How to Decide Whether to Buy or Rent

There are a lot of opinions out there about renting vs. buying, but many of which are on the antiquated side. With the economy as it is, the question of buying or renting isn't exactly as obvious as it may seem. And believe it or not, it may have less to do with a person's financial situation and more to do with their lifestyle. While renting may not give a person very much equity, it's also a safer decision for many. See which elements to consider if you're on the fence about buying or renting a Central Saanich home.

For informational purposes only. Always consult with a financial advisor before proceeding with any real estate transaction.

Changing Hands

Jobs today aren't exactly forever, with the majority of people changing jobs around 13 times before they officially retired. That's barely long enough to hit the three-year mark at most places! This kind of uncertainty makes it difficult to know whether or not a person will get another job in their area, which can make renting a safer option. It gives them the flexibility to pick up and move a lot more easily, which can be the difference between financially surviving or thriving. Owning a home means tax incentives and potential appreciation, but homeowners usually need to live in a home for around seven years or so before they see those foretold returns.

Turning a Profit

Speaking of possible rising resale prices, experts say buyers shouldn't really purchase a home with the expectation that they're going to turn a profit. While it's certainly possible to turn a primary home into a solid investment, it's more likely it will turn out to be similar to other major purchases (e.g., cars, etc.) than say, a runaway stock option. Even the trendiest neighborhoods can become saturated or be eclipsed by another fad, and homeowners can take a huge fall if they become overconfident.

Schedules and Work

Most people spend a lot of time at their jobs today, to say nothing of family obligations or one-off emergencies. These busy schedules aren't going to lend themselves to maintaining a home—no matter how move-in ready it is. From fixing small things around the home to refinishing the basement, the projects homeowners need to complete can be overwhelming and ultimately, not worth it for them in terms of the effort. Unless a homeowner can pay for professionals, their home may suffer from neglect. If the owner can't make the time commitment to the home, then it's better to rent.

Crunching the Numbers

Most Canadians find it difficult to measure up to the standard rules of yesterday. For example, spending the recommended third of income on housing is practically impossible in Toronto where real estate has done nothing but inflate. Putting 20% down on a $100,000 home is still $20,000 that people generally don't have. It's exactly these types of financial disparities that can make it smarter to rent. However, buying (or at least looking) is encouraged in neighborhoods that are subject to change. Areas that see a lot of coming and going may offer better sale prices because everyone is too busy snapping up rentals.

As the rules of real estate turn, potential buyers need to be realistic about their situation. They also need to remember that there's nothing wrong with renting until they're more certain about their future. Those who can't make up their mind should do a little soul-searching to recognize whether or not they can make the commitment to a property or not.

For informational purposes only. Always consult with a financial advisor before proceeding with any real estate transaction.