If “location, location, location” is the eternal mantra of real estate, the rent vs buy discussion is real estate’s eternal debate. Generally speaking, the debate revolves around whether it is better to buy a home or rent one.
The Advantages of Renting
The overriding advantage of renting is that it can be less costly than buying, at least in the short term. But renters point to many other benefits of renting as the reasons for their decision.
- Lower Cost of Renting – Want to move to a new location? If you choose to rent, generally all you need is your first and last monthly payments and you’re ready to go.
You don’t have to worry about all the costs of buying a house, including closing costs, property taxes, condo fees, land transfer tax, and repair and maintenance costs. The only regular cost you are responsible for is your single monthly rent payment.
- More Flexibility – If you want to move, you only have to wait for the end of your lease and you can move without incurring all the same home buying and ownership costs all over again. You can even move before your lease is up if you find someone to take it over.
- Easier Budgeting & Planning – Even if you stay in the same apartment, condo or home, your rent payments rarely go up more than a couple of percentage points. With such a stable housing expense, compared to surprise maintenance costs and fluctuating utility and mortgage expenses that homeowners may get, renters can be more able to make financial decisions with more confidence.
The Advantages of Buying
Homebuyers tout the pride of ownership that comes from purchasing their own homes as a major advantage. For them, the other advantages are icing on the cake or money in the bank.
- Building Equity – Many home buyers simply prefer to know that every payment they make helps build the equity they have in their home. Regardless of purchase prices and monthly costs, they prefer to pay themselves rather than pay someone else.
- Instant Financial Responsibility – Many buyers appreciate that, while it may cost more to own their home, they are putting the money to good use. The more they put into their home in the form of extra mortgage payments (in the case of open mortgages) or value-added renovations. Simply making their mortgage payments also helps increase their credit score.
- Traditionally a Great Investment – If there is one reason why buying may have been better than renting in recent memory, it is that homeownership has offered an excellent return on investment in recent years, and traditionally over recent decades. Remember, the past performance of any investment is not an indicator of future performance.
Right now, in Markham real estate, rents are at new lows compared to recent years, and mortgage rates continue to hover near historical lows. In that sense, it’s a great time to rent and a great time to buy. Ultimately, the best option for you is to choose the one that suits your preferences.
If you enjoyed this post, check out our recent article “3 Reasons Why Location is Important when Purchasing a Home”.