More Money Podcast - 081 Making a Case for The Wealthy Renter - Alex Avery, Author of The Wealthy Renter

Episode Date: January 11, 2017

Renting is not throwing your money away, and home ownership isn't something everyone has to aspire to. Alex Avery, author of The Wealthy Renter and seasoned financial analyst, shares his insight into why there is a misconception about the benefits of owning a home and why renting might actually make you richer. Long description: To kick off season 4 of the Mo' Money Podcast, I chat with a very special guest about one of my favourite topics — homeownership. Alex Avery, the author of The Wealthy Renter, and I chat about the upside of renting and how homeownership isn't for everyone and doesn't have to be. I've been an advocate for renting for a while, having been a renter myself for close to 6 years. It was the only way my husband and I could afford to live and work in downtown Vancouver and Toronto. If we tried to avoid renting and bought something right away, we'd either be forced to move an hour away or would be chained to a huge mortgage for 20+ years. Instead, we chose to rent and save up our money so one day we could afford to buy without becoming house poor (which we did this past August). These are some of the points Alex touches on in his book too. The idea that renting is the equivalent to throwing your money away is outdated and unfounded. Renting can actually mean more flexibility in your life and more space to save more money so you are richer in the end. For more podcast episodes, check out the podcast page. Show notes: jessicamoorhouse.com/81 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello. Jessica Morehouse here and welcome to season four of the Mo Money podcast. This is episode 81 and happy new year to everyone. 2017, new year, new beginning, new adventure for me. If you have been following me on the blog and on social media, then you know already the big news. I recently quit my day job so I can pursue my own career as an entrepreneur, something I've dreamed about, never thought I could actually take the plunge to do, but I guess I was just feeling a little crazy at the end of 2016. And I'm like, you know what? I've got nothing to lose. Let's do it. Let's go for it. And you'll definitely want to check out tomorrow's episode, episode 82, because I've got a awesome solo episode where I go into all of the details of why I made this big change in my life and all that good stuff. So make sure to check that out tomorrow. But for today's episode,

I've got a very special guest. And we're going to be talking about a topic that's very close to my heart. I love talking about housing and real estate and home ownership. I have got the wonderful Alex Avery, who is the author of The Wealthy Renter. So a fabulous book that's making a case for renting as opposed to buying. A lot of the information that's in the news and just out there is very pro-ownership. You've probably heard the saying, renting is like throwing your money away. Well, Alex would like to retort that and he wrote a book all about it called The Wealthy Renter. And I will also be giving away some copies of the book. So you'll definitely want to check out the show notes,

jessicamoros.com slash 81 to enter to win a free copy of Alex's book. Now, before I get to the interview with Alex, I want to thank BorrowWell for partnering with me for this episode. Did you know that only 14% of Canadians check their credit score each year? Well, luckily, now thanks to BorrowWell, you can check your Equifax credit score for free. And the best part is, and I think a lot of people are always concerned about this when they check their credit score, it will not ding your score either. So if you want to check your credit score for free and not get it dinged, visit bwll.co slash MoMoneyPodcast. Once again,

that's bwll.co slash MoMoneyPodcast. I will, of course, be linking to that in the show notes, jessicanwarrows.com slash 81 in case you didn't get that. So the reason it's so important to know what your credit score is, is having a good credit score can help you with some of the important decisions in your life, things such as paying off some debt, getting a mortgage, or even landing the perfect rental. And it's all easier to do when you've got a credit score that is in a good place. So make sure to take advantage of this freebie at bwll.co slash momoneypodcast. And now let's get to the show.

Thank you, Alex, for joining me on the Mo Money Podcast today. I'm excited to talk about housing with you. Thanks, Jessica. It's great to be here. Yeah. So I'm excited to chat with you for a number of reasons. I kind of mentioned to you before I hit the record button that I wanted to speak to you before your publisher reached out to me because someone I work with actually said that you

had a book coming out and it'd be totally up my alley. And he was completely right. Your book is right up my alley. It is called The Wealthy Renter. And for the past several years, I've been a big advocate about renting and how it shouldn't be considered throwing your money away. It should be considered a good option when it comes to living your life as a millennial in the city when you're focused on so many different things. And so we'll get into all of that conversation coming up. But I just want to say thank you so much for joining me on the show. I'm excited to chat with you about this specific topic because

no one really, you know, the perspective that you have that you wrote for your book about how it can be a smart option to rent instead of own isn't really a popular one. Yeah, it's definitely not conventional wisdom. That's true. And so, but before we get to all that, I'd like to know a little bit about you. So, you know, what is your background? How did you get to this point where you ended up writing a book about this topic? Well, for the last dozen years, I've been a REIT analyst. So I analyze publicly traded real estate companies, mainly ones that own office buildings and shopping centers and industrial buildings and apartment buildings. And, you know, for a few years before that, I worked in real estate valuation and analysis and consulting.

And, you know, about 12 years ago, I joined the bank that I work at right now. And it's one of those things where you have a lot of conversations and a lot of those conversations with people that you've just met, they'll say, Oh, what do you do? And I would say, I work at the bank. And that usually ended the conversation. But for people who had the follow up question, it was always Oh, what do you do at the bank? And I would say I'm a real estate analyst analyst and the first response that 99.9% of people have is should I buy a house? And so over the course of many years, I had thousands of conversations with people about housing and about what drives house prices and whether it's a good investment. And I started noticing over the years, starting about 10 or 12 years ago, that I kept running into people that had the same topics. And so I would write down the,

you know, misconception and then go through the logic and explain why that wasn't the case. And, you know, I thought, oh, you know, wouldn't it be funny if someday I wrote a book about this and, you know, just sort of slowly piled up over the years. And then probably four or five years ago, I got a little bit more serious about it. I ended up getting to about 25,000 words. And I thought, oh, you know, this is actually a topic that I can probably actually publish a book on. And I've always been a big reader and loved books my whole life. And so, you know, it's kind of like that would be pretty cool. And it is pretty cool.

Yeah, I think so. Yeah, it's very cool. It's very cool, especially I feel like it's pretty cool. Yeah, I think so. Yeah, it's very cool. It's very cool. Especially, I feel like it's so important. I mean, I was actually just at the bookstore today and I wandered to the business section where they had all the personal finance books. And I was just looking at them. And honestly, a lot of them are very similar.

They're kind of just spewing the same stuff. And especially if someone who wants to really educate themselves on what they should know from different perspectives, it's like there's not a lot of information when it comes to real estate, real estate specifically, unless you're looking for a book on like flipping houses, why it's smart to buy real estate, how to become a landlord. There aren't any books like yours that are about the pros and why you should consider renting as opposed to home ownership. So I'm glad that you, you know, took a decade to, you know, share this wisdom with all of us.

Yeah, no, it certainly I noticed the same thing. There was a real gap in advice. And really, the only advice that you ever get from your parents and your grandparents and your neighbors and your co workers is, you know, why throw your money away renting when you can buy, everyone should buy. And so that was actually one of the big drivers for me to write this is I felt that, you know, Canadians were being really disserviced by this completely biased one-sided advice. I mean, it's impossible that buying a house is the best option for everyone. It's just not possible.

And yet the advice for everyone is everyone should buy because renting is a waste of money. And the arguments that are used to disparage renting in efforts to promote home ownership are just factually incorrect. Okay, I would love to know why they're incorrect because just like you said, that is the exact advice that I got from lots of the personal finance books that I started reading right out of university. So it was kind of my first kind of look

at what I should know, what's a smart thing to do when it comes to your money. And also that's the advice I got from my parents and just from other adults. It's like throwing money or renting is throwing your money away. Don't do it. You need to, you know, focus all your energy into saving up a down payment so you can buy your first place. And then you're kind of in the clear. However,

lots of those people, I kind of look at them now, you know, as I'm in my 30s, I'm just like, well, you know, that could be some good advice. However, looking at them now, lots of them are house poor or that is their sole investment. And I think that's kind of one of the issues that you address in your books. Yeah, no, it is. And I mean, the probably the most common argument used, which is that, you know, paying rent to a landlord is just paying their mortgage or you're just throwing away your money is it's wrong. And it's actually incorrect. And it's incorrect because, you know, you're just throwing away your money is it's wrong and it's actually incorrect and it's incorrect because you know you're always paying rent everyone is always paying rent and

that goes for homeowners that goes for renters that goes for everyone and you know it's easy to understand how you're paying rent when you're a renter you're paying rent to a landlord in exchange for the right to occupy a space for a given period of time. And I actually think that's one of the beautiful things about renting is it's very easy to understand. It gets a little bit more complicated when people buy houses and they borrow a lot of money. And you'll often hear people kind of joke about it.

You know, I bought a house or, you know, the bank actually bought the house and I'm trying to pay for it now. The reality is that if you buy a house with a big mortgage, then you're paying rent. You're just not paying it to a landlord. You're paying it to the bank in the form of interest because you're paying money to occupy that space. And so when you look a little bit further down the road and you have people who have bought a home and paid off the mortgage and this is one of the little bit more difficult things to understand and i spend a fair bit of time in the book going through this but when you own your own home outright what you're actually doing is you're paying rent to yourself and then you're consuming

that rent and that's a it's a tough concept for a lot of people to understand unless they've taken economics and they understand what opportunity cost is. But what it essentially is, is that if you, you know, in Toronto, the average single family home is over a million dollars. So if you own a home and you occupy it, that you're actually consuming the value of having a million dollars. And a better way to think about that is if you own the home and you live in it, and if instead you moved out and you lived in your neighbor's house and you had someone live in your house and they paid you rent, you could then pay rent to your neighbor. And so the money that the house, the money that the asset could generate is the money that you're paying to yourself and then you're consuming. So if you were, you know, say to, yeah, I mean, it's a little bit of a complex topic to discuss,

but ultimately the opportunity cost or the implicit rent that you're paying to yourself always exists. And when people are envious of people who own a home and they say, oh, you know, what I'd really like is, you know, down the road, I'd like to own a house in Toronto. What they're really saying is I'd like to have a million dollars. And having a million dollars is great. And whether you put that million dollars into a house or into a portfolio of dividend-paying stocks or into some other investment is really beside the point. There's always a cost to occupying space. And so the idea that buying a house is somehow going to make you get to that point is actually a misconception in the sense that what you're actually doing is paying a lot of money over a long period of time into a savings plan.

And the real issue with that is that houses have not actually been a very good savings plan. When you look at the price performance of houses across Canada or even in Toronto, which has been a very strong performing market, they've really lagged the performance of a lot of other investments. But the reputation of housing is that it's a fabulous investment. And the reason that it has such a great reputation as an investment is that it's often the only significant investment that a lot of people accumulate. And because it has gone up over time, people believe that it has been a great investment. And they do a lot of mental math.

So, you know, you'll hear a lot of people say, well, you know, I bought this house in 1990 at $100,000, and today it's worth $300,000. It's been a fabulous investment. If you actually understand how to calculate returns, you'll see that over a 25-year period, that's about a 4.5% return. And people don't really take into account, I think, all the money that they put into the place. It's not like you just bought the place and, oh, it's doubled or tripled in value. It's like, yeah, but how much did you actually put into the place? Most people put a lot of money to renovate, and I think they don't take that into consideration. Yeah, that's one of the big topics that I get into in the book as

well. And the phrase that I use for it is investment creep. And the idea behind that is that investment creep is that thing that happens when you're house hunting, you're going to buy a house and you go and look at a bunch of different houses. And then you're standing in the kitchen of a house with your partner and your real estate agent and you're talking it over and you saw the fixer-upper and the fixer-upper was well within your budget but there was a lot of work that had to be done and then there was another house that you know perfectly fit your budget but it didn't really have everything that you wanted and then you're standing in the kitchen of this gorgeous house that has an extra bedroom so your friends and family can come and stay and the kitchen's been renovated and the backyard's amazing and you're in this great school district

and all of these things that you want in a home only it's 20 or 25 above your budget and one of you looks at the other and says you know what it's an investment and it's not an investment because when you pay 20 or 25 percent more than what you were planning to spend, you're not just spending that much on the house. You're spending that much more on a monthly basis in terms of the interest you're paying on the mortgage. You're paying that much more on property taxes. You're paying that much more on heating and utilities and insurance, and you have to furnish a bigger house. There are so many more expenses, but people do it because they really like having a house, and they like having a nice house.

And so it's not just an investment. It's also a personal item. But it gets into this gray zone where people make all sorts of crazy, crazy decisions. And one interesting sort of analogy is strollers. So a lot of people have young kids, and when you have young kids and you get into the market for a stroller, you'll be shocked. Strollers can be $400, $500, $600, $800.

We have twins, and to get a double stroller, it was $1,000. And they're outrageously expensive and they are not expensive because they are expensive to make. They're expensive because they're for kids and parents are suckers for paying for things for their kids. I mean, you want to have the best thing. And the best contrast to that is if you go to Canadian Tire and try and buy a wheelbarrow for more than $100. I mean, there's a couple that you can buy for 130, 140 bucks. You can't buy a wheelbarrow for more than $200 at Canadian Tire, but you can buy a stroller for $1,000 dollars and they're pretty much the same concept i mean in fact a wheelbarrow is designed to hold four or five hundred pounds whereas a stroller is much lighter than that so once you introduce this you know personal element into expenditures you end up

you know really distorting the way that people look at that uh you know housing it's it's not it's not just an investment but people believe it's a great investment, and then they don't keep track of all the expenditures. And the advice that you get is just really, it's not great. I mean, on the topic of investment creep, what do you think about, well, you tell me, where do you get the best bang for your buck on renovations? Well, everyone says it's the bathroom and the kitchen, right? Yeah. And you know why they say that?

Why? Why do they say that? Because they're contractors and real estate agents. And if you look at the two most expensive rooms in a house, it's the kitchen and the bathroom. I mean, how much money can you possibly spend renovating your living room? Yeah, it's a code of pain, really. Yeah, like $4,000. You can spend $100,000 in a kitchen. You can spend $20,000 or $30,000 in a bathroom.

So these people are saying, you're going to get your best bang for your buck in the kitchen and the bathroom because they're going to do the work for you, and they'd much rather have you spend $50,000 or $100,000 than $2,000. And the worst thing about that is when they say it's the most bang for your buck or it's the best return on your investment, what they're not telling you is that it's a negative return. I mean, if you spend $100,000 on a kitchen, your house probably goes up by $100,000 that day. But it's just like buying

a luxury car and parking it in your driveway. You know, the day you drive it off the lot, it drops by 25% and six months later, it's down 40%. And then the depreciation slows after that. But I mean, the difference between a brand new kitchen and a five-year-old kitchen is a lot. The difference between a 25-year-old kitchen and a 30-year-old kitchen, there's no difference at all. Yeah. I mean, they're both old kitchens. Yeah.

So people don't realize that that investment, quote unquote, that they're making into their kitchen or their bathroom or renovating their house is actually a consumption item. And that's true. It's like, I feel like I just kind of knew that or it was just common sense. It's like, yeah, if you really want to drive the price up on your place that you want to sell, you don't renovate until you're close to selling. You don't want to renovate and then hang out with the place, like the new kitchen or bathroom for like five or 10 years because

then it's going to be dated and people will want to be like, oh, I need to rip up these floors and this tile because it's very old fashioned. But people get sucked into the whole HGTV, Property Virgins, whatever shows there are. And they're just like, oh, I can do it. And believe me, I've been there. I've been obsessed with that channel for years. And I need to stop because you get sucked into this whole thing. Oh, so we could just buy a dump for not that much and then just put some money into it. And then magically we'll be able to, you know, get twice the amount that we normally could. And it's just this whole, it's just a bit of a selling the dream kind of thing, isn't it? It is such a fabulous marketing campaign for homeownership. And, and it's, uh, and I'm,

you know, I love it too. I watch all of those same television shows. It always blows my mind, especially the ones where it's like a 25-year-old single person in some middle America city. And they come on and they're like, you know, I'm looking for four bedrooms, a big backyard, five bathrooms, a brand new kitchen. And my budget's $180,000. Oh, I can't stand those episodes. I'm like, where are they? I want to move to there. That's ridiculous.

Where is that? Like, that's a garage in Toronto. Why are we all living there right now? Yeah, it's mind-boggling. But that kind of highlights how expensive housing is in Canada. And when you look at housing in Canada, it's not just expensive. It's extremely expensive, particularly in Toronto and Vancouver. And in the book, I go through all of the six major markets.

So I do Vancouver, Calgary, Edmonton, Toronto, Montreal, and Ottawa. And it's really interesting. I mean, price to income is probably the best measure of how expensive a housing market is. And the rule of thumb, if you look at markets that don't really have any constraints, so where you can keep building and building in all directions, is that they should be in the neighborhood of three to five times household income. And if they're constrained markets like New York or Hong Kong, you're looking at more like 6 to 10 or 6 to 9, something in that range. And then when you move into a really low interest rate environment like we're in, you can probably move all of those numbers up. So an unconstrained market, you'd be looking at 4 to 6 times.

And for a constrained market, you'd be looking at maybe 7 to 10 or 7 to 11 something like that so today vancouver is at 13 times wow no way really well that's actually not that surprising is it wow it's it's i mean it's up 30 plus percent year over year and that's more expensive than new york it's more expensive than hong kong it's more expensive than any major city in the world. It is extremely, extremely expensive. And Toronto, you know, isn't, I mean, it's sort of in that range. It's about nine times. So it's quite expensive. And then if you look at the rest of the country, it's not actually.

Most of the other cities are between four and, you know, five and a half, something like that. So Calgary and Edmonton, Ottawa and Montreal are actually, there really is no elevated pricing going on in those markets. And it's unfortunate that I live in Toronto and I'm from Vancouver, two of the most expensive cities in this country. So I've just been unfortunately used to this whole, well, I can't, like for years I'm like, I'm never going to afford a place. And, uh, and I feel like I'd still be saying that if I stayed in Vancouver, because it's not just that places are so incredibly expensive and not just in Vancouver proper, but you know, my parents

and my husband's parents, they live in the suburbs about 30 minutes outside. And those houses are in there, they're just houses in the suburbs and they are still going for a million dollars, which is insane. And the thing is, there aren't any jobs there. And that's why we moved away. There just isn't the economy to kind of balance those, the high cost of living out, which is just, you know, really unfortunate. Though I'm curious since, you know, things have been happening in the past couple of weeks, months about changes with regulations. So there's the foreign buyer's tax going in that's come into play. And also now there's the new stress tests that people need to take. What are kind of your thoughts on some of the things that are coming into play now? And do you think they're, I don't know, I'm kind of, I'm personally, I'm glad these are

coming into play because I think something needed to happen because things were just getting out of control. Yeah, no, absolutely. And it's an interesting dynamic, what you're seeing in Canada today. Governments are one of the biggest promoters of homeownership all around the world. And they do it for great reasons. And I go through this in the book as well. There's all sorts of great positive social benefits to homeownership. You find that people who are homeowners tend to go to work more frequently.

They take less sick days. They work a little bit harder, and that's the power of a mortgage because you've got to make that payment. So you find that they're more diligent workers and more consistent and they're less likely to change jobs and there's all sorts of stability things that it brings. But they're also a lot less likely to commit crimes because once you have something really big and expensive that you've worked hard for for a long period of time, you're less likely to mess with other people's stuff because you don't want them to mess with yours. So the governments are huge promoters of home ownership. But if you look in Canada, I mean, we've got policies like you can take $25,000 out of your RRSP to become a first-time homebuyer.

You can't do that for any other reason. You can't take money out of your RRSP. CMHC exists explicitly to reduce the interest rates that homebuyers pay. You've got a capital gains exemption. You can get exemptions from land transfer tax when you're a first-time homebuyer. They are big, big promoters of homeownership. And that's probably the most common source of housing bubbles and housing corrections is government policy changes. You know, the things that happened in the U.S. in 2006 and 2007 and 2008 and 2009

were a direct result of changes to policies and changes to the way that regulation worked for financing of homes. And if you go back to 2002, there's a fabulous speech that George Bush gave to a conference. It was a conference to promote homeownership amongst minorities. And he introduced a bunch of new policies. My favorite policy was this one called the American Dream Down Payment Fund. And the explicit purpose of this fund was to help Americans overcome the number one impediment to homeownership, which was not having a down payment. And so this fund would literally just give out money to people so they could have a down payment so then they could take out a mortgage and buy a home.

And that really undermines the whole discipline of having to save up money. And I just think that that kind of really ruins the whole purpose of homeownership and it puts a whole lot of people into homeownership who aren't ready. But when you take a step back, I mean, government is really player, coach, referee, cheerleader, and fan in the game of housing. And so when you think about how the market works,

they control everything. So when the market starts to get out of control, it's because they haven't been monitoring it or regulating it properly. And then when governments find that they're in a situation like that, they will often not have a full appreciation of the magnitude of the impacts of the changes that they make to try to bring things back under control. So it is really interesting. I mean, a lot of the changes that they've made recently, you know, it's entirely possible that the ones that they announced a couple of weeks ago may

actually tip the market, and we might see a correction here. But the hardest thing to tell with the housing market is what it is that will tip the market because it's a lot different than a lot of other markets the number one driver of house prices is sentiment do people believe that house prices will go up because as soon as people don't believe that house prices will go up no one will buy a house yeah and it's true it's so funny that you mentioned that because so me and my husband, we moved to Toronto three years ago. And after about a year, we started looking to buy an actual house because on MLS, it seemed like we could actually afford something compared to prices in Vancouver. And so we thought, okay, if we have like 500,000 or 550, we could probably actually buy a little house. And then we actually looked for places and then we realized actually the list price means nothing anymore because everything is a bidding war and everything was

selling for $100,000 over price. And so we just stopped, took a break for a couple of years and then started looking again, but more for the townhouse condo. But just when we were just in that situation, it was just insane, just the sentiment. Everyone kept on talking to us about how, oh, housing prices are going to continue to go up. Historically, they always go up. And it's like if you don't buy now, you'll never be able to afford. You won't ever get into the housing market, so you better buy now. And it's just this terror factor that if you don't buy now, you're going to make the worst decision of your life.

And I always knew in my gut, I'm like, well, that's not right. Like that's just – we're all kind of drinking this Kool-Aid. But so I'm hoping something will happen because we've been in this kind of mindset that this is the – not just like the smartest decision, but this is the only investment thing that you can do for yourself if you want to set yourself up for success. And I think that's just like, it's not right. I believe as a millennial, especially if you want to have flexibility, travel, have choices and options, renting makes the most sense and then investing the difference is the best policy. That's exactly why I wrote The Wealthy Renter. I mean, the advice out there

is so one-sided, it's so absolute, and the people who, you know, share it with you are so adamant that they are right and so adamant that there is no other way. I mean, I describe it in the book as a cult, and it uses fear and it uses all of these really nasty tactics to push people into a decision that they're probably not comfortable with. And it's a decision that sometimes involves leverage of 20 times your down payment. If you put 5% down, you're borrowing another 19 out of $20 that you're going to be spending on the house. And again, house prices are higher today than they have ever been relative to incomes. Canadians have prices are higher today than they have ever been relative to incomes. Canadians have borrowed more money today than they have ever borrowed in the past.

Interest rates are lower than they have ever been in Canadian history. This is the perfect time to be talking about renting as an alternative. Real estate has a very, very long cycle, and it's only after house prices have been going up for 25 years without a significant correction that everyone starts to say things like, oh, house prices always go up. Don't worry. They always go up. sold in Vancouver, I mean, you're not talking about a house purchase that you can pay off in 25 years because if you're borrowing that much, 13 times your average income, you're paying half of it in taxes. So it's really 26 times your take-home income.

And then on top of that, you still have to pay for food and clothing and you have to pay for your utilities and your property tax and your maintenance and everything else. So to pay off the purchase of the house, I mean, that could realistically be a 75 or 100 years of your savings potential. And so really what it is is it's speculation that house prices are going to continue to go up. When they're at 13 times, you start to actually choke off the economy because people can't find jobs they can't afford to live in the city i mean they call it the exclusion effect where you know the the barista at starbucks starts making 40 an hour because they can't get people to work at the starbucks because people, like, you have to take a train in for an

hour to get to a place where, you know, you can find a house where you can afford to live on $40 an hour. I mean, that becomes really economically inefficient for a city and very, very high house prices end up undermining the economy. So what do you kind of wrapping up here, what do you kind of foresee will possibly happen the next five to 10 years? Just your personal opinion. Yeah, I mean, in real estate, every market is a local market. Real estate is a local market business. And so I mean, if you want to talk about individual markets, Vancouver is extremely expensive. There are all sorts of dynamics like foreign buyers, which, you know, is very difficult to prove, but I absolutely 100% believe is a huge factor in house prices in Vancouver. So, I mean, really, if you want to call

the Vancouver housing market, you have to understand the capital flow coming out of China and whether or not there are changes that take place in policy in China that reduce that or increase that. What happens with government policies in Vancouver? I'm not a big believer that the 15% foreigner tax is going to have any impact, but I don't know. Well, I mean, it's very difficult to enforce and there's all sorts of ways to get around it and for the people who are funneling money if you have a hundred million dollars and you're in china and you want to basically have a second home and a second citizenship you know 15 isn't very expensive so it'll pay it it's not a big deal yeah um and we don't know enough about it to really understand what the dynamic is there,

but that's an extremely expensive market, and it's extremely difficult to figure out what's happening in that market. So that one is one of my favorite markets where people should be renting, simply because there's so many difficult to track down factors. The Toronto market, the reason that it is so much more expensive than it's ever been is because we introduced a green belt around the city in 2004 and 2005. And that basically took what was an unconstrained market and made it a constrained market. So Toronto is functionally a large island now and so you know it has all the makings for a very

expensive housing market like vancouver you know very land constrained um but it's only trading at nine times income which is expensive but it's not off the chart so i think probably you know single-family homes in toronto continue to be very expensive whether they go up or down i don't know but i think they're going to continue to be expensive. And then the other markets are, you know, Calgary and Edmonton are a function of the energy economy and whether there's a lot of investment that goes on there. Ottawa will be a stable market. It always is a stable market with lots of government jobs. Montreal is still pretty cheap. Actually, I think Montreal is one of the more attractive markets so i was always curious actually like when we were deciding where to move or even just to invest in property we were looking

at montreal because it is very affordable like i know people my age that own houses and it's not a big deal but it also kind of seems like there aren't a lot of jobs or the economy isn't as strong as say toronto and that's that always kind of scared me off. Yeah, no, there's lots of government involvement in the economy there. Population growth is slower than it is in most of the other major markets, but it's a pretty steady economy there. And it is an island. It's an island, too, which I think has a really positive dynamic. It hasn't really factored into house prices yet, but I do think that that's pretty good.

But again, I mean, buying or renting, and I don't want to sound like I'm anti-home ownership because I'm not. What I am is anti-biased advice. if I could give one message through the wealthy renter, is that the advice out there is so biased that it's very difficult to understand housing, and the best defense against biased advice is education. So I just hope that Canadians take the time to read the book, understand as much as they can about housing, appreciate who they're getting all of this different advice from. I mean, real estate agents can be fabulous when, you know,

you're trying to buy a house in terms of them helping you find houses and evaluate houses, but you shouldn't be listening to them if you're trying to decide whether or not you should buy a house because they're always going to tell you to buy a house. It's like going to a car lot and ask a car salesman if you should ride the bus or buy a car like he's going to say some terrible things about riding the bus so yeah so yeah i mean i think really um the advice is biased and you know renting is not a bad thing understanding more about home ownership i think is important debunking a lot of the

common myths about homeownership, which I do in the book, debunking a lot of the common myths, which are usually detrimental about renting. You know, that's another thing that I do in the book. Like it's, I'm just trying to balance out the way that people think about housing and help get people educated. And, you know, when I wrote the book, it's funny, we were talking about this at the beginning. I was a renter and my wife and I had been renters for years and years and years and years. And then about five years ago, we bought a house. And when I ultimately ended up publishing the book,

I remember thinking like, well, this is going to be a problem because I'm a home ownership and people are going to say, well, you know, why should we listen to him? He's not even a renter himself. But I think that that actually adds credibility to the argument because I'm not, you know, I'm not out at one pole saying everyone should rent or out at the other pole saying everyone should own. Because I don't think it's that simple.

I think home ownership is like prescription drugs. There's no one prescription for everyone. Everyone has their own needs, their own concerns, and those change over time. So even for the same person, you might need to be a renter at one point, you might need to be an owner at another point. There's no absolute rules. So I just hope that, you know, people understand what it is they're getting into, they don't succumb to the pressure to become a homeowner, you know, on a highly levered basis, right at a high point in the cycle, which, you know, I think today is a great time to consider renting as an option. No, you bring up some really good points. And I know I was before we did this interview, I looked at some of the other interviews you've done on TV and it seems like they always bring up, but you own a house. It's like that doesn't that shouldn't be, you know, disqualify all of the great information that you're giving. It's like, you know, I and I felt the same way. I've been an advocate for renting for years and I just bought a place and I felt financial sense for us. We could afford it. We didn't buy a place when we really couldn't afford it, which was, you know, I think I would have felt really bad if we did buy a house when we were originally looking because those were way outside of our

price range and it wouldn't have been a good financial decision. So just like you said, it's, you know, buying a place or renting, it's very personal. And so you have to make the right decision for you and your circumstance and what you want and your goals. And I hope a lot of people – I know I'm going to tell everyone I know to read your book because there's kind of nothing like that out there, and I think it's definitely a good read for millennials trying to figure out whether they should rent or own or what's the right thing they should do because I think a lot of the information we get is just, you know, buy now before it's too late. And that's not the only argument out there. Well, and I like to say to people, you know, Vancouver was up 37% this year. Toronto was up 23% on single family. I mean, if those markets can go up 37% and 23% in one year, they can go down 37% and 23 percent in one year they can go down 37 and 23 percent in one year and if you can't afford to lose that money then you really have no business being a homeowner and if you

want to become you know wealthy and like i say in the title and choose housing that will make you rich if you want to get rich there's much better ways than becoming a homeowner i agree i agree so thank you uh alex for chatting with me and letting me pick your brain and sharing all your wisdom with me. I really appreciate it. And that was episode 81 of the Mo Money Podcast with the wonderful Alex Avery, the author of The Wealthy Renter. Make sure to check out the show notes for this episode, jessicamorehouse.com slash 81, to find out some more information about Alex, his book, and of course, enter to win a free copy of his book, The Wealthy Renter. You will not want to miss it. It is a very good read.

And of course, a big thank you again to today's episode sponsor, BorrowWell. Now, BorrowWell is being awesome and they're doing something really great to help everyone figure out their credit score. So if you would like to figure out what your Equifax credit score is for free, you can do so by going to bwll.co slash momanypodcast. I will link to this in the show notes to make it super easy for you. And you can find out your credit score for free. And the best part is it will not ding your score. So why aren't you doing it right now? Like why not? It is a great opportunity, great freebie for this episode. So again, check out, uh, you know, bwl.co slash momenty podcast to find out, uh, your Echo facts credit score for free without digging your score. Thanks to BorrowWell. And again, don't go too far because I have a new episode for you tomorrow, a solo episode to talk about my new life adventure as an entrepreneur, self-employed freelancer. Never thought I would ever say that. If you've

been following me since the beginning of this podcast, and you remember that episode, I interviewed my husband who's been a freelance for over 10 years. I'm pretty sure I said on multiple occasions in that episode, I could never be self-employed. Not going to happen. Well, never say never, clearly, because here I am on this new journey and I talk about why I'm doing it. What am I actually going to be doing as my own business, how am I going to be making money, what does this all mean, and yeah, all that stuff. It's a bit of a good episode, I've got to say. I really like it. So definitely come back here tomorrow to listen to that episode, which is episode 82. Yeah, I guess I'll see you guys tomorrow and uh have a wonderful day this podcast is distributed by the women in media podcast network