Canada Goes House-Crazy
A recent FP article highlights a trend towards young single people buying houses or condos instead of waiting until they’re married. While it’s to be expected that builders and lenders are moving to make this easier it is a bit more surprising to see that financial planners are recommending this and government regulations still support prices on the high side.
The article reports that a lot of this is driven by people scared of being priced out of the housing market, so it’s just another side of pre-emptive spending. In this case it sometimes requires people to buy a house with a friend, which is sure to have some interesting results. I guess there just aren’t enough TV shows that glorify saving and investing to make it exciting enough for young people today. For a few people this might make sense, but the majority who haven’t exactly decided where they’ll be in 5 years would benefit more from $100,000 in savings than being anchored to a condo tower.
We can’t expect the people doing this to figure out the consequences it will have any time soon, and we can’t expect regulations to further prevent them from pushing the market in the wrong direction. So the only question left is how can we profit from this?
Other than good personal planning there’s probably not much we can do. My recent investment in a special situations lender based in BC might be getting some support from this but unless you’re a builder it’s probably too risky to do anything but watch the show.
The quote that ends the article says that a home is a great asset. While that’s not exactly wrong, I prefer the assets I acquired instead by waiting as long as possible to get our first home, finding an under-priced area of the market, and now figuring out ways to make it last longer (and shorten the mortgage). Maybe when all these first-time buyers figure out that a home doesn’t pay your bills there will be a rush to buy stocks, and I can sell my portfolio and retire 🙂 Of course they would probably have to refinance their mortgage to do that, if they haven’t already done so to buy a boat.