Young professionals should avoid non-liquid assets like houses - analyst

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While home investment volume in Canada’s most active real estate markets has steadily increased in the past few years, a finance industry professional said that young people who are still finding their fiscal bearings should avoid buying houses altogether.
 
In Libby Kane’s report for Business Insider, certified financial planner and XY Planning Network co-founder Alan Moore noted that a significant portion of his professional time is spent talking young adults out of buying residential properties in the present climate.
 
“Homeownership is a good way to really screw up your finances,” Moore said. “Now, I know it's the American Dream and I know that we've been told that buying a home is cheaper in the long run than renting — but honestly, it’s not always true,” Moore said
 
He explained that a non-investment home (especially in overpriced Vancouver and Toronto) is a somewhat difficult asset to sell, and the lack of mobility inherent in settling down doesn’t help matters.
 
“Whenever you want to chase a new job opportunity (or you get laid off and you need to downsize), or you want to move to a different state or life takes an unexpected turn in some way, homeownership tends to tie us down quite a bit,” Moore said.
 
Self-made millionaire Grant Cardone agreed with the assessment, adding that since a utilized home does not yield revenue every month, it isn’t “a good deal if you have to feed it constantly.”
 
“Buying a house is for suckers,” Cardone said.

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  • Dustan Woodhouse on 2016-07-15 10:51:56 AM

    It would be worth clarifying that these are the words of Americans who live in quite a different socio-economic environment than CDN's.

    Perhaps the most difficult passage to make sense of is 'a non-investment home (especially in overpriced Vancouver and Toronto) is a somewhat difficult asset to sell'

    Really?

    Aside from June 2008-June 2009 selling any property in Vancouver since the 1980's has been a pretty simple task.

    Putting 10K, or 15K down on a 200K-300K condo as a home base, in a building that allows rentals so that you have the option of retaining it as an investment, is not something that I think has gone wrong for many 20-somethings.

    Especially the ones that are now in their 30's and 40's and have hung onto that first property long term.

    my two cents.

  • Foys on 2016-07-15 11:25:55 AM

    These guys make commission off of investments that don't include real estate. They are totally biased. They would never recommend real estate as an investment unless it was a REIT, where they can make some commission.

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