15 thoughts on “Renting a home is better than buying”

  1. This article leaves out many of the benefits of home ownership. It assumes that everyone who buys a house is only doing so as an investment and that alternative inventments are the only opportuinity costs.

    It’s argument regarding appreciation of property values is conservative and uses the extreamly small window of time from 2001 to now as a comparison.

    If I would have followed this advice two years ago when we moved to Calgary, I would be kicking myself now and out $250K in increased property value.

  2. The article is very American, and some points were simply not applicable – especially to Alberta.

    But it also raises some very good points and crunches some numbers; something I think very few people really do.

    I’ve had to justify my renting over and over to my relatives who simply do not understand how taxes plus interest for a home are greater than my rent payment.

  3. “If you look at the very long term, houses have been the worst investment available to the general public”. The article then goes on to show that real estate returns (in some have been lower than the returns for stocks bonds and T-bills. That would be true if you paid cash for your house. But if you only put 10% down then your ROI is MUCH higher than the numbers given for real estate investment.

    I only put 5% down on my house ($7,000 for a $140,000 house). I might be able to seel now (2 years later) for $240,000. Even thought my house value has gone up by $100,000 making $93,000 on my $7,000 investment isn’t bad.

    Also, since I rent my basement out for $800/month and my monthly mortgage and tax payments come to about $1000 plus utilities I think I am paying less per month as a n owner than I would as a renter.

  5. JM, I agree on the points of Alberta and the 4-year sample period.

    I took out a $75,000 mortgage on my home, and my home has already doubled in value. I could sell my home now and still have as much in my pocket as the original value of the house.

    In addition, whoever takes out a 5-year mortgage? That’s like saying don’t invest in mutual funds that have been performing poorly for the past five year, but have performed great for the past 20.

    Mike, you’re forgetting to add in the price of interest for borrowing the remainder 90–95%.

  8. I think an important part of the discussion, especially as it relates to Alberta housing, is the fact that you must look at how much money you have cleared **after** you buy another house.

    If you are considering appreciation of your home as an increase in personal wealth, it’s pretty much a wash if you sell your house for twice what you purchased it for, only to move into a house twice as expensive as it would have been in the original home’s market period.

    Unless you’re moving into a smaller (less expensive) home, you really are not clearing anything – and are not any further ahead.

  9. That’s true rick.

    But financial gain isn’t the only reason to buy a home vs. rent.

    I remember when we rented, we were always subject to an increase in rent once the lease was up for renewal. There is the possibility of being evicted if the landlord wants to sell the house. We also don’t need to ask permission to paint the walls a different color, or to make any other changes to the property (other than the necessary permits, etc that may be needed).

    I’m sure there are other reasons as well.

  10. True enough, but a good friend of mine once told me,”You can buy anything in this world for money.” and the talk in thread has been primarily about investments and value for money.

    Talking about lifestyle or non-fiscal values is, as you mentioned, a completely different issue.

  11. “good friend of mine once told me”

    A Garth Brooks song comes to mind… :-)

  12. I should also mention that I am paying 150$ less per month owning my house than I was renting my previous home, and that includes property taxes.

  14. Rent controls should be in place only if housing price controls are put in place. It is unrealistic to control the price of renting if housing prices are allowed to skyrocket.

  15. Rent controls will reduce the number of available rental units since the controls will serve to reduce new construction of multi-user residential units.

    They have rent control housing in BC anCAAyOntario already and it doesn’t really help much.

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