Rent vs. Buy?

Sprint Hatches the Great Debate
Is it Time to Rent or To Buy?

Spring has sprung and along with the daffodils, it seems, so has the age old debate of “Rent or Buy?”. To buy is to build equity in your future. To rent is a virtual license to pour hard earned money down the drain. To buy is to see gains surpass those in a good stock market portfolio during rockier times on Wall Street. To rent is to enable landlords to own and often prosper. Do you sense a bit of a clash of dynamics in that last scenario? Financial experts say this is a prime time for first time buyers and investors alike. With continuing record low mortgage rates and banks virtually giving money away, the ‘Rent vs. Buy’ question seems all but moot.

Market economists enlighten us to the fact that market movement among buyers and sellers is very much dependent on the influx of first time buyers into the market at the entry level to allow current owners to sell and ‘buy up’ facilitating upward mobility through the home pricing grid enabling ‘top end’ sellers to do so and downsize. It’s the cyclical dynamic of any market. 

 Let’s take a look at both sides of the equation that consumers are considering:

Owning
  • Your mortgage payments are gradually building equity in your property
  • Over time market appreciation in your property is like ‘found money’ and as a principle residence a tax free gain upon the sale
  • Falling mortgage rates in a variable rate mortgage applies more of your payment to the principal, building equity faster
  • You are ‘king’ of the castle free to make your home uniquely yours
  • Financial benefit escalates with long term residency particularly when you become mortgage free
  • Maintenance costs are your responsibility
Renting
  • Your rental payments are building your landlord’s retirement plan
  • Your rent will increase over time within certain guidelines
  • Falling mortgage rates makes no difference in your rental payment
  • You must respect the limitations or guidelines of your landlord or strata council
  • Financial benefit favours frequent movers not interested in ‘setting down roots’
  • Maintenance costs are your landlord’s responsibility
For those first time buyers, there is so much I can offer in guidance on best strategies for buying, best financing and best transition tools from the rental to the ownership arena. Please contact me at 604.739.1129 for a free, no obligation consultation.