The Bank of Mom and Dad: confessions of a propped up generation
It seems like every 30-something couple has an embarrassing financial secret: their boomer parents are covering their mortgages, child-care costs and other expenses
Erica met Gavin on JDate in 2007. They were married two years later and had a daughter two years after that. Gavin owned a one-bedroom condo in Liberty Village, which his parents helped him buy with a $10,000 contribution to his down payment. He sold it, and he and Erica moved into a temporary rental apartment at St. Clair and Bathurst while they looked for a house. Three years later, they were still living in the rental—the $100,000 Gavin made selling his condo, their down payment, shrinking every day as the market continued to skyrocket.
Erica and Gavin aren’t their real names. They’re embarrassed by their financial situation and only agreed to speak to me on the condition of anonymity. They take pride in being career-focused young professionals. She’s 34 and works in the non-profit sector; he’s 40 with a job at a media company, and they have a combined income that fluctuates from the high five to low six figures. The endless house hunting made them feel desperate. Many of their friends had bought homes in the early 2000s and were already trading up to bigger houses in nicer areas, like Little Italy and High Park. The money from Gavin’s condo sale wasn’t enough to buy into those neighbourhoods without pushing them into extreme debt. “Our budget started at $500,000 and quickly went up to $600,000,” Erica says. “Our down payment was going to leave us with a huge mortgage and massive payments.”
Last spring, when Erica’s parents came to visit from Alberta, Erica and Gavin took them around to see a few houses. That’s when Erica’s father, a semi-retired lawyer who is financially comfortable but far from rich, pulled her aside and offered to triple their down payment. The young couple ended up putting $300,000 down on a $661,000 house near St. Clair and Dufferin, which left them with manageable monthly payments.
Erica and Gavin refer to the money as an investment. But for all intents and purposes, it’s a gift—a gift with substantial benefits. Without it, they wouldn’t be considering sending their daughter to private school or eating out whenever they want. Without it, they would either be house poor or living in a neighbourhood they didn’t much like.
Grateful as they are, they avoid talking about how their lifestyle is supported by Erica’s parents. Her three siblings don’t know about it and neither do her in-laws. “They would be hurt if they knew how much my dad was able to put in compared to the amount they put toward Gavin’s condo,” Erica says. She and Gavin don’t want to think about what would happen if her father died tomorrow. (“Would my siblings inherit a portion of my house? That would be awkward.”) When her parents recently visited the new house, she and Gavin expressed their thanks and told them, “This is your house too.”
Erica and Gavin try to be more frugal, not less, because of her parents’ help. She wouldn’t feel comfortable driving a fancy car or going on lavish vacations because her parents might notice and think, “Gee, I guess they could have paid the higher mortgage payments after all.” They’re also careful about what they reveal to friends, many of whom seem to have more decadent lifestyles than they do. “I’m grateful,” she says. “I feel like this money has allowed us to finally catch up.”
Over many years of living and working in Toronto, I have known few friends or colleagues who managed to get on the property ladder without help from someone in their family—usually a parent. And for some, the funding continues beyond that. I had a girlfriend who received a monthly stipend from her parents (she wouldn’t tell me how much, but judging by her lifestyle it had to be substantial), and a boyfriend who received regular family cash infusions. I know a married couple who had the child-care costs for their three kids paid for by the wife’s mother. These aren’t people with large trust funds who will inherit millions—that’s not what I’m talking about here. This is about money that middle-class Toronto families give their adult children just so they can get by in a regular-seeming way.
My father helped me over a decade ago by making me a $15,000 loan. I bought a little Victorian row house near Trinity Bellwoods Park that appreciated very nicely before I sold it five years later. In the end I was able to pay back my dad, but without his help I wouldn’t be a homeowner at all.
The “velvet handshake”—an early inheritance from a relative before said relative dies—was once only common in wealthy circles. Now it’s the secret force powering the city’s middle-class downtown economy. Millions of dollars are being transferred within families, usually between living generations, in order to prevent adult children from going into a dangerous amount of debt as they enter the housing market and struggle to pay for their own kids’ nannies, summer camps, piano lessons and iPhone bills.
While the rising economic tide of the post-war boom meant that young Toronto professionals in the ’60s, ’70s, ’80s and ’90s could reasonably be expected to buy property on their own, today circumstances have changed. The Cities Centre at the University of Toronto found that the income gap in Toronto has increased by 46 per cent since the 1980s. A good degree and a decent job will no longer automatically entitle you to the financial breathing space to save up a down payment. Most economists agree that the middle class has been hit hard in recent years by real estate prices that are climbing much faster than average incomes. For many couples, a withdrawal from the bank of Mom and Dad is the only solution.
The thing about the bank of Mom and Dad is that once you’ve made one withdrawal, you’ll likely return for another. Many couples I spoke to for this story had tales of unexpected crises that would have bankrupted them without an assist from their parents. And these are people who are well into their prime earning years—people who, in any other decade, would be paying off their mortgages and building their RRSPs.
One couple I’ll call Amy and James are not the sort of people who come to mind when you think of family money. Both in their mid-40s, they have two children, aged five and seven, who attend public school. They live in a narrow, well-maintained three-bedroom semi on a west-end street where some of the old-world residents still make sausages in their backyards. James, who is the major breadwinner, works at a mid-size marketing firm, while Amy, a former public sector worker, is now a stay-at-home mom who takes on occasional freelance work. Together, they earn a low six-figure income and are, as Amy describes it, “not big spenders at all.” They have a single, slightly battered family car and have not been away on a holiday, aside from taking the kids to Amy’s parents’ place in Florida, in over three years. They are modest, even frugal—they have a monthly household budget and stick to it.
But Amy and James have a secret that sets them apart financially from almost all their friends and colleagues in downtown Toronto, especially those with kids. They’re completely debt free. “We feel kind of bad about it, so we don’t tell anyone,” Amy confesses. They’re the lucky beneficiaries of Amy’s father’s largesse. He’s a now-retired corporate lawyer in his 70s who worked hard, invested well and lived to reap the rewards of the late 20th century’s extraordinary period of sustained economic growth.
When Amy and James got together over a decade ago, her dad contributed to their down payment. He had done the same for Amy’s two older brothers. “I don’t know how much he gave them,” she says, “because we’ve never talked about it.” Later on, when Amy and James had babies and incurred child-care expenses, her dad gave them another chunk of cash. “It was just to get us over the hump.”
And then, while the city was still in the depths of recession, Amy and James lost their jobs within three months of each other. For the first time in their adult lives, they were scared. How would they pay their $2,000 monthly mortgage once James’s modest severance package ran out? Would they have to pull their youngest child out of daycare? One night, as all these questions were swimming through Amy’s mind, her dad called her up and offered to pay off her mortgage. “You’re never going to need it more than you need it now,” he said. Amy had to admit he was right. Within a month, they paid off the house. All told, they have received $200,000 from Amy’s dad.
A couple of years on, they’re doing well. Amy’s new freelance business, which struggled in the first year, is now making a small profit. James got a new job that came with a big promotion and pay raise. “When I think about what my dad gave us, I feel incredibly lucky because it’s partly why we’re so happy as a family. It’s been a massive load off our minds. It’s made everything feel much more…” she pauses to search for the right word, “not rich, just normal. This is what it takes in Toronto just to get to the middle ground.”
While Amy and James are now in a secure position because of their access to family money, it could have gone the other way entirely. “We were in our 30s when we met, and neither of us had any equity,” says Amy. “I was coming out of my third university degree and not making much. We would never have been able to buy without that initial help.”
After watching my Gen X friends (and the millennials who followed us) struggle in Toronto’s job and housing markets, I came to believe that affluent baby boomers have a moral obligation to help their kids. They lived through so many years of prosperity and were able to buy houses cheap, pay them off and watch them appreciate wildly, take annual tropical vacations, join country clubs and drive German sedans. They should help their children who flail in the economic tailwinds of the early 21st century economy.
There are at least two serious repercussions to this scenario. First, parental money artificially props up the economy, especially the housing market. John Pasalis, a Toronto real estate broker and owner of the firm Realosophy, has noticed the impact of family funds on the local market. Family money is, at least in part, the reason why the city has seen such an extraordinary real estate boom in the past decade. He estimates it has raised the number of first-time buyers in the Toronto market by 25 to 30 per cent. It’s a vicious circle: rising house prices have spurred a growing number of parents to help their adult children get into the property market, which in turn causes house prices to rise even further.
Second, some middle-class boomers, feeling flush with the value of their real estate, cash in a few bonds or take out a loan as leverage for their offspring, leaving them vulnerable to debt right on the verge of retirement. New buyers are now entering the market with outstanding loans both to the actual bank and the bank of Mom and Dad. The help they receive now to buy their high-priced real estate is money they will not be receiving as an inheritance later on—which means if property values fall and the pension funds dry up, we are a generation without a retirement plan.
Kathryn Kotris, a Toronto mortgage broker, told me that in recent years she’s seen a sharp rise in older parents taking out new or second mortgages against their homes in order to free up cash for their children’s first down payments. Sometimes the parents take out the loan and the kids simply pay it back themselves. Part of the reason for the shift is the CMHC’s recent decision to reduce the maximum amortization period from 30 years to 25, thus raising both minimum down payments and monthly mortgage payments for new buyers. “For young families living in Toronto it’s been prohibitive,” she says. “These people are trying to buy their first homes and have daycare costs of $1,000-plus a month per kid. Their parents want to see their kids building equity.”
I know one boomer who has happily gone into debt to help out his adult children. David is a retired veterinary epidemiologist. He’s given his daughter, Rebecca, a 35-year-old physician, and son, Matthew, a 37-year-old stay-at-home dad, cash gifts toward house down payments. In all, since his kids have graduated from school, he’s handed over roughly $300,000. He took out a line of credit against his house to do so. While many financial experts would caution boomers against taking on more debt late in their lives, David says it was an easy choice. “My children are growing up in a situation that is very different from mine. My reasoning was, ‘What’s the money for anyway?’ I’m not interested in remodelling the house. I want my kids to have the security I did.”
It’s a generous sentiment, but not one that Rob Carrick entirely agrees with. The business journalist and author of How Not to Move Back in With Your Parents has dedicated his career to advising boomers on the best ways to help out their adult children financially, and going into debt is not one of them. “Baby boomers actualized themselves through property, and they’re bound and determined that their kids will have the same thing,” he told me, “even though it’s no longer feasible.” The Americans learned a big lesson after the 2008 crash. In cities south of the border, where the subprime crisis turned millions of U.S. homeowners into renters virtually overnight, fewer young people are buying houses than ever before. Not so in Canada, where stricter lending standards protected the market. Here, we’re also propelled by a powerful conviction that buying property is the key to economic stability and success.
While older parents who are extending themselves to help their kids buy houses might think they’re doing something conservative and prudent, their generosity presents a threat to the economy as a whole. “Baby boomer affluence is undercut by record baby boomer debt levels,” says Carrick. “For many, home equity is not liquid money they can pass around. When their kids get in a pinch, they’ll say, ‘I’m used to borrowing, so I’ll just do that.’ But who’s to say whether they can pay it off?”
With the rising income gap, it’s understandable that people at the top are doing everything in their power to make sure their children inherit their privileges. While Toronto was once a city where you could make your fortune, it’s rapidly becoming a place where it’s necessary to have a leg up to get a foot in. The more unequal a society, the more you inherit your chances.
One girlfriend of mine who received a family cash infusion for a down payment on her first house over a decade ago told me she was open about it with her friends in order not to perpetuate a big lie. “You don’t want to project this ludicrous façade that a single woman in her 30s, even on a decent salary, can afford to buy her own house, because in Toronto that’s not true,” she said. And yet that’s exactly what we do when we fail to mention that parental money is in play: people with family help get to live the dream and people without get to feel like failures.
Megan MacQuarrie was just 21 when her grandfather, Barry Morse, a British actor then in his 70s, called her up from his home in London with good news. “Megan Louise,” he said in his West End drawl, “I’ve got a bit of an inheritance for you, and I’ve decided I want you to have it now rather than when I’m dead.” Morse, a one-time London theatre legend who later made his fortune playing the inspector on the original TV series of The Fugitive, wanted to watch his granddaughter enjoy the money he knew he wasn’t going to spend. The gift was $100,000. That’s not buy-superyacht-and-float-on-it money, but it’s hardly peanuts either. For MacQuarrie, the news came as a complete shock. She was pursuing an arts degree and bartending on Queen West, trying to figure out what to do with her life. “My first impulse, obviously, was to go to Morocco and smoke a ton of hash,” jokes the now-38-year-old. “But luckily I’d just hooked up with a responsible older guy who would later become my husband, and he urged me to buy a house instead. At the time it just seemed like my grandfather gave me a place to live, but I now realize what an extraordinary gift it actually was.”
MacQuarrie and her chef husband-to-be bought a ramshackle Parkdale row house for $110,000 the following year (yes, that’s what a house in Parkdale cost in 1998) and a couple of years after that upgraded to a bigger, renovated Victorian in Leslieville, which at the time, says MacQuarrie, “was basically junkieville. There were needles in my backyard every morning. Now it’s a high-end stroller derby.” A few years later, after they’d had their daughter, Olivia (now 10), the couple decided to start a business. They borrowed against their house and used the cash to open a shellfish restaurant in P.E.I., where they lived for several years before expanding to another location in Manhattan’s Lower East Side, all the while renting out the Toronto house.
Eventually, they sold the restaurants, returned to Toronto and moved back into the Leslieville house, where MacQuarrie used the restaurant proceeds to pay down their mortgage. It wasn’t long after that her father, a drama instructor, was diagnosed with leukemia. He sold his condo and put a down payment on a large semi at Coxwell and Queen. MacQuarrie and her husband rented out their house again and moved into the upstairs apartment of her father’s new house. She now cares for him while working and bringing up their daughter. As a family, they’re uncommonly open about money. “The deal is, we pay the mortgage and when Dad dies I get the house,” she says. Meanwhile, the place in Leslieville continues to provide the family with a tidy rental income. “It’s very multi-generational and old-fashioned in a way—we help each other out,” says MacQuarrie. “But looking back on it, everything I was able to do as an adult was made possible because of my grandfather’s gift.”
While it’s hard not to admire the generosity of the old and affluent passing on their assets to the young and struggling, the practice is inherently unsustainable. The boomers, who have benefitted from a one-off growth in real estate prices, are an anomaly in their land riches. Their children, earning comparatively smaller salaries in contrast to the rising cost of living, will not be in the same position to help their kids maintain a so-called “normal” lifestyle. Expectations are going to have to change.
If boomers deplete their retirement savings helping their kids buy houses and paying for child care, who’s going to take care of them when the money runs out? Similarly, will there be anything left for their grandkids to inherit now that so many of us are cashing in the family nest egg early? And don’t even contemplate a housing crash. If that happens, we’ll all be screwed.
“All told, they have received $200,000 from Amy’s dad.”
Sorry, but you can’t consider yourself debt free if you’ve accepted $200k from Daddy. You just have a different form of debt, one that is not owed to the bank/etc.
I think you can consider yourself debt-free, but not self-sufficient.
“And don’t even contemplate a housing crash. If that happens, we’ll all be screwed.”
You mean “when.”
Exactly. I just don’t see how it can be avoided. Many Boomers’ retirement-income plan is to sell their house, but to whom? Eventually they will have to accept prices that GenX and Millenials etc can afford, and those will be very low. It’s going to get ugly.
Bingo, and sadly I know too many people who are exactly that.
My husband and I are both millennials of parents who immigrated to Canada and found success starting their own businesses. Although we both have very well paying jobs in the six figure range, the world is not the same place it was when they were in their 30’s and first starting out. We had summer jobs growing up (and as any child of parents who own their own business knows, you grow up working for or doing some odd task for no money) and eventually taking retail and restaurant jobs as university students to pay for tuition and living expenses. My husband did a co-op and was employed straight out of school. I took half a year and landed a stable corporate job. We got married. We saved and bought a condo pre-construction to live in the city and it nearly doubled in value. We moved out to the burbs and bought a house.
A good salary and home ownership. That’s the dream isn’t it? Well why do we shame those who don’t do it alone? Our parents have chipped in here and there helping us get a leg up (to be honest mostly they helped with our wedding and the first year of university not home ownership so I think relatively less than some of the examples in this article). My mom waitressed all the way through university and was able to pay her tuition and living expenses; I don’t think that is really a possibility any longer. We did everything “right”, that is the way our parents did it, but the world is a different place. Could we have gotten to where we are now without that? Yes but it might have taken a bit longer. Both our parents were very successful and are now in financial shape to chip in to support us to have the same success. I agree that no parent should go into debt to help their children and I would never accept anything from our parents if that was ever the case. But what if we redefined how we manage our finances?
This article talks about redefining expectations and while I agree some millenials are out of touch, I think those painting our generation with broad strokes as lazy and entitled need to stop judging and redefine the financial relationship between parent and child. It is standard in Asian culture to take care of our elders so when they get older we will take on that financial burden whether that means living with them or paying for a home. I already know that the money I am saving now is for my future children’s education and parent’s care. It all comes full circle.
Funny that “Erica and Gavin” claim that they try to be MORE frugal, rather than less, so they feel less awkward about all the financial help they’ve received, yet are considering enrolling their daughter in private school. Perhaps that kind of convoluted thinking is what helped get them into such a financial mess in the first place?
I’m about to say something very controversial here… but the two threads that bind everybody mentioned in this article together are being in debt, and having kids.
Why has nobody spoken up yet, and said that the latter (having kids) is the centric issue here?
Simply put, having kids is a luxury. Having kids and sending them to private school (such as is the case with Erica and Gavin) is an ultra-luxury. Personally, I don’t think you should even be thinking about either, if so much as buying a house requires borrowed money from mom and dad.
I’ve done the math, and I’m currently banking on a market crash in Toronto in the next 7-10 years for this very reason. The inter-generation transfer of funds, to live what is quite frankly a lavish lifestyle is not a sustainable one.
While I can certainly appreciate that parents will want to help their kids out in whatever way they can, it’s essentially “robbing Peter to pay Paul”. Sure, mom and dad might sign over $200k to their kids, because they need it… but that’s $200k of their retirement that they have to replace now. Which means they have to work longer. Perhaps to 75, instead of 65. Which means fewer jobs free up. Which means fewer become available. Which means 20-somethings like me are going internship-to-internship for a matter of years due to a lack of openings.
Does anyone else see the vicious cycle here?
Well, to be fair, I was debt-free when I was five years old. Why? Because my parents took care of everything for me – so I had no reason to earn or worry about an income, as a five-year-old.
On the same way of reasoning, they’re debt-free, too. Nothing to worry about – because mommy and daddy took care of it. Debt-free? I guess so. Independent? Absolutely not.
One of the arguments being made here is that having a generation of parents “help out” buying their children’s first home essentially raises the price of starter homes, to the point where they become out of reach for those without wealthy parents.
I’m sure it was nice for you to have your parents help you through school and pay for your wedding, but keep in mind that there are plenty who don’t enjoy that luxury.
So when poor people wise up and stop having kids, what then?
Its bigger than just kids.
Its making choices between option A at the expense of option B, or option B at the expense of Option A. Renting in North America for some reason has become some sort of mark of shame, through it’s very common for many other European nations. Granted to have a 2 kid family, you’d need to rent something that had 3 bedrooms, which would cost upwards of $2000+ for an apartment, or 2300+ for part of a converted house. Though that is still far, far less than having to pay for a mortgage, taxes, maintenance of a home, which if you spent 600K + on, would be at least 3000/mo. Renting is not a waste, as some people put it, if you take the balance of what you would be spending on mortgage and investing it carefully and consistently.
Yup.
Sounds like they have grandiose idea of which class they belong in. You know.. the whole “you’re richer than you think” brand of thinking…
I guess the boomers will swap places with the condo crowd.
Maybe the kids can move into the homes, and the retirees can move into the condos (if they’re still standing and in good repair)
My dad has only spoken to me twice (in three months) since I jokingly asked if he was going to pay for my wedding. IT WAS A JOKE DAD.
If i asked him for a contribution towards a down payment on a house, he’d disappear entirely.
Dad is a lawyer and she has no idea how an interest in land is transferred? That’s rich, not everyone has to live in downtown Toronto you know pppl
totally!
Then their money can go towards such things as making a down payment as opposed to borrowing one. Not just because it’s supposedly a good investment (depending on who you ask; personally I think home ownership is a mediocre investment at best), but it’s also good practice for handling a major financial responsibility. If coming up with mortgage money every month is a struggle, then how is coming up with money to support kids going to be any less of a struggle?
People are self-entitled and spoiled. The ones with money grow up in a certain lifestyle and seem to think that they are entitled to continue that lifestyle without having to pay for it on their own. Sadly the parents continue to support and fund this behaviour.
Its ridiculous. These 30 and 40 somethings are living like teenagers, still being financially supported by parents. At this point in time the parents should be worrying about their retirement, not how to support their parasites and the spawn of said parasites.
Yet these people on the receiving end of the handouts are the victims. They have to hide their handouts because others judge them. The point that they are missing is while they are sitting in the house paid for by mommy and daddy or grandmommy and granddaddy (while hiding the fact), a lot of them are looking down on other people that didn’t have the luxury of receiving a handout. That don’t have a house. They ‘feel sorry’ for people that can’t afford to marry, buy a house, and have children. They expect ‘friends’ to keep up with their ridiculous lifestyle they even they couldn’t afford it by themselves.
It’s rich that these people are complaining about daycare costs, and mortgages, and private schools, and not taking vacations. I LOVE the woman that’s worried about her siblings inheriting her house. Guess what sunshine… children pay for the mistakes of their parents. Remember that while enjoying your fake contentment of being a homeowner.
I even know someone that had to go back to mommy and daddy, pays NOTHING for rent, mommy acts as a live-in nanny/housekeeper (heaven forbid they even do their OWN laundry!), then complains when mommy starts worrying about her and her husband’s retirement and begins to start commenting about rent money or refusing to be chaffeur to the grandkids, or to do their and their children’s laundry, or go on clothes shopping sprees for the kids. oh the hardship! How dare she be so uncaring!
Eventually the parents pass away. Their debt in turn will be passed on instead of inheritances.
Boy, did this article hit home. My husband and I are living this: we are a beyond middle age, financially conservative couple who denied ourselves a lot of things to give our only child a “better life”. Trouble is, she is now renting an apartment from us (at quarter the value of market rent), has several children, and shows no signs of living responsibly. And it hurts that she seems to take everything for granted.
When we expressed our reservations, she turned on us and threatened not to allow access to our grandchildren, whom we love to bits.
At what point does assistance become enabling? I guess I have answered my own question, since we have clearly crossed the line. If anyone has any ideas on how to get things back on keel, I’d love to hear from you.
Well it is funny to see how the example couples struggle with finding homes. I live in Scarborough and found a perfectly nice house for half the money that these couples mention, and with far less downpayment. I am of the same generation X with two kids, have no debt and my mortgage payments are far less than $2000. The only reason that is so is that my partner and I do not care that we live in Scarborough, we are not obsessed with living in trendy West-end neighbourhoods, we don’t mind using TTC to get to work. My baby boomer parents cannot help us because on their meagre Canada pension and supplement we have to help them. So I wonder how is it that there are plenty of us Gen X who do not need hundreds of thousands of dollars in parental help. Maybe it has to do something with class?
I mean on a macro-level.
But nice poor-shaming there, implying that poor people need practice handling financial responsibility.
That is a totally different situation from the topic of the article.
Not unless they sell before a crash. But none of them will do that because that’s what causes a crash, pack mentality ;)
You can have a 2 kid family in a 2 bedroom. Easy.
If they are the same gender it’s easier, harder if they are opposite sex and when they’re in the 8+ age range. Some kids could cope with that. There have been cases where landlords have successfully taken tenants to the board about getting separate bedrooms for children of opposite sex, and occasionally 1 bedroom per child, but those rulings are getting murkier, especially with larger immigrant families where there are 4 or more children, it denies access to housing. So i think it is changing, but if a child complains at school about sharing a room with a sibling of the opposite sex, Child Sevices can and has been called to discuss alternatives with the parents about providing privacy needs
In Canada, the home-ownership rate is about 70%; this value is slightly lower in Toronto, but not much lower. (High 60s most likely).
However, home ownership in Europe is all over the map. Pretty much all of Eastern Europe (Russia, Poland, Hungary, Czech Republic etc.) has much higher home-ownership rates than Canada (typically in the 80s). Home-ownership rates in Italy, Greece and Portugal are also higher than Canada (mid-70s.)
These latter three countries were the source of a lot of immigration to Canada in the 1950s-1970s, and I contend that these immigrants brought their cultural attitudes toward home-ownership with them; they are likely among those who would be very willing to help out their children with down-payments.
The UK, Netherlands, and Scandinavian countries have home-ownership rates comparable or a little lower than Canada. Only Germany and Switzerland have home-ownership rates that are significantly lower than Canada’s.
I don’t read anywhere in the article that Erica and Gavin are in a financial mess — only that they couldn’t buy a house without parental help.
The ratio of house prices to incomes in Toronto has been growing every year since the early 2000s (before that, it was stable for a decade). For this reason, the only way I think your situation could be comparable to these couples is you are also a similarly recent buyer.
I’d imagine it a lot easier to buy a house in Toronto in the early- to mid-2000s when the median house price here was about 3.5 times the average household income, than it is these days (2013-2014), when the median house price is about 4.5 times the average household income.
In other words, rather than class, I think it’s more about where house prices sat relative to your income at the time you got into the market.
They admitted their current lifestyle is, in effect, almost entirely the result of receiving substantial financial assistance from her parents, and they’ve apparently never considered trading down that lifestyle to accommodate their actual financial circumstances. True, they’re not technically in a financial mess now, but they’re hardly living within their means. Frankly, it was the comment about considering enrolling their daughter in private school that got me – that comment alone (not to mention their whiny insistence on living in a neighborhood they clearly couldn’t afford to on their own) says to me at least that their priorities are more about giving the appearance of living a certain lifestyle than actually living a lifestyle they can afford. They’re a financial mess – whether or not they’re actually in financial trouble is really only a matter of time.
But then, that’s just my take on it.
Well as I did not say when I bought my house I guess I was not clear enough. I bought my house in 2010. But there are plenty of houses around 400,000 where I live. Mind you that is still not cheap- and yes i agree that prices in Toronto are high, however, there is a bias against living in Scarborough (or other outside of the downtown core neighborhoods) and so people who are willing to shell out a lot of money to live in the West end are not inclined to buy in the East end. Actually people will rather move to Hamilton, a trend that has now been going on for a couple of years, then move east.
I do, however, completely agree that the ratio has changed- BUT that has everything to do with class again- as only specific class of people will now be able to live in Toronto. Namely those with very very high incomes, while the rest will have to get by.
Instead of talking about the change of prices in houses what we should be talking about is how to create more affordable housing, how to have more affordable rent and a better infrastructure in the city that would create a number of neighborhoods that thrive and can accommodate and accept various people by offering local food stores, good public transit, and amenities. It has a lot to do with class difference and who lives where. I see it for example in the way the city treats certain streets and neighborhoods in terms of street lighting, safety and so forth.
Again, here I think you are reading more into the article, as I also don’t see a “whiny insistence” on living at Dufferin and St Clair (many parts of which are hardly a high-class neighbourhood anyway). I see your point about the private school though.
I am not “poor-shaming”. None of us are born with an acumen for financial management. Regardless of one’s background financially, we will all need practice in some way to effectively manage money. That might start with a weekly allowance when you’re ten – your first credit card when you’re eighteen – or your first RRSP contribution when you’re 25.
All I’m trying to get at is that it’s a little ill-advised to condone going into the “have kids and buy your first house” song and dance, when doing just one of those things requires external assistance. Mortgage rules are the way they are for a reason; if you can’t come up with 20% as a down payment, how can you be expected to consistently come up with monthly payments, plus interest for the next 25 to 30 years?
This is what I refer to when I speak of people needing practice handling financial responsibilities. There is such a huge business in financial IRresponsibility (think car title loans, payday advances, second mortgages, “guaranteed approval” 29.9% interest rate credit cards), which makes taking on major responsibilities such as getting a mortgage, and having kids essentially swimming with sharks, because the very companies that enable unrealistic dreams to happen, are the ones who are preying on peoples’ overeagerness and underplanning.
In cases of such, of course the banks will grant the Erica and Gavin’s of the world a mortgage with their parents’ funding the down payment. Do you know why? Because all of the payments in the first two or so years will go towards interest. So the bank gets all of their money in-hand, before any of the principal is paid off, during which time, the borrowers can probably hold it together.
But if the whole “oh, we can handle a mortgage, can’t we, sweetie?” thing all just a charade, and they have to sell the house after three years, then the bank doesn’t just profit from all of the interest that they earned, they also get a big fat early payoff penalty, for the mortgage ending early – which comes right out of Erica and Gavin’s pocket, and is pure, easy profit for the bank.
The bottom line is, the banks will always win in the end. Just like with credit cards; they make money if you carry a balance, and they make money if you pay it off in full every month. Getting a mortgage is not a feat in itself. KEEPING a mortgage is a whole other story.
Debt is a very easy trap to fall into – especially if you’re just jumping into things, not realizing their implications. If you are not ready to take one step (e.g. buying a one-bedroom condo in the suburbs as opposed to a semi-detached in the city), then how is taking two steps (buying a house while still being responsible for the costs of raising kids) a smart thing to do?
I agree with you that the change in house prices is segregating the home-owner pool by class, but because prices are increasing so rapidly, I think that “time in the market” (which is mostly a proxy for age) is also an enormous factor.
As an example, you mention that you bought your house in 2010; average house prices in Toronto have increased enormously since then. The average Toronto house price increased by 33% from October 2010 to October 2014. No doubt that your decision to live in Scarborough has helped you afford a home, even with two young children, without parental help; I would suggest the fact you bought in 2010 is also a huge factor.
As an example, if you had a $50k down-payment and a $2000 per month budget for mortgage payments in October 2010, you could pretty much afford a home at the average Toronto value of that era ($443k).
Fast-forward to October 2014: your $50k down-payment and $2000 per month budget example now lets you buy a $463k home, because interest rates have gone down a bit, but the average house price is now $588k, so you’re buying either a much smaller, much more run-down, or much more suburban house to meet your budget. The only difference here is four years in entry-time to the market!
I agree that affordable housing is important, but unfortunately it is much much easier to propose than it is to implement.
No actually. It isn’t a different situation. You’re just speaking to the banker as opposed to the bankee.
BlueGoo, people can’t really give advice when it’s a bunch of strangers that don’t know your particular situation or the situation of those involved. Its a good start though that you realise the mistake of enabling this type of behaviour. Good luck! :)
According to City of Toronto, the current split between rental and ownership is 50/50. With the condo boom, those stats may change slightly but not by much.
I agree with your numbers, they are supported, but if we go back to home ownership in Toronto, which i think was the spur of this article, most people in the world do not own single detached homes in Europe (and including those stats you supported) but rather apartments (they’re called apartments, but they are essentially condos.)
I think it’s important to really make clear what people are upset about: Are they upset that can’t own a home, or upset they can’t own a single detached single family home in Toronto?
Depending on what the answer to that is, I can debate further. Perhaps my statement should be amended to reflect that,
My relatives in Spain are well off – lawyers, doctors – all in Madrid, but home ownership there means a unit in a building, not like a multi-story house, with a yard, and a driveway. In that sense, if the statistics in reflected that, we would see dramatically different numbers of home ownership.
Type is important.
This is an interesting article and no doubt reflects a lot of what is happening in the local real-estate market.
For those who would bemoan the fact that parents are helping their children with down-payments by claiming the children are spoiled or entitled, or by illustrating how they were able to buy a house without parental help, it is worthwhile having a look at the numbers.
Since 2010, Toronto average house prices have increased by about 30-35%. Median incomes have increased maybe 7% during this period.
As I mentioned in another comment, the same down-payment and monthly mortgage that would have supported the purchase of an average Toronto home in 2010, only supports the purchase of a home about $120k below the Toronto average in 2014. The salaries haven’t changed much, and the houses haven’t really changed at all, so what is happening is that a family buying in 2014 gets a much smaller, more run-down, or farther-out home than an economically comparable family who bought just four years prior.
One way to look at it is that the practical definition of a “starter home” (in dollar terms) has changed enormously in just a few years.
In the end, the primary determinant of who ends up being able to afford a home is not income and diligence in saving, but rather *when* you entered the market and whether you can get help with a down-payment.
I have no doubt that the couples portrayed in this article can only afford their homes because they got help from family. But I also suspect that if they were five years younger, or got into the market five years earlier, they would have needed much less help, or perhaps none at all. The primary factor here is not greed or entitlement, but the state of the market — one in which house prices increase far faster than incomes.
I was just responding to your comment that renting, while it may be a mark of shame in North America, is much more common in European countries. I posit that this is true of Germany and Switzerland, but not true of other European countries, including those from which many Toronto residents hail. These 1960s or 1970s-era immigrants have probably strongly pushed the concept of home ownership (vs. renting), for cultural reasons, on their children — who they are now helping out with down-payments.
This is similar to my parents situation with my sister. I tell them most importantly, don’t give more money than you can afford to lose – she’s not in a position to help you in retirement or health emergencies if you need help. Since your child has a big bargaining chip, your grandkids, I would try to creatively help her establish her independance. Talk to her about her goals, financial and otherwise and incentives to help her reach them. Like you’ll contribute x amount if she goes back to school, or whatever you think she needs to live responsibly.
For just one difference, the couples in the article did not threaten their parents with no access to their grandchildren if they didn’t pay up.
Nope. Debt is not inheritable in Canada.
Why assume that non-poor people handle their finances responsibly? I know plenty who don’t. And lots of poor people are truly brilliant at stretching a dollar. So yeah, you were showing your own bias there.
And you didn’t answer my question about the macro-level impacts of poor people not having kids.
Oh that’s easy – less poor people having kids means less poor people that have to be supported by their fellow citizens in the future. This would result in significant cost savings to the welfare programs in the future.
You couldn’t figure that one out on your own?
Well she is a human being. Don’t be dismissive. Don’t look at people like facts like matching up square to square.
She just meant she is in this economic-generational scenario, where she is at the other-end having to make her adult children’s ends meet.
But who will work all those minimum wage jobs? Not all poor people are on welfare. There are plenty of working poor.
Forget the having kids = increased debt argument. Why are people even considering being a stay-at-home parent or private schools if they’ve put the importance of owning a home (they can’t afford) near the top of their list?!?!
I don’t get the mentality of “needing” a big house, two cars, private school for the kids, private music lessons etc.
An entire generation grew up in post war bungalows with two br and one bath. Kids played outside and went to the school on the corner. If you can’t find it downtown, move to the ‘burbs.
Ditch the ridiculous expectations of what you “need”, and live within your means without a hand out.
Do people realize that any more? Can’t afford to live downtown? Don’t live downtown. If enough people do this, prices in downtown Toronto would drop.
No, because there is a whole dysfunctional dynamic in play here as well. It’s not just a purely economic & generational issue.
Also, it sounds like BS. Notice that in this account, the parents have apparently done nothing wrong, and “sacrificed” for their child, who is now inexplicably doing everything wrong.
It’s tough – damned if you do, damned if you don’t. Maybe a slow weaning is the best.
Yes that is possible and true I found that weird. Guilt is a two way street. They should defiantly see a professional therapist if the want to honestly improve things with out games.
The problem with where this discussion has gone is that it has become an analysis of “rich people” and “poor people”. The two labels are not appropriate here, for the simple reason that they imply a plethora of things respectively, when only a few specific things are the subject of focus in the context of this debate.
Here’s why I don’t think “rich” and “poor” are appropriate labels… you can earn minimum wage (which, by most peoples’ standards, equates to being “poor”) and be more financially sound than someone who makes $100k per year. All it takes is the right financial management and living within your means.
At $11.00 per hour, and 2,000 working hours per year, minimum wage stands to bring in $22k gross per annum. To live in a shared apartment, cook your own meals, commute and not drive to work, and be entirely devoid of expensive debt such as credit cards, you can absolutely survive comfortably on such an income.
But let’s take the $100k per year earner. If they have a $400k mortgage on a $600k house, they’re spending at least $20k per year in mortgage payments alone, about $4k on property taxes, whatever amounts extra for such things as insurance and utilities, and amortized maintenance on the house over the course of ownership.
Then, there is the cost of living. Meals, transportation, clothing, phone and internet – all that good stuff. That cost is for both the earner, as well as their dependents. Which adds up pretty quickly. Especially when their NET income from $100k is closer to $70k – or about $192 per day to live on.
THAT is not living within your means. In effect, regardless of how much gross income that person is pulling in, for all intents and purposes, you could be earning a million dollars a year, and still be under water, if you have a disproportionate amount of expenses against your income. So, it’s not about how much you earn… it’s about how much you have left over.
To get at your “who will work all those minimum wage jobs?” question – essentially, whoever needs the work. There are so many unemployed recent graduates now (I know, because I just graduated from a program back in Toronto, this Spring), who would love to have the work experience, as well as the income.
But that’s not even the point. The point is that no matter how much money you earn, how comfortable you will be with your way of living is entirely dependent on what expenses you are responsible for.
As someone who’s single with no kids, and would actually LOVE to live in a bachelor apartment, I would be more than comfortable on $100k per year. Probably even way less.
Add some kids to the situation, and a perceived “need” to buy a house – all of a sudden, that abundance of income isn’t so abundant anymore.
So, the idea that someone in a situation of owning a house and having kids “doesn’t have enough money” is not correct. It’s the other way around. They have too many expenses – and proper planning could have prevented that.
Now, to get at the macro effects, here we go. Let’s have a look…
– If they borrow some money from their parents, assuming it comes out of their retirement fund, as I had said in my previous comment, it only delays their retirement, which serves to hurt the job market, as fewer jobs will become available. The result: Retiring at 65 won’t be a thing anymore, because retirement dollars are at work funding kids who overextended themselves.
– With this practice being (relatively) commonplace, demand for housing becomes artificially stimulated. Which drives prices up. Sure, the Erica and Gavins of the world could go on and place million-dollar bids on houses in Toronto. But what happens when, say, Canada Revenue Agency puts in new, discouraging tax rules for down payment loans? Or CMHC puts in tougher restrictions, to crack down on externally funded home purchases?
Don’t think it won’t happen. The Medicaid program in the US has a five-year “look back”, where you will be ineligible for coverage if you were found to have transferred certain assets out of your possession in a five-year period. The same sort of thing could easily be applied to home purchase law.
Then, there aren’t so many people capable of making a million dollar bid. The result? House prices go down.
All I’m trying to advocate is living within your means. If you want a sports car – that’s cool. As long as you can afford it. If you want a house – that’s admirable. As long as you can afford it. If you want kids – that’s your prerogative – but again, as long as you can afford it.
Minimum wage jobs would be staffed by students, and people who dont really need to work but want to keep busy (e.g., homemakers whose kids have grown up, bored retirees).
Because most people, including the highly educated professional types are financially illiterate. They see the real estate and mortgage advertisements asking the perennial question “why rent when you can own – the rent you pay could be going towards a mortgage!”
They don’t factor in the additional costs of home ownership as opposed to renting like:
-property taxes
-mortgage interest
-gas heating
-repair and maintenance costs
If you have knowledge of Microsoft Excel, use the mortgage amortization template and plug in the numbers for the amount you want to borrow, annual interest rate, and amortization period and then see the result. Most people are absolutely floored when they see the amount of interest they pay over the life of the mortgage. Its often more than the amount they actually borrowed….
It sounds like she’s playing a game of chicken with you…
Call her bluff and see what happens. Worst case, you won’t see your grandkids as she threatened, but hopefully they’ll be mature enough to understand your actions when they are older.
If she blinks, then you’ve put her back to the wall and forced her to become a grownup.
Good luck!
I wouldn’t necessarily say it’s a class difference argument. I lived in Scarborough most of my childhood, and whenever I go back I still see families thriving and the same mom-and-pop shops doing well. If it were as easy as buying a house in Scarborough, and using the TTC, then I definitely would have done it by now. So would my sister, but the truth is she recently bought a house out in Whitby because the prices in Scarborough are still too much to afford, and if you’re going to be commuting to work anyway, you might as well save on the down payment and just move further down the 401.
I wish I knew the answer to this as well. My partner and I have a hard enough time with my (unfortunately useless) school loans and our combined credit card debt (which isn’t much, really). We have a beater car, rent a modestly priced apartment in midtown, and we can’t even consider saving up for a newer beater, let alone having a child! For me, a wedding is a waste of money, and buying a house in this market even more so. How people can justify debt so their kid can go to private school is beyond me. I bet 90% of those parents went to public or catholic school and got a perfectly fine education.
Except it’s never really been like that, there have always been people who worked min wage jobs for decades.
You really need to read up on the topic. It is extremely complex and your simplistic statements show that you don’t understand it.
This is absolutely true, but when making such a comparison, you have to be careful to compare apples to apples (i.e., buying a condo vs. renting a similar condo, buying a house vs. renting a similar house).
Comparing renting an apartment to buying a house does not make sense introduces a lot of other variables that confound the comparison.
What a notion. You’re trying to pin the north american obsession with detached home ownership on groups of European immigrants (read Italian, Greek, Portuguese) instead of looking at the larger colonial enterprise which have rise to this whole thing? Ridiculous. Really.
I had boomer parents – thankfully i never had to worry about tuition, but my parents made me pay my rent and bills for the 4 years of my undergrad, yea I sussed it out… I subsequently did a Masters degree (self funded) but was lucky that my parents paid half of my wedding expenses. So let’s be honest – I worked hard but also had some breaks!
And yes, these generous gestures helped me to become more financially stable more quickly – but this doesn’t compare to a $200K cash infusion! My husband and I scraped together the bare minimum to get a toehold in the housing market yet make our mortgage payments with ease. (Because we are financially responsible and realize that owning a home means that we watch tv in, rather than go out for a fancy toronto dinner…totally good with that though!)
So. You either come to terms with the fact that you’re propped up in some sense….small or large or you (maybe) can’t do it! Sorry. Toronto sux. It’s hard.
It’s not about having kids, it’s about consumerism and selfishness. People like this irresponsible couple want to live a lifestyle they can’t afford and instead of downsizing to a manageable life or moving to an affordable area, they take handouts to support the lifestyle they can’t support themselves. There are families in Toronto and cities like it living on one paycheck, raising their own kids and doing it with an income below these people. It all comes down to the choices you make. Your parents are not responsible for you, you’re an adult, act like it.
No, I’m saying that these groups of European immigrants are so strongly inclined towards home ownership that they are willing to go above and beyond to help get their children into homes vs. renting.
Shall I point you to the many white Anglo-Saxon kids I know whose parents are helping foot their housing bills? You are making things up based on your anecdotal observations, and to be honest, it comes off as prejudiced.
This is neither new nor news.
My spouse and I have 6 siblings. All of us born between 1948 – 61. Neither family is wealthy. All 8 of us has received some measure of financial help…loan, gift, bail-out….from family…parent, aunt, uncle, grand-parent, sibling….right up to loans from elderly parent to enhance the elderly person’s revenue stream when fixed income rates dropped…this had added benefit of reducing tax exposure for parent.
Intra-family and inter-generational financial management has nothing to do with millenials or any other catch phrase generation.
This is what families do.
I smell a lot of jealousy in the comments… My grandfather left me a high-six-figure inheritance… I used it to buy a nicer house than I could otherwise afford. However, I don’t spend frivolously and I work as hard as the next guy. Don’t hate me because of the family I was born into!
Where did I say that Anglo-Saxon kids aren’t getting help too? And I’m doing exactly what you say, making a hypothesis based on observation (including home-ownership rates in other countries that were big sources of immigration to Canada in the past). Nowhere do I claim this to be gospel truth, or to explain the whole phenomenon. No need to read more into it than that.
Actually there is a need to read into it, even if you probably didn’t mean anything by it. There’s an insidious kind of thinking represented here, where people look at social problems (if you want to see housing prices as a problem) and find some anecdotal way to blame it on a minority group, immigrants, certain races etc.
Another related yarn I hear all the time is that Toronto housing is so expensive because of all the foreign (Chinese & Russian mainly) absentee owners that flood the market with their rubles and renminbi, leaving tracts of vacant buildings littering the city in their wake. I am sure there is a significant foreign presence in the market, just like there is a foreign presence in the city, which has massive immigration. But is that WHY houses are expensive? Damned if I’ve seen any evidence of that. Convenient to pin things on certain groups, and ignore the more complicated structures and histories behind them. That’s all.
I’m not blaming anyone.
When it comes to vacant housing, there is actual data in any case, that supports the notion of pre-sale investment purchases of condos for capital appreciation (i.e. not for rent / cash flow) as a major driver of condo prices, which over the last several years have increased much faster than condo rents.
Absolutely agree with you on that point and how those forces ultimately affects the market. Was just trying to add something further to the conversation from a different cultural lens and suggesting an alternative perspective on finances if you will. Certainly agree with the point about all these things culminating in higher prices for starter homes. In fact my own parents are now essentially priced out of the very market they worked so hard to get into all their lives.
I don’t want to argue about what quantifies being well off or not, and the fact that our parents were able to give us some money would certainly suggest that, but again it’s a matter of perception and back on an individualistic vs. familial sense of money. Whether if was a couple hundred dollars or a million dollars, the parent and child support one another in our culture. Parents would happily live in a smaller home or delay retirement if it meant we could have a better life. And inversely, we would happily delay some other life event, take on debt or having elderly parents move into our home if it meant better quality of life for our parents.
My mom waitressed her way through university, and sure it was a different time and she was able to pay for her degree, but she had help too. There was once a time where my Grandpa worked hard to saved up as much as he could to buy her a plane ticket to Canada. Eventually she sponsored her entire family to come to Canada. And when my Grandpa became ill, all his children took care of his living, healthcare and retirement home expenses. So it comes full circle.
You’re rambling on about cultural differences, as if there is something profound to be said about it. You frame your posts as if it’s only Asians who take care of their familes. Yes some cultures are more coddling of their children. Is that a “better” way to go? How many Asian “adults” do you know still live with their parents into their late 20s? Embarrassing.
For the record, I’m an Asian immigrant, born and raised there until my family moved here when I was 13. I’ve refused money from my parents since I left for university at 17. The way I look at it, every dollar they spend on me as an adult is a dollar further they are from retirement – and I don’t want to keep my parents away from retirement. Should they need my help when they’re older, am I going to say no? Of course not. But this isn’t some unique thing that Asians do.
The point of this article is that this type of financial coddling contributes to raising home prices for no good reason. It removes money that should be in retirement accounts of parents, and moves it into real estate for the children, artificially raise the price, and continuing the cycle. I’m fortunate enough to have a good paying job to be able to afford RE for myself, but it’s a toxic environment for those who get priced out of the market because their generation still borrow from the bank of mom into their 30s.
I have friends who are real estate agents and they say that most of the young couples buying a house in the GTA are getting advances on their inheritances. But it isn’t advances that put the parent in debt just reduces their investments or from the sale of a family cottage. I have friends who stay at home and have their parents pay for renovations or special schools for their learning disabled child. Her husband makes well over 6 figures and her parents are not in debt. The article is missing this piece – not all parents are going into debt but using cash or investments or downsizing to a smaller home and using that cash. Those of us without the help are the ones truly frugal and counting on low interest rates!
With the right attitude, we can learn to respect money.
I think we Ontarians can often be a bit spoiled. We never really learn to appreciate and budget money extremely well, in fact I know I too am still learning that one, though I’m somewhat sparing.
We waste a little money too, most of us do, trying to live a life! But some people are like giant babies who never take any responsibility for their financial lives, preferring to blame external causes and a situation they ‘can’t help.’ They feel entitled, believing they should be in the position to get stuff – and it’s ‘not fair’ this didn’t happen based on their past actions. Red Alert! Helping these people is hurting them – they will NOT learn, they will get worse & less responsible!
A small bit of help from family – eg. someone retired who is living comfortably – is a kindness not a crime, and does not undermine principles. But substantial support should not be a reliance in most cases. It can undermine the recipient’s respect for money and even ruin their appreciation of what you are doing for them (look at people waiting for Trust Funds or big inheritances, spoiled.)
Me? I feel I’ve missed financial opportunities where I may have done better but am at least on fairly solid ground. Surprises even me! If I had been more careful eg. with frivolous or unnecessary expenses we all like to indulge ourself with… well, I could be much further ahead. Those two daily Starbucks espressos, regular take-out meals and careless parking tickets can add up to a big mountain of ‘nothing to show for it.’
Money rewards our attention, and it escapes our lack of attention. Consistently. Check those bank fees and high monthly bills for ways to keep more money in your pocket, and see if you believe it.
First world problems indeed!
It is warped thinking that leads people to believe that private school is necessary in Canada and that real estate will alway rise. As the author states, we’ve had an unprecedented run up in prices. Houses have appreciated far in excess of inflation for an extended period. Like everywhere else, there will be a correction.
And boomers have the majority of their wealth in real estate. I would love to see a follow up story in 5 years. It won’t be pretty.
Right on. When reading the first couple’s story, who are now contemplating sending their children to private school, and eating out whenever they feel like it, after being helped out on numerous occasions by daddy big bucks, I wanted to scream! Grow up and pay your way already! That just may mean eating in and public school.
The real estate market has been driven by many factors, most of which purpetuate the rise in prices each year. Yes Gen X and Y’s now are getting help from family. Other real factors are real estate investors that have been driven to the market due to the too frequent ups and downs of the stock markets ( and occasional crashes). And how about conservative investors? 1.5% in GIC’s? No thanks. Real estate has the triple lure effect. Its safe, its pays very high returns in the form of capital gains or rent, and , here is the really lure, it pays to live in it with TAX FREE gains when you sell it. How else is a regular shumck going to make any money in todays fix and exclusive investment markets?
Very happy to stumble across this article! Jian cover got me here, very happy to find Leah writing in TL, and this was a a good one for her.
I am always happy to see any hip, or possibly hip, articles aimed at reminding young people that the lives they want to lead…based on their impressions from their family, friends, peers, media, whatever…might not be attainable, and maybe, just maybe, your friends are also lying about how good their own lives are going. :-)
I think the internet makes the sphere of negative influence much wider…”the medium is the message” …and it crushes today’s young adult’s reasonable goals in their search to figure out where they fit in amongst their peers. Way too much competition, So early adopter articles like this one are all the more valuable for their ability to explain this common phenomenen and hopefully reach the afflicted. :-)
Although, it might just be a big city thing too…or a liberal, middle-class thing…or some other thing, who knowS!
Modern people are far too quick to blame uncontrollable circumstance for their failings and attribute good luck for the successes of others. This is utter hogwash.
In days gone by, we baby boomers were the sons and daughters of WW2 survivors. Many of them immigrants. Our parents didn’t have anything much to speak of and it was their job to carve out an existence from the rubble in the aftermath of the war years. We, the said baby boomers learned from our parents. We learned how to work, we learned frugality, we learned about saving our money for a rainy day, we learned that if you want something badly enough, you wait till you have saved up the money for it. Most of all we learned self reliance.
I’m reasonably satisfied with the quality of my upbringing. I had a paper route when I was 10, collected my own money from customers. When it snowed and there was a day off school, I pounded the pavement for driveway clearing jobs. I got low pay jobs wherever I could and I spent less than I took in. As I got older, I sought out other income opportunities like building fences, yard work and the like.
I paid for my own education in University and that included off campus housing in another city from my parents home and when I graduated my new wife and I saved a bit of money to embark on our out of Canada entrepreneurial adventure in a third world country. Coming home penniless we got to work again. She in an insurance company, me in real estate sales.
Our two kids always had everything. What they didn’t get was a fire under their butts to accomplish like we did. We helped them and their spouses with down payments, we let them use the cottage we built and we let them go to our beach house in Florida.
Big mistake. We should have told them if they want something, they should save for it.
Most 30 somethings will never understand how we failed them.