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I moved into my first home with my girlfriend in January, this year. We had been looking for a place for nearly a year before that, and there were many questions that came to mind as we were searching:
- What is the area like?
- What will the commute be like?
- Will we be able to afford it?
Purchasing our first home was definitely no small feat. We spent a lot of time looking at different properties and I even talked to a buyer’s agent (who I found through another blog, funnily enough) about properties. We looked at condos, small homes, and we even considered a duplex so that we could rent out the other section.
When we first started shopping, I thought we’d look at different places, eventually fall in love with one and decide to go for that. The reality was actually somewhat different! We ended up striking off one place after the other because they didn’t meet one of our criteria, even if we did like the place. Eventually we were left with just a few choices, picked the best choice, and we’ve been happy since then.
Find an area that you’ll be happy with.
We looked at all sorts of areas: Downtown, the suburbs, new areas, old areas, hipster areas, gentrifying areas, and regular middle-class neighbourhoods. Here are some areas that we considered, but ultimately decided against:
Downtown
The good side of living downtown is that you have convenient access to the universities and a short commute to work (if you work downtown), and there are tons of restaurants, cafés, and shops. Downtown is where things happen. The downside is that the property prices are sky high, and the taxes are extortionate. Living downtown means you will be up to your neck in expenses, and you will be tempted to go out and spend with all of the shops and stuff around.
In the end, I was firmly against living downtown because the marginal advantages of a slightly shorter commute did not make up for the added expenses. I don’t go out all of the time, and downtown is not that far away for the festivals and stuff, anyways.
The outer suburbs
The advantage of the suburbs is that property prices are more relaxed than in other areas, though you would be surprised with the high housing market that we have up here in Canada. The greatest downside is that depending on where you live, the commute can be an absolute nightmare. My grandmother lives in a suburb that is perennially gridlocked, even on the weekends! I’d hate to live in a place where everything requires a long car-trip and is a nightmare to get out during the working day just so I can save a couple hundred bucks a month on the mortgage (that I will be paying back in additional car maintenance, repairs, and trips to the shrink to deal with the added stress!)
Not all suburbs are the same though, and some areas may have just enough added quality of life and a decent enough road network to make up for it. It also depends on if you have kids or not, which we don’t at the moment.
The hipster areas
We also looked at new developments in gentrifying areas as well as older properties. The interesting thing here is that if you get a duplex, you can rent out the other unit and get some help on paying down the mortgage. This could be a rapid route to accelerating your net worth.
The problem is that it’s already a bit too late for this strategy. Prices in these areas have skyrocketed, and you may be paying sky-high prices to live in a run-down building that’s 80 years old and needs a lot of work. At the same time, these areas might be close to downtown, but don’t always have a well-developed local economy or public transportation network due to their history as industrial areas or working-class neighbourhoods. The ones that have developed a local economy are even more expensive, with property taxes to match. Some of these areas are also somewhat dangerous, and I find it a bit strange to see affluent new projects next to areas that are known for gang activity, drug abuse and prostitution.
We ultimately decided to live in a new condo, in the inner suburbs.
After crossing off all of the alternatives, we decided on a new condo project in the inner suburbs. The building is conveniently located next to a subway station and a university, and because of the subway there is a flourishing local economy and the area is rapidly developing. At the same time, the area is in the middle of an older suburb so it is still relatively quiet, and there are parks and greenery in the area. I am only a 20 to 30 minute ride from downtown, yet the prices and property tax are already significantly lower. We are still paying more than I would have preferred, but we are also staying within the 33% rule.
Even though the mortgage is large, we save a lot of money by not having to buy a second car and driving only on the weekends. We also save a lot of time in not having a yard to rake, a driveway to shovel, etc…. and since we both work and we both study on the side, this is a huge timesaver.
The biggest downside is probably the fact that we are surrounded by highways in all 4 directions, so the area is noisy. With the windows closed it’s not that bad, but the trucks can still be heard. There is also no visitor parking and the city is making some ill-conceived “traffic calming” changes to the local road network that make it a real pain to get in and out. The good thing is that I don’t drive during the week, so I don’t have to deal with most of the hassle.
The other downside is that while the area is solidly middle-class and student, some strange things have happened recently: someone was pushed off the balcony of a neighbouring apartment by his girlfriend a couple years back, and he fell to his death. A construction worker was found dead in the middle of the night at our very own building during construction, and of course we found that out after we had already signed. 😉 There are also other things that I’ve heard about, such as a rape in the neighbouring parking lot, and those massive unlit highway pillars seem like the perfect place to conduct a shady deal in the middle of the night.
My imagination is probably getting carried away though, and I feel very safe in this area. I love the easy commute, easy maintenance, and affordable prices in contrast to downtown which is only a few kilometers away.
Make sure that you can afford it.
Ultimately, you have to make sure that you can afford it. We were in love with a condo downtown before we decided to go for the one we live in now, but the place was expensive. Just one parking space cost almost $50,000. We would have been paying thousands of dollars more in property taxes and fees, and we wouldn’t have had the view that we do now. We also would have been in pretty much the worst unit in that building, while now we’re in one of the best units in our current building.
The building is also in a gentrifying area, but also an area that is host to massive festivals, with all the garbage and noise that brings. At other times of the years, there are also prostitutes and punks just a short distance away. It’s interesting to see that when you pass through downtown, but having to live next to it is another thing, especially if you have to pay a fortune to do so.
My own rules for making sure that you can afford it are pretty simple:
- First, ensure that you are following my 33% rule. This helps to ensure that you avoid becoming house poor.
- Also ensure that you have at least 20% down. That way, you won’t have to pay a surcharge for mortgage insurance.
It’s been more than a year since I last wrote about it, but you can check out my thoughts in “Purchasing Your First Home: Questions and Decisions to Consider“. That was written long before we had moved into the place. Almost a year and a half later, I’m still happy with the decision overall. 🙂
Good luck on your next home purchase!
congratulations! i felt like i was reading house hunters 🙂
Haha, it can be an adventure. 😉
I’m glad you found a home you are both comfortable with.
We have been in the same home for twenty years now and will probably age in place here. We both like the location, the acreage and the fact that we can maintain it ourselves (it’s a one story ranch).
However, I’m considering looking around for a residential rental property so thanks for the analysis.
My girlfriend’s parents are still attached to their home as they have been in there for 20+ years, even though it’s now way too big for them! I guess a place really grows on you over time.
Congrats on your new home! I am quite far away from home ownership myself. New York City is not a great place to buy, just so crazy expensive that it is out of reach for mere mortals.
Thanks, Neo! New York City… wow, I’m not sure how I would afford it there, either! I suppose if you’re a high-paid professional working in Manhattan. I also hear though that the lifestyle helps to make up for the high costs in the city that never sleeps. What’s your take on that?
Kevin, the lifestyle is the whole point of living in NYC. I work a lot, but my commute is 10 minutes and I walk everywhere, stores, restaurants, etc… And I can get any type of food I want and experience just about anything I want right in my own neighborhood. However, the price for this kind of access is huge, so unless you have serious cash, buying a truly comfortable apartment is a no go… But I think it is worth it to live here and rent for a few years just for the experience.
This is where I have such a natural advantage over most people. My dream home is a place in a rural area. So this keeps my costs down automatically. I figure I’ll save at least $300,000 on the initial cost of a house and mortgage interest alone for the first 20 years of my life.
I like the idea of a rural place, myself, but it wouldn’t work out at this point in life. If I really want to go dream house though, I’ll go for a nice beach home in Hawaii or something like that. Then I really am just dreaming, though. 😛
I think it is really important to have some very firm criteria set before you go shopping for a new home. Location is one of the biggest factors for me, finding finding something that ticks all of the location specific boxes is actually pretty hard to do.
It was difficult for us, too! It really takes time, but patience pays off especially when such big sums are involved.
Glad you have found your dream home. We have a home we really like but we are realistically going to outgrow it when we start a family. What we have been talking about is putting on addition. If we can meet the space requirements we need in the end, then would call it my dream home. I love the area and the features inside. Don’t really want to move which is why an addition is an option we are going to really try for.
An addition is a great option if you guys can manage it. My grandmother did that on a small bungalow that she used to live in, and it really helped to expand the place. I kind of miss that little house now, because it was very cosy, and well-shaded in the summer with the trees. It was on a corner lot and had ample grass all-around. Too bad the housing bubble hadn’t yet started when she sold!
I agree that location is the most important thing. We live downtown and it is quite a bit more expensive than the suburb. Our condo is near the university and it is much more lively than living in the suburb. It is a bit smaller than I would like now that we have a kid, but it still works well enough for us.
My dream home would be with in 5 minutes walk from a nice warm beach… I can dream, can’t I?
Haha, true, I should qualify the post title with “and one you can afford!”. If money were no object, I would have a really nice beach home somewhere sunny and hot…
Location, location, location, always the first rule of real estate.
That said, I’m with MUM – my wife and I love the rural area. We save a bit more money outside the ‘burbs and have our sanity to thank for it 🙂
Great post!
I used to live in the sticks, so I have an affinity for that kind of living and wouldn’t mind it. It just wouldn’t work out though with the long commute times that we’d have. Eventually when we have kids we probably will have to move, though! Not at first, but once the little guy’s 3 or 4 or so, we’ll probably need the extra space. That’s still a good 5 years off, though.
I watch House Hunters a lot, and I just saw an episode where a couple bought a one bedroom condo in downtown Toronto for over 400,000. I have to say I was shocked. People must really love downtown to pay that kind of price.
My only ‘downtown’ option is Detroit, and that is not a viable option. Another thing about many downtown communities is the public schools are not very good. (Not saying that is true everywhere, but it seems a lot of kids that live in Detroit, Chicago, LA, etc go to private school.)
I keep thinking about the wrapped cement pillar in the parking garage when I think of your condo. How long do you think you will stay there?
Hey Kris,
Downtown Detroit has/had some really nice, historic buildings, and it’s a shame that the city has been so afflicted by urban blight. Maybe the new future for the city is urban farming.
Public schools are not that great in Canada, either, as it works under a similar system as the U.S.. I don’t think they’re quite as bad, either, and you can still find palatable and decent schools but it really depends on where you live. The inner city schools definitely have their share of problems. I’m not quite in downtown but across the river, but it’s very close in terms of commute time. 20-30 minutes door to door and you’re there, and sometimes in even less time. Since you’re on a subway, you can read or do other things in that time.
I remember I talked once about a cement pillar.. I don’t remember what I was complaining about anymore. 😉 I think I could stay in this building for 5 years, until the seasteads are ready! Haha, I don’t know. If I switch to a house, though, I will want to stay in the same price range instead of succumbing to lifestyle inflation. It would probably mean not so great of a commute, but who knows where we’ll find ourselves in lives 5 years out. My plan for now is to stay here and have a baby here until the kid is too big and we need more space. 😉
The real estate business does not seem to have caught its breath’ It seem to be gasping for air. All the hupla years and years ago about being in the housing market was the best thing that could ever happen to you. I can can picture the young real estate agent’ the banker waiting for the buyer to sign on the doted line chuckling when someone suggested that real estate could maybe not be the greatest investment in the world. So over confident that you could smell it in the room.