How Can Anyone Afford a New House Here?

House recently boughtMy sources suggest that a local retailer recently bought the Blue Shores house shown on the right, paying more than $100,000 over the asking price, for a total of $1.15 million

By my standards, that’s a helluva lot of money. Where would anyone working in retail get the funds to buy and maintain a home that sold for that much? I did some rough calculations.

The minimum down-payment for a house selling at more than $1 million requires a $230,000 (20%) down-payment, plus another $19,000 in land transfer tax, legal fees of around $1,000, plus title insurance of $1,150, you’d need at least $251,150. Not to mention the home inspection fees of $300 to $500, plus appraisal fees of around $300. Plus the purchase of a Condominium Status Certificate: $100. Let’s say we’re at $252,000.

Plus there is HST on all legal fees and other services. And potentially other costs in title search and so on. Then there are the costs of moving or any new furniture required.

Let’s round it up to $255,000 needed upfront. That’s just getting started.

On a 25-year mortgage, at the lowest rate (2.08% if you have the best credit rating), the monthly fee is $3,931. Plus there’s the mandatory “insurance” premium on a “high ratio” mortgage loan (the CMHC — Canada Mortgage and Housing Corporation — fee) of 2.40% on an 80% of sale price mortgage. That would put the monthly mortgage payment to roughly $4,000.

Plus you have to pay property taxes of at least $958 a month (and possibly as much as $1,200 a month). Plus the condo fees for Blue Shores ($325 – $375 a month). The total is now at least $5,300 a month.

Even if you have a perfect credit rating and can wheel and deal for a better rate, the monthly total is still more than $5,000. And we’re not even adding in the monthly phone, cable, utilities… and, of course, vehicle costs, food, internet, streaming services, and all the other necessities.

Buying and living in this home would be very expensive. You’d pay a minimum of $6,000 a month, or $72,000 a year. Or even more if your property taxes and other expenses were higher. And that’s just making ends meet: no luxuries, no entertainment, no second vehicle, no filling up the wine cellar.

More interesting is that I was told the person who apparently bought it seems to be in a legal battle with an ex-partner and they are asking the courts for financial support from that ex ($1,000 a week, I’m told). And while in court, their bank accounts are tied up in trust while the case works through the justice system. And possibly their chattel (furniture) is in legal limbo, too. So where did the money come from?

Who in retail has that kind of money? I sure wish I had it when I had my own business here. If we hadn’t bought our home more than 30 years ago, we’d never be able to afford one here today.

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