Is your house a home, an investment or a calling card?

By Sabrina Almeida

Mississauga, February 12 (CINEWS): Over the years I have learned that everyone has different reasons for buying a house. Particularly that… the most basic premise of having a roof over your head is rarely a reason at all. Yes, there are individuals who do buy houses ‘just to live in’, but these are considered to be infants in the real estate world. While a few will remain at this level, most will quickly graduate to becoming investors or overstretch their housefinances to purchase property that they believe will define their social status.

A means to building fortunes

If you’ve heard about the recent goings on in Vancouver where houses are being flipped even before anyone gets the keys in a bid to inflate pricing, then you’ll know how seriously some take this real estate investment business.
A friend who owns a lucrative enterprise in Calgary once told me that he made more money from selling his homes than his 15-year-old business. While he just moved for personal reasons, many others see real estate as the fastest growing investment. And one can’t blame them. With bank interest rates being virtually flat and stock markets performing dismally since 2008, there’s almost no other way to secure your retirement.
The ever-rising prices however are causing some investors to get in deep over their heads and purchase two and three properties which they really cannot afford. If the bubble were to burst and a price correction to ensue, most would be sending their keys to the bank or whichever institution they borrowed money from, as some Albertans are allegedly doing right now.
Yes, real estate is and always will be an investment. Unfortunately prices are being hyped right now through unnatural and unfair means by those who have begun to treat it like a game. (Hence the warning from the regulatory board.) Something similar to the Harshad Mehta scam that took place in Mumbai in 1992. And we all know the result. Only those that cashed in, in time, had anything to celebrate.
However as Newton said, what goes up must come down, and these individuals had better hope that a real estate crash doesn’t crush their get-rich-quick dreams.

A symbol of status

In the past few years auctions of prestige homes have risen considerably. Often, their owners couldn’t afford the huge expenses that came with the prestigious buy. Even those that managed to shell out the huge mortgage amounts found themselves overstretched when it came to property taxes and the cost of maintaining a multi-million dollar home. It’s like purchasing a luxury car only to realize that the parts and upkeep are bleeding you dry.
Sadly enough many in the South Asian community are willing to go to great lengths to buy a lifestyle in the hope of climbing up the social ladder. Perhaps they ought to consider how an auction or foreclosure reflects on their social status?
I know of two people who have bought homes in Mississauga’s prestigious Mississauga Road area. Given a choice their addresses would be larger than their names on a business card. They can’t wait to tell you where they live. Little do they know about the gossip and snickering that follows them because the interiors are so shabby that people have concluded that they are struggling to keep up.
And then there are some who will say they live “off Mississauga Road” (way off actually) but not divulge the exact location. For “Mississauga Road” is what they want you to remember. Should we really be defined by where we live? And at what price?

Rental income helps pay the  mortgage

You’re probably familiar with the story of the young man who lived in his basement and rented out the rest of his home to pay off his mortgage in three years. While it opened up a slew of negative comments about his choices, few in the South Asian community would have batted an eyelid. While the young man did it for three years, many South Asians are guilty of renting out their basements and other rooms in their homes as a regular business. In fact a renter who was out exploring his options was told by one prospective landlady that the high rate he was protesting helped to pay her mortgage. Is this how they calculated whether or not they would be able to afford the house?
If you look at the house listings in cities with a large South Asian population like Brampton and Mississauga for instance, basement apartments with separate entrances are prominently displayed, and for this very same reason. With most in the community looking to buy homes with rental potential, those that don’t offer these conveniences can expect to have fewer prospects.
As the real estate bubble grows larger and a slow economy threatens more jobs, many homeowners and investors are walking too close to the edge. However the fortunes that a few have amassed after quickly capitalizing on the rising prices will continue to lure others to virtually sign their lives away!


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