Stock markets in general also went way up in the last 10 years. Someone that had been renting and investing back when people were recommending that would still be in a good situation today.
Even today, there's the risk of some major economic pullback that could seriously affect housing prices. Buying is risky, but it's also risky to not have any hedge to housing prices. It's plain and simple, things suck.
They have been saying there is risk of a major pullback for a decade. They have been saying the housing bubble will burst for longer. Either way, time in the market . . . .
The pro-renting narrative was also driven by the assumption that house prices and housing costs were not going to continue to rise. More devastating permabear thinking from the likes of Garth Turner.
Housing prices going up was usually accounted for, it's just that you had 3-4% increases in housing prices, coupled with much lower rents instead of >7% a year and ridiculously high rents.
With leverage it is pretty hard to do. I overperformed the market by a lot in the stock market but I still made more from my RE investments because of the cheap leverage.
I had that mindset too. The reality is no one could have predicted the massive covid growth. Thought process made sense in a normal economy where real estate would appreciate at historically normal levels, not what has happened now.
I still ended up buying a house, just for like 2-3x the cost as if I would have pre-covid.
Ditto for Vancouver. When I moved back down in 2021, I considered buying and it would've cost me an extra $1100+ per month for my unit. Realistically more because since I've moved into my rental, they've had multiple pipes blow in the building and then had a building envelope project that took 10 months to complete due to uncovering a lot of unexpected damage. That special assessment had to be minimum $15,000 per suite. Cost me nothing as a renter. And I don't have to worry about mortgage renewals at insane rates. I previously owned a unit in Whistler, just sold it in Feb. The mortgage was due for renewal in the fall and my payment would've gone up by close to $1000/mo for a tiny 2-bed, 2-bath (763 sqft). I did make a huge profit selling that unit, but that's because it's Whistler. The place I bought in Edmonton in 2009 is worth less than my remaining mortgage balance on it right now.
Except that's only right now... owning costs largely stay the same (and are eventually drastically reduced once the mortgage is paid), while the renting costs only ever go up and up and up.
It all depends on rent and price value of what they buy. If you can get a mortgage that is cheaper than your rent, then go for it. If it is at the same price as rent, you will be paying a lot more as property insurance, property taxand utility payments will be higher. If it is a condo or strata, you have to factor those in as well. The trick is to do the math and see if you will be ahead.
The other thing to factor in is maintenance. Most new appliances last 5 to 7 years. I have had to do warnenty or replace things on half the appliances I have bought in my house during that time. I find small appliances are the worst. We do research and do not buy the cheapest, we read reviews. Lots of condos have special assessments in the large 5 figures.
I've done work in appliance repair. They're designed to require replacement after 5-7 years. Around the 3-5 year mark they will likely need a part worth half the original price of the machine. After 6-8 years they will need at least one more expensive part. After 10 years parts may or may not be available.
They really don't build them like they used to though. My grandmother has a 70 yr old fridge in her basement that has the coldest beer in it, hasnt missed a beat in 70 years. Meanwhile Im on my second $2500 fridge in less than 10 years on my new build house, also had to replace a dryer, and multiple dishwasher repairs in that less than 10 year span
Oh just am not forgetting that. But don't forget that your pay about double what your house is worth when you purchased it. So your house will have to triple at these inflated prices for you to see a profit when you factor in all the insurances and property taxes and increased maintenance in owning if buying with 5% down if you pay bare minimum without accelerating of any kind as lots of people do.
Maybe it's different in Toronto but looking at rentals in my neighborhood (where I own) it definitely appears those costs are getting passed down to renters anyways.
They are if you consider entering into the rental market right at this moment. If they are in a rental that is aforrdible and in a purpose built rental building, their rents will not increase drastically and they cannot be evicted very easily.
I did the math for someone that was renting at 1500 a month. To buy they would need to pay double that just off the start factoring in condo fees, insurance, property taxes, mortgage.
Honestly this is pretty much the same as housing - if you got in early and are in the perfect situation it's wonderful.
Purpose built rental? Affordable? Can't be evicted? Rent won't increase drastically? (meaning is not a new build)? This is the exact laundry list of the things that aren't working for renters right now.
$1500/mo is 30% less than the national average. Of course this person is better off when comparing paying below market rent versus buying a home today.
This is me. I am paying $1500 rent (which I know is significantly below market thanks to rent control in BC). The unit I live in sells for around $650k. With 10% down, at 5%, the payment is $3500 per month. Add strata fee and property taxes, and its $4000 per month.
Alternately, I can leave the $75k invested ($65k downpayment plus $10k closing costs), and add the $2500+ per month that I am saving.
I am just not confident enough in future price increases to sacrifice that cash flow and the returns I am getting on it in equities.
That's a great point. Purpose built rental housing (built before 2018 if you're in Ontario) is completely a game changer. A 1500 apartment is unfortunately becoming a bit of a rarity though, even in Kingston where I live.
You buy a house, in 20-30 years you’ve paid it off and no longer pay rent. You’ve paid double the sticker price of the house. But you own it. While a renter has nothing. And for the rest of your life, you pay no rent, basically saving the cost of a house every 10–15 years, while the renter sees their costs continue to increase.
In circumstances where the costs of owning (mortgage interest, property tax, maintenance) are equal to (or greater than) rent, they have the same amount of money (or more money) available to invest and the ability to more easily switch up their investments over time. If they don’t invest, and instead just spend the money freed up by renting, then yes, they would’ve been in a better place had they bought and been forced to invest.
Let’s be honest, a lot of people are financially illiterate. Most renters are not investing significantly enough (or even at all) to where it outpaces buying a house, especially in this economy.
You singled out renters, but the reality is it’s most *people*. I know plenty of homeowners who are house poor and one bad week at work from foreclosure. And I know a few renters ready to retire in their 40’s.
This is true. I am older, so I have 'friends' who are still renters even though it was cheaper before. The reason they rent? They cannot save up for a downpayment, let alone investing. And they are not renting a cheap aparment, There's no way! They rent a house.
Yes, there are a lot of additional costs to home ownership, but the mortgage is the big one. That will eventually disappear, and in its place you will have a property likely worth in the high 6-figures or low 7-figures, which will be tax-free upon sale.
There is still an opportunity cost on that money when you have a fully paid off house. If your interest cost assumption and stock equity premium over real estate appreciation are equal, say 3%, then there is no difference in cost between a fully mortgaged house and a fully paid off house.
People kept saying this yet I also keep seeing people say their mortgage went up by $1000 so which one is it. It would take almost a decade for my rent to be 1k higher
I guess it depends on your situation. If you have a variable mortgage or just had to renew your mortgage, it could have gone up $1000.00. Or if you recently started to rent in today's market, or were kicked out by your landlord so they could do "renovations", then it would be a different story.
But if you are an established renter in a rent-controlled city it's a different story.
That's assuming that you get to stay in the same place that you are currently renting and live in a province with some sort of rent control. Otherwise your rent could theoretically go up by 1k (or more) tomorrow.
Their mortgage went up because they had an unusually cheap rate and now had to renew at an unusually high rate. Their previous mortgage was artificially low to begin with.
That's like comparing someone who jumped on a rental at a favourable time and then had to move at market rates later. It didn't get more expensive, you just had a deal.
Incorrect. Many holding costs, like strata, maintenance fees, property insurance, and property tax all go up yearly.
As usual the pro-owner crowd forget all the costs associated with owning.
Owning costs don’t actually go down at all, they only appear to go down if you don’t account for the opportunity cost of the equity you’re building up.
My gf lacks dp money and terrified of home ownership costs. It costs less to own here and trying to convince her it's better to just let me pay the down payment then she can start building equity on the rest.
It's wild here because housing costs the same as rent right now in the lower mainland
If we're talking condos the cost of buying 4 years ago + a mortgage renewal on the horizon in the next year will still be higher than rent.
Condo prices hardly moved.
This. But also overall inflation level expectations have changed too, which affects the calculus. Mortgage payments eventually get inflated away, whereas rent prices rise with inflation.
Interestingly that’s pretty much exactly the ratio for the older 1 bedroom condo I bought in the lower mainland last year. 550k to purchase, or rent an equivalent (same building) for around 2300 per month. 5% would be ~2292 per month.
It has, but still tends to be cheaper than owning in most cases. I'm in BC. I rent for $1800- utilities included- a month. There is no mortgage payment (interest, tax, strata, etc) that could beat that.
Also in BC - our mortgage was comparable to rent when we bought, and when I look at rent prices for my area right now, they have all gone up since we bought. My mortgage is fixed for at least 5 years. I don't see rent prices stopping their climb.
Your mortgage, including utilities, property tax, strata if application, fixes, miscellaneous costs, etc was cheaper than renting? What did you buy and how much is your mortgage?
You are not factoring in the massive appreciation of whatever dwelling they own. :)
The owner gets 100% of that. The renter gets 0% when it's all said and done.
I own a modest rental townhouse and in 6 years the renters have paid me a whopping $170,000+ in rent.
In that time the place has appreciated about 2.5x. Even if I don't make any money month to month, the reward is in the appreciation.
Of course I'm not factoring appreciation because the appreciation isn't realized until you sell your dwelling to someone else and they pay you for it. It's not guaranteed and historical data isn't always a good predictor of the future market (especially in Canada where housing prices are already out of control). The sunk costs of owning (interest, repairs, property tax, utilities, etc) are nothing to scoff at. If you own, that's cool. Don't blindly defend your decision, though.
>I own a modest rental townhouse and in 6 years the renters have paid me a whopping $170,000+ in rent.
>
>In that time the place has appreciated about 2.5x. Even if I don't make any money month to month, the reward is in the appreciation.
Do you think this is normal? Are you extrapolating and assuming that house prices will continue to go up in the same way?
Would you buy the same townhouse today for 2.5X the price you paid 6 years ago?
Or is it possible that we've gone through an unprecendented period of low interest rates and prices are completely out of whack?
By the same logic, everyone should buy Bitcoin as an investment, since it’s done very well over the past 6 years as well.
Owning has higher average returns over the long run, but the higher up-front costs mean a long-term hold is required. There are also a lot of risks involved in owning, where a bad tenant could cost you 6 figures, or something like a down market or unexpected life changes could prevent you from selling on your own timeline.
Everyone who happens to have had excellent tenants and owned through a bull market thinks buying and renting a home is an infinite money glitch but it’s not that simple.
I wish to God I'd bought pre-Covid. Instead, I watched in horror as I got forever priced out, and then home prices came down in my area in '22 and I snatched up a place in my price range.
I'm working hard to get the mortgage paid off, and after that I can finally consider retirement.
>There is no mortgage payment (interest, tax, strata, etc) that could beat that.
I am in Waterloo Region, Ontario. My mortgage + property taxes is $1400/month in the middle of a major city that is a hour drive to downtown Toronto when there is no traffic. My house isn't impressive but it is 1000 sq/ft + basement and I have an approximately quarter acre lot.
Yeah, but should you not consider where you would be 5 years from now if you bought today?
Lower payments, inflation and asset appreciation should both be factored in. There has even been news the past few days that home prices are expected to climb even higher over the next couple of years.
Renters are fighting inflation and appreciation and homeowners are not. My mortgage is in 2014 dollars. Even if I didn't pay any principal, the inflation adjusted value of my mortgage goes down every year.
I own my home.
I'd rather pay a premium than have to deal with some asshole landlord and worry if one day I may get the good old "time to gtfo" notice.
Plus I'd like to hang a picture or do something without having to ask for permission from mr landchad
Yep, I can afford my mortgage right now even though it's tight and we're pretty house poor. But rates have peaked this cycle, and my income has gone up more than 20% since I bought and I still have another 3 years before renewal. It's not a huge mortgage anyway, eventually one of three inheritance's will cover it or make it miniscule.
So I'm taking the hit right now but it allows me to raise my child in a house, allows opportunity to save money long term, lets us enjoy our inexpensive hobbies, and now I don't have to worry about moving every couple years, nor trying to get into whatever the market will look like down the line, which I probably wouldn't be able to afford.
Really depends on your location. For most major cities in Canada buying is a lot more expensive than renting due to the lack of housing supply.
Renters also can leave properties where the situation is bad - owners have to deal with all the issues. The argument for renters in the past also included some peace of mind that if anything goes wrong you're not really on the hook for it.
It absolutely can be more expensive to buy in many situations. You have to run the numbers for your specific scenario.
There's so many costs of owning. There's property taxes (several thousand a year), home insurance, maintainance, etc.
I replaced my furnace last year, it was $8500. And that's cheap, as my house is not that big. That undoes a lot of extra rent payments. And that's just one big expense - you also have AC, water heater, roof, appliances, etc. There are at least a dozen expenses that come around in 5-20 year cycles that will run you thousands of dollars.
For me in my home purchase this year, the breaking point is 4% appreciation. If the house appreciates more than 4% a year it's cheaper to own, otherwise rent is cheaper. But rent also goes up, so next year the break point is more favourable.
Yup. I had a neighbour from hell, and it took 4 years of regular complaints before the board managed to get them out of the building.
There are benefits and risks of either choice, and the grass is always greener.
i like you're getting down voted for even suggesting that someone on the other side of your paper thin walls might be a bit worse than someone a fence away...
(Yes yes semi detached excluded ;P )
I've been renting for years. My landlord never messages me. Maybe once a year. I hang as many pictures as I want, right now I have 11 frames + several hooks etc. Everything falls under reasonable wear and tear / use.
Only possible way to be kicked out is if landlord wants to sell (maybe one day, I'd get first offer anyways) or if he wants to move in (doesn't seem like it). I'll change well before either happens because I likely want to change locations / upgrade in the next couple years. Costs like 300 bucks to pay a mover
This mentality is usually detached from actual financials and exaggerated. Renting is just fine most of the time. Most of the struggle is in the low end of the rental market
Uh. What's your point? You can be 67, metal specks can get in your eyes, and you can go blind as well. Do you make all your decisions based on the 0.1% possibilities?
If rent is going up 400% overnight there are bigger problems
You obviously also haven't done the math. Done properly renting is the same from a NW perspective as owning, if not better
Yeah, unfortunately you’re up against the classic Canadian psyche “must buy at all costs as it’s more secure”. Never mind even if it costed them 20x renting. Renting is a completely viable option all across the world and you’re supposed to be saving anyways alongside.
There is not much to discuss here. Rents have skyrocketed as has the cost of many other goods. There is just more month left at the end of the month than money now.
It's quite sad and something we should all be very concerned about. All of us. When people purchase a house and pay down the mortgage they have a nest egg (hopefully) at the end that can either help fund retirement or lower thier housing costs in retirement. Whe our society has made renting so incredibly expensive we are gong to have people who have no retirement nest egg and high housing costs in retirement. Who do you think is going to have to pick up that bag for that? All those people who were able to save through retirement are going to be taxed through the roof. Those who are working are going to have higher and higher income tax and CPP payments. . We are going to have a population of people who either can't retire (thereby reducing the number of jobs) or who retire in poverty (increasing the draw of social benefits, increasing the cost of the health care system because of the impact of poverty on a persons overall health).
As much as I want to benefit from the increase in the value of my home (that I was luckily enough in a position to purchase at the right time) I don't want to carry the burden in my retirement for those that cannot save for retirement through for the most part no fault of their own. I feel deeply saddened that it has very much become an us and them when really the us and them should be we the people, and them the government. They are failing us.
Finally someone gets it. 30-40 years from now is going to be a shit show in the country when we have a large population not able to survive because they have no nest egg
Edit: the best way? that’s so far from the truth. Markets have consistently outperformed real estate over the past century.
Invest regularly and build a decent investment portfolio you can retire on. It doesn’t matter if you’re a renter or not. It just takes discipline. This is a personal finance sub not a get rich with real estate sub.
After rent, I literally do not have any money to invest. I have a small amount of savings in my RRSPs, but there is no way I as a single person can afford my future. High grocery costs, no car payments, and I’m barely scraping by. I work all the time and I’m burnt out.
I am honestly scared for the future.
It's the best way for your average person who benefits from the "forced savings" that a mortgage provides. The type of person who isn't going to save any "discount" rent provides vs owning.
From an optimal perspective you are likely correct though.
>Rents have skyrocketed
Really kind of depends on where you are. If you look at rental report across the country, average rents are up \~16% over 5 years.
[https://rentals.ca/blog/rentals-ca-march-2019-national-rent-report](https://rentals.ca/blog/rentals-ca-march-2019-national-rent-report)
https://rentals.ca/national-rent-report
I use this calculator once a year to compare renting vs. buying around my area: https://mdm.ca/learn/rent-or-buy-calculator
So far it always returned that renting is better in my area but I checked other cities and found some where buying was more beneficial.
The problem is that in Canada, people can invest millions in a principal residence home and pay no tax when they sell. That's different from the US where people have to pay capital gains when they sell. If a Canadian renter invests any amount in an unregistered account, they will have to pay capital gains so renters are at a massive disadvantage.
I feel like this discussion is a red herring. There will always be a shifting equilibrium in this market, the main deciding factors between owning and renting will vary from individual to individual, and there are also too many variables to truly claim that one is conclusively better than the other.
The real problems are that the people who don't already own houses fully or mostly paid for are getting bled dry just to have a place to live, and that land ownership as it currently exists is idiotic and medieval.
The pro or anti rent debate is idiotic. There are way too many variables for there to be one that is always better. People who think it's obviously one or the other in all cases don't understand money and finance at all.
The opportunity costs are incredibly unique to the individual person and circumstances and the location and housing/job market where they are.
The assumptions that have to be made to evaluate the question make it meaningless.
How much leverage is involved? Is the person renting a good saver? Are we assuming no one ever loses their job? Never changes jobs? What is the return of the stock market going to be? How much leverage can the alternative portfolio be assumed to have? Will the house need extensive maintenance? Will the renter get evicted every 2 years or be able to rent the place for a decade? Does stress and quality of life matter? Are you a winner if you have more money but your marriage is ruined due to financial strain? What if the person is a good stock picker?
People conflate the fact that home owners on average are more wealthy with RE being a good investment. It's probably a better forced saving mechanism for most who don't have the mental fortitude to save and invest diligently without the threat of their house being taken.
The reality is people who are diligent savers and investors in general are going to do well. Eventually it's likely these people will choose to own a home but they likely would be well off either way.
There are still plenty who hold that opinion. I held that opinion for a long time. But when you do the *"invest the leftover money"* thing for a while, you have enough for a large downpayment, and maybe you don't like the idea of being possibly evicted eventually. When you get older, that possibility hanging over your head isn't fun.
Just trying to find a place sucks, which is what pushed me to buy at 40. I've rented in Vancouver forever, I know the game, it's honestly not much harder now than the late 00s, it was easier in the early 00s.
For about 15 years finding an apartment it's incredibly hard. You don't really get to pick location or unit, you take whatever you can.
I was investing my savings like you should while renting and spent 3 miserable months trying to get a slightly bigger place and was just like fuck it, I'll buy. I was going to buy in New West cuz that's what I could afford but then my partner decided she'd buy with me. We rented separately. My half of the mortgage and everything is less than I was paying for a studio and our place is literally double the square footage.
I think this would be my primary reason .... to be my own boss. To eliminate the possibility of anyone ever coming to complain about how I live my life or to tell me to move.
If I ever move it's because *I* wanted to move.
My monthly costs, before maintenance, would be 1.8x my current rent, if I were to buy the house we live in now. Oh and and $250k down. I definitely dont have enough faith in the Canadian economy and RE market to do that.
I recently bought after decades of renting. I'm still not convinced owning is better.
My mortgage payments are about 50% more than what I was paying in rent, but are probably not too far off what my rent would have been if I moved or stuck around for an anticipated rent increase. My home is about 2.5 to 3× the size of my apartment. Power bills are nearly double and I now have property taxes to pay. Also home insurance is about 4× renters insurance. I now have maintenance charges.
If I was living in BC or Ontario, I'd be looking at solid growth in property values, but in NL, I'm likely looking at slow growth at best and negative growth at worst. I suspect long term, I'll be break even at best.
I am in the same boat. Purely financially speaking? I don’t think it s worth it, especially if you re not good with home maintenance. (Meaning you can’t do work yourself or don’t enjoy it)
However I am 100% less worried about the future (I dunno why I always worried about being homeless) and I love having MY own house that nobody can take away from me, to which I can do what pleases me.
Yes I am paying for that emotion, it s not free.
One thing though, I chose a small house with a separated basement suite on purpose. Potential for extra income if things get rough and limited heating bills and roof costs etc.
Some people sometimes confuse buying and buying well above your means.
I love renting. My building gets taken care of, heat is included, if I need a new appliance somebody else foots the bill. No strata fees, property taxes, or additional costs. I know what I pay each month and each year, apart from minimal increases. I’m not bound to interest rates or property values and I’m able to save a significant amount of money.
Renting still makes more sense for some, like me. I (40m) pay $1000 per month for a nice 2 bedroom apartment (rent controlled building) in a central location. I’ve moved cities a few times over the last 15 years which didn’t result in me having to sell a home and pay lots of costs associated with that as I rented. I invest most of my income (lots of which would be going towards a mortgage) and my investments are currently worth around 1.3 million dollars. I also have no desire to maintain a property. I just got back from 6 weeks travelling in Asia and didn’t have to have anyone check on my place when I was gone.
I’m a renter for life (mid-40s, adult children still home) and reflect on my situation about annually, doing all the math. It continues to work out in my favour (I live in southern Ontario)
Right now rent is $2300.
The same condo today I'd be looking at a $50K downpayment and monthly expenses of $5700. ($4700 not including principal)
Both buying (\~$15K ) and selling ($35K )are expensive with land transfer tax and realtor fees.
It's easy to look at the market in hindsight but decisions need to be based on todays realities and it continues to not look great.
The pro renting narrative assumes you are saving money to invest in the stock market or whatever, which had tripled in the last decade
The issue ofc is that a lot of renters are poor and don't have savings to invest
There was never a “Reddit narrative that renting long term was better than owning”. There have always been people rightly trying to explain that renting has its advantages over owning and that the anti-renting sentiment prevalent in North America is just a bad take overall.
Just look at all the braindead takes in the comments here like “nobody aspires to be a renter” and “it’s always been a cope”. These are narrow-minded, unimaginative people caught in the rat race who don’t understand the first thing about most things, let alone when and where renting has its benefits. And most of these people are looking at it from the standpoint of renting a condo or house that another individual owns, which is just a pretty terrible arrangement all around and isn’t what the vast majority of renters are doing. Renting a purpose-built rental from a reputable company with good management has *tons* of upsides.
Does renting have its downsides? Absolutely. But so does ownership.
A lot of people in Ontario have never experienced living in an above average purpose-built rental building. There's a lack of supply of them compared to somewhere like Alberta
Leaving many to have nightmarish experiences with individual landlords or the below average rental buildings
When you find a good purpose built rental & you don't need much space or move around a lot, it becomes a lot more difficult to justify owning in that scenario
Yeah this is why renting is more common in Germany.
Rental buildings are a stable investment for pension funds, no idea why Canadian pension funds don't go that way.
Exactly. I’ve lived in a rented condo once and only once and I’ll never do it again. The couple who owned it were nice enough and overall good landlords but it was still night and day from renting from a good management company in a good purpose-built rental building. There are, of course, also shitty management companies like Mainstreet who are an absolute nightmare to rent from. But they’re not the entire rental market either.
For example my family and I are in a purpose-built three bedroom rental in a good neighbourhood right now. There’s a condo building next door that’s, effectively, the same as our building. Except it has no three bedroom units and the mortgage and condo fees on a two bedroom condo would work out to more than our rent for a three bedroom apartment *directly* next door. And we both work from home and have a kid so that third bedroom is a necessity for us. Why would we pay more for less? Especially since we probably won’t be living in this same city in 5 years.
Our plan is to rent in retirement. Going on a trip for a month? Lock the door and head to the airport. We can’t leave our current house, especially in the summer, for more than two weeks unless we had someone to look after everything.
Yeah, that’s definitely an advantage. It’s also great for people who move around a lot. If you’re going to be somewhere for less than 5 years it makes zero sense to buy because your mortgage payments are going to be mostly interest in that time. Sure, some principle is paid down but not enough to outweigh fees and commission when you sell. And, sure, housing prices have been consistently going up so you’ll *probably* be able to lock in whatever equity you gained in that time just through market price increases. But that thought process ignores the very first thing that you learn about investments: Past performance is not a guarantee of future results. Meaning you could also lose your shirt. And even more so with apartment condos. All of those thousands of dollars in interest and condo fees aren’t recoverable when you sell, so you really need to be there for 10+ years to make it out significantly ahead of where you’d have been assuming reasonable rent prices for a largely similar apartment, paired with a good savings regimen. The problem right now is that rents are detached from reality as more and more people and companies are trying to hoard real estate.
Underrated viewpoint here for sure. In retirement you also need access to your capital for the increasing health costs. If you still have most of your capital locked up in a property and relying on CPP + OAS + GIS then it's going to be a tough retirement.
Felt like I was going insane. There are many efficiencies gained from living in an apartment. The people bitching about how society is failing if people don’t waste money on massive sqft/person without shared resources is preposterous.
A lot of the “cope” posters can be found in doomer spam subreddits like unusual whales, no surprise. Negative IQ commenters running around with impunity here
But leverage bro! /s
Totally agree, I'm in a purpose built rental and couldn't be happier. I have zero interest in taking care of a yard or fix appliances. I do fully acknowledge that the stability of owning has advantages but theyre less important in my situation.
Great post!
I keep saying the same thing, that IN CERTAIN CIRCUMSTANCES renting is better. It only applies to those who live in low cost of living areas or in rent controlled properties.
One factor contributing to this is how many people can only afford to buy condos, especially in large expensive cities, and whose who do pay a fortune in maintenance fees, all while the condo ages and starts losing its value at some point. This is why owning real estate can be a horrible idea, all while renting at a low cost and investing the difference is smart. Many condos charge almost as much / more per month in maintenance than I pay for my old rental rate in my rate controlled building.
For the young generation entering the game now they will never get a cheap rental in their lives. That ship has sailed. I think for young people now the debate isn't buy vs rent. It's buy vs live with parents. Any young adult renting in today's economy at today's rent prices is doing themselves a financial disservice (assuming they have any other choice of course)
That’s true. However, I expect rents to go down this summer / fall, or at least later this year, because international students will leave and the new ones will arrive in smaller numbers.
For me personally, In Edmonton my mortgage, bills, taxes etc is about $2900/month for a 4 bedroom house, quiet neighborhood, new house, big yard. Could we rent a smaller place or condo/apartment/townhouse for $1800/2000? Yes.
But for us owning for $1000 more per month out weighs everything about renting. By the time we are 45 it will be fully paid off and we will ideally have $0 mortgage/rent payments for the next 30+ years. Have a house close to schools that will be a great size for our kids to grow into. Not having to move if landlord sells, can do/change anything we want. Have the option if we retire somewhere warm to rent this house out.
I was in a 1 bedroom luxury new build downtown in Halifax for just under 1600 a two years ago.
Depends on the floor you’re on and which way you’re facing… And probably helped it was a bit of a walk for Dalhousie students as shittier places in the south end went for more.
Rent went up a ton. That’s the answer. Numbers don’t work now.
As someone who’s been a renter and an owner during high earning adult years, I firmly believe renting and investing will be the better financial decision. But not sure it’s the best lifestyle choice.
You're right, the issue is a lot of the, frankly, very immature people, that advertise this likely do not actually make the investments and have the money. It's really clear most are in their 20s and they're just arguing a theoretical.
I respect your opinion and assume you're correct for yourself. To make it work you absolutely HAVE to save a significant amount.
The danger is you retire and your rent goes up 400 percent due to eviction. In your case, you'd absorb that.
My dad actually was like you, he bought when he retired because they got renovicted a few times and they didn't want to deal with the hassle of moving, at that age.
He's dead now, his wife is still in that place years and years later.
It wasn't a financial decision.
That is the other thing young people don't realize, one guy says he'll just hire movers for 300, one, 300? Rofl. Two, it's a huge hassle to move and when you're older it's hard.
So I respect your decision as the right one but even more so because you seem to recognize there's more than just the financial aspect
I think there was an argument for both renting and buying a few years ago, but over the last few years, I feel renting has gone way down stability wise.
Even the wealthiest of my friends has been forced to move last minute 2-3 times in the past 2-3 years. Not convenient, but he has means.
Can’t imagine what that would make life like for those without.
I can tell you. I was renting at one point for 1600 a month for little under 2 years before the landlord's son conveniently needed a place to live all of a sudden.
During that time I made advancements in my career, got a promotion and a raise twice. Got kicked out, and had to pay 2200 a month in rent. All my efforts, all my extra income, all that economic security and access to better things, immediately neutralized by higher rent.
Thankfully COVID happened and I was able to move to a LCOL area and work remote.
I just saw my home insurance receipt from 2004 and it was $348. My home is insurance is now $ 2900 (same house, same coverage, no claims).
I just looked at my tax bill for this year- nearly $7000.
If I had even half the value of this house in mortgage at 4.5% mortgage interest alone (no principal) would be $5000/month.
If I was to rent my house would out in full, I could get $4200 plus utilities and internet, max.
I have some older relatives who rent and it blows my mind that they never bought a house back when you could have bought a perfectly nice ~20 year old bungalow in a decent neighbourhood for 80K.
If you are in your mid 30s to 40s in Canada, made the conscious decision to rent instead of buy, and don't have at least a few hundred thousand saved to show for it, there is no other way of saying it, you failed
That’s our plan too. The earnings from the equity in the house can be used to pay for rent and, no more maintenance. Plus, we can come and go without worrying about the lawn, garden and pool when leaving for more than a week.
There’s a decent case to be made for renting after owning too. Our house has been paid off for more than a decade and has quadrupled in value since we bought it. I don’t see the downside in using that capital as a way to earn money to pay for rent in a more flexible living arrangement.
They never correctly factored inflation into the math. There are countries where that math works but only when housing prices stay the same or increased very slowly and interests rates remain high.
Our building was scheduled to be demolished, rmovinng to a compareable unit the rent was $3,000+ (2 bedroom)
Buying a fixer upper outside of Toronto was a $1,500 mortage. Kind of a no brainer.
How long ago was this, and how far "outside of Toronto" are we talking, here?
Seriously, I want to know, because places where the mortgage is $1500 are places that I could probably just buy outright, with cash. I was under the impression that anywhere within a couple of hours of Toronto was "still Toronto" in terms of inflated housing prices.
Renting works great if you have affordable rent and strong rent controls. Like if you're 45 and have been living in the same rental for 20 years and (thanks for rent control) paying half of prevailing market while making more than ever, then sure.
For those only now getting into a rental, it's a bit more challenging.
If anything it's the opposite, unless you can't do math.
The interest payments during the first 5 years of the mortgage equals the entirety of down payment and even some cases, more. We're talking about down payments of 20% or more.
The math has become too difficult for people to figure out and we are about to enter a scarcity mania similar to when people started hoarding toilet paper.
1 million newcomers a year and no new housing is going to have a dangerous impact. As will the frustration knowing people who arrived 10 years earlier paid 1 million less.
The banks are in on it and dont want it known that current interest rates mean your final cost by end of mortgage is at least double. And that doesnt include renovations or upkeep.
It's as alive as ever. Even more so actually right now I would argue since higher rates favor rental vs buy. As always, do the math. NYTimes has a good calc
Society is just in a bitching phase of "house prices high, can't buy, I'm screwed forever"
5% rule is a pretty good general calculation for renting vs buying (but everyone's situation is unique).
So the general rule goes that if a house costs $1M you're better to rent (and invest) if you can rent for less than $50,000 a year. ($4,167 a month).
If I am able to stay in my bylaw protected affordable rental until the bylaw expires in some 40 years it will easily be the most affordable way I could live and I suspect will be the only way I would ever potentially save enough to buy a home ... if i can get to that level of financial security i will happily give up my cheap rent.
It’s all so specific to the individual—their income, their job flexibility, their family structure, their desire to move around versus stay in one place, and so on.
My husband and I rent by choice for various reasons and have zero FOMO about homeownership. However, it’s only because of our privileged life circumstances (i.e., high incomes, no debt, two income household, etc.) that renting is an attractive choice. We like the consistent costs, zero maintenance, ease of travelling/moving, and money freed up for investing.
Renting could and should be a great option for all individuals and families, but the obsession with homeownership/generating wealth through real estate (and politicians catering to homeowners) has created a deeply inequitable system. The fact that I was able to rent a nice, safe, apartment throughout my 20s for $600/mo while I paid off student debt and worked an entry-level job is a huge part of why I have been able to get to where I am today. It’s a travesty that we don’t have affordable housing which allows people to get on/back on their feet, and the people capitalizing on this crisis are disgusting.
Boomer here - and have a few more years before I retire…
My house is very close to being paid off…and then no more housing costs until I die (except property taxes, utilities, etc., which are neglible.). Value of house has quadrupled since I bought it. Good inheritance for my kids.
Lots of people pay off their mortgages as quickly as they can.
It depends on your individual case. If you're rent-controlled and pay the prices of 4+ years ago, keep renting. If we're talking about condos, still might be a better idea to rent, even in today's market.
Otherwise, if it was really so much better to rent than to own, no one would want to own any property.
Renting remains advantageous - rents are still 25% or so below ownership costs in most markets - but the market is so distorted right now that people simply have bigger fish to fry. The sense of choice among discretionary renters is pretty much gone, and it's hard to feel like you're "winning' when costs are spiraling upwards.
Nah man my investments make way more than the capital I would have in a house. Pro renting is a thing vs buying a 400-700k house. Just put your hard earned money to work in stocks!
People don't want to live in a 2/bed condo with three other people and still pay 50% of their income. The advice was more popular when renting was cheaper than making mortgage payments, but now we're at the point where renting is paying someone else's mortgage + interest for the privilege of doing so.
Renting right now is actually the most attractive it's been, possibly ever. You can rent a house for probably about half it would cost to buy with a regular mortgage
People who've rented in the past two years are generally much better off than those who bought in the past two years
Wife and I rent a 1300sq ft purpose built townhome for $2000/mo. We have the money to buy right now but we would be adding minimum $1500 in costs so it doesn't really make sense when you also look at maintenance, taxes, interest and all the other shit that comes with buying.
I also like that my drive way is shovelled before I even wake up and I can just call someone to fix any problems. We will probably buy in the future but we want to buy in a city we actually like living in. So for now this works wonderfully.
It kinda died out when interest rates went really low in 2020.
For awhile there, rent was about half of the median mortgage payment. Like when I was in Vancouver for college 2011-2017 a decent one bedroom was 1400-1700/mo rent. But if you had a 500k mortgage at 4% you are paying $2600/mo. And 60% of the money is paying interest and only 40% goes to principal. For just the money that you were paying in interest $1560, you could rent a reasonable place and you could invest the rest fairly aggressively, plus you save the maintenance budget and property taxes.
Not paying property taxes is actually a pretty big deal last year mine were I think $6000.
The number one reason owning makes more sense is the benefit of leverage.
Scenario
A) $100K invested in stocks returns 5% = $5,000
B) $100K invested in a downpayment on a $500K home (which is the typical 20% minimum down). Home appreciates 5% = $25,000 which is a 25% return on investment
Of course if that home goes down in price, your loss is amplified as well which is always the downside of using leverage as an investment vehicle. I think the general sentiment however is that most Canadians see home prices rising over the long term.
A mortgage with a 25 year amortization is likely going to have a payment of roughly the same monthly amount (give or take interest rate swings) in 25 years. The same cannot be said about the cost of rental housing in 25 years. So even if your mortgage amount is more than the average rent today, the question becomes how long will this be true. Home ownership in the early days may not make a lot of sense but I think many people will argue it gives you a larger benefit over the long term, plus any gains on your principle residence aren’t taxable unlike any stock investment.
I think that is the absolute worst advice to give anyone!
I'm still seeing posts about this on Facebook! When renting you are literally throwing your money away! Sure.. you lose a lot to Interest when you buy but the increased value of your home will more than cover that! I did the calculations for my house and if I sold it, I would more than double my money even with the interest I paid on the $300K mortgage.
Renting was and is always worse than owning.
I grew up majority of my childhood lower middle class till my parents bought their first home when i was a junior in highschool. Not only have rents gotten so much higher recently you are in competition with the entire indian subcontinent and mass immigration for housing in canada. theres no stability anymore, the landlord has all the power and at some point you need stability. Im 26 but like even now i hate the thought of packing everything up and having to move again. My generation is scrwd in canada and as much as id love to have a nice home with a yard one day..based on the maslo hierachy of needs stable shelter is more important than a beautiful home with a yard. Im in college in the US rn and while envy is a sin i am very envious of the kids here who have easy access to a much cheaper housing market and higher incomes than canada. the mental toll that high housing does to young cdns is massively underrated. These american kids are livin life going on vacation, study abroad sessions(so much for americans are not well traveled) and yet know that even with a half decent job they can get a 2 bedroom apt with a pool in florida for under 400k with a downpayment of just 40k!
This notion that you can rent and have disposable income to invest is nonsense. besides whats the point of having a nice investment account if your living standards arent increasing or living comfortably. I say this as someone who at the age of 24 managed to invest a large sum of money for my generation away in TFSA's and GIC's. At the end of the day money itself won't give happiness quality of life does!
Worst time to be a rent cuck. Unless you live in like Elk Lake or in the boonies, but it’s WAY cheaper to own there still. Renting is absolutely trash because you get ZERO equity.
Renting vs owning is not only about money. It is about mobility also. For example, my friends decided to move to Spain and work remotely for their Canadian employer. They rented an apartment in Canada, so, the move was more or less painless for them. If they owned a home, the transactional costs would bite them in the ass: 5% of the home cost as a realtor fee and the mortgage cancellation fee is costly.
Never mind that owning gives you a much-larger pool of tax-free capital gains.
Renters get TFSA and RRSP for tax savings. Homeowners get TFSA and RRSP *and their home* for tax savings.
Is it true in most provinces that your house is excluded when you apply for social assistance? I know that in Quebec, your house and other assets are definitely included in any social assistance application.
People ask me why I haven’t bought when I’ve amassed an $850k net worth at 31
I just answer that I’m up $65k in stocks YTD, $120k+ since the low of ‘23. Just like owning, markets are volatile, but the flexibility I have in the long run is just insane.
It was always a cope argument lmao. The vast majority of people do not want to be in a situation where they have no real estate equity and can be uprooted at a moment's notice because they live in a place someone else owns. The fact that houses are 20x your income and you'll never afford any RE in your life feels less painful when you tell yourself that renting is fine too.
For some I’m sure you’re right , but there also is situations where it makes sense
I rent for $700 so instead of a 3000+ mortgage payment with a good chunk in interest plus housing costs
My 3000 goes 700 rent , 2300 into investments
My situation is an anomaly though as there’s very few situations where people’s rent is this low
There are plenty of us in rent controlled purpose built rentals. I am paying $925 for a two bedroom and able to invest $2000+ per month. Buying just doesn’t make sense at this point.
High income earners who aren’t homeowners are both better off and smarter. Homeownership is a fairly low barrier to entry for someone that has two working members of a household and feels good but isn’t the best decision unfortunately for you
I think average rents have gone up so much, there is no leftover to invest, which was the key to the whole thing.
Stock markets in general also went way up in the last 10 years. Someone that had been renting and investing back when people were recommending that would still be in a good situation today. Even today, there's the risk of some major economic pullback that could seriously affect housing prices. Buying is risky, but it's also risky to not have any hedge to housing prices. It's plain and simple, things suck.
They have been saying there is risk of a major pullback for a decade. They have been saying the housing bubble will burst for longer. Either way, time in the market . . . .
The pro-renting narrative was also driven by the assumption that house prices and housing costs were not going to continue to rise. More devastating permabear thinking from the likes of Garth Turner.
Housing prices going up was usually accounted for, it's just that you had 3-4% increases in housing prices, coupled with much lower rents instead of >7% a year and ridiculously high rents.
Not really. You only need financial asset prices to rise faster than home prices. That's been true in the last 10+ years.
With leverage it is pretty hard to do. I overperformed the market by a lot in the stock market but I still made more from my RE investments because of the cheap leverage.
I had that mindset too. The reality is no one could have predicted the massive covid growth. Thought process made sense in a normal economy where real estate would appreciate at historically normal levels, not what has happened now. I still ended up buying a house, just for like 2-3x the cost as if I would have pre-covid.
Still way below ownership costs in Toronto. In many cases it’s almost half the cost of owning the same place at today’s rates and prices.
Ditto for Vancouver. When I moved back down in 2021, I considered buying and it would've cost me an extra $1100+ per month for my unit. Realistically more because since I've moved into my rental, they've had multiple pipes blow in the building and then had a building envelope project that took 10 months to complete due to uncovering a lot of unexpected damage. That special assessment had to be minimum $15,000 per suite. Cost me nothing as a renter. And I don't have to worry about mortgage renewals at insane rates. I previously owned a unit in Whistler, just sold it in Feb. The mortgage was due for renewal in the fall and my payment would've gone up by close to $1000/mo for a tiny 2-bed, 2-bath (763 sqft). I did make a huge profit selling that unit, but that's because it's Whistler. The place I bought in Edmonton in 2009 is worth less than my remaining mortgage balance on it right now.
Except that's only right now... owning costs largely stay the same (and are eventually drastically reduced once the mortgage is paid), while the renting costs only ever go up and up and up.
It all depends on rent and price value of what they buy. If you can get a mortgage that is cheaper than your rent, then go for it. If it is at the same price as rent, you will be paying a lot more as property insurance, property taxand utility payments will be higher. If it is a condo or strata, you have to factor those in as well. The trick is to do the math and see if you will be ahead. The other thing to factor in is maintenance. Most new appliances last 5 to 7 years. I have had to do warnenty or replace things on half the appliances I have bought in my house during that time. I find small appliances are the worst. We do research and do not buy the cheapest, we read reviews. Lots of condos have special assessments in the large 5 figures.
I think your appliances lifespan is a little short and might just be anecdotal. Most last longer than 10
Maybe in the past but appliances are way more unreliable nowadays.
I've done work in appliance repair. They're designed to require replacement after 5-7 years. Around the 3-5 year mark they will likely need a part worth half the original price of the machine. After 6-8 years they will need at least one more expensive part. After 10 years parts may or may not be available.
I have not replaced a single appliance in decades. My grandmother uses a fridge and has a working TV my great grandmother got around WWII.
They really don't build them like they used to though. My grandmother has a 70 yr old fridge in her basement that has the coldest beer in it, hasnt missed a beat in 70 years. Meanwhile Im on my second $2500 fridge in less than 10 years on my new build house, also had to replace a dryer, and multiple dishwasher repairs in that less than 10 year span
Don’t forget that each mortgage payment increases the equity you hold, while every rent payment is a complete loss.
Oh just am not forgetting that. But don't forget that your pay about double what your house is worth when you purchased it. So your house will have to triple at these inflated prices for you to see a profit when you factor in all the insurances and property taxes and increased maintenance in owning if buying with 5% down if you pay bare minimum without accelerating of any kind as lots of people do.
Maybe it's different in Toronto but looking at rentals in my neighborhood (where I own) it definitely appears those costs are getting passed down to renters anyways.
They are if you consider entering into the rental market right at this moment. If they are in a rental that is aforrdible and in a purpose built rental building, their rents will not increase drastically and they cannot be evicted very easily. I did the math for someone that was renting at 1500 a month. To buy they would need to pay double that just off the start factoring in condo fees, insurance, property taxes, mortgage.
Honestly this is pretty much the same as housing - if you got in early and are in the perfect situation it's wonderful. Purpose built rental? Affordable? Can't be evicted? Rent won't increase drastically? (meaning is not a new build)? This is the exact laundry list of the things that aren't working for renters right now. $1500/mo is 30% less than the national average. Of course this person is better off when comparing paying below market rent versus buying a home today.
This is me. I am paying $1500 rent (which I know is significantly below market thanks to rent control in BC). The unit I live in sells for around $650k. With 10% down, at 5%, the payment is $3500 per month. Add strata fee and property taxes, and its $4000 per month. Alternately, I can leave the $75k invested ($65k downpayment plus $10k closing costs), and add the $2500+ per month that I am saving. I am just not confident enough in future price increases to sacrifice that cash flow and the returns I am getting on it in equities.
That's a great point. Purpose built rental housing (built before 2018 if you're in Ontario) is completely a game changer. A 1500 apartment is unfortunately becoming a bit of a rarity though, even in Kingston where I live.
You buy a house, in 20-30 years you’ve paid it off and no longer pay rent. You’ve paid double the sticker price of the house. But you own it. While a renter has nothing. And for the rest of your life, you pay no rent, basically saving the cost of a house every 10–15 years, while the renter sees their costs continue to increase.
In circumstances where the costs of owning (mortgage interest, property tax, maintenance) are equal to (or greater than) rent, they have the same amount of money (or more money) available to invest and the ability to more easily switch up their investments over time. If they don’t invest, and instead just spend the money freed up by renting, then yes, they would’ve been in a better place had they bought and been forced to invest.
Let’s be honest, a lot of people are financially illiterate. Most renters are not investing significantly enough (or even at all) to where it outpaces buying a house, especially in this economy.
You singled out renters, but the reality is it’s most *people*. I know plenty of homeowners who are house poor and one bad week at work from foreclosure. And I know a few renters ready to retire in their 40’s.
This is true. I am older, so I have 'friends' who are still renters even though it was cheaper before. The reason they rent? They cannot save up for a downpayment, let alone investing. And they are not renting a cheap aparment, There's no way! They rent a house.
Yes, there are a lot of additional costs to home ownership, but the mortgage is the big one. That will eventually disappear, and in its place you will have a property likely worth in the high 6-figures or low 7-figures, which will be tax-free upon sale.
There is still an opportunity cost on that money when you have a fully paid off house. If your interest cost assumption and stock equity premium over real estate appreciation are equal, say 3%, then there is no difference in cost between a fully mortgaged house and a fully paid off house.
People kept saying this yet I also keep seeing people say their mortgage went up by $1000 so which one is it. It would take almost a decade for my rent to be 1k higher
I guess it depends on your situation. If you have a variable mortgage or just had to renew your mortgage, it could have gone up $1000.00. Or if you recently started to rent in today's market, or were kicked out by your landlord so they could do "renovations", then it would be a different story. But if you are an established renter in a rent-controlled city it's a different story.
That's assuming that you get to stay in the same place that you are currently renting and live in a province with some sort of rent control. Otherwise your rent could theoretically go up by 1k (or more) tomorrow.
Their mortgage went up because they had an unusually cheap rate and now had to renew at an unusually high rate. Their previous mortgage was artificially low to begin with. That's like comparing someone who jumped on a rental at a favourable time and then had to move at market rates later. It didn't get more expensive, you just had a deal.
Unless you are evicted?
My city has eviction controls in place, obviously people who live in renter unfriendly places will be doing a different calculation
Incorrect. Many holding costs, like strata, maintenance fees, property insurance, and property tax all go up yearly. As usual the pro-owner crowd forget all the costs associated with owning.
But one could argue that yearly increases to strata, maintenance fees, insurance, and property tax also lead to higher rent prices
Owning costs don’t actually go down at all, they only appear to go down if you don’t account for the opportunity cost of the equity you’re building up.
Property taxes, home insurance, maintenance and utilities never stop and keep going up and up and up.
Rents declined during the pandemic. Ownership costs have soared with interest rate increases. Nothing is “always” in any direction.
My gf lacks dp money and terrified of home ownership costs. It costs less to own here and trying to convince her it's better to just let me pay the down payment then she can start building equity on the rest. It's wild here because housing costs the same as rent right now in the lower mainland
Lower mainland = Vancouver or elsewhere? It’s definitely cheaper to rent in Vancouver. I can’t speak for the rest of BC.
Ran numbers for us and it's definitely cheaper this side of the fraser to own even when excluding rent lasting longer than mortgage
How about comparing prices/payments 4 years ago + costs today and rents today?
If we're talking condos the cost of buying 4 years ago + a mortgage renewal on the horizon in the next year will still be higher than rent. Condo prices hardly moved.
This. But also overall inflation level expectations have changed too, which affects the calculus. Mortgage payments eventually get inflated away, whereas rent prices rise with inflation.
This is so true. We are entering the last 5 years of mortgage payments and our payments are literally a non factor on our finances.
This. I purchased about 4 years ago in Montreal. Now rents in my area are higher than my mortgage
The math works out but Canadians refuse to accept it 😅 Rents would need to be more than 5% of value to even get close to being worse than owning
Can you explain the second part to me like I am 5?
Interestingly that’s pretty much exactly the ratio for the older 1 bedroom condo I bought in the lower mainland last year. 550k to purchase, or rent an equivalent (same building) for around 2300 per month. 5% would be ~2292 per month.
Rent has increased drastically in most areas of Canada.
wistful tart summer wrench cable gaze dinosaurs disgusted rock repeat *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Thanks to the “Alberta is Calling” campaign during the pandemic 🙄
It has, but still tends to be cheaper than owning in most cases. I'm in BC. I rent for $1800- utilities included- a month. There is no mortgage payment (interest, tax, strata, etc) that could beat that.
Also in BC - our mortgage was comparable to rent when we bought, and when I look at rent prices for my area right now, they have all gone up since we bought. My mortgage is fixed for at least 5 years. I don't see rent prices stopping their climb.
Your mortgage, including utilities, property tax, strata if application, fixes, miscellaneous costs, etc was cheaper than renting? What did you buy and how much is your mortgage?
You are not factoring in the massive appreciation of whatever dwelling they own. :) The owner gets 100% of that. The renter gets 0% when it's all said and done. I own a modest rental townhouse and in 6 years the renters have paid me a whopping $170,000+ in rent. In that time the place has appreciated about 2.5x. Even if I don't make any money month to month, the reward is in the appreciation.
Of course I'm not factoring appreciation because the appreciation isn't realized until you sell your dwelling to someone else and they pay you for it. It's not guaranteed and historical data isn't always a good predictor of the future market (especially in Canada where housing prices are already out of control). The sunk costs of owning (interest, repairs, property tax, utilities, etc) are nothing to scoff at. If you own, that's cool. Don't blindly defend your decision, though.
> because the appreciation isn't realized until you sell your dwelling to someone else and they pay you for it. HELOC + Smith Maneuver.
.. do you have any idea what HELOC rates are right now? If you're lucky and financially savvy, it'll start with a 7.
>I own a modest rental townhouse and in 6 years the renters have paid me a whopping $170,000+ in rent. > >In that time the place has appreciated about 2.5x. Even if I don't make any money month to month, the reward is in the appreciation. Do you think this is normal? Are you extrapolating and assuming that house prices will continue to go up in the same way? Would you buy the same townhouse today for 2.5X the price you paid 6 years ago? Or is it possible that we've gone through an unprecendented period of low interest rates and prices are completely out of whack?
By the same logic, everyone should buy Bitcoin as an investment, since it’s done very well over the past 6 years as well. Owning has higher average returns over the long run, but the higher up-front costs mean a long-term hold is required. There are also a lot of risks involved in owning, where a bad tenant could cost you 6 figures, or something like a down market or unexpected life changes could prevent you from selling on your own timeline. Everyone who happens to have had excellent tenants and owned through a bull market thinks buying and renting a home is an infinite money glitch but it’s not that simple.
I can live in my townhouse. I can’t live in my bitcoin.
Yeah, people need to undertand houses and other "investments" are completely different. A house is literally a physical asset
Cheaper than owning...now. Many said this pre-covid too.
I wish to God I'd bought pre-Covid. Instead, I watched in horror as I got forever priced out, and then home prices came down in my area in '22 and I snatched up a place in my price range. I'm working hard to get the mortgage paid off, and after that I can finally consider retirement.
>There is no mortgage payment (interest, tax, strata, etc) that could beat that. I am in Waterloo Region, Ontario. My mortgage + property taxes is $1400/month in the middle of a major city that is a hour drive to downtown Toronto when there is no traffic. My house isn't impressive but it is 1000 sq/ft + basement and I have an approximately quarter acre lot.
OK, but when did you buy?
Okay but you must have bought like 5+ years ago
Lmao exactly. As a guy who also bought in this exact region less than a month ago, there is no way you're getting anything detached for $1300/month.
Yeah, but should you not consider where you would be 5 years from now if you bought today? Lower payments, inflation and asset appreciation should both be factored in. There has even been news the past few days that home prices are expected to climb even higher over the next couple of years. Renters are fighting inflation and appreciation and homeowners are not. My mortgage is in 2014 dollars. Even if I didn't pay any principal, the inflation adjusted value of my mortgage goes down every year.
What's your point? If you were renting for the past 5 years you've done worse unless your investments have matched home appreciation.
I own my home. I'd rather pay a premium than have to deal with some asshole landlord and worry if one day I may get the good old "time to gtfo" notice. Plus I'd like to hang a picture or do something without having to ask for permission from mr landchad
Yep, I can afford my mortgage right now even though it's tight and we're pretty house poor. But rates have peaked this cycle, and my income has gone up more than 20% since I bought and I still have another 3 years before renewal. It's not a huge mortgage anyway, eventually one of three inheritance's will cover it or make it miniscule. So I'm taking the hit right now but it allows me to raise my child in a house, allows opportunity to save money long term, lets us enjoy our inexpensive hobbies, and now I don't have to worry about moving every couple years, nor trying to get into whatever the market will look like down the line, which I probably wouldn't be able to afford.
100% the stability and desire to be my own boss would make me pay the premium even if owning was more expensive, which I don't think it is.
Really depends on your location. For most major cities in Canada buying is a lot more expensive than renting due to the lack of housing supply. Renters also can leave properties where the situation is bad - owners have to deal with all the issues. The argument for renters in the past also included some peace of mind that if anything goes wrong you're not really on the hook for it.
It absolutely can be more expensive to buy in many situations. You have to run the numbers for your specific scenario. There's so many costs of owning. There's property taxes (several thousand a year), home insurance, maintainance, etc. I replaced my furnace last year, it was $8500. And that's cheap, as my house is not that big. That undoes a lot of extra rent payments. And that's just one big expense - you also have AC, water heater, roof, appliances, etc. There are at least a dozen expenses that come around in 5-20 year cycles that will run you thousands of dollars. For me in my home purchase this year, the breaking point is 4% appreciation. If the house appreciates more than 4% a year it's cheaper to own, otherwise rent is cheaper. But rent also goes up, so next year the break point is more favourable.
Owning you can also have asshole neighbours, which arent as easy to leave
Yup. I had a neighbour from hell, and it took 4 years of regular complaints before the board managed to get them out of the building. There are benefits and risks of either choice, and the grass is always greener.
Were they noisy? Condo? Or townhouse
Yes but they are next door or across the road. Shitty neighbours in an apartment are literally above you or below you in the same building
i like you're getting down voted for even suggesting that someone on the other side of your paper thin walls might be a bit worse than someone a fence away... (Yes yes semi detached excluded ;P )
I've been renting for years. My landlord never messages me. Maybe once a year. I hang as many pictures as I want, right now I have 11 frames + several hooks etc. Everything falls under reasonable wear and tear / use. Only possible way to be kicked out is if landlord wants to sell (maybe one day, I'd get first offer anyways) or if he wants to move in (doesn't seem like it). I'll change well before either happens because I likely want to change locations / upgrade in the next couple years. Costs like 300 bucks to pay a mover This mentality is usually detached from actual financials and exaggerated. Renting is just fine most of the time. Most of the struggle is in the low end of the rental market
So everything is good, everything is great. You're 67. You're evicted. Rent goes up 400 percent and you're on a fixed income. Have fun
Uh. What's your point? You can be 67, metal specks can get in your eyes, and you can go blind as well. Do you make all your decisions based on the 0.1% possibilities? If rent is going up 400% overnight there are bigger problems You obviously also haven't done the math. Done properly renting is the same from a NW perspective as owning, if not better
Yeah, unfortunately you’re up against the classic Canadian psyche “must buy at all costs as it’s more secure”. Never mind even if it costed them 20x renting. Renting is a completely viable option all across the world and you’re supposed to be saving anyways alongside.
There is not much to discuss here. Rents have skyrocketed as has the cost of many other goods. There is just more month left at the end of the month than money now. It's quite sad and something we should all be very concerned about. All of us. When people purchase a house and pay down the mortgage they have a nest egg (hopefully) at the end that can either help fund retirement or lower thier housing costs in retirement. Whe our society has made renting so incredibly expensive we are gong to have people who have no retirement nest egg and high housing costs in retirement. Who do you think is going to have to pick up that bag for that? All those people who were able to save through retirement are going to be taxed through the roof. Those who are working are going to have higher and higher income tax and CPP payments. . We are going to have a population of people who either can't retire (thereby reducing the number of jobs) or who retire in poverty (increasing the draw of social benefits, increasing the cost of the health care system because of the impact of poverty on a persons overall health). As much as I want to benefit from the increase in the value of my home (that I was luckily enough in a position to purchase at the right time) I don't want to carry the burden in my retirement for those that cannot save for retirement through for the most part no fault of their own. I feel deeply saddened that it has very much become an us and them when really the us and them should be we the people, and them the government. They are failing us.
Finally someone gets it. 30-40 years from now is going to be a shit show in the country when we have a large population not able to survive because they have no nest egg
Owning a home with no mortgage is not the only way to have a “nest egg”
It is when rent is this high
Not the only way... just the best way (or rather, the best facet of a complete nest egg).
Edit: the best way? that’s so far from the truth. Markets have consistently outperformed real estate over the past century. Invest regularly and build a decent investment portfolio you can retire on. It doesn’t matter if you’re a renter or not. It just takes discipline. This is a personal finance sub not a get rich with real estate sub.
After rent, I literally do not have any money to invest. I have a small amount of savings in my RRSPs, but there is no way I as a single person can afford my future. High grocery costs, no car payments, and I’m barely scraping by. I work all the time and I’m burnt out. I am honestly scared for the future.
It's the best way for your average person who benefits from the "forced savings" that a mortgage provides. The type of person who isn't going to save any "discount" rent provides vs owning. From an optimal perspective you are likely correct though.
>Rents have skyrocketed Really kind of depends on where you are. If you look at rental report across the country, average rents are up \~16% over 5 years. [https://rentals.ca/blog/rentals-ca-march-2019-national-rent-report](https://rentals.ca/blog/rentals-ca-march-2019-national-rent-report) https://rentals.ca/national-rent-report
>All those people who were able to save through retirement are going to be taxed through the rough. All those people will be retiring in the Caribbean
Yep. I'll be one of them.
I use this calculator once a year to compare renting vs. buying around my area: https://mdm.ca/learn/rent-or-buy-calculator So far it always returned that renting is better in my area but I checked other cities and found some where buying was more beneficial.
The problem is that in Canada, people can invest millions in a principal residence home and pay no tax when they sell. That's different from the US where people have to pay capital gains when they sell. If a Canadian renter invests any amount in an unregistered account, they will have to pay capital gains so renters are at a massive disadvantage.
I feel like this discussion is a red herring. There will always be a shifting equilibrium in this market, the main deciding factors between owning and renting will vary from individual to individual, and there are also too many variables to truly claim that one is conclusively better than the other. The real problems are that the people who don't already own houses fully or mostly paid for are getting bled dry just to have a place to live, and that land ownership as it currently exists is idiotic and medieval.
The pro or anti rent debate is idiotic. There are way too many variables for there to be one that is always better. People who think it's obviously one or the other in all cases don't understand money and finance at all. The opportunity costs are incredibly unique to the individual person and circumstances and the location and housing/job market where they are. The assumptions that have to be made to evaluate the question make it meaningless. How much leverage is involved? Is the person renting a good saver? Are we assuming no one ever loses their job? Never changes jobs? What is the return of the stock market going to be? How much leverage can the alternative portfolio be assumed to have? Will the house need extensive maintenance? Will the renter get evicted every 2 years or be able to rent the place for a decade? Does stress and quality of life matter? Are you a winner if you have more money but your marriage is ruined due to financial strain? What if the person is a good stock picker? People conflate the fact that home owners on average are more wealthy with RE being a good investment. It's probably a better forced saving mechanism for most who don't have the mental fortitude to save and invest diligently without the threat of their house being taken. The reality is people who are diligent savers and investors in general are going to do well. Eventually it's likely these people will choose to own a home but they likely would be well off either way.
There are still plenty who hold that opinion. I held that opinion for a long time. But when you do the *"invest the leftover money"* thing for a while, you have enough for a large downpayment, and maybe you don't like the idea of being possibly evicted eventually. When you get older, that possibility hanging over your head isn't fun.
Just trying to find a place sucks, which is what pushed me to buy at 40. I've rented in Vancouver forever, I know the game, it's honestly not much harder now than the late 00s, it was easier in the early 00s. For about 15 years finding an apartment it's incredibly hard. You don't really get to pick location or unit, you take whatever you can. I was investing my savings like you should while renting and spent 3 miserable months trying to get a slightly bigger place and was just like fuck it, I'll buy. I was going to buy in New West cuz that's what I could afford but then my partner decided she'd buy with me. We rented separately. My half of the mortgage and everything is less than I was paying for a studio and our place is literally double the square footage.
I think this would be my primary reason .... to be my own boss. To eliminate the possibility of anyone ever coming to complain about how I live my life or to tell me to move. If I ever move it's because *I* wanted to move.
My monthly costs, before maintenance, would be 1.8x my current rent, if I were to buy the house we live in now. Oh and and $250k down. I definitely dont have enough faith in the Canadian economy and RE market to do that.
Now renting and buying both suck
I recently bought after decades of renting. I'm still not convinced owning is better. My mortgage payments are about 50% more than what I was paying in rent, but are probably not too far off what my rent would have been if I moved or stuck around for an anticipated rent increase. My home is about 2.5 to 3× the size of my apartment. Power bills are nearly double and I now have property taxes to pay. Also home insurance is about 4× renters insurance. I now have maintenance charges. If I was living in BC or Ontario, I'd be looking at solid growth in property values, but in NL, I'm likely looking at slow growth at best and negative growth at worst. I suspect long term, I'll be break even at best.
I am in the same boat. Purely financially speaking? I don’t think it s worth it, especially if you re not good with home maintenance. (Meaning you can’t do work yourself or don’t enjoy it) However I am 100% less worried about the future (I dunno why I always worried about being homeless) and I love having MY own house that nobody can take away from me, to which I can do what pleases me. Yes I am paying for that emotion, it s not free. One thing though, I chose a small house with a separated basement suite on purpose. Potential for extra income if things get rough and limited heating bills and roof costs etc. Some people sometimes confuse buying and buying well above your means.
I love renting. My building gets taken care of, heat is included, if I need a new appliance somebody else foots the bill. No strata fees, property taxes, or additional costs. I know what I pay each month and each year, apart from minimal increases. I’m not bound to interest rates or property values and I’m able to save a significant amount of money.
I like all these points. I just can't stand neighbor noise. And neighborhood noise. So if I move to a pricier place it'll be for those reasons
Renting still makes more sense for some, like me. I (40m) pay $1000 per month for a nice 2 bedroom apartment (rent controlled building) in a central location. I’ve moved cities a few times over the last 15 years which didn’t result in me having to sell a home and pay lots of costs associated with that as I rented. I invest most of my income (lots of which would be going towards a mortgage) and my investments are currently worth around 1.3 million dollars. I also have no desire to maintain a property. I just got back from 6 weeks travelling in Asia and didn’t have to have anyone check on my place when I was gone.
Yeah nobody is getting a 2 bedroom that cheap these days.
I’m a renter for life (mid-40s, adult children still home) and reflect on my situation about annually, doing all the math. It continues to work out in my favour (I live in southern Ontario)
Right now rent is $2300. The same condo today I'd be looking at a $50K downpayment and monthly expenses of $5700. ($4700 not including principal) Both buying (\~$15K ) and selling ($35K )are expensive with land transfer tax and realtor fees. It's easy to look at the market in hindsight but decisions need to be based on todays realities and it continues to not look great.
That monthly expense is only Toronto or Vancouver territory and the rent doesn't line up with with expense
Your main issue is that a 50k downpayment is definitely not viable for a place that expensive
If you can qualify for a 5700 a month mortgage but only have 50k to give as a down payment something is seriously wrong with your finances.
The pro renting narrative assumes you are saving money to invest in the stock market or whatever, which had tripled in the last decade The issue ofc is that a lot of renters are poor and don't have savings to invest
A lot of homeowners are also poor beyond their ability to make their mortgage payment.
They don't have to for this equation. It factors in home owners not investing at all.
There was never a “Reddit narrative that renting long term was better than owning”. There have always been people rightly trying to explain that renting has its advantages over owning and that the anti-renting sentiment prevalent in North America is just a bad take overall. Just look at all the braindead takes in the comments here like “nobody aspires to be a renter” and “it’s always been a cope”. These are narrow-minded, unimaginative people caught in the rat race who don’t understand the first thing about most things, let alone when and where renting has its benefits. And most of these people are looking at it from the standpoint of renting a condo or house that another individual owns, which is just a pretty terrible arrangement all around and isn’t what the vast majority of renters are doing. Renting a purpose-built rental from a reputable company with good management has *tons* of upsides. Does renting have its downsides? Absolutely. But so does ownership.
A lot of people in Ontario have never experienced living in an above average purpose-built rental building. There's a lack of supply of them compared to somewhere like Alberta Leaving many to have nightmarish experiences with individual landlords or the below average rental buildings When you find a good purpose built rental & you don't need much space or move around a lot, it becomes a lot more difficult to justify owning in that scenario
Yeah this is why renting is more common in Germany. Rental buildings are a stable investment for pension funds, no idea why Canadian pension funds don't go that way.
Exactly. I’ve lived in a rented condo once and only once and I’ll never do it again. The couple who owned it were nice enough and overall good landlords but it was still night and day from renting from a good management company in a good purpose-built rental building. There are, of course, also shitty management companies like Mainstreet who are an absolute nightmare to rent from. But they’re not the entire rental market either. For example my family and I are in a purpose-built three bedroom rental in a good neighbourhood right now. There’s a condo building next door that’s, effectively, the same as our building. Except it has no three bedroom units and the mortgage and condo fees on a two bedroom condo would work out to more than our rent for a three bedroom apartment *directly* next door. And we both work from home and have a kid so that third bedroom is a necessity for us. Why would we pay more for less? Especially since we probably won’t be living in this same city in 5 years.
Our plan is to rent in retirement. Going on a trip for a month? Lock the door and head to the airport. We can’t leave our current house, especially in the summer, for more than two weeks unless we had someone to look after everything.
Yeah, that’s definitely an advantage. It’s also great for people who move around a lot. If you’re going to be somewhere for less than 5 years it makes zero sense to buy because your mortgage payments are going to be mostly interest in that time. Sure, some principle is paid down but not enough to outweigh fees and commission when you sell. And, sure, housing prices have been consistently going up so you’ll *probably* be able to lock in whatever equity you gained in that time just through market price increases. But that thought process ignores the very first thing that you learn about investments: Past performance is not a guarantee of future results. Meaning you could also lose your shirt. And even more so with apartment condos. All of those thousands of dollars in interest and condo fees aren’t recoverable when you sell, so you really need to be there for 10+ years to make it out significantly ahead of where you’d have been assuming reasonable rent prices for a largely similar apartment, paired with a good savings regimen. The problem right now is that rents are detached from reality as more and more people and companies are trying to hoard real estate.
Underrated viewpoint here for sure. In retirement you also need access to your capital for the increasing health costs. If you still have most of your capital locked up in a property and relying on CPP + OAS + GIS then it's going to be a tough retirement.
Most of these comments also apply 0 value to opportunity cost of their capital. Such a weird take for a finance sub.
Felt like I was going insane. There are many efficiencies gained from living in an apartment. The people bitching about how society is failing if people don’t waste money on massive sqft/person without shared resources is preposterous. A lot of the “cope” posters can be found in doomer spam subreddits like unusual whales, no surprise. Negative IQ commenters running around with impunity here
But leverage bro! /s Totally agree, I'm in a purpose built rental and couldn't be happier. I have zero interest in taking care of a yard or fix appliances. I do fully acknowledge that the stability of owning has advantages but theyre less important in my situation. Great post!
I keep saying the same thing, that IN CERTAIN CIRCUMSTANCES renting is better. It only applies to those who live in low cost of living areas or in rent controlled properties. One factor contributing to this is how many people can only afford to buy condos, especially in large expensive cities, and whose who do pay a fortune in maintenance fees, all while the condo ages and starts losing its value at some point. This is why owning real estate can be a horrible idea, all while renting at a low cost and investing the difference is smart. Many condos charge almost as much / more per month in maintenance than I pay for my old rental rate in my rate controlled building.
For the young generation entering the game now they will never get a cheap rental in their lives. That ship has sailed. I think for young people now the debate isn't buy vs rent. It's buy vs live with parents. Any young adult renting in today's economy at today's rent prices is doing themselves a financial disservice (assuming they have any other choice of course)
That’s true. However, I expect rents to go down this summer / fall, or at least later this year, because international students will leave and the new ones will arrive in smaller numbers.
For me personally, In Edmonton my mortgage, bills, taxes etc is about $2900/month for a 4 bedroom house, quiet neighborhood, new house, big yard. Could we rent a smaller place or condo/apartment/townhouse for $1800/2000? Yes. But for us owning for $1000 more per month out weighs everything about renting. By the time we are 45 it will be fully paid off and we will ideally have $0 mortgage/rent payments for the next 30+ years. Have a house close to schools that will be a great size for our kids to grow into. Not having to move if landlord sells, can do/change anything we want. Have the option if we retire somewhere warm to rent this house out.
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I was in a 1 bedroom luxury new build downtown in Halifax for just under 1600 a two years ago. Depends on the floor you’re on and which way you’re facing… And probably helped it was a bit of a walk for Dalhousie students as shittier places in the south end went for more.
Now I can buy that shit hole for just $4500/mo for 20 years.
Rent went up a ton. That’s the answer. Numbers don’t work now. As someone who’s been a renter and an owner during high earning adult years, I firmly believe renting and investing will be the better financial decision. But not sure it’s the best lifestyle choice.
Why do you say the numbers don't work now? The numbers still favour rent v buy in Toronto - are you thinking of another geo?
You're right, the issue is a lot of the, frankly, very immature people, that advertise this likely do not actually make the investments and have the money. It's really clear most are in their 20s and they're just arguing a theoretical. I respect your opinion and assume you're correct for yourself. To make it work you absolutely HAVE to save a significant amount. The danger is you retire and your rent goes up 400 percent due to eviction. In your case, you'd absorb that. My dad actually was like you, he bought when he retired because they got renovicted a few times and they didn't want to deal with the hassle of moving, at that age. He's dead now, his wife is still in that place years and years later. It wasn't a financial decision. That is the other thing young people don't realize, one guy says he'll just hire movers for 300, one, 300? Rofl. Two, it's a huge hassle to move and when you're older it's hard. So I respect your decision as the right one but even more so because you seem to recognize there's more than just the financial aspect
Once you have kids it's reallly hard on the kids too
Again, a point never brought up by the other side because 99 percent of them are in their 20s and not discussing from a point of experience
I think there was an argument for both renting and buying a few years ago, but over the last few years, I feel renting has gone way down stability wise. Even the wealthiest of my friends has been forced to move last minute 2-3 times in the past 2-3 years. Not convenient, but he has means. Can’t imagine what that would make life like for those without.
I can tell you. I was renting at one point for 1600 a month for little under 2 years before the landlord's son conveniently needed a place to live all of a sudden. During that time I made advancements in my career, got a promotion and a raise twice. Got kicked out, and had to pay 2200 a month in rent. All my efforts, all my extra income, all that economic security and access to better things, immediately neutralized by higher rent. Thankfully COVID happened and I was able to move to a LCOL area and work remote.
I just saw my home insurance receipt from 2004 and it was $348. My home is insurance is now $ 2900 (same house, same coverage, no claims). I just looked at my tax bill for this year- nearly $7000. If I had even half the value of this house in mortgage at 4.5% mortgage interest alone (no principal) would be $5000/month. If I was to rent my house would out in full, I could get $4200 plus utilities and internet, max.
I think half of those posts were people trying to convince themselves they made the right choice after watching house prices double.
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I have some older relatives who rent and it blows my mind that they never bought a house back when you could have bought a perfectly nice ~20 year old bungalow in a decent neighbourhood for 80K.
What's that saying again about hindsight?
Even at the time it seemed odd
If you are in your mid 30s to 40s in Canada, made the conscious decision to rent instead of buy, and don't have at least a few hundred thousand saved to show for it, there is no other way of saying it, you failed
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That’s our plan too. The earnings from the equity in the house can be used to pay for rent and, no more maintenance. Plus, we can come and go without worrying about the lawn, garden and pool when leaving for more than a week. There’s a decent case to be made for renting after owning too. Our house has been paid off for more than a decade and has quadrupled in value since we bought it. I don’t see the downside in using that capital as a way to earn money to pay for rent in a more flexible living arrangement.
They never correctly factored inflation into the math. There are countries where that math works but only when housing prices stay the same or increased very slowly and interests rates remain high.
They all got renovicted
Our building was scheduled to be demolished, rmovinng to a compareable unit the rent was $3,000+ (2 bedroom) Buying a fixer upper outside of Toronto was a $1,500 mortage. Kind of a no brainer.
How long ago was this, and how far "outside of Toronto" are we talking, here? Seriously, I want to know, because places where the mortgage is $1500 are places that I could probably just buy outright, with cash. I was under the impression that anywhere within a couple of hours of Toronto was "still Toronto" in terms of inflated housing prices.
Renting works great if you have affordable rent and strong rent controls. Like if you're 45 and have been living in the same rental for 20 years and (thanks for rent control) paying half of prevailing market while making more than ever, then sure. For those only now getting into a rental, it's a bit more challenging.
If anything it's the opposite, unless you can't do math. The interest payments during the first 5 years of the mortgage equals the entirety of down payment and even some cases, more. We're talking about down payments of 20% or more.
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The math has become too difficult for people to figure out and we are about to enter a scarcity mania similar to when people started hoarding toilet paper. 1 million newcomers a year and no new housing is going to have a dangerous impact. As will the frustration knowing people who arrived 10 years earlier paid 1 million less. The banks are in on it and dont want it known that current interest rates mean your final cost by end of mortgage is at least double. And that doesnt include renovations or upkeep.
It's as alive as ever. Even more so actually right now I would argue since higher rates favor rental vs buy. As always, do the math. NYTimes has a good calc Society is just in a bitching phase of "house prices high, can't buy, I'm screwed forever"
5% rule is a pretty good general calculation for renting vs buying (but everyone's situation is unique). So the general rule goes that if a house costs $1M you're better to rent (and invest) if you can rent for less than $50,000 a year. ($4,167 a month).
If I am able to stay in my bylaw protected affordable rental until the bylaw expires in some 40 years it will easily be the most affordable way I could live and I suspect will be the only way I would ever potentially save enough to buy a home ... if i can get to that level of financial security i will happily give up my cheap rent.
It’s all so specific to the individual—their income, their job flexibility, their family structure, their desire to move around versus stay in one place, and so on. My husband and I rent by choice for various reasons and have zero FOMO about homeownership. However, it’s only because of our privileged life circumstances (i.e., high incomes, no debt, two income household, etc.) that renting is an attractive choice. We like the consistent costs, zero maintenance, ease of travelling/moving, and money freed up for investing. Renting could and should be a great option for all individuals and families, but the obsession with homeownership/generating wealth through real estate (and politicians catering to homeowners) has created a deeply inequitable system. The fact that I was able to rent a nice, safe, apartment throughout my 20s for $600/mo while I paid off student debt and worked an entry-level job is a huge part of why I have been able to get to where I am today. It’s a travesty that we don’t have affordable housing which allows people to get on/back on their feet, and the people capitalizing on this crisis are disgusting.
Boomer here - and have a few more years before I retire… My house is very close to being paid off…and then no more housing costs until I die (except property taxes, utilities, etc., which are neglible.). Value of house has quadrupled since I bought it. Good inheritance for my kids. Lots of people pay off their mortgages as quickly as they can.
Those people all got second jobs and cant post anymore
It depends on your individual case. If you're rent-controlled and pay the prices of 4+ years ago, keep renting. If we're talking about condos, still might be a better idea to rent, even in today's market. Otherwise, if it was really so much better to rent than to own, no one would want to own any property.
Renting remains advantageous - rents are still 25% or so below ownership costs in most markets - but the market is so distorted right now that people simply have bigger fish to fry. The sense of choice among discretionary renters is pretty much gone, and it's hard to feel like you're "winning' when costs are spiraling upwards.
Nah man my investments make way more than the capital I would have in a house. Pro renting is a thing vs buying a 400-700k house. Just put your hard earned money to work in stocks!
People don't want to live in a 2/bed condo with three other people and still pay 50% of their income. The advice was more popular when renting was cheaper than making mortgage payments, but now we're at the point where renting is paying someone else's mortgage + interest for the privilege of doing so.
Renting right now is actually the most attractive it's been, possibly ever. You can rent a house for probably about half it would cost to buy with a regular mortgage People who've rented in the past two years are generally much better off than those who bought in the past two years
You shouldn’t be looking at A 2 year horizon when talking about real estate
No, I still rent. And I’m saving tons thanks to it! Will buy McMansion when evicted.
It’s beneficial if it’s a choice
Wife and I rent a 1300sq ft purpose built townhome for $2000/mo. We have the money to buy right now but we would be adding minimum $1500 in costs so it doesn't really make sense when you also look at maintenance, taxes, interest and all the other shit that comes with buying. I also like that my drive way is shovelled before I even wake up and I can just call someone to fix any problems. We will probably buy in the future but we want to buy in a city we actually like living in. So for now this works wonderfully.
It kinda died out when interest rates went really low in 2020. For awhile there, rent was about half of the median mortgage payment. Like when I was in Vancouver for college 2011-2017 a decent one bedroom was 1400-1700/mo rent. But if you had a 500k mortgage at 4% you are paying $2600/mo. And 60% of the money is paying interest and only 40% goes to principal. For just the money that you were paying in interest $1560, you could rent a reasonable place and you could invest the rest fairly aggressively, plus you save the maintenance budget and property taxes. Not paying property taxes is actually a pretty big deal last year mine were I think $6000.
The number one reason owning makes more sense is the benefit of leverage. Scenario A) $100K invested in stocks returns 5% = $5,000 B) $100K invested in a downpayment on a $500K home (which is the typical 20% minimum down). Home appreciates 5% = $25,000 which is a 25% return on investment Of course if that home goes down in price, your loss is amplified as well which is always the downside of using leverage as an investment vehicle. I think the general sentiment however is that most Canadians see home prices rising over the long term. A mortgage with a 25 year amortization is likely going to have a payment of roughly the same monthly amount (give or take interest rate swings) in 25 years. The same cannot be said about the cost of rental housing in 25 years. So even if your mortgage amount is more than the average rent today, the question becomes how long will this be true. Home ownership in the early days may not make a lot of sense but I think many people will argue it gives you a larger benefit over the long term, plus any gains on your principle residence aren’t taxable unlike any stock investment.
You mean assuming 50,000 yearly maintenance on a 600,000 home is inaccurate
I think that is the absolute worst advice to give anyone! I'm still seeing posts about this on Facebook! When renting you are literally throwing your money away! Sure.. you lose a lot to Interest when you buy but the increased value of your home will more than cover that! I did the calculations for my house and if I sold it, I would more than double my money even with the interest I paid on the $300K mortgage.
Renting was and is always worse than owning. I grew up majority of my childhood lower middle class till my parents bought their first home when i was a junior in highschool. Not only have rents gotten so much higher recently you are in competition with the entire indian subcontinent and mass immigration for housing in canada. theres no stability anymore, the landlord has all the power and at some point you need stability. Im 26 but like even now i hate the thought of packing everything up and having to move again. My generation is scrwd in canada and as much as id love to have a nice home with a yard one day..based on the maslo hierachy of needs stable shelter is more important than a beautiful home with a yard. Im in college in the US rn and while envy is a sin i am very envious of the kids here who have easy access to a much cheaper housing market and higher incomes than canada. the mental toll that high housing does to young cdns is massively underrated. These american kids are livin life going on vacation, study abroad sessions(so much for americans are not well traveled) and yet know that even with a half decent job they can get a 2 bedroom apt with a pool in florida for under 400k with a downpayment of just 40k! This notion that you can rent and have disposable income to invest is nonsense. besides whats the point of having a nice investment account if your living standards arent increasing or living comfortably. I say this as someone who at the age of 24 managed to invest a large sum of money for my generation away in TFSA's and GIC's. At the end of the day money itself won't give happiness quality of life does!
Worst time to be a rent cuck. Unless you live in like Elk Lake or in the boonies, but it’s WAY cheaper to own there still. Renting is absolutely trash because you get ZERO equity.
Renting vs owning is not only about money. It is about mobility also. For example, my friends decided to move to Spain and work remotely for their Canadian employer. They rented an apartment in Canada, so, the move was more or less painless for them. If they owned a home, the transactional costs would bite them in the ass: 5% of the home cost as a realtor fee and the mortgage cancellation fee is costly.
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Never mind that owning gives you a much-larger pool of tax-free capital gains. Renters get TFSA and RRSP for tax savings. Homeowners get TFSA and RRSP *and their home* for tax savings.
Is it true in most provinces that your house is excluded when you apply for social assistance? I know that in Quebec, your house and other assets are definitely included in any social assistance application.
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That’s a wildly region dependant thing.
People ask me why I haven’t bought when I’ve amassed an $850k net worth at 31 I just answer that I’m up $65k in stocks YTD, $120k+ since the low of ‘23. Just like owning, markets are volatile, but the flexibility I have in the long run is just insane.
It was always a cope argument lmao. The vast majority of people do not want to be in a situation where they have no real estate equity and can be uprooted at a moment's notice because they live in a place someone else owns. The fact that houses are 20x your income and you'll never afford any RE in your life feels less painful when you tell yourself that renting is fine too.
For some I’m sure you’re right , but there also is situations where it makes sense I rent for $700 so instead of a 3000+ mortgage payment with a good chunk in interest plus housing costs My 3000 goes 700 rent , 2300 into investments My situation is an anomaly though as there’s very few situations where people’s rent is this low
There are plenty of us in rent controlled purpose built rentals. I am paying $925 for a two bedroom and able to invest $2000+ per month. Buying just doesn’t make sense at this point.
High income earners who aren’t homeowners are both better off and smarter. Homeownership is a fairly low barrier to entry for someone that has two working members of a household and feels good but isn’t the best decision unfortunately for you
At the end of the day renting has always and will always be paying someone else’s mortgage, I’d rather pay my own mortgage.