Desirae Odjick: Yes, you can retire rich without ever owning property
A lot of people will try to convince you to buy a house, but that doesn't mean it's always the best option.
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There are some really, truly, unreasonably pro-housing people out there. Many of them have a vested interest in telling you that buying a house is always a good choice.
New rules from Canada’s financial regulator that came into effect Monday will make it more difficult for some buyers to get a mortgage, because everyone will have to pass a “stress test” in order to qualify for a loan. This has many people worried.
But here’s a little secret about housing: You can be a financially responsible human who will retire rich without ever owning property. However, a lot of people will try to convince you otherwise. Here are some of the fun and nuanced ways they’ll do it!
People will say that it’s forced savings.
Yes, but it’s also forced spending. If you own a house and the roof leaks, or your furnace dies, or your pipes burst? You have to fix it. It’s a non-negotiable, especially when it comes to furnaces in the winter, or a pipe spraying water all over your main floor.
People will say that housing always goes up.
Just like any asset class, housing is not some kind of real-life GIC you can live in that is bound to go up every year. Over long periods of time, housing will probably go up just like the stock market, but on a year-to-year basis, it could easily go down. Just like the stock market.
People will say that it’s a good investment.
Investing in real estate is not the same thing as buying a house, FYI. You can invest in an REIT — a real estate investment trust — with as little as a few hundred dollars. You could also buy an investment property and become a landlord. You can even invest in real estate as part of a robo-adviser portfolio if it fits your risk profile! But the house that you live in should be viewed more as a place to live than an investment.
People will say that it’s a “marker of adulthood.”
The best marker of adulthood I’ve ever found is managing your money in a way that lets you do responsible things like save for retirement, while also having the things you want, like a dog or some avocado toast now and again. You don’t actually need to buy a house to do anything on that list. And if buying a house gets in the way of any of those things? You can’t afford it right now.
So what should I do instead?
If buying a house either isn’t on the table for your current life situation, or isn’t something you want to pursue, here’s what to do instead: Start an emergency fund, start saving for retirement and start investing your money so it can grow over time (the way everyone tells you that housing will grow over time).
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If you want to save, you need to change how you think about spending.