April 27, 2015

How I Dodged a Bullet by Not Buying a House in Toronto

I’m Jessica and I’m a money expert, speaker, Accredited Financial Counsellor Canada®, host of the More Money Podcast, and am currently writing my first book with HarperCollins Canada (2025).
Ready to Take Control of Your Money?
Sign up to access my entire free resource library
let's do this
Debit & Credit
Estate Planning
Making Money & Careers
Saving & Budgeting
About Me
Early Retirement
Financial Independence
House Hunting
Life After Graduation
Life in Review
Making Money
Money Management
Moving Out
Rewards Programs
Saving Money
Side Hustle
Student Life

Remember all those months ago when I was so gung-ho about buying a house in Toronto? My HB and I got pre-approved for a mortgage, we got ourselves a realtor, and we dedicated what seemed like all of our free time to looking at listings and participating in bidding wars.

Before we started looking, we were adamant that this was the right time to buy. Average house prices in Vancouver topped a million bucks, but you could still find a nice bungalow in Toronto for under $500,000. Or so we thought.

Once we actually started looking as serious home buyers and not just browsing MLS, we found out quickly that the list price and the selling price of a home were two very different numbers. For example, one house we saw was listed for $489,000 and sold for $625,000. After almost two months of house hunting, we realized that this in fact was not the right time to buy and decided to end our search.

Related Content

That was back in February, and two months later I am so glad we called it quits. During the whole house hunting process, we were both incredibly stressed out. Because Toronto’s real estate market is so competitive, with every house we saw we felt pressure to put an offer. Even if we didn’t really want the place.

There was a lot of “Well if you don’t bid on it, someone else will.” And of course, several other people would bid on it and it would sell for well over asking within a matter of days.

I was honestly hoping that the housing market would calm down in time for summer and we could restart our search. I mean, it’s unsustainable for housing prices to keep going up, up, and up!

But alas, because interest rates are staying put and home buyers are paranoid that if they don’t buy now they’ll miss the boat, people are still willing to become house poor for a chance at owning instead of renting.

Remember my crazy bidding war experience? I remember telling my friend Hiroshi (a realtor in Vancouver) about it not too long ago and he said he never heard of anything like that happening on the West Coast.

Well, I think the West Coast just needed a few months to catch up because bidding wars are par for the course there too now. I talked to my mom the other day and she told me home down the street from her got 17 bids and sold for over $100,000 over the asking price.

The crazy thing was it wasn’t anything special. It was an older two-level house close to a school. But it wasn’t immaculately renovated on the inside or anything. It was just a house on a piece of land and home buyers went absolutely crazy for it.

So I guess our break from house hunting is going to extend until at least next year. I still really want to buy a house, or maybe even a condo or townhouse, but not if it means buying in a market like this. If there’s one thing I do not want to ever be, it’s house poor.

I’d honestly rent for longer than I’d like for the security of knowing that if something ever happened to my HB or myself (sudden illness, loss of job, whatever), we’d be financially okay.

I don’t want to rent forever, but at this very moment, I honestly feel like we dodged a bullet by not buying a house in Toronto right now. When the time is right we’ll start looking again, but right now I’m loving the freedom of not being tied down to 30+ years of debt.

Disclosure: Nothing on my website or affiliated channels should be considered advice or an endorsement, and some content may include affiliate links in which I may earn a commission at no extra cost to you. Please read my disclaimer to learn more.

add a comment

  1. Petrish @ Debt Free Martini says:

    It’s great that you both can agree what is best for you at the time. I don’t think anyone should ever rush into buying a home, or buy something that they are not truly happy with. Its better you both save up more money and not be house poor than take on such a heavy burden and have regrets. Good luck!

  2. Cait Flanders says:

    I’m with you, girl – just thinking about buying stresses me out. I will say, i think we are smart to wait. I don’t think we’ll see a crazy 30% correction or anything, but I don’t know how much longer the market can continue to operate the way it is now… and buying just because we’re scared we’ll never find that “perfect” house or deal again just seems like a bad idea all around. More to discuss next week, when I’m in TO!

  3. Keaton says:

    We bought a townhouse close to transit in Vancouver a few years ago. Could’ve bought a house but went cheaper instead. Our lifestyle is such that we don’t like living in a big house and most big houses are in car dependent areas. We instead invest in stocks and ETFs that spit out 35k a year in dividends. Our net worth is 1.5 million (I am 35 my wife is 31). We have one paid off car, which saves us at least 20k a year to invest. We take transit and bike everywhere.

    Moral of the story is, there is irrational exuberance right now in the real estate market. You can still invest in stocks to “keep up” but in many cases beat the real estate market with less risk. I say less risk because in real estate you usually leverage, and leveraging can be risky. Ignore broad market dips because the market always comes back. Instead let the buyers subsidize your lifestyle.

  4. Christine Weadick says:

    Talk about timing!! Just finished reading the article that Kerry K. Taylor wrote for the Globe about million dollar houses in Toronto on her Squawkfox blog…. Definitely worth your while to read. Enjoy…..
    Prices are sure crazy in Toronto and Vancouver!!! Good luck in what ever you decide to do and where ever you go….

  5. Anum says:

    I’m glad you guys dodged a bullet! We’re waiting for the housing market to calm down in our neighborhood too. I’m still sticking to renting precisely for the same reasons that you mentioned. I completely agree that being house poor is the worst.

  6. Kenny Schneider says:

    You are very wise to not buy. I am an agent in Tennessee and prices are CRAZY right now. It’s definitely a sellers market here, and it sounds like the same in Toronto. The other day one of my buyers came to the same conclusion that you did. Prices were too high for him, so they’re going to rent for at least another 6 months before looking again.

  7. Will - First Quarter Finance says:

    Get on one of those house hunter shows on HGTV! They are always house shopping in Toronto! Then you can wear a shameless t-shirt promoting the blog! 😀

  8. Bridget says:

    Toronto real estate market is BS.

    I legit can’t wrap my head around the ludicrous bidding war thing… and Krystal told me that is happening in BC now too. Insanity. I’m afraid Calgary is next which is making me wonder if I should get in now or stay on the sidelines a bit longer (I’m still convinced housing prices will fall further here, as long as oil stays down)

    I think you dodged a bullet as well. Renting > Owning in Van, TO, and Calgary for now.

    • That’s a tricky one. It’s awesome that Calgary housing prices are falling, but who knows how long they’ll keep falling or if they’ll suddenly start rising? Listen to your gut, that’s all I’ve gotta say.

  9. Michelle says:

    You’re smart to wait, the housing market is absolutely insane. When a house is 8 to 10 times your income, there’s a problem with the universe. I don’t see how this can go on and honestly low interest rates mean jack when you’re house poor times three. People are being blinded by the super low rates and forgetting all common sense that they ultimately can’t afford it and are putting themselves in a very precarious financial situation. I’m keeping my butt out of this swimming pool and my next step will be to rent unless house prices drop dramatically.

  10. Rob says:

    Yes Jess, as I’ve commented in the past, now is not a good time to buy a reasonably priced house, especially here in Toronto as well as in Vancouver’s overheated housing market..

    Here’s another way to look at things – from a current homeowner’s perspective – mine. My house must be getting close to the $1 M mark but I’ll not rush to sell it simply because:
    (1) I’d have to then go look for another overpriced house to live in (even if it’s downsized).
    (2) There is no way that I’d pay $50 K in combined Real Estate fees
    (3) Likewise, there’s the Land Transfer Tax – over $32 K
    (4) Not to mention, the other costs for moving, buying new furniture / appliances / etc. etc etc.
    So it’s no wonder, sellers are not rushing to sell, resulting in a supply/demand housing problem.

    As far as housing corrections are concerned, it will eventually occur – maybe greater than anyone expects (and that will spell big trouble for those who today buy overpriced Real Estate and later are stuck with mortgages much greater than their housing values). Look in 2008 in the US. Lots of f0lks walked away from their homes, left the keys behind on the table for the bank to foreclose. Since then fortunately the US housing market has “slowly” started to recover but you can still get a fantastic bargain down in Florida right now (as my BIL has told me).

    So when is the “right time” to buy? My answer – don’t just check the housing market but monitor the entire economy. Canada is way overdue to for a cyclical significant economic correction. In the meantime save, spend wisely, and watch for good quality investments to buy when the fun begins. Like the Warren Buffets of the world say: “Buy low, sell high”. Housing is not low right now but, if one is patient, one day it will be and then you will be very grateful that you had waited.

  11. The market in Toronto is insane. G and I have been dipping our toes into the house hunt, which seems silly considering how much it ramps up over the spring. We went to two open houses in the late winter, and the first one had a lineup of about 20 people before it even started… We recently tried to go to an open house a few weekends ago. We pulled up to the house what should have been an hour into the showing, and there was a SOLD sign plastered on the FOR SALE sign out front. I think it sold before the open house even started…

  12. Samantha @ LifeOnCredit says:

    The RE market in Toronto is hugely overpriced. here is a listing in North Toronto, that came out at $1,388,000 a week ago and now is reduced to “only” $1,318,000:


    Houses like the one above were going for mid-800s 3 years ago. In retrospect I would say that 3-4 years ago was a great time to buy in Toronto (I thought RE was overpriced at the time), however now is definitely time to sell, before things get ugly.

  13. Samantha @ LifeOnCredit says:

    I know Jessica, it’s beyond belief! Nobody knows when this insanity will stop, but once it does there will be a couple of tough years for the Canadian economy while RE values fall. Once the correction is over nobody will want to touch real estate with a ten-foot pole, and this will be a good time to buy again 🙂

  14. Buying real estate says:

    I’m happy you all avoided a projectile! We’re sitting tight for the lodging business sector to quiet down in our neighborhood as well. Despite everything i’m adhering to leasing exactly for the same reasons that you specified. I totally concur that being house poor is the most exceedingly bad.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.