“I’m worried about being priced out of my apartment”
Is owning a condo better than renting an apartment?
In 2006, my dad passed away and I got a little bit of an inheritance. I thought, “Oh wow, this sort of opens up my options. Maybe I can look at a condo.” And I did actually connect with a realtor and I did look at condos, but I didn’t follow through with it. I’m really glad I didn’t, because I feel that I would be chained to the condo and maintenance fees, and I wouldn’t be able to do the things that I really enjoy doing, like travel.
And if something happens in the future, I feel like you could muddle through that if you’ve got a partner—and a second income. Not that it wouldn’t be stressful. But I just thought, “Okay, I can see my future. I think I’m going to be single.” I felt it was a big gamble for me to take on ownership of a property not knowing what the future holds. It’s different strokes for different folks, but I don’t regret not purchasing.
Affording rent in a pricey market
I love my apartment, I love the location. It’s my home. But, I also feel that I can’t afford to move even if I wanted to, because I know that I’m not going to get a similarly sized department in as good a location for the same price. I’d be paying $2,000 a month.
“Could I be priced out of my current apartment?”
That worry is ever-present. There’s that theory about how 30% of your income should go to rent. Well, I think I’m nudging closer to 50%. I was just going to say I’m not stressed, but if I’m always thinking about it, I’d say that’s stress, right? Every time I pay my rent, I’m thinking, “This is only ever going to go up.” My salary is not going to go up at the same percentage. At some point, there’s going to be a disconnect.
I mean, right now I’m earning a very good salary, but I’m realistic enough to know that nothing is forever. Will I still be in this job in five years’ time? Probably not. But I can’t afford to move. So, what gives? I’m 50. My friends roll their eyes when I say this, but realistically, I should be thinking about retirement. I don’t want to live anywhere else. I choose to live in Toronto. I like city life—I certainly don’t see myself out in the suburbs or the country. So, if I choose to stay in my apartment, what else do I have to sacrifice and what happens when I retire? What happens when my pension doesn’t cover my rent—just rent, not hydro, not Rogers [services], not anything else. What do people do? I don’t know the answer.
Advice on renting vs. buying from a financial planner
“I am dealing with clients who are on both ends of the spectrum,” says Kelly Ho, a Certified Financial Planner and partner at DLD Financial Group Ltd. in Vancouver. “And what I mean by that is, I have clients who are currently making decent money, who are in their thirties and forties and are renting and would like to buy, but their choice is either saving for a down payment or paying rent.”
In either case, Ho’s approach is to helping those clients decide which choice is right for them, financially speaking, is to hammer out the numbers—and not just for a week or two. She digs into clients’ fixed expenses, their discretionary spending and even their risk of illness. “We [may have been] counting on one’s ability to be able to earn x amount for x number of years to meet a particular goal. But that’s a huge risk, especially for those who are single, right? You have no one else to fall back on if something happens to you,” she says.
Ho recommends finding out what your employer offers to cover those risks. “What does their long-term disability plan look like? Do they offer critical illness or life insurance? And, if not, is that something we should factor into your personal plan?”