I often hear people concerned with the price of real estate in Vancouver and people saying “I just don’t know how I’ll ever be able to afford to buy a home.” This is usually over dinner and drinks where that same person drops $60 to $100 right before getting into their leased vehicle less than 3 years old which is costing them $1200/month and all the while dressed in the latest fashions from any number of boutiques other than Winners.
On the other hand I know quite a few 20 something’s (at least 10 to 15 friends) that own their home. It seems they were able to make it work. The question is what is the difference? Now don’t get me wrong, the cost of real estate in Vancouver compared to most other cities in Canada is definitely higher, but the reality is that most of us make choices everyday which either lend themselves to owning real estate in Vancouver or not.
If you really want a home in Vancouver today you need to prioritize your spending. What’s important to you? Clothes, a car, nights out… or a new home. If it’s a home you want then you need to go one step further and understand your needs versus your wants. The reality is that most of us will need to work up towards our dream home and make sacrifices in the interim to increase our equity and get into the market. This means you may need to renovate in five years to get the coveted granite countertops as it may not be possible to get “it all” on your first purchase. Decide what matters most to the way you live today and then make decisions accordingly.
If you did the math on what you regularly spend, I bet you would be surprised to find the money you think you “don’t have” to buy your new home. Think of it this way, your new car costing you $1,200 per month (financing/lease, fuel and insurance) is worth over $230,000* in a mortgage financing. Reduce your dinners out by once a month and save on $75 or the financing value of $15,000*. Buy your new clothes at a place like Winner’s instead of that “must-have-in-season item” from a brand name store and save even more money. If home ownership is truly important to you, these are the ways in which to trim your lifestyle to make it possible. Otherwise, saving the money you need for that downpayment surely will always seem like an improbability.
I believe many of those complaining that “Vancouver is too expensive” can actually buy a home if they put their mind and budget to it. Sure it won’t be the 3 or 4 bedroom dream home but ask around and I’m sure you’ll find that everyone started with something modest and worked their way up. Find yourself a good financial planner to help you save for the deposit and help make home ownership possible if it’s something you truly want.
Dan Thomson
Disclaimer
*Financing examples based on 4.5% for a 5yr term at 30 year amortization
