Home ownership vs renting

[SilverRex]

Not sure how often this was discussed or debated in the past. But what's everyone take on this subject matter? I know for decades if not forever the concept has always been to own real estate because simply, over time they only continue to go up. The only part that is difficult is the timing for entry and one has to try not to buy at the peak of house markets prices. This is probably the single most effective way to build net worth especially if one does not have the discipline to save or investment wisely elsewhere.

However, is this believe coming to an end? With the fastest interest rate hiking cycle on record, I have heard from a few respectable economist argue that we are now entering an inflationary era which could last decades. if Just like in the 70s/80s, no one would have thought rates could virtually hit 0%. So is this about to change? No one could imagine high rates are here to stay. -minus any financial market crashes which could drop rates sharply, rates could go back up just as easily and for a long time.

One that I follow is suggesting the US housing market is actually crashing, it is being kept afloat due to developers giving buyers incentive in what's called a mortgage buy down, in short, buyers cannot afford the 8% interest rate mortgage so developers will eat the 4% of that cost. In other words they are giving buyers discount and this does not show up on the sold prices. Eventually this will come to an end where it will cut into developer's profit margin.

Other potential catalyst includes all those Airbnb owners will also suffer from regulation change and forcing to sell. Another one I read mentions how in the US most home owners pass their property generation to generation and enjoying low tax because tax was based on the original purchase price, but again rule change may be going into effect that any one inheriting a property will be subject to market price tax assessment. So the current generation may not be so keen in paying what use to be 2000 annual tax to say 20,000 and again encouraging them to sell the property instead.

I understand Calgary is enjoying it's own real estate bubble because of supply and demand, but if holding real estate is not the best time due to what is to come. I now wondering if moving to rental makes better financial sense.

From my own personal take is that, I could sell my home and rent something similar amid the monthly rent is higher than my mortgage payment, but I can pull out all those equity (over 50%) and park that in a 5%+ cash interest savings account with the rate being so high. Having the flexibility with a large sum of cash deposit that is earning me interest and without the headache of worrying about fixing anything in the house.

Personally I believe for the foreseeable future, having as much cash and being as liquid as possible is probably the best position and wait for good opportunities whether a better real estate landscape or stocks.

[jwslam]

In general, almost everyone I know like the freedom of being able to do whatever to their home. Paint? Reno? Fail to maintain?

The few exceptions of perpetual renters I know are: people who fail to save for a down payment due to high discretionary spending, and people who don't commit e.g., move countries/cities/communities frequently.

[killramos]

Own my home. Pretty against ever owning equity in a second though ( vacation home ), that I think the math works out to rent all day long aside from some vary narrow circumstances.

[ExtraSlow]

If you want flexibility and are okay moving with short notice, renting CAN work out. Hard 9n kids changing schools etc.

Better not have a dog.

[Lex350]

Own my own place. My first place cost $134k in Charleswood. I downsized from a 2400 sqft house into a new townhouse in the NW. in 3 years it has gone up over $225k. I have a very small mortgage. ( divorce made me take that on) My first mortgage I had a rate of 9.2%.

I have considered buying a vacation property numerous times and am glad I didn't. The numbers never seem to add up and I prefer the flexibility of travel rather than feeling tied to a particular place.

[bjstare]

This quote is hidden because you are ignoring this member. Show Quote

Own my home. Pretty against ever owning equity in a second though ( vacation home ), that I think the math works out to rent all day long aside from some vary narrow circumstances.

Idk if I agree that it's a narrow set of circumstances, as there are quite a few levers on the vacation home own/vs rent decision. If there is a market crash, it might make a lot of sense to pick up a second home if a person plans to use it a lot. That being said, some friends of ours just bought a house in Palm Springs with plans to rent it out while they're not using it, and it's going to cost them $10k/mo to carry if they don't rent it. That's not something that makes any sense to me.

re: OP - sitting on lots of cash during an inflationary period is basically the worst thing you can do, isn't it? The value goes to $0 eventually.

[rage2]

This quote is hidden because you are ignoring this member. Show Quote

re: OP - sitting on lots of cash during an inflationary period is basically the worst thing you can do, isn't it? The value goes to $0 eventually.

This is how I justify my shopping problem.

[ExtraSlow]

If someone told me Calgary house prices might go up less than general inflation over the next decade I'd listen to that. However, I firmly believe that we will be seeing significant general inflation for a long time.

I also don't think your primary residence should be treated the same way you'd treat other investments.

[Buster]

Buy as many homes as you possibly can.

[Masked Bandit]

Numbers aside, in the right lifestyle I can absolutely see how renting is the answer. But that's not me and the the financial pros & cons are way down the list of factors with respect to my decision to own.

[ercchry]

Moving is annoying… if you rent you have to more more frequently as it’s not up to you if you stay in that property or not. So own.

This is also not a bubble. Remember that last talk about a bubble? How did that crash go? We’re just catching up from a decade of stagnation… as usual. The net migration and lack of new homes will ensure growth continues.

We’re also not the US, their mortgage system is completely different than ours.

[Swank]

With appliances and furnaces/HWT no longer expected to last more than 10 years and PolyB replacement prices, owning isn't looking as pretty. Windows, doors, insulation, roofs, etc don't last forever either. At the same time, all of those costs would almost certainly be passed down to renters. Having been mortgage free for a few years in my previous home and selling it for double what I paid, I'm still OK with owning.

Also, landlords seem to me like either a 3rd parent or a 2nd boss.

[firebane]

This quote is hidden because you are ignoring this member. Show Quote

With appliances and furnaces/HWT no longer expected to last more than 10 years and PolyB replacement prices, owning isn't looking as pretty. Windows, doors, insulation, roofs, etc don't last forever either. At the same time, all of those costs would almost certainly be passed down to renters. Having been mortgage free for a few years in my previous home and selling it for double what I paid, I'm still OK with owning.

Also, landlords seem to me like either a 3rd parent or a 2nd boss.

Can 100% agree with this and if you aren't handy then costs are going to be even more.

Our hot water tank and furnace are original the house and I know the hot water tank is on borrowed time. The washer has had to have parts replaced as did the dishwasher. Within the first year we had a big fail with our fence on one side and was a big cost.

Owning is nice but all the small shit starts to add up and gets expensive fast.

[taemo]

if you are somehow financially literate then hopefully you will be mortgage free before retirement age, but it you keep dipping from your home equity or still paying a mortgage after you retire then renting might be better for you.
other problem is that a lot of people over leveraged on their mortgage during the pandemic

This quote is hidden because you are ignoring this member. Show Quote

Own my own place. My first place cost $134k in Charleswood. I downsized from a 2400 sqft house into a new townhouse in the NW. in 3 years it has gone up over $225k. I have a very small mortgage. ( divorce made me take that on) My first mortgage I had a rate of 9.2%.

I have considered buying a vacation property numerous times and am glad I didn't. The numbers never seem to add up and I prefer the flexibility of travel rather than feeling tied to a particular place.

also thought about buying a 2nd/vacation rental property but RE is just not my type of investment. our goal is to make Calgary our home base and travel anywhere for weeks/months.

This quote is hidden because you are ignoring this member. Show Quote

Can 100% agree with this and if you aren't handy then costs are going to be even more.

Our hot water tank and furnace are original the house and I know the hot water tank is on borrowed time. The washer has had to have parts replaced as did the dishwasher. Within the first year we had a big fail with our fence on one side and was a big cost.

Owning is nice but all the small shit starts to add up and gets expensive fast.

personally, I would rather have/save 4-5k yearly for maintenance than making a landlord 1-2k richer every month.

[Lex350]

I was mortgage free until an ugly divorce. I'll be mortgage free again in 2 years. I don't use my home equity as a loan. My mortgage could double and it wouldn't be be a hardship at all. I have enough to retire soon but won't fully. I'm kind of like my dad who retired for a week and then went back to work until he was 77. I like the field I'm in and can easily transition to fully remote work when I'm ready to slow down a bit.

[max_boost]

There’s something to be said for home ownership
Freedom. Good feels. Accomplishment etc.

which is better? Renting or owning?
Depends on govt policies and your timing lol

[msommers]

We went through this thought process just over a year ago and I was actually more for renting than buying from a financial point of view. The Couch Potato guys really had me looking at the renting side which I'd never even thought about because this is Canada and we're obsessed with homeownership.

In my end, we want to start a family and have seen multiple people essentially kicked out of their place because the landlords were selling, or some landlords just refused to fix stuff, it didn't feel secure enough. It went so far as to think that if we had to move a lot because of external forces, the kid(s) may end up losing their friends or play for different sports teams, and that's tough. When owning, renos could be done without asking, repairs could be expensive but completed as quickly as you wanted.

There is a lot of social value to owning a home vs renting. So we opted to buy, along with all the lovely things ($$$) that come with homeownership.

I'm never moving again though, gonna die in this house.

[Twin_Cam_Turbo]

Homeowner since 22 years old. First home I lived in for two years and then rented it for six more, and saved/invested every penny of rent I collected over that time while living rent free. I can see renting being financially better for some people, but at the expense of stability and convenience. Tbh I would not be mad if there was a market “crash” as we have a small mortgage and tons of equity in our house, and that would probably be the only reason we look at upgrading our house. My parents own two properties, I’ve been pushing them to sell their vacation home they rarely use for the last few years but I guess it doesn’t fit into their tax plan.

[pheoxs]

Bought my first home at 24, sold at 27 as I hated Airdrie. Rebought at 31, only regret was not just buying again sooner.

Renting is fine if you happen to stay in the same place for a while but I had to move 5 times in 4 years due to variety of reasons (first condo board wouldnt let me get a dog even though they were allowed, second condo complex had bed bugs at the opposite end, third townhouse the landlords were moving back in, fourth the owner sold the house). Stability is worth it over the hassle

[jwslam]

This quote is hidden because you are ignoring this member. Show Quote

However, I firmly believe that we will be seeing significant general inflation for a long time.

That moment when you tell your kid that Big Mac used to be $3.49, not $34.99