Written by Frankie Barnet
ISN'T IT ROMANTIC/THE MOVERS IN THE AIR
Forget Canada Day. Here in Montreal, July 1 is all about overpriced U-Hauls and sidewalks littered with old furniture. The island's official moving day, when almost every lease either expires or renews, sees as many as 70,000 households1 overwhelm the streets in what can feel like a twisted, grown-up version of musical chairs. A little charming, a little tortuous, it all depends on the humidity and if your new place comes with appliances.
"What I remember most was the garbage," says Fia Stobbe, a former Montreal resident who now works as a functional analyst in Edmonton. "Streets just filled with people's stuff. You never needed to buy furniture, you'd just wait for July 1." Stobbe always rented when she lived in Montreal as a student at Concordia University: "Buying absolutely never crossed my mind. It seemed hard enough at the time to even come up with first and last month's rent, let alone a down payment." Still, her tone gets wistful just thinking about the opportunity. "Ten years ago, a condo that might have cost $200,000 is now probably worth triple that. There's no way I could have done it, but could you imagine?"
SPLIT-LEVEL WEALTH, CRAFTSMAN-STYLE DISILLUSION
She's right. In just the first quarter of 2022, Montreal housing prices rose 18.5%2. And the city's not alone. According to the Canadian Real Estate Association, prices have climbed more than 20% since last year, seeing the average price of a Canadian home reach $816,720. Some people, somewhere, have certainly made a lot of money. Can you imagine?
These profits, however, have not been shared. Not at least, among young Canadians living in urban centres, more than 80% of whom, according to a report by Mustel Group and Sotheby's International Realty, said they're worried they won't be able to purchase a home in the community of their choice due to rising house prices. According to the report, half have completely given up on the dream of owning a single-family home.
THE CASH IS ALWAYS GREENER?
Here's the bright side: there are, in fact, real, tangible benefits to renting. Traditionally, they go something like this:
- Low commitment: signing a 1-year lease doesn't tie you down, a factor that's especially important for young people or those early in their careers where a big move may be likely.
- No hidden fees: as a renter, you're (generally) not responsible for any big repairs on the property.
- Lifestyle: for a lot of budgets, what you can afford to rent is generally bigger and better located then what you can afford to buy.
- Cash flow: not having your money locked down in a property means that you can put it towards other things that are important to you, a business for example, or other investments, like the stock market, where returns have the potential of being higher than in real estate.
While these factors aren't untrue, what starts to feel bristly is the matter of choice. Whereas for generations past, a pros and cons list like this might have actual, applicable value for young people deciding what's best for them and their future, with today's rising prices and stagnant salaries, the choice has already been made on our behalf.
STUCK BETWEEN RENO-VICTION AND A LEAKY ROOF IN THE SUBURBS
So where does that leave you?
Most experts advise approaching homeownership with a healthy serving of both compromise and patience, meaning that Canadians are saving longer to buy properties that are further away from what they may have wanted: a condo instead of a detached house, a fixer upper in the suburbs instead of a new construction in the city center. And for many, that's a compromise worth making, as most people still see home ownership as one of the most reliable ways to grow wealth and lay a foundation for financial stability.
The Federal Government's aware of the problem, too, and has recently unveiled plans for the Tax-Free First Home Savings Account, which combines advantages of an RRSP and a TFSA to allow Canadians under 40 to save up to $40,000 for their first home. There are also plans to double the number of homes built each year over the next decade to meet rising demand.
INTERVIEW WITH A HOMEOWNER
Stobbe, who's owned a bungalow in central Edmonton for the past two years with her older brother, doesn't mince words. "For me," she says, "If you're talking about whether or not to buy a home, the question really comes down to one thing: are your parents helping you or not?"
She's refreshingly open about her financial journey from the RRSPs her parents helped her set up at 18 to home ownership at 30. In a world where it can still feel impolite to talk about money directly (despite its overbearing presence in almost every aspect of our lives), Stobbe isn't scared to name numbers—and for good reason. "When I first finished university," she explains, "I had no idea what things cost or what my worth was as an employee. It's not something that's taught, and I think that when we're not open about money, it puts us at a disadvantage."
Though her parents helped her through university, Stobbe still graduated with around $20,000 in student loan debt and lived at home for a few years before renting a subsidized apartment in one of her dad's (a realtor and property manager) buildings. Now at an annual salary of $80,000, she's worked full time in a professional role since she graduated and always prioritized saving, even if she didn't have the specific goal of home ownership in mind.
"I think I just got tired of the lack of amenities in the place I was renting," Stobbe says. "And my brother was in the same spot. We had enough saved in our RRSPs that buying was a real possibility, so we started looking at houses." Nodding playfully at the increasingly common practice of millennials purchasing property with friends or family members, she adds with a chuckle, "I was single. I had no prospects." (For the record, Stobbe is now in a relationship and plans to rent out the house to move in with her partner in the coming months.)
"We bought the house for $355,000," Stobbe remains specific. "Which was a down payment of $39,000, split evenly between my brother and me. The house required some renovations, which we completed over the first year and cost around $55,000." Today, just two years later, in an Edmonton market that continues to break records in sales and prices, she estimates that the overall value of the house has increased about $100,000, highlighting the considerable gains that are on the table for those who can afford to jump into the market.
"But the funniest thing," Stobbe adds. "Is that my parents were renters. They rented the house I grew up in for thirty years, and I see now the advantages that had for my dad especially. He had access to capital and he could grow his business. So that's the most important thing they've instilled in me, that there's nothing wrong with renting. We didn't have a lot of money at the time, but we never felt less than."
TO RENT OR NOT TO RENT?
If it is, indeed, a question, it's certainly one that doesn't travel solo. To compromise or not to compromise? To side hustle away your evenings and weekends or to relax with friends? To have a mountain of debt or not? To be genetically disposed to wealthy parents, or even those who were able to pass on financial literacy, or to be at it on your own?
As our responses to these questions deepen the issue of home ownership into ever widening complexity, one thing remains clear: whatever the choices available to us may be, one's context does not reflect one's intrinsic value. And the more open we can be about these contexts—familial, economic, geographical, or otherwise—the more empowered we are to make the financial decisions that make the most sense for ourselves.
WE CAN HELP
Lawyers Financial is a not-for-profit that offers free financial planning to every member of Canada's legal community. Whether you rent or own, or rent and want to own, we can help you create a budget that allows you to save for the future while also living (rent-free) in the moment.
Frankie Barnet is a Montreal-based writer whose new book, "Kim: A Novel Idea," is available from Metatron Press.
Sources: 1. Bloomberg: "In Montreal, 70,000 households move on the same day." June 28, 2019. 2. CBC: "More Canadians than ever can't afford to buy a home. But is owning always better than renting?" March 19, 2022.
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