It used to be a no-brainer: Buy. Period.
Over 70% of Canadian households are owner-occupied, and home ownership has always been seen as the road to financial stability.
But in Metro Vancouver, housing is the least affordable in Canada. Buying a detached bungalow will eat up 91% of an average household’s income, and buying a condo will take around 45%.
According to the Canadian Mortgage and Housing Corporation (CMHC), Metro Vancouver has one of the lowest vacancy rates in the country, and, at $1,237 for a two-bedroom apartment, the highest rent.
But considering property taxes, utilities, insurance and the costs of maintaining a home — on top of mortgage payments — renting may be a better option for some people.
This article from the Wall Street Journal sets out six factors to consider when you’re deciding whether to buy or rent. And while the article was written for Americans, whose real estate market has been in the basement for three years, these six steps to making a buy-or-rent decision will work for any market:
1. Examine the housing market
2. Consider additional costs
3. Look into the future
4. Look into your personal future, too
5. Consider your personal finances
6. Think about opportunity costs
Making a New Case for Home Buying
Amy Hoak, The Wall Street Journal
As another year of the housing downturn ends, some are wondering if it finally is more advantageous to buy instead of rent, given discounted home prices and mortgage rates near historical lows.
The answer not only depends on where you live, but also your personal finances, the stability of your job and what you expect for home prices and rental rates in the years ahead.
Historically, renting has been the better choice, according to recent research.
Renting was the better move about 75% of the time, according to “Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?” a paper scheduled for publication next year.
The catch: Renters need to invest all the money they save.
“We find that if people don’t invest the money, actually about 90% of the time, you’re better off buying,” says Eli Beracha of East Carolina University, who co-authored the paper with Ken H. Johnson of Florida International University…