Rent or buy? Real estate analyst says buying comes with unexpected costs
Posted September 4, 2016 9:36 am.
Last Updated September 4, 2016 10:01 am.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – Should you rent, or should you buy? It’s a question you have probably asked yourself at one time or another.
You’ve probably never heard the phrase “renting is a beautiful thing,” but you’ll find it in real estate analyst Alex Avery’s new book The Wealthy Renter.
“The main thrust of the book is that it makes so much sense to be a renter in today’s Canadian housing market,” says Avery. “Renting gets tarred with such a negative brush by a chorus of pro home ownership cheerleaders: Real estate agents, lenders, parents, friends, neighbours, even the government promotes home ownership. With all of that biased advice, renting becomes the whipping boy of the housing world, when in reality renting has a whole lot to offer.”
Avery points out owning a home comes with costs many buyers never factor into the equation.
“Particularly for first time home buyers, what they often do is compare rent to mortgage payments, when a mortgage payment is only a fraction of the total costs of housing,” says Avery. “You’ve got ongoing costs like property taxes, maintenance, utilities, home furnishing, and all sorts of other expenses that tend to only accrue to homeowners. On top of that, you’ve got one-time expenses that can be pretty substantial, like land transfer tax, real estate agent fees, mortgage insurance, other transactional costs, and those can build up to very, very large amounts.”
He says renting gets a rap and in many cases is a smarter financial decision, assuming you have the discipline to save through other means.
“At its most simple, renting removes your house price risk,” says Avery. “When you rent a home, you don’t have any exposure to any of the positives or negatives that come with house prices moving up or down. There are no transaction costs. It’s more affordable on a month-by-month basis. It’s not a major commitment. If your lifestyle changes and you need to change your housing, it’s very quick and easy to change. And there’s no confusion about whether renting is an investment or lifestyle decision.”
Even for those who refer to buying a home as enforced savings, Avery cautions if a market can go up 33 percent in a year as we’ve seen in parts of our region over the last year, it can certainly go the other direction.
