Should You Be Married Before You Own Real Estate?
Should You Be Married Before You Own Real Estate?
“There is something permanent, and something extremely profound, in owning a home.” – Kenny Guinn
It is funny how quickly reports and predictions in the media seem to replace a transition to a more balanced real estate market as being a “real estate crash”. You don’t need to look further than online to read contradictory statements about the reasoning behind the changes that include a provincial government strategy to cool the market and various tax initiatives recently unveiled. However, all too often, you read “Chicken Little” inspired responses to individuals considering purchasing real estate that make you shake your head.
Garth Turner, an outspoken critic of real estate, recently responded to a question by an engaged couple considering purchasing their first home together. They had no debt, had maxed out their TFSAs, contributed to RRSPs, and had a combined income of $140,000 that may be slightly reduced when they relocate within B.C. A reasonable response to this situation might be to ask what each partner’s motivation is behind owning a home, what their expectations are for a long-term investment strategy, and what their time frame is for purchasing.
However, I was shocked to read Mr. Turner’s response to this couple’s real estate quandary. “Engaged, yes. Married, no. There’s no way they should buy any property together, assuming the massive debt it will involve, until the relationship is cooked. Already she is worried about him creating ‘the worst financial decision of my life.’ If that turns out to be the case (highly likely) can this union even survive? The real trouble will begin not with signing the mortgage, but the emotional and financial consequences. Then, of course, there’s the timing of this ill-conceived nesting hormone thing.” Mr. Turner’s response seems so out of touch with reality as many couples are choosing to cohabitate for a longer period before having a wedding, or elected to bypass marriage altogether. This lack of awareness to emerging trends is what can lead to sensational headlines that don’t accurately represent reality.
A normal real estate market makes sense for everyone. This return to a balanced real estate market is proving to be a positive shift, especially for anyone who is looking for a home, needs to find housing quickly, or who’s looking to invest in property without getting sucked into a multi-bid price war. While Canadians are generally not big buyers for investment purposes, real estate has been one of the safest plays during the past 40 years or so — returning roughly 5% a year. That’s despite several significant market downturns, the most recent of which was the global recession that began in 2008; the last big one was back in 1989–1991.
What makes us different than American debtors? Nearly 80% of Canadian homeowners say they want to pay off their mortgages as fast as possible, according to Canada Mortgage and Housing Corp (CMHC). Almost 85% make weekly or biweekly payments to speed up amortizations, while a third have made a lump-sum payment against principal. Canadians are pretty averse to carrying debt compared to their American counterparts.
How to thrive, not just survive in this market? There are some good life skills that seem to remain true, regardless of what type of real estate market we experience – whether it be a buyer’s or seller’s market. Firstly, it is important to avoid overpaying for anything, including investments. Don’t buy something you cannot afford – a good mortgage broker will meet with you and provide you with an educated approach to what you can really afford to buy and a budget to ensure that you can manage payments. This being said, it is critical to have an emergency fund and insurance for the unexpected (especially with home ownership). I recommend not having debt servicing costs that exceed 25% of your income.
By working with an experienced real estate team with years of experience dealing with the cyclical nature of real estate, you get the expert advice your family deserves. We will strategize the best moves according to your goals, discuss financing options, and point you in the direction to specialized professionals who can assist you throughout the process. It is something our team has been achieving for the past 40 years, so we have seen a thing or two when it comes to changing real estate markets.
In conclusion, to echo the words of Donald Trump, “the worst things in history have happened when people stop thinking for themselves, especially when they allow themselves to be influenced by negative people. That’s what gives rise to dictators. Avoid that at all costs. Stop it first on a personal level, and you will have contributed to world sanity as well as your own.” I know…but his was too good not to share, especially with all that is going in the word today.
Brian & Myles McCullough
BUYING? If you are interested in buying or investing in real estate, view some of our featured listings on my website at www.mmshomes.com. Feel free to call McCullough Marketing anytime at 250-751-1223. We look forward to hearing from you.
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