mrfusion as in General Fusion? Or Andrea Rossi ecat?
So timing and a bit of luck. I could not afford to enter the Vancouver housing market today.
When they speak about the percent income required to own a house in Vancouver, they only speak about first time home buyers entering the market today. The housing costs for current owners who have been in the market for some time (like me) or current owners selling and buying are not as high because their starting mortgages were much lower and they have lots of equity for a down payment.
But I do sometimes feel the pain of people trying to enter the market or renters. For example, I’ve had a couple great job offers in the SF bay area in the last few years, but I turned them down because the cost of renting would have eaten away more than the salary increase. I was not willing to sell my house in Vancouver to remedy this (i.e. have a big down payment for a house there).
> I don’t count house equity in our extreme retirement plan, as far as I am concerned, it will be icing on top of the cake.
If that turns out to be true, you are doing very well indeed with your saving. For typical income in Vancouver vs typical housing price (and even in other parts of Canada, but to a lesser extent), your house is the cake and everything else is a rounding error. There is a vast net worth chasm in this country between those who purchased before housing started going nuts vs those who did not, regardless of your saving level.
Housing has gone up nation-wide, but not everywhere is nearly as crazy as the major urban centers (Vancouver, Toronto, etc). For mid-sized cities or smaller, I don't think the gap can be called a "chasm".
if i sold my house today and found a place to rent for the same housing costs, we would only have to work 4.5 years before "retiring" (work by choice, earn enough interest to cover expenses) compared to the 10 to 13.5 years I mentioned above.
but i don't want to sell right now to "retire" earlier. my kids are still young and in school and we love our place. We can walk and bike almost everywhere. My current job is still interesting. If things change (jobs, health, etc.) then maybe I would sell and move.
My prediction is you'll find holding turns out to be a wise financial move as well, I think another doubling of housing (houses, not condos) prices will happen, within 10 years if not much sooner.
sure there are extremes, one should be making a multiple above the poverty line. but if you assume this is the case, then how much you make can either be translated into earlier financial freedom through an increased savings rate or "nicer things".
here is an ouput of my simple retirement calculator:
https://drive.google.com/file/d/0B8k8RO7VeaIbc0JlUExLZmktSkE...
Sorry, just a little bitter that I lived below my means and actually saved, unlike those who stretched dangerously to buy as much house as possible, and essentially won the lottery in the process.
We save 48% of our take home pay, so spend 52%. We live the extreme early retire lifestyle, not for everyone. Some extreme early retire people would laugh at our savings rate (only 48%!).
The breakdown of the 52% spend is
- 27% goes to housing (mortgage, property taxes, house insurance)
- 5% goes to fixed costs (car insurance, life insurance, internet, cell phones, utilities, Skype phone, Netflix, VPN service, etc.)
- 20% goes to variable costs (groceries, gasoline, supplies like toilet paper, light bulbs, entertainment like restaurants, bars, movies, sport league fees, etc.).
I know variable costs are big, but we only loosely keep track of this. We control it by only allowing ourselves so much spend cash per month for these variable things and we stick to it, if we get low, we don’t do it or we have a serious discussion. We’ve tried to lower it more, but this seems the right level for our lifestyle.
I know I know, we own a house in Vancouver. Hey, we bought fixer upper years ago and got lucky with the market. I don’t count house equity in our extreme retirement plan, as far as I am concerned, it will be icing on top of the cake. Our only debt is mortgage (student loans paid off, 1 car that we paid cash for).