The renting vs buying debate is one of the most classic arguments within the real estate market. Some people believe renting is the same as throwing money away when they should be saving for a house. Others favour renting for its flexibility, less maintenance, and the thought that it’s cheaper. While this debate will probably never resolve itself, you can at least figure out what the best option is for you.
As with everything else in this industry, your choice of housing type is highly dependent on you. Not everyone is suited to own a property just yet, while for others, renting may no longer make sense. Remember to take a close look at your own situation before you decide which end of the renting vs buying spectrum you fall on.
When should you rent?
There are certain situations where renting is the better option for you, and that’s perfectly fine. Your timeline, budget, and your feelings about entering a competitive housing market will all influence your decision. Your situation is unique to you, but there are a few common reasons people choose to rent instead of buy.
Competitive seller’s market
The real estate market is intense right now. Low interest rates have caused a spike in demand for housing. The housing market is moving very quickly, and Barrie is no exception. The high demand and low supply has given rise to a seller’s market, resulting in significant price increases. In Barrie, the average home sale price hovers near $700K, up from just under $500K one year ago. You can find extra details on housing prices in Barrie here.
Since home prices are on an upward trend, this may weigh in on your renting vs buying decision. If you don’t want to deal with the extra stress of competing as a buyer in a seller’s market, renting is always a good option. Real estate and housing trends are constantly shifting, and it’s okay if you’d rather wait until the market balances out.
Making a temporary move
Timing is really important in the housing market. It can save – or cause – a lot of headaches for you. If you’re unsure whether you should rent or buy, think about your plans. If you’re relocating temporarily and don’t truly see yourself staying in the area, renting is likely the better option. Buying is a big commitment and a time-consuming process. If you’re not certain you’ll still be there in five years, for example, buying might not be worth the work and the costs.
The other thing to think about is how soon you need your home. If you’re relocating to the area on short notice, it might be best to rent, at least at first. You don’t want to feel rushed into buying a home. That’s a process that should receive your full attention and time!
Budgeting for a less pricey home
This is the biggest factor to think about! Simply put, what can you afford to pay for? Renting and buying both come with significant costs, but those costs are paid in different ways. In general, renting is the cheaper option. There’s no down payment or mortgage to worry about, and you’re usually not responsible for any repairs. Of course, this means you don’t have the advantage of a long-term investment. But if your main focus is saving money, renting might just be your best bet!
When should you buy?
On the other hand, there are many reasons to buy a home as well. Just like with renting, you should take the same factors into account. Again, your individual situation won’t be the same as anyone else’s, so you have to make the final choice. Wondering whether you’re ready to buy? Here are some common reasons people take the plunge into home ownership!
Interest rates are at historic lows
This might seem like old news at this point, but it’s super relevant to your housing situation. The Bank of Canada’s overnight rate sits at 0.25%, and it will stay this low for the foreseeable future. The economic pressures of COVID-19 caused the rates to drop last spring, and the Bank has indicated that we can expect low rates until 2023. What does this mean for renting vs buying? If you’re already considering buying a home, 2021 might be a good year to do it.
Making a long-term move
Ask yourself, once again, what your timeline looks like when you’re moving. If you want to stay in the area for a long time, you’ll have the opportunity to grow the equity of a home. The longer you stay in your home, the more you can take advantage of its value. In this case, buying is certainly something to consider. And if you’re not making an urgent transition and have time to search for a house to buy, go for it!
Building home equity
Finally, buying means you’ll be putting money towards a home you actually own. You’ll have to keep in mind this does come with significant costs, like your mortgage interest and down payment. However, you’ll get to build home equity and own an asset that’s likely to appreciate in value over time. Buying is a bigger investment than renting, and that investment pays off down the road.
Home hunting is a tricky process to navigate. It comes with so many options and important decisions that it can feel overwhelming to handle. That’s where the advice of an unbiased mortgage broker comes in handy!
If you decide you want to buy a home, I can help you get started with the mortgage process! You can get in touch with me here.