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1. What did you learn about your topic that surprised you the most?

What surprised me the most about renting vs. buying is how there really isn't a right answer to the question of which option is better. It's so individual to each person's situation, that really a great argument can be made for both options depending on who you are, where you want to live, and what your plans for the future involve. I really did think that the research would show that buying a home was 100% the best option, but it turns out that isn't the case.

2. Provide a real-life example of how this topic is relevant or interesting for you.

I'm a renter and have been for 5 years now, but I would ideally like to buy a home someday, if only for just the freedom to do whatever I'd like to the house and have the security that it is mine and nobody else can decide to sell the home at the drop of a dime and make me move out. It's a safety net for me that I'd love to have someday. However, I've been aware that I'm not ready to buy a house. Researching this topic gave me a better idea about things I need to budget for while saving, along with a better idea of a timeline for when I may actually be ready.

3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

I think the most important thing to pass on is that buying a house will likely make you a little bit more money over time than renting and investing would. It is definitely a factor that most people would want to take into consideration so they can make an informed decision about whether to continue renting or to take the plunge and buy a home. With that being said, There are of course other factors to take into consideration, like the emotional aspects of owning a home, or the freedom to move as many times as you'd like that comes with renting.

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Post 11: Image #2 - "Is It Better To Buy Or Rent A Home?"

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Post 11: Image #2 - "Is It Better To Buy Or Rent A Home?"

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This image shows the pros of buy and the cons of renting. The image provides five pros and five cons, kind of balancing it leaving it up to the viewer to decide what they take out of it since they have not outbalanced one over the other.

I think that this can offer some more very great information about buy vs renting. One thing that I really liked about this picture is the cons because I did not realize how many cons there were to rent a house. The one con that would persuade me to purchase a house rather than rent is that the landlord may not renew the lease. If you are renting and planning to stay there for a while, when this occurs it can throw a curveball into your plans. By buying a house it adds a little bit more stability for the renters/owners since they know that they will never have to worry about finding a new place on short notice.

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Is It Better to Buy or Rent a Home? | Renting vs buying home, Real estate quotes, Renting a house

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Feb 18, 2013 - The decision to buy or rent a home is a very personal one, but for people who can stay in one place for a even just a couple of years, purchasing a home has become a better bargain than leasing. Rising rent costs, historic low mortgage rates and falling home prices have made homeownership a more attractive option for…

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Post 10: Image #1 - "Renting vs. Buying a Home"

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Post 10: Image #1 - "Renting vs. Buying a Home"

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This image is an infographic that shows the pros of both renting and buying a home. It shows that an equally good case can be made for either choice, depending on what's important to the person deciding.

I like this image because it shows that both options can be good ones for different people. It's funny because both options have their own version of "stability" or "peace of mind". For example, renting means you are not needing to be worried about the house itself, the landlord is liable for maintenance and repair. But with owning, the physical stability is there, in that you don't need to worry about a landlord deciding it's time to sell their house, which means you need to move out on relatively short notice.

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Renting vs Buying a Home. | Rent vs buy, Renting vs buying home, Real estate infographic

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Oct 8, 2020 - If you're renting and considering buying a home, this guide will help you calculate the requirements and if a home purchase is an advantage.

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This website is called Rent Seeker. The page we've linked is a rent vs. buy calculator tool. It allows the user to input the different numbers involved with renting and buying in order to help themselves make an informed decision financially. For renting, it asks the user to input rent cost, city of residence, the type of apartment, and the cost of tenant's insurance. For owning, there are obviously a lot more numbers to consider. It asks you to input the cost of the house, the down payment amount, the mortgage interest rate, and the length of the mortgage. It then asks you to include taxes, maintenance, and utility costs if you were to buy, which includes property tax, home maintenance costs, utilities, home insurance, and condo fees if they apply. It will then calculate your total monthly payment for both renting and buying so you can compare.

Tools like this one can be so helpful to people who are on the fence about renting or buying a home. It allows them to calculate costs and might remind them of costs they could forget to take into account without a tool like this to help. Knowing your different financial options can definitely help to improve your decision making and this sort of calculator really helps to make an educated decision (rather than a guess) at which option is right for you.

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Monthly Payment Details

Assumptions

This calculator compares your initial monthly rent payment to your initial monthly housing payment and does not factor in future changes to these payments. The calculator adds a mortgage insurance premium to the mortgage amount for mortgages with a down payment between 5% and 19.99% using CMHC rates.

The minimum down payment is 5% on homes up to $500,000, 10% on the amount between $500,000 and $999,999 and 20% on homes priced at $1 million and over. Monthly rent figures using the Province, City and Apartment Type drop down menus are average rent prices as of Fall 2015 (Source: CHMC-SCHL, RentSeeker.ca).

Disclaimer

The calculator is for illustrative purposes only and may not reflect the actual numbers for your mortgage or rental lease agreement. You should not rely on the results as an indication of your financial needs and we recommend that you seek out your own financial, investment, tax, legal or accounting advice nor shall the information herein be considered as investment advice or as a recommendation to enter into any transaction.

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Monthly Payment Details Assumptions This calculator compares your initial monthly rent payment to your initial monthly housing payment and does not factor in future changes to these payments. The calculator adds a mortgage insurance premium to the mortgage amount for mortgages with a down payment between 5% and 19.99% using CMHC rates.

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Post 8: Website #3 - "No right answer to rent-or-buy debate. But there's no question who ends up ahead"

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Post 8: Website #3 - "No right answer to rent-or-buy debate. But there's no question who ends up ahead"

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This article in the Financial Post explains that there are pros to both renting and buying. However, it states that according to a report by The National Bank of Canada, buyers are undeniably more wealthy/financially smart than renters. The report showed that monthly mortgage payments are much more costly than rent payments. This being said, the Financial Post claims that the National Bank accidentally overstated mortgage cost amounts by not subtracting the amount of a mortgage payment that goes towards the principal of the home. They say that the principal amount paid monthly is a form of saving money because it is going directly back into your home, not towards interest for the banks. Within this report, after the principal amount is subtracted from the mortgage payment, mortgages are significantly cheaper than rent payments. This article also talks about other hardships that are tied to renting, such as how much harder it is to actually find a place to rent. The lower rent costs bring in more interest for renters, which then makes for a very low vacancy rate, making it incredibly hard to not only find a place but to be accepted as a tenant out of all the applicants. There are less than 1% vacancy rates in Toronto and Vancouver because of the interest in renting in these areas.

This article really lays out the cons to renting and makes it clear that the reality right now in Toronto is that it can be incredibly hard to even become a renter in the first place. With such a high demand for rental spaces, it drives the prices up even higher which creates even more roadblocks. It's important to remember that even though renting can sometimes seem like the easy way out, it can still have as many challenges as buying a home in the way of demand and competition.

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The Haider-Moranis Bulletin: The answer depends on individual circumstances, taste preferences and housing market conditions. But home ownership does enable forced savings
Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

To buy or not to buy, that is the question.

A recent report by the National Bank of Canada suggests it might be cheaper to rent than to own in some expensive real estate markets in Canada. Many thus wonder whether they might be better off renting if the monthly rental payments are lower than the monthly mortgage payments.

There is no one right or wrong answer to the question of whether to rent or buy. In fact, the answer depends on individual circumstances, taste preferences and housing market conditions.

1. The Haider-Moranis Bulletin: Plenty of questions about speculation in housing markets

2. Haider-Moranis Bulletin: Housing data doesn't belong under lock and key

3. Haider-Moranis Bulletin: Why rent control is a false cure for housing shortages

In the long run, though, homeowners often fare financially better than renters because homeownership enables forced savings that accumulate over the years, growing into a sizeable nest egg.

The National Bank report revealed that the monthly mortgage payment on a median-priced condominium was higher than the average monthly rent for a similar unit in Toronto, Montreal, Vancouver, Victoria or Hamilton. At the same time, monthly mortgage payments were lower than rents in Calgary, Edmonton, Quebec City, Winnipeg and Ottawa.

The Bank's report compared the total mortgage payment with rent. But in so doing, the report unintentionally exaggerated ownership costs and understated rents.

The monthly mortgage payment comprises two parts: the mortgage interest and the principal amount. The principal being repaid each month is a form of saving. A comparison of the net mortgage payment that excludes the principal is likely to change the calculus in ownership's favour.

In fact, a report comparing the ownership and rental costs by veteran housing economist Will Dunning revealed that when the principal repayment is netted out, the cost of ownership is less than renting in most combinations of housing types and locations.

Before the principal repayment is subtracted from the monthly mortgage payment, the author found that, on average, the "cost of owning exceeds the cost of renting an equivalent dwelling by $541 per month." After the principal is subtracted, however, the net ownership cost is $449 less than that of renting.

In markets with growing demographics and economies, housing prices often rise over time, resulting in even greater capital appreciation. Dunning's calculations, though, did not include price increases over time because of the uncertainty associated with the magnitude and timing of house price changes.

The long-term financial benefits of ownership are also well established. Dunning used data from Statistics Canada to compare the wealth status of renters and owners. As expected, he found that homeowners were "distinctly better off financially compared to tenants" with similar age and income profiles.

Rental units are often not of the same quality as owned units. The difference in structural quality, especially in purpose-built rentals, is part of the reason that rents on average are lower. A true comparison would require comparing the rents and ownership costs for the same units.

... when the principal repayment is netted out, the cost of ownership is less than renting in most combinations of housing types and locations.

according to housing economist Will Dunning

Even when one agrees with the numbers presented in the National Bank report, other challenges with renting remain. For instance, the cities with high housing prices and lower average rents might seem attractive to rent, yet renting could prove challenging given the low rental vacancy rates.

In Toronto and Vancouver, the rental vacancy rates are down to one per cent. Finding a rental unit in one's desired neighbourhood has become increasingly difficult because many households who would have changed tenure from renting to owning, couldn't do so anymore because of higher prices and stringent mortgage regulations.

The result is an even higher demand for renting, which is pushing rents higher and vacancy rates lower.

Statistics Canada's data on income dynamics show that the average household income of owner households is twice that of the renters. Whereas the renter households' incomes have grown faster than owner households from 2006 to 2016, the gulf between their incomes is too large to be narrowed considerably even in the long run.

Higher household incomes not only facilitate the transition from renting to owning, they also enable households to select more desirable neighbourhoods, for example superior-quality school districts, where rental units may be few or non-existent.

Renting might still be preferred for younger cohorts, such as the millennials, whose careers might take them to different cities or countries. The fixed costs associated with home purchases in the form of transfer taxes and commissions could prove a deterrent to relocate for exciting opportunities elsewhere.

It makes sense to many in Montreal to rent and in Calgary to own. Thus, a prudent answer to the question of whether one should rent or buy is 'it depends.'

Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.

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No right answer to rent-or-buy debate. But there's no question who ends up ahead

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The Haider-Moranis Bulletin: The answer depends on individual circumstances, taste preferences and housing market conditions. But home ownership does enable forced savings Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

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Post 7: Website #2 - “Rent vs. Buy Debate in the Current Canadian Housing Market”

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Post 7: Website #2 - “Rent vs. Buy Debate in the Current Canadian Housing Market”

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The article "Rent vs. Buy Debate in the Current Canadian Housing Market" talks about the pros and cons of a buy or renting a house, to try and persuade its readers into finding the best option possible for them. The market in Canada has been changing lots over the past couple of months making it harder for Canadians to purchase a home and making people turn to other options. This article lays out the benefits of owning your own home and the benefits of renting. This article really breaks down what you should plan to expect from either renting or purchasing a house. Some of the benefits to owning a house are you build equity, it's a good investment, stability, and more privacy. The downsides to owning your own house are that it's a commitment, ongoing maintenance cost, mortgage payments, ROI can be slow, and less disposable income. Potential benefits to renting are its cheaper, flexibility, little to no maintenance, and financial freedom. The downfalls to renting are you're not building equity, you have a landlord, and it is unstable. It also provides many more great details such as when to rent and when to buy, which is better, and much more important information.
This article has provided many benefits and cons to both renting and buying a house. I wanted to add this article to this wall since it does not state which is better to rent or to purchase. I like this since it really lays out what the benefits, cons, when to, how-to, and much more important information that can be very useful to someone who is deciding whether to rent or purchase a house.
My favourite part about this article is that it breaks down the cost of ownership. There is a subtitle in the article called "How Much Does Home Ownership Cost?" This subtitle breaks down the down payments, closing costs, insurance, and maintenance. This is a really great thing to show first-time homebuyers since it gives them a bit of insight into other costs/fees they might have just to purchase a home.

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Last Updated on

Once upon a time, buying a home in Canada was simply a milestone in the life of the average Canadian. But times have changed: prices have skyrocketed, and housing markets have exploded, particularly in Vancouver and Toronto, making homeownership difficult and calling the investment potential of real estate into question. Simultaneously, the surge of remote work situations and the shift to a global economy have made the portability of renting an attractive choice. It's left many Canadians with rent vs. buy debate.

With so many variables-personal and financial-in play, whether to rent or buy may well come down to your financial circumstances, future goals, and personality. This article outlines some of the considerations when deciding to rent or buy a home.

Benefits of Owning Your Own Home

There are a gazillion reasons why homeownership has serious appeal (not dealing with nosy landlords is definitely one of them). Here are some of the common benefits of owning your own home:

You build equity: When you make a mortgage payment, you build equity (the portion of your home that you truly own and isn't encumbered by a mortgage). So each monthly payment takes you one step closer to owning your own place - something renting can't give you.

It's generally a good investment: Homes usually go up in value, so if you buy a home within your budget, the payoff can be plenty down the line. The general rule is to hold onto a property for five years or longer in order to reap the full benefit of the home appreciation.

Stability: With a fixed-rate mortgage, your mortgage payment is predictable and more stable than renting (yes, your lovely landlord can hike the rent).

More privacy: There's no landlord policing your every move.

Downsides of Owning Your Own Home

Homeownership isn't all unicorns and rainbows. Here are some of the downsides to homeownership, which may sway you towards renting:

It's a commitment: You can't just sell your house overnight or break your mortgage on a whim (at least, not without a hefty penalty). Buying a home generally means you're sticking around for at least five years or longer.

Ongoing maintenance costs: When renting, your landlord is responsible for the upkeep of your home. But homeowners have to foot the bill for regular maintenance and repairs: whether it's replacing the roof once every ten years or fixing an exploding toilet, you're on the hook.

Mortgage payments can be higher: By and large, it's usually cheaper to rent than to pay for a mortgage. However, this depends heavily on your location.

ROI can be slow: It can take time for the value of your home to increase, so patience is essential. Don't expect an immediate return on investment.

Less disposable income: Homeowners take on considerable responsibility and debt, which may prevent them from investing elsewhere (in RRSPs or TFSAs, for example). In some cases, a homeowner may find themselves "house poor" - meaning a big part of their income goes towards the costs of homeownership, leaving little left over to pay for other needs and wants.

What are the Benefits of Renting?

It may not a popular opinion, but renting a home has some perks worth considering. Here are the pros of renting a home:

Cheaper: In general, rent payments tend to be lower than mortgage payments, and may cover other costs, such as utilities, hydro, cable, and internet.

Flexibility: In the era of Airbnb, renting gifts you the ultimate flexibility. Most leases are one year, but it's possible to score an agreement that's month-to-month. You may decide to get a short-term rental through a home-lending website. If you've got wanderlust or commitment-phobia, renting may work best for you.

Little or no maintenance: You don't have to shell out a wad of cash when the dishwasher breaks or the basement floods. Call your landlord instead!

Financial freedom: As a renter, you'll likely have more free cash to sink into investments and retirement planning.

The Downsides of Renting a Home

Let's be honest: there are some unappetizing things about renting. Here's are some not-so-great aspects to being a renter:

You're not building equity: While renters avoid taking out a mortgage and footing the bills for running a house (which can be big bucks), they also lose out on building equity. Instead, your monthly rent cheque goes towards paying someone else's mortgage.

The landlord is boss: We've all heard horror stories about deadbeat landlords and surprise eviction notices. Renting means you're living on someone else's turf - and they get to call the shots (within reason though...there are laws, after all).

Instability: In accordance with local laws, the landlord can hike the rent. A spike in your rent payment could trigger you to start packing - which is not only inconvenient but for cash-strapped people, could trigger a full-blown financial crisis.

Rent vs. Buy: How to Decide

Before you make the leap from renting to owning, it's wise to dig in and analyze your current financial situation and short-to-medium-term goals. We'll deal with specific financial considerations later; but first, survey your personal situation and readiness for homeownership first.

Where do you want to live?

The first (and most important) thing to do is to compare the cost of rent to mortgage payments in your neighbourhood. The housing market will exert significant influence on your decision-making. In "hot" housing markets like Vancouver and Toronto, the cost of a mortgage may be significantly higher than the amount you would pay in rent. As a general rule, if you're paying more than $3,000 per month in rent, you can probably do better on a mortgage.

Rent vs. Buy Calculator

One way to crunch the numbers is to use our rent vs. buy calculator.

Can you pass the 40 percent rule?

The "40 percent rule" says you should be able to meet your housing costs (principal and interest, taxes, and heat), as well as your other registered debts (such as car loans and credit cards) with no more than 40 percent of your gross income. Not only is this a handy guideline for your personal planning, but it's also a measure applied by many lenders. Relatedly, you should be able to cover monthly costs such as your housing, food, and transportation (known as "fixed costs") with 50 to 60 percent of your net monthly income. Any more than that, and you're likely to struggle.

How stable is your employment situation?

Without stable employment, you'll have trouble convincing a lender to give you a mortgage, but more importantly, you may run into problems meeting your obligations. Do a realistic survey of your employment picture before making a decision.

How long do you plan to live in your home?

With all the talk of investments and equity, it can be easy to lose sight of some basic truths. As a general rule, the longer you live in a place, the better the investment. This is partly due to the fact that there are numerous costs associated with the transfer of real estate.

Are you ready for the commitment?

Homeownership is a big step. It means that you're saying "yes" to forking over a chunk of change for property taxes, home insurance, maintenance, utilities, and a mortgage. Are you really ready for it?

When to Rent

You're not ready to put down roots, and your long-term plans are influx. If you're thinking about travelling, going back to school, changing careers, hit pause on your plans for homeownership.

You can't afford the mortgage payment and ongoing expenses that come with homeownership. Renting is a more affordable option and makes fiscal sense in the short-term.

You've got a mountain of debt. Focus on paying off your student loans, credit cards, car loan, or whatever else is bogging down your bank account. When you're back in the black, you'll be ready to approach a mortgage lender to talk about homeownership.

You don't have a down payment saved up. Stick with renting, and instead, set up an automated savings plan to a high-interest TFSA account. After a few years, you'll be golden.

You want to invest what you save. Renting will likely give you more wiggle room to make regular payments to a TFSA or RRSP investing account.

You have "precarious employment." If your job is temporary or you're self-employed, a mortgage loan often gets nervous. Your best bet is to spend a couple of years renting, saving up for a downpayment, and building up a proof of your income. That generally means being able to produce 2 years of tax returns from Canada Revenue Agency.

When to Buy

You're ready to settle down. You want a place to call home and you don't anticipate moving for at least 5 years or more.

You're (financially and emotionally) ready to take on the many costs associated with homeownership. We're talking about making your mortgage payments, but also things like utilities, repairs and maintenance, property taxes, home insurance, snow removal, condo fees, and so forth.

You're financially fit. You've got enough money saved for a down payment and to cover closing costs. You're debt-free (or almost debt-free) and have a chunk of change that you can put towards ongoing maintenance and property taxes. You're prepared to put your needs ahead of your wants, temporarily shelving plans like travel and buying the latest gadgets.

You've got a steady source of income. You're not planning on making an abrupt career change that could impact your income, or taking time off to explore other pursuits like travel. If you're self-employed, you have at least 2 years of CRA Notices of Assessment to show a mortgage lender that you've got a stream of income coming in the door.

How Much Does Home Ownership Cost?

If you're convinced that homeownership is for you, the next step is taking a detailed survey of the real financial obligations of homeownership. Use these guidelines to estimate the real financial responsibilities of buying a home.

Down payment: 5 to 20 percent
This is the standard amount you'll need to apply for a mortgage. If you put down less than 20% of the purchase price, you'll have to pay "CMHC insurance" - a mandatory mortgage default insurance policy for those who purchase a home with less than a 20% down payment.

Closing costs: 1.5 to 5 percent
This includes lawyer fees, appraisal fees, home inspection fees, and property tax adjustments.

Home insurance: $50 to $100 per month
A home is an enormous investment. You'll want to protect it.

Maintenance: 1 to 2 percent of your income annually
A new hot water heater, roof repairs, blown electrical circuits - you name it! Homes need regular, expert maintenance if they are going to be safe and efficient. Regular upkeep also protects your resale value.

A note for first-time homebuyers: Incentives like the RRSP Home Buyer's Plan, the First Time Home Buyer's Tax Credit, and the Land Transfer Tax Rebate can all save you a bundle.

Is Homeownership a Good Investment?

If you have the resources to buy, homeownership is more than likely a smart investment. Every time you make a mortgage payment, you are essentially paying down the principal and taking a step towards owning a piece of property that will appreciate over time. Think of your mortgage payment as an investment or a savings strategy: if you sell your house down the road, you'll not only get back the money you've paid out but also likely turn a profit. If you stay put long enough, this can grow into a very healthy nest egg.

Of course, there are no guarantees and even buying a house comes with risks. In the past, CMHC has warned about overvaluation in certain areas of Canada's housing market, but for the most part, buying a house in Canada is a safe bet. Just make sure to buy within your budget and plan to hold onto the place for more than five years.

Verdict: Is It Better to Rent or Own a House?

When it comes to renting vs. buying a house, neither is better than the other. There's no clear-cut answer to this age-old debate, and it's going to require some soul-searching and number-crunching on your part. Your current personal and financial situation, as well as your goals and location, will largely determine what's right for you. Use our rent vs. buy calculator to see which option makes fiscal sense.

If you decide to take the plunge into homeownership, remember to shop around for the best mortgage lender and get the lowest mortgage interest rate possible. A bit of research could save you hundreds of thousands of dollars in the long run. From our research on the best mortgage interest rates in Canada, consider an online lender like motusbank or a credit union like Meridian. Looking at the rates, Meridian has some great fixed and variable rate mortgages, with their 5-year, closed fixed-rate mortgage at 2.59% and their 5-year, closed variable rate mortgage at 2.90%. Likewise, motusbank has some very competitive rates, and you can do the entire application online in under 10 minutes.

If you choose to remain a renter, use the situation to your advantage and set up an automatic saving plan to an investing account with a robo advisor or online brokerage. You may not be building equity with mortgage payments, but you can still build a "wealth empire" with your disposable income. According to the 50/20/30 budgeting rule, aim to put away 20% of your after-tax earnings towards savings and investments.

With low-interest rates and climbing market values, buying a home may well be on your radar. But with obstacles like paying down debt and the mortgage stress test, renting may also make good financial sense for many Canadians, especially since you value financial freedom. Both offer risks and benefits and working through our checklists and guidelines should help you make an informed and realistic decision.

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Rent vs. Buy Debate in the Current Canadian Housing Market

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Last Updated on Once upon a time, buying a home in Canada was simply a milestone in the life of the average Canadian. But times have changed: prices have skyrocketed, and housing markets have exploded, particularly in Vancouver and Toronto, making homeownership difficult and calling the investment potential of real estate into question.

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Post 6: Website #1 - “Is it time to buy a home, or should I continue renting?”

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Post 6: Website #1 - “Is it time to buy a home, or should I continue renting?”

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This article provides important factors that may influence someone to buy or rent. The first subtitle in it is "What's Your Time Horizon?" in this paragraph the author talks about different factors that may influence someone to purchase a house rather than rent. It states that the general rule is the longer you plan to live in an area or plan for a long period of time it becomes more favorable to purchase a home than rent. They also mention that when deciding to purchase a house you need to think about your lifestyle choices that are current and in the future (if you want kids, what schools are in the area, etc.). The article then goes on to talk about taking a closer look at your financial standing and how if you purchase a house you will need to pay a mortgage, utilities, home insurance, property taxes, and repairs. If you are renting you will still have to pay for these, but they will be slightly cheaper than if you were to purchase a house.  The last topic that the author brings up is location. When deciding on whether you want to purchase or rent a house it is important to consider the location of the house and the location of where you are looking for. For example, if you are looking for a house in downtown Toronto it may be better to rent.

I chose to include this article since I thought that it offers valid points about renting and buy. I personally would rather buy than rent and even with that mindset I still have not looked at all the pros to owning your own house. I have always just thought that it's my space and I own it. This article really made me start and think about how even though I want to buy a house it might not be the right time for me to do so, since I don't know where I will end up with my career. I think that this article has provided many great details and offers great value to those trying to decide on whether they should rent or buy.

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Look at how long you expect to live in your next residence, your ability to handle all the monthly payments associated with owning, and locations that might offer better value.

Look at how long you expect to live in your next residence, your ability to handle all the monthly payments associated with owning, and locations that might offer better value.

Early in the summer of 2020, I wrote about how the uncertainty of the COVID-19 pandemic had some home buyers reviewing their decision to jump into the housing market. After a quiet spring season, there's been a resurgence in housing demand in markets across the country, with record-breaking sales noted for June and July . As Canadians return to the housing market, one of the biggest questions for prospective first-time buyers with an impending move remains: Should I continue to rent, or should I take the leap into home ownership?

The answer to that question is, perhaps unsurprisingly, that it depends on your circumstances. The decision to move is often equally a lifestyle and financial decision, and it varies for each one of us based on our needs and preferences. Here are the key considerations to keep in mind as you navigate your own decision to buy or rent, along with some concrete examples on how to approximate and compare your financial costs in each scenario.

1. What's your time horizon?

As you plan your move, it's important to ask yourself how long you intend to live in your new home. The time horizon of your stay in that property is one of the key factors that should influence whether you choose to buy or rent.

The general rule is that the longer you plan to live in the home, the more favourable the decision to buy becomes. Real estate is a long-term investment and there are real costs associated with buying and then selling a property in the short run. Although the Canadian real estate market as a whole has experienced a decades-long streak of positive appreciation, the thousands of dollars in transaction costs such as land transfer taxes, moving costs, and real estate professional and legal fees will eat into any appreciation and may not justify the financial investment involved over the short term, even in the most positive market conditions.

If you plan to live in the same home for less than three years, it's probably better to rent and avoid making what amounts to a speculative investment. If you're planning to live in the home for at least five years, the decision to buy is likely better. If you anticipate needing to move again within the next three to five years, it might be a good idea to take a look at the broader financial aspects of owning and carrying a home, as they apply to your personal circumstances before moving forward.

But how do you determine how long you're likely to live in your new home? Your decision should be driven by your lifestyle needs, both today and in the future. For example, will the property you move into be able to accommodate an expansion or contraction of your family? Do you live in a neighbourhood with good schools and, if not, will this be important to you in the future? Do you expect changes to your daily commute?

The goal is to choose a property and location that account for as many factors as possible, so you can limit the number of times you need to move, minimize financial churn associated with moving and maximize your investment return should you choose to buy.

2. Take a closer look at your financial picture

Beyond having a down payment, it's important that prospective buyers take into account two other financial aspects of home ownership: the monthly carrying costs of owning a home and, as I outlined above, the costs associated with selling that property in the future.

When it comes to carrying costs, here are some of the key carrying costs that prospective buyers should account for:

Mortgage payments

Utilities

Home insurance

Property taxes

Maintenance fees (if you purchase a condo) and/or repairs

If you're a renter looking to make a leap into home ownership, some of the costs outlined above will likely increase your monthly housing costs, and make a dent in your disposable income. That being said, with interest rates at historical lows, payment against your mortgage principal will likely account for more than half of these monthly payments, and you can think of that portion as forced savings and contributions toward building your net worth.

Recently, Zoocasa published a report reviewing condo apartment pricing trends in 35 Toronto neighbourhoods to understand which neighbourhoods may offer better opportunities for condo apartment buyers, and where it may be better to rent. Based on our analysis of Toronto's neighbourhoods, here's a look at the costs of renting and buying comparable condo units across three distinct areas of the city. While I've used specific examples, this is a helpful framework for any prospective buyer or renter to use as you research and plan your next move in your preferred location.

3. Location should be part of your financial strategy

It may be better to rent than buy in Toronto's downtown area

Let's start by comparing two similar units in the same high-rise building in Toronto's C01 (Downtown, Entertainment District, CityPlace, Liberty Village) neighbourhood. The first is a one-bedroom rental with a parking spot listed for $1,850 and the other is a unit for sale a few floors below with similar specs, listed at $579,900. Here's how the some of the biggest monthly costs for the unit for sale break down with different down payments:

Monthly costs with a minimum down payment (5.69%) on $579,900

Monthly costs with a 20% down payment on $579,000

In this specific instance, for someone who wants to live in this building, particularly a person on a shorter time horizon who is only able to make the minimum down payment, the rental may be more appealing or manageable.

Toronto's east and west end offer opportunities for first-time buyers

Taking a similar approach, let's have a look at properties in the east and west end. In the east end in E04 (Dorset Park, Kennedy Park), a good-sized two-bedroom unit with a parking was recently listed for rent at $2,400, with a similar unit listed for sale seven floors below at $449,000.

Monthly costs with a minimum down payment (5%) on $449,000

Monthly costs with a 20% down payment on $449,000

In this case, prospective buyers who have saved up a sizable down payment may want to strongly consider the unit available for purchase, given that the monthly costs are comparable even with the addition of owner-specific fees and taxes.

Although some units sell for higher than the list price, this is a useful exercise to help prospective buyers trying to research and understand their carrying costs across a few different neighbourhoods in the city.

Finally, in W04 (Yorkdale-Glen Park, Weston), let's compare a one-bedroom unit with parking listed for rent, and a larger two-bedroom unit with parking listed for sale at $330,000. Compared to the rental price of $2,205, here's how the monthly carrying costs would compare for a prospective buyer:

Monthly costs with a minimum down payment 5% on $330,000

Monthly costs with a 20% down payment on $330,000

In this case, buyers with even the minimum down payment will want to strongly consider taking the leap into home ownership. In this case, given the historically low interest rates currently available, buyers should keep in mind that over half of their monthly housing cost would go toward their mortgage principal-meaning forced savings that help them grow their net worth. Those with a good amount set aside for a down payment will actually end up saving money on a monthly basis despite paying taxes and maintenance fees, and have a larger space, all while growing their net worth.

The bottom line

Although I've highlighted very specific examples above, the same general approach can be applied to your own research, and adjusted based on whether you're purchasing a freehold property or a condo.

At the end of the day, there isn't one silver bullet that I can share to help you make the decision that's best for you. There are benefits to both buying and to renting and, ultimately, the choice must be carefully weighed and considered, keeping your lifestyle needs and financial picture at the forefront. However, a little effort and research can go a long way toward helping prospective home buyers find clarity as you prepare to make your next move.
Lauren Haw is the CEO & Broker of Record at Zoocasa , a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download Zoocasa's free iOS app.
MoneySense is fully owned by Ratehub Inc, whose co-founder and CEO, Alyssa Furtado, is also a director at Zoocasa.com. MoneySense remains editorially independent. For more information, please read our policies:

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"Is it time to buy a home, or should I continue renting?" | MoneySense

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Look at how long you expect to live in your next residence, your ability to handle all the monthly payments associated with owning, and locations that might offer better value. Look at how long you expect to live in your next residence, your ability to handle all the monthly payments associated with owning, and locations that might offer better value.

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Post 5: Video #4 - "3 Reasons Not to Buy a House in 2021 (2021 Housing Bubble)"

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Post 5: Video #4 - "3 Reasons Not to Buy a House in 2021 (2021 Housing Bubble)"

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Description:
This video explains important reasons buying a house in 2021 may not be the best decision. It's important to look at buying vs. renting not only as a whole, but as part of our current situation, living through a global pandemic that has affected our housing market greatly. The reasons listed include that this year may include a housing bubble, bringing demand up incredibly high which then causes prices to skyrocket. Buying a house during a housing bubble is risky because if the bubble pops a few months after you buy, your house value will drop significantly and you will have essentially "lost" part of the insanely high amount you paid. Another reason is that foreclosures are at higher risk because of the pandemic. Jobs are not secure right now, meaning if there is another large lockdown situation, the market may drop significantly and people may not be able to keep up with their mortgages, resulting in foreclosure and eviction. The third reason is that renting is cheaper than buying, which is an important factor during a pandemic when job loss is very probable.

The best takeaway from this video is that situations should always be taken into account when choosing whether to buy or rent a house. With the situation we are currently living in, it is likely going to be very hard for many people to make the leap and buy a home, making renting the better option for lots of people at this time.

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3 Reason Not to Buy a House in 2021 (2021 Housing Bubble)

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Post 4: Video #3 - "Drawing Conclusions: Is renting really a waste of money?"

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Post 4: Video #3 - "Drawing Conclusions: Is renting really a waste of money?"

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Description:
This video explores whether renting is actually a waste of money, the way most people argue that it is. Many people will ask about why renters are paying their landlord's mortgage when they could pay their own instead. The narrator of this video explains that while renting, you're not actually throwing your money away. You're exchanging money, and in return, gaining space to live in. He states that when buying a house, you're technically still renting. Instead of renting space, you're renting money (mortgage) to buy a space. He calculates using two similar people who start with the same net worth of $35,000, and follows them with calculations over the course of 25 years with one person renting, and one person owning. He finds that at the end of the 25 years, while the renter has a net worth of about $100,000 less than the owner, he still has grown his net worth by $500,000 by being disciplined and investing the money he saved by deciding not to buy a house.

I think the most important takeaway from this video is that renting is not necessarily a waste of money. It largely depends on each individual's situation and financial decisions. If someone who is renting can be diligent about saving/investing their money, they can still earn a significant amount over time.

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Drawing Conclusions: Is renting really a waste of money?

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Post 3: Video #2 - "Renting vs. Buying a Home: Settling the Debate | Which Makes More $$?"

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Post 3: Video #2 - "Renting vs. Buying a Home: Settling the Debate | Which Makes More $$?"

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This video depicts a Canadian Accountant/Real Estate Agent breaking down the costs of renting vs. owning a house in Canada. For renting, he states that if you find a home where rent includes utilities such as electricity, water, heat, etc. then the only costs involved would be your rent payment and tenant insurance. For owning a home, obviously, there are a lot more costs to consider. He includes the costs of down payment, monthly mortgage payment, mortgage insurance, lawyer & closing costs, home insurance, property tax, and the cost of maintenance. He takes all of these costs and calculates what value you're left with after 30 years (the average time of a mortgage term). He does this by "assuming" that instead of buying, you would take the money that would have gone towards a down payment, and invested it instead while you were renting. He calculated the money a person would be left with after either investing that money, or selling the house they bought and lived in for 30 years, and found that buying would earn you over $250,000 more during that time frame.

I chose this video because it takes a different viewpoint than most. Rather than looking at which option costs more, it looks at which option earns more over time. One piece of information that I really took away from this video is that even if I were to invest all of my leftover money while renting, I still wouldn't earn nearly as much as I would by buying a home, living in it for 30 years, and then selling it. That gives someone a lot to consider!

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Bassem Zahili - Finance, Investing & Real Estate

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Renting vs Buying a Home: Settling The Debate | Which Makes More $$?

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Post 2: Video #1 - "Renting vs. buying a home"

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Post 2: Video #1 - "Renting vs. buying a home"

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This video is a CBC News segment talks about a shift in belief that states renting a home and investing your money is a better option than buying a home. This is different than the normal mindset; most people do believe that owning is superior to renting. It's explained here that investing your money rather than putting it all into real estate can be more reliable and make you more over time. A finance professor teaches his students to challenge the normal beliefs and think about the extra costs with homebuying that people don't talk about, such as interest almost doubling the end cost of a home, and maintenance costs. It does, however, talk about a different topic which is the emotional attachment aspect of buying a home. They say that while buying a home may lose you money, it gives a sense of fulfillment and security, knowing that you own your home. This makes a good case for situational decision-making. For example, someone may be financially able to buy a home, but may decide for themselves that renting and investing is a better option. Another person can decide that even though they could make more money by renting/investing, they would rather have that sense of security by buying their home instead.

The most important takeaway from this video is that a case can be made for either situation, whether it be renting or buying. The decision doesn't (and shouldn't) rely only on financial reasons. Some people feel more comfortable continuing to rent because of the safety of not having to pay for surprise maintenance like a water leak or broken appliance. On the other hand, some people may feel that it is much more worth it to have a sense of accomplishment and security that they have bought a home.

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Welcome! This wall will be used to provide some important information and other important things to keep in mind when deciding whether to rent or buy a house. On this wall, you will find three videos, 4 websites, and two pictures. These sources will provide the pros and cons of renting and buying a home.