How House Prices Influenced Our Real Estate Budget

Estimated reading time: 15 minutes

Make informed decisions about house prices. Learn how to navigate the real estate market and purchase a home that suits your budget and sanity.

House Prices Are Only Part Of Home Ownership

Everyone knows that house prices have not just burst as expected.

Instead, they have exploded and kept rising, meaning first-time buyers and graduates struggle to enter the housing market.

Living in the Greater Toronto Area (GTA), I’ve seen some of Ontario’s most expensive real estate.

Back in the UK, house prices were and still are astronomical compared to what you can buy in Canada.

I was never one to complain about house prices in Canada until I started earning a paycheque, and life in Ontario kicked in.

When you are a tourist from out-of-town, where the money is practically worth double and house prices are high, it’s easy to get excited about the prospects of owning a home.

Although I didn’t struggle to sell my house in the UK when I moved to Canada, the current owner has struggled for years to sell because no one can afford the house prices.

So many houses are on the market; the same goes for Canada.

Come March, every year, signs are popping up all over the neighborhoods with the snow barely melted.

When we bought our home in 2009 for $265,000, that was far under the amount our mortgage company allowed us to borrow.

House prices at the time crashed along with the stock market, so we quietly slipped in while we had the opportunity.

This window of opportunity did not last long, as house prices started to creep back up within the next six months.

Just 5 years later, we are mortgage-free and not contemplating moving at this time because house prices are very high.

Truthfully, we won’t get much more in a house apart from possibly another mortgage.

We will only move from this expensive city to a smaller town or the countryside.

House Prices Vs. Our Budget

Something is out there for everyone looking to buy a house, but the worst thing you can do is let house prices take a back seat to reality.

There are more properties for sale than ever, and I’m betting many people struggle to keep up with the bills of owning a big house.

With so many new housing developments, buyers rush in to get a new house, even if it’s the most expensive real estate.

Buying a house at the top of your budget range is a HUGE mistake, in my opinion, but that doesn’t stop people from becoming house-poor on their agenda.

It’s simple math, but for those who care more about how other people will view your new investment, get ready to sink or swim if something should happen in your world.

Follow House Prices To Understand Trends

Mrs. CBB and I always follow house prices, especially in our current neighborhood, since we like it around here.

A 1600 sq ft house on our street just sold for over $500,000, and it was purchased five years ago for slightly over $300,000.

Other homes in our neighborhood are much more expensive, up to $1.3 million, as they are bigger but don’t necessarily sit on as significant of a piece of land.

If you want to get into an all brick decent built house with over 2000 sq feet, expect to pay in the high $600,000-$million dollar range.

For a cookie-cutter home, you can squeeze it with just over $500,000.

You get what you pay for, so it’s important to follow real estate trends in your area.

Not Jumping Into Home Ownership Feet First

Current house prices pushed this frugal family back because we didn’t want another mortgage for a few hundred square feet for the perks we gave up as first-time buyers to safeguard our finances.

When looking at houses to buy, house prices greatly influence our decision-making process.

I remember looking at houses for $199,000 at the bottom of our real estate budget range to see what we could get.

We didn’t want to get in over our heads, and rightfully so because we were starting our careers or, shall I say, starting over since I was a new permanent resident in Canada trying to pave the way.

Being realistic about our wants was what we had to do, which is challenging for those buyers who have blinders on and want it all.

Sometimes, all it takes is real estate marketing, house staging, and someone to motivate a sale.

Before you know it, you’ve bought yourself a house even though you’ll be living tight with your money.

If you plan to have kids, you’re just asking for trouble.

Your income may increase, debt decrease, or increase, but predicting the future is a deadly mission to gauge current financial availability based on future improvements in income levels.

Let your decision(s) be the only influence when making an offer on the house.

We knew we would find our house, but we may have to give up things like a triple garage, finished basement, land, custom-built house, or a dated house.

Millennials and Gen X to which we belong are home buyers who want flashy and modern, and with high house prices, a realistic budget would squeeze them into an older fixer-upper, new townhouse, or condo.

When we bought our house, we had a $80,000 down payment and found out how much our mortgage would be.

I was still stunned at the high costs of owning a home.

We got lucky, though, and if it had been any other year, we would have paid far more to buy a house.

Today, home buyers face even higher house prices, and we couldn’t imagine what first-time home buyers are paying to own a home.

I don’t think we would buy a house in the city we live in today if all we could afford was a condo or townhouse.

Nothing is wrong with either, but we prefer owning a fully detached home.

This was why we opted to rent a room until the time was right, and our down payment was reasonable enough to get us the detached home we wanted.

Buying A House Using One Income

Although Mrs. CBB was earning more money than I was then, we decided to budget our expenses on one income, which was mine at $15/hr.

Back then, it was low, but it made sense to us just in case something happened.

It was a massive consideration if Mrs. CBB got pregnant and went on maternity leave.

What if one of us lost our jobs or got injured?

Shockingly, Mrs. CBB lost her job due to downsizing and now stays home with our son.

This is fine now that we don’t have a mortgage, and I make far more money than I did in my new grad days.

Times are tough, but they can get better.

We didn’t use an actual budget either.

Numbers were scribbled on paper to ensure they’d work, and we used an online mortgage calculator.

We don’t recommend that today as we could have made some big mistakes due to budget miscalculations.

I suggest creating a test budget that includes a mortgage and expenses to see if it’s feasible.

It wasn’t until 2012, when I started Canadian Budget Binder that our budget came to life.

We still use that budget today and offer it to our fans for free.

We know that it helps us and hope it can help others without the added cost of paying for a simple Excel budget from other websites.

Benefits Of House Prices Below Your Budget

Have you ever driven by a house and asked yourself who on earth would buy that house?

The realization is that almost every house will eventually sell as there will always be a buyer.

Every buyer has a budget, meaning they may purchase the home on a hill or with a sloped driveway, no back garden, etc., because that’s what they can afford.

Sometimes, you must give up the extras to enter the real estate market.

Not everyone gets hung up on must-haves in a home, especially if they want to be in the housing market.

There’s nothing better than knowing that you will be fine financially if something were to happen.

You can’t put that stress relief on the likes of a house, which can bend your budget from a month to a month waiting for pay to be deposited.

It’s not a fun place to be.

If you can’t afford a house with a reasonable down payment, rent until you can.

Run the numbers ten times to ensure you have the safe numbers in a budget with one income.

This is what we did.

There is no rush to buy a house, ever.

Related: Buying vs. Renting

Housing Prices And Affordability Perks

When you buy a house that your budget says you can afford without being house-poor.

• You get a house you can afford on one income if you are a couple or less than if you are a single homeowner.
• It costs less to maintain a smaller house than if you had bought a bigger one with a lower bill.
• You have less financial stress depending on your other debts.
• Paying your mortgage off faster is possible because you can save more.
• You enter into a housing market that quickly sells because of affordability.

Getting Into The Housing Market In Over Our Head

If we had gone the whole nine yards with house prices back in 2009, we would have seen ourselves in a house that would have cost us up to $800,000.

Given our financial situation and income level, this is what the mortgage lender was willing to lend us.

For a young couple, that money sent visions of the “good life” running through our minds.

Thankfully, we didn’t get caught up in what could have been a bad scenario.

Had she lost her job months after buying the house, which meant we would have had to pay for a mortgage of $800,000-$80,000= $720,000 @3.95 % interest (our interest rate at the time), 5-year fixed rate, 25-year mortgage on my $15/hour wage. YIKES!!

Mrs. CBB wouldn’t have been able to stay home with our son either, which would have meant daycare costs, increased clothing allowance, a second vehicle, an insurance premium hike, and a higher budget for gasoline.

When Life Falls Apart At The Seams

The devastation of job loss shortly after buying our first home as a couple had a direct impact on my wife, too, and with that came guilt.

Even though we still had emergency savings that would have seen us through for a year or two, we could not have kept a house that expensive without making extra money.

This likely would have stressed our marriage and, overall, just wouldn’t have been a smart move for us as a couple.

That doesn’t mean it would kill us. It just means things could get rocky.

Couples who fight about money and then divorce because of it either have too much debt or don’t know how to say no when spending money to work on the issue.

Money is undoubtedly a relationship killer when there isn’t much to go around and the debt is out of control.

Related: How to make money fast without going up the wall.

Base Real Estate Affordability Differs For Everyone

We advise letting house prices influence your real estate budget but don’t go overboard when it comes to stretching the budget to the max.

Don’t listen to what your real estate agent tells you that you can afford just because the bank will give you a high mortgage, either.

Once the buy and sell transaction is done, they walk away with their commission, and you have to pay the bills, not them.

The last thing you’d want is to be stuck in a situation like the above and possibly lose everything you’ve worked so hard for.

Discussion: How did house prices influence your decisions when shopping for real estate?

Please Leave Your Comments Below.

Mr. CBB

Saturday Weekend Review CBB

This week, I could squeeze in a few trips to the park with Mrs. CBB and our son, which resulted in one dirty little piggy.

Our son has a new-found passion for swimming in the rocks, sand, and wood chips.

You wouldn’t know he’s only coming up for 20 months old the way he rips through the park alone.

He adores it, and I will see plenty of trips there this summer.

I did manage to put fertilizer on the grass this week and organize more of the garage, although I have much more to do.

I also need to sand and seal the deck again this year before I put out the deck and sunroom furniture.

In the next few weeks, I’ll put grass seed on the lawn to keep up with the lovely grass we’ve been fortunate to have over the past three years.

That being said, I’ve been working on my professional resume, so hopefully, I’ll have some good news in the upcoming month.

Fingers crossed.

Posts Published This Week On CBB

If you’ve missed any of my blog posts this week, I will share them all below.

Top performing CBB Post this week: How Much Should My Grocery Budget Be?

• VarageSale App is the Newest and Safest Way to Garage Sale
• Strange Things People Do At The Grocery Store To Save Money
• Homemade Potato Waffles

Budget Brag

Submit your Deal or Brag: Saving money while grocery shopping is essential in the CBB family, and that’s why we share our grocery shop experience every week in The Grocery Game Challenge.

If your Budget Brag gets chosen, you get an extra ballot!

So send your brags with a photo and tell me about your deals.

This week, Jen Peacock is back in action on the garage sale scene and has already sent in one of, I’m sure, many of her amazing finds this season.

Hi Mr.CBB and Fans,

I’m back and ready to share any deals I can find this summer, starting with this.

Here are this week’s garage sale deals:

• Shake cup $.25
• Lego building table with Lego pieces $7 (they were asking $10).
• This is probably worth $50-$60 or more.

Awesome deal, Jen, and yes, the Lego table would cost far more than $7 to purchase all of that Lego included.

Awesome score!!

Best Recipe Find

If you would instead buy convenience foods, consider cooking homemade meals or baking from scratch.

Not only will you save money, but you will be proud of what you’ve accomplished, and you’ll see that from the smiles on those you feed.

For the past two years, I’ve had a second Facebook page called The Free Recipe Depot, where I exclusively share recipes from Food Bloggers worldwide.

This week, our Top Recipe Pick goes to Sally from Sally’s Baking Addiction for these 30-minute Homemade Whole Wheat Pretzels.

Add cinnamon sugar on top, or dip them in your favorite sauces.

Pretzels and honey mustard are a perfect pair.

So, if you’re craving some hot buttery pretzels, you know where an easy recipe is to get your fix on!!

If I made a batch of these, you’d have to roll me out of the house because I’d be eating them all.

Top DIY project

When I saw this Easy DIY Toilet Paper Roll Cell Phone Holder at Creative Homemaking, I just had to share it.

It takes a second to see this craft project’s simplicity, which is brilliant.

The best part is you are using an item typically recycled or tossed in the garbage bin.

You can expect to pay next to nothing to complete this project.

I may just make this for the wife who keeps losing her phone.

Great job, Petro, this is a winner.

Google Search Terms

Thousands of people visit Canadian Budget Binder every week because they have searched my blog online. 

The spelling errors below are because I shared how they typed their search engine query to land on my blog. Some of them are serious, and others are meant to laugh.

• Supermarket customers stealing sandwiches and stuffing under clothes– Clearly, someone is either hungry or gets off stealing sandwiches. My guess is that the person is hungry, but stealing never solves anything.
• Tasting something at the grocery store is stealing– If you are supposed to pay for it and you don’t, then yes, that is stealing and against the law.
• Live Poor and Save Money– I don’t know if I’d go to such extremes, but I’m sure people do
• Man spends all his money on gadgets but nothing for the home– I guess you married a gadget guy, not a DIY’er.

That’s all the fun for this week; thanks for dropping by.

-Mr.CBB