Not sure how often this was discussed or debated in the past. But what's everyone take on this subject matter? I know for decades if not forever the concept has always been to own real estate because simply, over time they only continue to go up. The only part that is difficult is the timing for entry and one has to try not to buy at the peak of house markets prices. This is probably the single most effective way to build net worth especially if one does not have the discipline to save or investment wisely elsewhere.
However, is this believe coming to an end? With the fastest interest rate hiking cycle on record, I have heard from a few respectable economist argue that we are now entering an inflationary era which could last decades. if Just like in the 70s/80s, no one would have thought rates could virtually hit 0%. So is this about to change? No one could imagine high rates are here to stay. -minus any financial market crashes which could drop rates sharply, rates could go back up just as easily and for a long time.
One that I follow is suggesting the US housing market is actually crashing, it is being kept afloat due to developers giving buyers incentive in what's called a mortgage buy down, in short, buyers cannot afford the 8% interest rate mortgage so developers will eat the 4% of that cost. In other words they are giving buyers discount and this does not show up on the sold prices. Eventually this will come to an end where it will cut into developer's profit margin.
Other potential catalyst includes all those Airbnb owners will also suffer from regulation change and forcing to sell. Another one I read mentions how in the US most home owners pass their property generation to generation and enjoying low tax because tax was based on the original purchase price, but again rule change may be going into effect that any one inheriting a property will be subject to market price tax assessment. So the current generation may not be so keen in paying what use to be 2000 annual tax to say 20,000 and again encouraging them to sell the property instead.
I understand Calgary is enjoying it's own real estate bubble because of supply and demand, but if holding real estate is not the best time due to what is to come. I now wondering if moving to rental makes better financial sense.
From my own personal take is that, I could sell my home and rent something similar amid the monthly rent is higher than my mortgage payment, but I can pull out all those equity (over 50%) and park that in a 5%+ cash interest savings account with the rate being so high. Having the flexibility with a large sum of cash deposit that is earning me interest and without the headache of worrying about fixing anything in the house.
Personally I believe for the foreseeable future, having as much cash and being as liquid as possible is probably the best position and wait for good opportunities whether a better real estate landscape or stocks.