Sweet Pea is 20 months old in a few days. I know, I know, I was going to stop counting months after she passed 18. But this is relevant – she’s almost two. I guess I could just say she’s “almost two,” but then you wouldn’t know the imminency of her almost two-ness.
I keep hearing about this “terrible twos” catastrophe that’s slated to unfold before my eyes. I’m told to just shrug it off and accept it as her discovering her autonomy for better or for worse. But there’s another “double-T” looming over Canadian parents, and that’s the Terrible Money Twos.
Ratesupermarket.ca recently surveyed 1700 Canadian families and found that over half of them feel like it’s tougher than ever to afford a family and home ownership.
My recent post on buying a new construction home is something that I’m advocating everywhere to first time homebuyers trying to wade through the current real estate market. I am extremely grateful that our stars aligned and we were able to find our house, because it really is wild out there.
I remember when I was 4 years old and we moved into the house I grew up in. My parents purchased a 3 bedroom, 2 bathroom detached home for $159,000. Right now in the Greater Toronto Area, that is impossible (I even hopped on Realtor.com to make sure… and nothin’). It’s just not happening. You can maybe get an apartment condo, or something that needs to be demolished.
Even though there are talks of “market correction” and cooling down of the housing market, the prices are still enough to keep people out of home ownership. 72% of millennials say that “their ability to start or expand their family is directly impacted by real estate prices in their region.” You guys. Three quarters of people born after 1980 are getting pummelled by real estate prices. And for good reason – some of the prices I’ve seen are out of this world: in some regular areas (ie: not ghetto and not overly affluent) you can’t even get into a townhouse for under half a million dollars. Where are these so called “starter homes?” Unless you have no debt and/or have one heck of a down payment and/or have a high annual income, it’s gonna be pretty hard to buy a first home that costs half a million dollars.
Factor in the costs of raising a child, and owning a home in Canada becomes even more inaccessible. Over half surveyed said that the costs of food, clothing, and childcare were higher than expected. 48% of parents say that the cost of childcare have affected their affordability for other things so almost half of families have one parent at home full time. That’s one less income going towards an already overinflated market with higher than expected expenses. Doesn’t sound like a very forgiving equation, does it?
So because housing prices are so high, couples are actually holding back on either starting or growing their family because they feel they can’t do so in their current home. Think about this: babies aren’t being born because stuff is too expensive! Okay, maybe that was a little dramatic. But that is kind of the case when it comes down to it – 49% of parents say the known costs of raising kids has changed their minds about the size of family they’d like to have.
I’m a few months shy of two years being a mother, and I’ve been told that the baby stage is the “cheap” stage where they don’t need much. (Somehow I think that’s a bit skewed…) But I get it – we breastfeed, cloth diaper most of the time, she eats the same food we eat, and we don’t have daycare costs. My perspective might be a bit premature with only one baby, so I took to my lovely mommy group and asked them what is holding them back from buying/upgrading their home and growing their families:
- bigger house means higher mortgage, taxes, and utilities
- need to buy a higher capacity vehicle
- food and daycare costs for multiple children
- searching for a job outside of the urban core to find affordable homes
It’s like a vicious circle. The chicken or the egg. You want the bigger house to have more kids, but those kids keep you from affording the bigger house. And when the bigger house is out of reach to begin with, then the kids don’t come.
I always assumed we’d be a 2-kid family, until one day this summer I learned about fiat currency. Then I had a slight meltdown and called Dan in a panic, asking him if he’d be okay sticking with just one baby for now. We were scheduled to start trying for #2 that month and he very supportively agreed with my decision to hold off. It’s not even higher daycare or mortgage payments, this is a whole other ball game. I’d explain fiat currency and the cause for my freakout further, but I’d rather not go down that rabbit hole. It’s a dark, dark place and I’d like to stay in a good mood today.
When we went on our homeownership journey, we had to do things a bit creatively to make it work.
1: We bought a house off of a brochure, rather than getting a real estate agent and walking through existing homes to see if we liked it or not. By doing that, we were able to secure a crazy low price for a home that was worth much more. It took a little bit of trust and hope to make such a big purchase based on a picture, but we ended up being pleasantly surprised.
And 2: No major banks. Like far away from the big banks. They are “designer” lenders with “designer” prices. You can knock off a few basis points just by shopping around and going through a broker. Those percentage points can increase your affordability and can mean thousands and thousands of dollars either added to your borrowing capability, or knocked off your payments. Either one is a plus.
Ratesupermarket.ca has a great tool that gives you a list of lenders and their interest rates. I did a quick search and found a majority of brokers going between 2.43% and 2.59%. Then further down the same page, it shows that the big banks are peddling rates between 4.49% and 4.79%! This can increase up to an extra $401 per month ($1,422 per month at 2.43% vs $1,823 per month at 4.79% based on a $400,000 house with a 20% down payment) – that’s an extra $4,812 per year.
Seriously, whyyyyy? Why is anyone going with a mortgage through the bank? I see this and I cringe. That is extra money that can go towards your principle, or spend it on literally anything else. Maybe it will pay for daycare? Fix that scary clunking in the car? Beef up your savings account? It’s like giving them your money and saying, “I was too lazy to burn this myself.” And don’t tell me it’s about reliability – our mortgage lender is a company I didn’t even know existed, and everything is legit. The lawyers signed off on all the papers, and we didn’t buy our house with Monopoly money. (Although with fiat currency, we might as well!)
If you are, or if you know anyone who is looking to buy their first home or refinance their mortgage, be a good friend and don’t let them pay anything more than they need to! Have a gander at Ratesupermarket.ca and find a lender with the best rate and fit. They also have great money saving tips with MoneyWise, their official blog that features news and advice articles such as Should You Share Your Credit Card?, 8 Liberal Government Money Promises You Should Know About, and How To Tackle High Risk Debt.
Disclosure: This post was sponsored by Ratesupermarket.ca. All opinions are honest and my own, as always!