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May 17, 2019 | Country Moist

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Enough of Vancouver. Ditto Toronto. It’s hopeless. Inflated real estate. Subdued wages. Escalating taxes. Tough to carve out a balanced, stable, secure life in such money-sucking places. Especially if you’re young, single and craving some liberty.

This brings us to Cathy, 27, over-educated, under-paid and, above all, rural.

“I know most of your readers are in the GTA and Vancouver,” she says, “but I’m hoping you can give some advice to young(ish) readers who choose not to live in those cities.

I am single, have a masters degree, am employed in my field, and live in a rural area 2 hours southwest of Toronto (Norfolk County). I am aggressively paying down my student debt so it will be paid off by Halloween, so no savings. I moved back home to live with my parents when I was close to finishing my masters because my boyfriend dumped me (we were going to live in the GTA). This arrangement cannot last forever, though, as kind as they are for letting me move back home. There is no rental market in this area, and if there is a rental unit available, it is either dilapidated or the same price as a mortgage, which I can’t maintain on my salary (so much for an education). GTA real estate agents are coming to our area and driving up housing prices for their Toronto clients who want more house for less money, leaving locals like me struggling. A small house that needs work will go for 250K or more. There’s nothing cheaper than that.

You always recommend renting, but what would you say to someone in my situation where that’s not possible? I need independence despite what people say about my generation. I really hope to hear back from you.

What kind of Neanderthal loser was he, Cathy? An educated, sensible, frugal woman with a taste for freedom, empathy for her parents and who, especially, reads this blog is a rare and beautiful thing. Maybe it’s best he left. Let him fall into the web of some floozy from Mimico.

Now, as to your dilemma. First, you can’t afford a house. Any house. Without savings the only way you can swing a downpayment is if you hit up your folks for one. And that means obligation, not independence. No matter what they say, there will always be an implied emotional debt. If you can avoid it, don’t go there. The bond you have with them will be stronger without those strings.

Even if you did have an extra twenty grand kicking around for a $300,000 property, it would likely be a junker requiring renos. The carrying costs (mortgage, taxes, insurance) would amount to $2,000 a month, plus utilities (and renovations). Plus, you’d have to pass the stress test (at 5.34%) in order to qualify for a mortgage. So this is a dodgy option. Forget it until your career turns out a bigger income

And do you really want to buy a place where jobs are thin for a woman with an MA? If that’s a lifestyle choice, fine. But remember selling in a secondary or rural market is no fun. It can take months and months and price appreciation on starter houses is scant. Not always a good investment choice.

Renting? Sure. You have freedom, flexibility, independence and get to save/invest your money at the same time – if you can keep costs under control. But you’re right. In the non-urban areas rentals are hard to find, with lots of competition keeping lease rates high. But they do exist. For example, current rentals include a two-bedroom house for $1,200 in beautiful downtown Delhi. Or a townhouse in Jarvis (not far too Hamilton) for $1,275. Or this place below in Tillsonburg (the place to be on a summer Saturday night), with a backyard, shop, patio and garage for $1,700.


Another option: rent from your parents. Pay them some serious money in return for whatever changes are necessary to give you a separate space and dedicated entrance. They get income. You get to stay in a place that works and are familiar with. You can control costs and stay investing for the future. And you increase privacy and independence. It could be the right compromise.

Just promise us you won’t reconcile with the wiener. He deserves the GTA.

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May 17th, 2019

Posted In: The Greater Fool

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