't the market come down? Don't you have the power when you are buying your "biggest asset?" Do you realize how such "most buyer" are actually not getting their money's worth or contributing to economics growth? Canadians overpay for homes because someone "sold" it to them and they "bought" it . Simple.
@@jasminhabeeb Because there are really only two options 1. Overpay to buy a home 2. Overpay on rent. Doing the former at least builds equity and ensures that you can't get kicked out by a landlord. If you don't overpay, you can't buy.
@@tylerdurden7142 No, the reality is the biggest business in Canada is money lending and the big ticket item is real estate because Canada doesn't have a Silicon valley or startup culture. And this is a created scarcity of homes so that money lenders make money. Nobody is rich buying a home unless that home adds enough value to your life, gives you peace of mind to create your million dollars. It works the other way around in Canada. It's high time Canadians woke up.
property tax hikes coming all the way to year 2028
Especially in Toronto, everyone’s a millionaire living in houses worth millions so their easy targets for taxation extortion from the mismanagement needed to upgrade city of Toronto. Go figure…..perpetual construction and shrinking commercial real estate revenue.
Paper gains are mercurial, they come and go. Cash in hand is what counts. This real estate market is heading for a big correction. The Trudeau years are a lost decade.
RE is the economy fuel, of course they will feed the people with this labs articles.
It's absolutely true that homeowners are richer than renters because renters have to part with all of their money every month they get to keep nothing not even the equity but in markets like this it depends what you have and if you don't have something that other people want then you have nothing at all