WATCH ABOVE: When does it make sense to rent long-term? The experts weigh in.
Should you rent or should you buy? There are a lot of factors to consider when tackling this question. Affordability, of course, is one of the biggest.
A 2015 Global New-Ipsos Reid Poll found 17 per cent of renters were confident they could buy soon while 83 per cent said they just couldn’t afford it.
That doesn’t surprise Ben Myers, a market research and analytics expert with Fortress Real Developments. He thinks those wanting to buy may need to temper their expectations.
READ MORE: 4 dos and don’ts of buying your first home
“I always recommend starting out with a small condominium. Less maintenance to take care of. … Not immediately pushing out to your maximum budget gives you the additional freedom to take vacations, have more fun on the weekends, and gives you greater flexibility should your employment situation change or the housing market or interest rates change dramatically.
“Although renting also provides tremendous flexibility, you may be missing out on appreciation in the market, and a tax-advantaged forced savings plan that is home ownership.”
His bottom line?
“If you’re planning on living somewhere for five years, you’re in a stable job, then you should be looking to buy.
If you’re transient in nature and unsure about your employment situation, then I would definitely recommend renting.”
Credit: Leo Kavanagh
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Sean Mahoney, an agent with Sage Real Estate, urges cash-strapped millennials to “save every penny and have a plan to get to the next step.”
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But what about renters whose next step doesn’t involve buying a place? Is it really that crazy to be paying off someone else’s mortgage instead of your own? Not according to a study from the director of the UBC Centre for Urban Economics and Real Estate, Tsur Somerville. He argues home ownership isn’t necessarily a path to future wealth; neither is renting without careful saving.
Somerville stressed that renters have to be very disciplined about saving the difference between their rent and what they would pay in mortgages and ownership costs.
“From a wealth perspective, renters could do as well as home owners,” Somerville said.
“That’s a long term assessment,” he later added. “In a year where houses prices rise 20 per cent and the equity market falls, it isn’t going to work.”
On the other side of the spectrum are seniors. They’re in a unique situation, in that they may be tempted to sell their property and opt for something with less maintenance and commitment.
“Sometimes it does make sense to sell your asset. Take everything out, rent maybe short-term — six months — and travel the rest of the time,” said Mahoney.
The decision is a personal one, and should also be dependent on your economic security.
“A lot of them are use to owning and having full control of their unit, and gardening,” Myers adds. “So it’s really something they need to think long and hard about.”
WATCH: Does renting make sense for seniors?
With files from Leslie Young and Erika Tucker, Global News
Editor’s note: The article was originally published March 5. 2015. It was updated March 7, 2016 with new mortgage information, as well as new statements from Ben Myers and Tsur Somerville.
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