This morning started with my friend *Janice (not real name) sharing this article with us. So after reading this, my question was, what’s the take-away for us all? We agreed that we should start teaching our children early on around financial literacy, but I do not particularly enjoy reading this article because it neither addresses what we need to learn, nor does it calm readers down to have a plan, should real estate be the right thing to pursue.
While it’s titled “teach our kids about real estate”, it doesn’t specifically says what about real estate do we need to teach them about?
Different housing options?
Is it to analyze what housing options is most suitable for your lifestyle and future plans? For example, maybe you’re young and you want to travel, or perhaps you want to work abroad for extensive periods of time, so if you have own your home, you’ll have to consider what to do with it while you’re away (and the pros and cons of leaving it empty vs renting it out using a service like AirBnb).
Or…
Renting vs Buying
Is it to analyze whether renting or buying is the right thing to do given various life priorities? Perhaps you prioritize a short commute to work, and for now you don’t know if you’ll stay at the current job for long.
Many people see the mortgage as a forced savings plan. However, unlike stocks, a house takes longer to liquidate when you need to access the funds.
Also, depending on where you are located, ahem, like certain pockets in the GTA, it can be cheaper to rent than to own. So if you are disciplined enough to save the delta, it might be a better option to rent. (This is by no means a comprehensive list of considerations – consult your professionals!!)
Here’s a CBC article with more pros and cons of rent vs Buy.
Saving for downpayment
Perhaps you’ve decided home ownership is what you want, what are some of the ways to save up for a downpayment? Did you know that there’s a home buyers plan that lets you withdraw out of your RRSP? Should you use this?
Transaction & Home ownership
Of course, you should also plan for the costs associated with a real estate transaction, such as closing and moving costs and land transfer taxes. And lastly, there are cost of ownership considerations. For example, condos not only have condo fees, but sometimes they get special assessments. Whereas homes also requires maintenance, but since no one is charging you condo fees, you will need to budget for it.
The above list is not an exhaustive list of items to consider, and you should definitely consult finance professionals and do your own research. So although the article has a lot of statistics around millenial’s housing intentions and real estate price gains in the last few years (and I LOVE data!!), it mostly just sets the stage for some FOMO (fear of missing out) if you don’t get into real estate. Please read articles from the internets with a critical thinking hat on!
Her Finances 