The big question, should I rent, or should I buy? Many people all over the world, including many Canadians, ask themselves this question when considering owning a home.

Considering the principles of economics, one should recall that land is a finite resource. With this in mind, we come to conclude that you should buy. If only it were that simple. There are a number of different factors to consider before coming to a clear answer.

2017 was an exceptional year for real estate prices in many Canadian cities, including Brantford with the average sale price of $366,680; an increase of 17.45% from 2016. In 2018, housing prices in Brantford saw a slight increase of 3.6% with the average sale price of $380,522.

Approximately 4.4 million Canadians rent a home/condo/apartment/etc., while “40 percent of those who have a landlord rather than a mortgage spend over 30 percent of their pre-tax income keeping a roof over their heads.”

Despite the fact that convention wisdom continues to state that it is better to buy than rent. In the end, it is a matter of circumstance.

 

Advantages of Owning:

Buying a home may make sense for several reasons. If property values increase and you pay down your mortgage, you’ll build equity. This can open the door to future financial resources. When you need funds, you can use your home equity as collateral for a line of credit; you can borrow against it at interest rates that are generally lower than other forms of consumer debt.

Also, if you sell your home, you can collect your equity in cash, gaining liquidity. As a bonus, any growth rate is tax-free if the home is your primary residence.

 

Advantages of Renting:

Renting often means predictable expenses and more money in your pocket. Your monthly costs tend to stay the same. And the landlord generally pays for maintenance, repairs, taxes, and other property expenses that come up.

Renting makes sense if you plan to move short term. The costs of selling a home – real estate commissions, property, and land transfer taxes, legal fees and moving expenses – are significant. It could take a few years to regain those costs if your new home appreciates in value.

Also, there aren’t any long-term commitments beyond the length of your lease when you rent. You can relocate relatively easily and quickly.

 

Disadvantages of Owning:

Making a down payment and investing in a home could be a lost opportunity. Why? Because if you invest your down payment, It could grow faster than a property.

Plus, you can add home maintenance costs and property taxes to your list of regular expenses.

 

Disadvantages of Renting:

Rent is money out the door, with no return, because a rented home doesn’t build equity. At the end of your lease, there is no financial payoff as there may be with owning. So, the money you pay in rent could be a lost investment opportunity.

Finally, as a renter, you are tied to your landlord by a legal contract. The landlord can ask you to vacate the property at any time if they have a legal reason and give you proper notice.

Ultimately, the decision to own or rent depends on your circumstances, plans and lifestyle choices. While owning a home means more responsibility and expense, the feeling of security and potential increased value can make it a worthwhile investment.