Should I Rent Or Should I Buy? Here Are The Arguments

With real estate becoming more expensive and rental housing crunch driving rents up, it is definitely worth discussing buying vs. renting.

There is a popular refrain that says: “you should buy because renting is paying someone else’s mortgage.” While this may be true sometimes, there are plenty of circumstances where it makes more sense to rent than buy.

The case for buying

• A home purchase is a good way to build wealth.
  The monthly mortgage payment is a form of forced savings. These payments grow the equity, and as the equity grows, the homeowner owns a greater share of the home. Over the years the home equity growth accelerates as more is paid towards the principal and less towards the interest.
• Price appreciation will help build wealth.
  Home appreciation, though not guaranteed, allows the homeowner to build wealth. There is a constant demand for homes as the population grows and homebuilders have not been able to keep up with demand due to increased land costs, labor and material shortages. At some stage demand outstrips supply.
• Rents never end, mortgages do.
  Once the mortgage is paid off, the owner is debt free. No need for anymore payments, except for the property taxes, repairs and maintenance. So unless the owner takes out another mortgage for another purpose, the costs of home ownership are greatly reduced. A renter on the other hand will have to keep paying rent in perpetuity or until a home is purchased.
• Buying can be a source of income.
  A home with a finished basement can be rented out to earn extra income or help pay the mortgage. This can be very useful to potential homeowners.

The case for renting

• Renting can create wealth (as well).
  Renters typically have to pay rent and a share of the utilities. This leaves cash flow available for investment, but there is a caveat here: they have to be financially disciplined, and not spend the residual on improving their lifestyle.
• Renting allows greater mobility.
  A person who rents has the opportunity to move should a better opportunity arise in work or business, to another area or city without sacrificing too much. All that is required is giving the landlord adequate notice. Homeowners on the other hand would not be as flexible.
• Renting is cheaper.
  A renter has to come up with a month’s rent as a deposit (some require first and last month’s rent). This beats looking for a hefty down payment, especially if a person does not have a lot of savings. There are property taxes and repairs and maintenance to think of as well when owning a home.

When it comes to buying or renting a home, there is no right or wrong answer. It’s all about the lifestyle you chose to live and what works best for your situation and budget.

Contact us or call us on 604 913 1000 if you have any questions or concerns regarding selling or buying a home.