Renting vs. Buying, Which is Better For You?
Traditionally when asked which they prefer – buying or renting – most answer with buying.
However recently that preference may be shifting as rising housing prices have opened opportunity for a different option.
Rising real estate prices
Even coming up with the down payment is a challenge for many hoping to live in Canada’s major cities. Asking prices for an average detached home in a desirable neighborhood can often exceed $800,000. In some cases, these homes may even sell above the asking price, leaving some prospective buyers out of that market entirely.
If you do own a detached home currently in a hot real estate market, you can likely count on selling it for much more than you may have purchased.
Monthly costs of owning a condominium?
For many, purchasing a condominium is a far more affordable option. Average condominium prices are rising as well, but if you are contributing to a mortgage you are building equity in an asset. Of course, you may have to pay monthly condo fees which make many feel as though they are throwing money away.
With the current state of housing prices, we have seen increased construction of purpose-built high-rise rental buildings. This is a new opportunity, as many of these buildings are designed with features similar to condominiums; in-suite laundry, party rooms and grand lobbies. A far more desirable option for some as many existing rental buildings are over 50 years old.
What it takes to rent
This new supply of rental accommodations may provide more cost-effective solutions to suit lifestyles and permit opportunity to allocate some funds for investments or retirement planning. For some, this may outperform buying a home and building home equity. In addition, many prefer the rental application process, as it is less stressful than receiving mortgage approvals.
Although subject to change, your monthly rent is predictable. Consequently, if you own a home, costs are often less predictable. Roof replacement, furnace repairs and other general maintenance items can add up quickly. Renting avoids such matters as property management holds that responsibility. Owning isn’t specifically better than renting, and renting isn’t always simpler than owning.
It may be challenging for people in their twenties to come up with the down payment and be able to carry a mortgage but it has been done before and can be achieved today with careful planning.
Ask yourself, what is the best option for you? There are various price points for renting and buying a condominium or home. Have a look around before making a decision and pick what makes the most sense for you.
Ignore those whom may enforce their opinions on you. This is a personal decision. It is about your lifestyle and financial comfort. The right decision always feels right.
ROD L. ROWBOTHAM, OAA, MRAIC
CEO, President, Principal Architect