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Renting vs. Buying: Why Owning a Home is Always a Smart Investment

In this period of economic uncertainty, it’s common to question whether purchasing a home is a smart decision. It is often argued that paying rent is the better financial move—and for some, that may be the case. It’s a personal choice, and there is not one right way for everyone. If you’re adept at playing the stock market, perhaps the money you save on property taxes is invested. In other words, as long as you’ve found a way to invest your money smartly, there is no wrong choice.

However, many people who rent don’t necessarily do so because they believe it’s the smarter move. According to the 2014 Altus survey, nearly 80% of renters said they would absolutely buy a home if it weren’t for the required down payment, the fear of qualifying for a mortgage, or the idea that now is not the right time to buy.

It’s true that renting involves lower annual insurance costs, maintenance fees, and taxes, so there is a considerable amount of money to be saved on a monthly basis. But for those who prefer to think long-term, property ownership is never a lost investment. Eventually, your mortgage payments will pay off your property, whereas your rent money, evidently will not. Your home is yours to sell, rent out, flip, pass down—no matter what, you will always gain your money back.

So, is it a good time to buy?

Right now is an excellent time to make a purchase. This past year, interest rates have fallen to a near-record low. While it’s true that they are slowly on the rise, buyers should take advantage of the available fixed rates currently averaging 2.7%—still exceptionally low compared to the past eight years, as well as the additional 2.5% increase experts predict in the coming year.  

In addition, the housing market is always growing. For example, longer-term performance for the Toronto and Vancouver markets is off the charts. According to CREA's stats for January, Greater Vancouver average home prices rose 20.56 per cent in the last year, and 31.58 per cent over the last three years.

home price index

In the long run, owning a home is always a benefit to citizens. So before you write it off for fear of not qualifying for a mortgage, contact our experienced mortgage broker Rose Blankenagel at Mortgage West—The Mortgage Centre today to discuss the options available to you.