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Wealthy Barber questions need for homeownership

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Guest | 03 Feb 2014, 08:34 AM Agree 0

David Chilton, author of the Wealthy Barber and a panellist on the Dragons' Den, tells the CBC he's worried about the Canadian fixation with homeownership.
"I'm not against real estate," he said. "I'm against the fact that so many people have it as their primary asset, their only asset in a lot of instances. That's not good diversification. It's not wise."
It's also a reality that an increasing number of experts are questioning given the reduced inventory of houses for sale in key markets such as Toronto.That limited supply is helping drive up prices in consideration of growing demand, which the latest numbers suggest are rising despite dangerously high household debt levels.
The typical homebuyer's reaction to the phenomenon has routinely been to borrow and save more in order to buy into the increasingly pricey Canadian dream.
Chilton is effectively asking young Canadians to rein in on their expectations and err on the side of modesty in order to better spread their investment eggs across several different baskets.
"My argument has always been a more modest home is a better way to live," he said. "You're not stressed about your financial future.You have enough money flowing through to save. And it's easier to keep clean."
Still, other finance experts are shooting holes in the whole idea of buying a home at all. Something that could accrue to the benefit of landlords as look forward to a continuing run of the market in their favour.
"Once you've got the house, there's the car and the TV and the furniture," Richard Florida, head of the Martin Prosperity Institute at the University of Toronto, told the CBC. "That's money that's not being spent on new technology, on adding to your own stock of human capital by upgrading your education, by investing in your future."
  • Ed Novak | 04 Feb 2014, 10:56 AM Agree 0
    Though I agree that one should not have all of his eggs in one basket, historically, as a long term investment. Canadian real estate in prime markets has outperformed any other type of investment by a mile!

    I don't understand what the last paragraph is about, but we live in an age of obesssive consumption. This consumption is driving technology, economy and everything else. At the same time, consumption is directly linked to consumer sentiment which is highly influenced by media. Therefore, if media says BOO, the consumption dies, development stops, manufacturing disappears, jobs gone and economy grinds to a hault. What happens to stocks and binds? I don't need to explain. At the same time, there is real estate still providing home and shelter. It may faulter in value, but people still need to live somewhere. So, invest in real estate and you won't go wrong.
  • Craig Watson | 11 Feb 2014, 03:16 PM Agree 0
    I will always openly and graciously accept advice from seasoned investment professionals and weigh the information against personal goals and future decisions. However, this article seems extremely “generic” to be of any solid advice. Personally working in the Real Estate industry, I AGREE, not everyone should be viewing home ownership as a necessity for life. It has MANY varying factors involved to make any kind of informed decision whether it is a wise choice or not for an “individual”. Unfortunately home ownership is a milestone that has been ingrained into the Canadian culture (like the US) over many generations as something that must occur for one to be viewed as successful in life. As our societal financial costs continue to climb year over year, disposable income for most lower and middle classes continues to slip away. This creates additional burden on whether home ownership is viable as becomes extremely difficult for many to save for down payments, closing costs, upkeep, maintenance, etc. For investing I agree with diversification, long & short term goals, and really understanding one’s wants vs needs. But along with Ed, I also find the final paragraph oddly written into this article. When was the last time that buying a new (technologically advanced) car, personal 3D printer or hand-held “gotta have it because it’s so new” item actually attributed to creating personal wealth, like paying down one’s mortgage …?
  • Paul Tobey | 11 Feb 2014, 11:40 PM Agree 0
    I'm sure most of you would agree that whatever advice you get about how to invest your money should come from someone who invests well and can prove it.

    My personal top 3 investments in order are:

    1st - investing in myselt learning things I don't know how to do.
    2nd - investing in my business with what I learn and ...
    3rd - real estate has always been there to help fund 1 and 2
  • Bruce | 12 Feb 2014, 11:25 PM Agree 0
    I never realised that people who rent don't own cars, TVs and furniture. Learn something new every day.
  • WillAshWP | 03 Nov 2014, 11:16 AM Agree 0
    If you read William Bernstein's book, The Investor's Manifesto, you'll learn that a house is not an investment but rather a consumption item just like a TV or a couch. Historically, homes haven't done as well as people think. A home is a lifestyle choice, nothing more.

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