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This is assuming the priced don’t increase. In many places, the prices increase so fast your downpayment grows faster than your savings. Home value goes up 10%

by nikanj 5y ago

This is assuming the priced don’t increase. In many places, the prices increase so fast your downpayment grows faster than your savings. Home value goes up 10%, from 1 million to 1.1 million, 20% downpayment goes up from $200k to $220k. If you’re saving under $1666 per mo, you’re actually further away than you were last year. In Vancouver, the average price is $1.36 million and it went up 21% in a year. For detached, $2.12 million/25% yoy. Waiting and saving money is no longer a feasible housing strategy, unless you can save at least a few thousand every month.

chii 5y ago
you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
- PickledHotdog 5y ago
  Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
  - vba616 5y ago
    Has NZ taken steps to ban foreigners from owning property, particularly if vacant? I thought I read something about that.
  - chii 5y ago
    > should you have to take risks by investing your deposit yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded). > the chance to take a bigger risk in the housing market? A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even! It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.
    - nikanj 4y ago
      In the past, you didn't need returns when saving for your down payment. Proverbial dollars in your mattress was plenty good enough to ensure your savings were growing faster than the required down payment
Fire-Dragon-DoL 5y ago
The greater Vancouver area though is not 1.3M and a detached house is something not even taken in consideration in Europe. I lived in Rome and having a yard meant you were loaded
- nikanj 5y ago
  This was the first hit from Google https://wowa.ca/vancouver-housing-market https://wowa.ca/vancouver-housing-market
  - Fire-Dragon-DoL 5y ago
    Sorry, simpler than that, I misread the post. The post states 2.12M for detached, which is definitely in line with what I was observing
deleted 5y ago
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by nikanj 5y ago

chii 5y ago

you don't save money by merely keeping it in your savings account (at least, not for the past decade and a half). You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).

PickledHotdog 5y ago
Ah yes, I'm sure that's what my parents had to do in the late 70s to get their deposit together. I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
- vba616 5y ago
  Has NZ taken steps to ban foreigners from owning property, particularly if vacant? I thought I read something about that.
- chii 5y ago
  > should you have to take risks by investing your deposit yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded). > the chance to take a bigger risk in the housing market? A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even! It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.
  - nikanj 4y ago
    In the past, you didn't need returns when saving for your down payment. Proverbial dollars in your mattress was plenty good enough to ensure your savings were growing faster than the required down payment

Fire-Dragon-DoL 5y ago

The greater Vancouver area though is not 1.3M and a detached house is something not even taken in consideration in Europe. I lived in Rome and having a yard meant you were loaded

nikanj 5y ago
This was the first hit from Google https://wowa.ca/vancouver-housing-market https://wowa.ca/vancouver-housing-market
- Fire-Dragon-DoL 5y ago
  Sorry, simpler than that, I misread the post. The post states 2.12M for detached, which is definitely in line with what I was observing

deleted 5y ago

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