Million Dollar Mortgages

[dirtyharry555]

There was a great article about two weeks ago comparing San Fran and the GTA. In San Fran, today, it’s basically the wealthy and the poor. If I was going to bet on things, that’s where I’d place my money…

Yes ultimately this is what is going to happen, first in the major cities, and then everywhere as wealth and assets are aggregated.

The middle-class only came into existence after the industrial revolution generated unfathomable prosperity in the Western world. We were born into this world. It's all that we know, and it's what we're accustomed to. But it's never been the norm.

There's no escaping the return to the condition of haves and have-nots, with no middle-class. It's a cold reality that many will refuse to accept.

 

[jeff2]

I have been renting for the past five years. I am a bachelor with no dependants. I earn on average $225k a year. I was looking at a condo $900k in Etobicoke. I am a first time buyer and can put 100k down. My mortgage payment would be $5200 per month. It's completely unaffordable even for someone in the top 2% of earners..

Yeah, that is crazy. Then maintenance fees and property tax on top of that.

 

[Steve_Stevens]

For sale: 426 CANTERBURY CRES, Oakville, Ontario L6J5K7 - W5956165 | REALTOR.ca

$1.786 Million will get you a 60*100 lot in SouthEast Oakville.

A bungalow used to sit on this lot; it was bought and torn down.

426 Canterbury Crescent - Google Maps

There are permits in place to construct a 4,500 Square Foot house with Pool; you build the house.

What about just buying the lot and parking an RV there? There's probably a By-Law that prohibits that.

The surrounding homes don't look like 2million dollar homes.

 

[rtg311]

I have been renting for the past five years. I am a bachelor with no dependants. I earn on average $225k a year. I was looking at a condo $900k in Etobicoke. I am a first time buyer and can put 100k down. My mortgage payment would be $5200 per month. It's completely unaffordable even for someone in the top 2% of earners..

I just moved here from the states and my company pays my housing (8500 a month) as part of my expat package. It's literally insane what housing is here compared to the cities in the US. I am in the 1 percent of earners here and I just don't understand how anyone could afford to own here. When I walk around my neighborhood I'm just thinking, "does everyone here make over 500k?"

I have some US properties - one in NYC. Both houses are much higher quality construction, nicer and cheaper. I enjoy Toronto but I would never stay here long term if I was a youngster. It took me over 6 months to find a decent rental even with that stipend because most things are such low quality or overpriced.

 

[mj400metres]

I was surfing Realtor to see houses I may want to buy one day. Seeing price tags of around 1.5M. Assuming a couple bring 500k to the table, which is a decent down payment and borrowed a million bucks (yikes), the monthly payment comes out to $6500. Who's paying 6500 a month in mortgage??? That's without other expenses. I wasn't looking in rich areas even where you'd expect wealthy people to put a giant sum as down payment (well over 20%).

How does the math work out ?

Agreed it is just ridiculous

 

[New World]

So many people don’t want to believe that $100k or better puts you in the countries top 10%.

without getting into anyone’s personal finances people….man some questions….

Assuming
First time buyer
GTA home cost ($1,000,000)
Standard bank 20% down.

$200,000

Let’s say you want to buy 10 years from today.
how many people can save $20,000 / year
????

Living in the GTA. Not many people can save $20k a year. It is impossible to save $20k earning 100k a year..

 

[backstreetorg]

Agreed

 

[sprite09]

Living in the GTA. Not many people can save $20k a year. It is impossible to save $20k earning 100k a year..

You'd certainly have to watch your spending. There are many variables such as how much you're paying for benefits; RRSP matching; etc. etc., but let's say it works out to be $5,000 a month net.

Say you're a single guy and paying $2,500 a month in rent, leaving you with $2,500.

$500 goes towards internet, phone, utilities, $2,000 left (some condos you dont need to pay utilities).

$500 towards groceries, $1,500 left.

$500 -$1,000 for discretionary spending, leaving you with $1,000 to $500 in savings, which is $12,000 to $6,000 in savings per year.

Of course, you can save even more by having a roommate, renting an apartment, etc. etc. and if you're doing all that other stuff (ESOP, RRSP matching , etc.), you're saving more than what's stated above.

But, yes, 100K is in the GTA is not a big deal anymore, much like any metropolitan city.

 

[johnnysc]

You'd certainly have to watch your spending. There are many variables such as how much you're paying for benefits; RRSP matching; etc. etc., but let's say it works out to be $5,000 a month net.

Say you're a single guy and paying $2,500 a month in rent, leaving you with $2,500.

$500 goes towards internet, phone, utilities, $2,000 left (some condos you dont need to pay utilities).

$500 towards groceries, $1,500 left.

$500 -$1,000 for discretionary spending, leaving you with $1,000 to $500 in savings, which is $12,000 to $6,000 in savings per year.

Of course, you can save even more by having a roommate, renting an apartment, etc. etc. and if you're doing all that other stuff (ESOP, RRSP matching , etc.), you're saving more than what's stated above.

But, yes, 100K is in the GTA is not a big deal anymore, much like any metropolitan city.

Great way of breaking down the numbers. These numbers show that people will almost never buy as it will take 20 years to even save 200 000

 

[nadaltennis]

We needs these
Rates to go down or we are in trouble in Canada. People going to start losing their homes.

 

[Not getting younger]

You'd certainly have to watch your spending. There are many variables such as how much you're paying for benefits; RRSP matching; etc. etc., but let's say it works out to be $5,000 a month net.

Say you're a single guy and paying $2,500 a month in rent, leaving you with $2,500.

$500 goes towards internet, phone, utilities, $2,000 left (some condos you dont need to pay utilities).

$500 towards groceries, $1,500 left.

$500 -$1,000 for discretionary spending, leaving you with $1,000 to $500 in savings, which is $12,000 to $6,000 in savings per year.

Of course, you can save even more by having a roommate, renting an apartment, etc. etc. and if you're doing all that other stuff (ESOP, RRSP matching , etc.), you're saving more than what's stated above.

But, yes, 100K is in the GTA is not a big deal anymore, much like any metropolitan city.

100k per year. You’re in the top 10% of earners in Canada………..how many people do we think make that???

you forgot
Car, gas, maintenance and insurance.
House/condo insurance.
utilities are low. When I left Whitby in 2016 I paid
$100/month Nat gas
$125 month Hydro
$90 month water
$15 month water heater

Phones/internet
All over map. Most basic are around $150-200

Clothing?
Lunch at work? How many people actually brown bag it?

Can people that make 100k do it and save? Sure. 90% of people in Canada don’t make 100k

Not sure why people still doubt this.

Average net saving for all Canadian households was $852 in 2018, while the highest income quintile (the top 20% income earners in Canada) saved $41,393 per household.

The Daily — Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, 2018

The average net saving for Canadian households was $852 in 2018, while the highest income quintile saved $41,393 per household. Conversely, households in the lowest income quintile had net dissaving of $27,935, as on average they consumed more than their annual income and either had to incur...

www150.statcan.gc.ca

 

[sprite09]

xx

100k per year. You’re in the top 10% of earners in Canada………..how many people do we think make that???

you forgot
Car, gas, maintenance and insurance.
House/condo insurance.
utilities are low. When I left Whitby in 2016 I paid
$100/month Nat gas
$125 month Hydro
$90 month water
$15 month water heater

Phones/internet
All over map. Most basic are around $150-200

Clothing?
Lunch at work? How many people actually brown bag it?

Can people that make 100k do it and save? Sure. 90% of people in Canada don’t make 100k

Not sure why people still doubt this.

The Daily — Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, 2018

The average net saving for Canadian households was $852 in 2018, while the highest income quintile saved $41,393 per household. Conversely, households in the lowest income quintile had net dissaving of $27,935, as on average they consumed more than their annual income and either had to incur...

www150.statcan.gc.ca

I was focused more in your point 100k is impossible to save in GTA (specifically Toronto).

$500 for utilities, phone and internet is probably an overkill , it's more like $200ish. If you're renting a condo, you're just paying extra for hydro, as the maintenance fees the landlord pays commonly include heat, water, AC, building insurance, and parking (parking being less common now, though). So, the maintenace fees are incorporated in the $2,500ish rent you're paying.

The remaining $200 to $300 should more or less cover transit and/or a car and its associated costs, perhaps maybe an additional $100, depending on your driving record; how much you drive (gas), etc.

Keep in mind I'm thinking Toronto (thus rent being $2,500), so most likely the commute involves transit and not much driving. Save even more if you skip the car, since it is doable to live in Toronto without a car (esp downtown which is why newer condo units don't include parking). Renting and have a parking space, but don't drive? Rent it out for $100 or whatever for additional income.

$500 for groceries, you're left with $$1,500 for discretionary spending and savings.

Clothing ? that falls under discretionary spending and it's obviously not necessary to buy clothes every month.

Lunch ? I see many people bringing their lunch, even directors and VPs.


If you're making a 100k, saving money IS doable, but like I said, it's not like you're raking it in and thus 100K is no big deal anymore in the GTA, as you need to still closely monitor spending.

But, maybe based on your lifestyle 100K isn't doable.

You can save even more if you're willing to make sacrifices (e.g., apartment instead of condo, getting a roommate, don't go out, etc. etc.), which reiterates the point that 100K in the GTA isn't a big deal anymore.

But, I think it's pretty much known that if you want to buy place in the GTA in a realtively short period of time, it requires dual income (i.e., going in with a spouse or partner).

 

[Steve_Stevens]

I just moved here from the states and my company pays my housing (8500 a month) as part of my expat package. It's literally insane what housing is here compared to the cities in the US. I am in the 1 percent of earners here and I just don't understand how anyone could afford to own here. When I walk around my neighborhood I'm just thinking, "does everyone here make over 500k?"

I have some US properties - one in NYC. Both houses are much higher quality construction, nicer and cheaper. I enjoy Toronto but I would never stay here long term if I was a youngster. It took me over 6 months to find a decent rental even with that stipend because most things are such low quality or overpriced.

So for 8500/ month, what area are you renting in?

 

[sprite09]

So for 8500/ month, what area are you renting in?

probably Yorkville , 3 BD or penthouse suite.

 

[Soccersweeper]

The nuclear family is an historic aberration that came to prominence in the West in the 20th century due to unusual prosperity combined with a mass exodus of people from the farms to the cities. Before then most western families were extended/multigenerational families and the family farm was a joint enterprise. Since the post WW2 boom has wound down, historical norms are reasserting themselves and once again it will be the families that work multi generationally that thrive. It's long been too expensive to have a good home on one income, which means two working spouses, which means daycare costs, etc, plus the costs of the grand parents' homes and care. Far more economical to pool resources in one multi generational home with everyone doing their share and the home isn't doomed if one person loses a job or takes reduced hours, etc. Who is excellent at this? Asian and East European countries where this practice never ended. Who are our main sources of immigration? Asian and East European countries. Asians especially are coming here with big resources and no problems living together. Markham and Richmond Hill are half Chinese. Brampton and Misissauga are dominated by Indians and other Asians. Woodbridge/Vaughan has long been Ital central.

And Toronto and other cities are sourcing people from all over, plus the ultra rich from everywhere who still find Toronto cheap compared to other major cities around the world. Canada is an investor's dream due to its stability, boring but welcoming government, embrace of foreign money and the people behind it, and few barriers to owning property. We are routinely on top of lists of best / most desirable places to live, economic opportunity, quality of life, etc. It should be no surprise then that people with means are flocking here. Our way of life is our best product and people are willing to buy. The only way this ever gets affordable for middle class people again is if we build a shit tonne more housing fast and/or we limit immigration. The latter is a non starter in any material way for various reasons so if we don't get building, the only alternative is leveraging the whole family's resources as we used to and as others are. Otherwise you can't compete on financing.

 

[rtg311]

So for 8500/ month, what area are you renting in?

Islington area now, first place was in Rosedale. I have very large dogs so I couldn't go condo like I did in Asia. I couldn't find any buildings with penthouses with private elevators.

 

[sprite09]

Islington area now, first place was in Rosedale. I have very large dogs so I couldn't go condo like I did in Asia. I couldn't find any buildings with penthouses with private elevators.

I thought that was pretty common in Yorkville ? eg 1 Bloor , but maybe there weren't any units available at the time .

 

[jeff2]

The nuclear family is an historic aberration that came to prominence in the West in the 20th century due to unusual prosperity combined with a mass exodus of people from the farms to the cities. Before then most western families were extended/multigenerational families and the family farm was a joint enterprise. Since the post WW2 boom has wound down, historical norms are reasserting themselves and once again it will be the families that work multi generationally that thrive. It's long been too expensive to have a good home on one income, which means two working spouses, which means daycare costs, etc, plus the costs of the grand parents' homes and care. Far more economical to pool resources in one multi generational home with everyone doing their share and the home isn't doomed if one person loses a job or takes reduced hours, etc. Who is excellent at this? Asian and East European countries where this practice never ended. Who are our main sources of immigration? Asian and East European countries. Asians especially are coming here with big resources and no problems living together. Markham and Richmond Hill are half Chinese. Brampton and Misissauga are dominated by Indians and other Asians. Woodbridge/Vaughan has long been Ital central.

And Toronto and other cities are sourcing people from all over, plus the ultra rich from everywhere who still find Toronto cheap compared to other major cities around the world. Canada is an investor's dream due to its stability, boring but welcoming government, embrace of foreign money and the people behind it, and few barriers to owning property. We are routinely on top of lists of best / most desirable places to live, economic opportunity, quality of life, etc. It should be no surprise then that people with means are flocking here. Our way of life is our best product and people are willing to buy. The only way this ever gets affordable for middle class people again is if we build a shit tonne more housing fast and/or we limit immigration. The latter is a non starter in any material way for various reasons so if we don't get building, the only alternative is leveraging the whole family's resources as we used to and as others are. Otherwise you can't compete on financing.

While greenbelts may be necessary, in combination with NIMBYISM and massive immigration, it makes it hard to get building enough homes.
Marriage is no longer logical for women as men's salaries have been static(or gone down in many cases) while women's salaries(especially when you also consider their government work pensions that they have more of) have increased.
Alpha males are making more than ever but there is not enough of them.

 

[rtg311]

I thought that was pretty common in Yorkville ? eg 1 Bloor , but maybe there weren't any units available at the time .

Yea quite possible. I had an agent working on it for 6 months but eventually had to just settle. Was sick of commuting from the states

 

[Soccersweeper]

While greenbelts may be necessary, in combination with NIMBYISM and massive immigration, it makes it hard to get building enough homes.
Marriage is no longer logical for women as men's salaries have been static(or gone down in many cases) while women's salaries(especially when you also consider their government work pensions that they have more of) have increased.
Alpha males are making more than ever but there is not enough of them.

Men's salaries are more needed than ever. That's one thing the rich understand all too well. They are more likely to marry and less likely to divorce. The more women have, the more they're for this "patriarchal" institution even though they could best afford not to partake. And they lock up the alphas.