To Buy or Not to Buy?

julieK By julieK, 27th Nov 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/2mfe228u/
Posted in Wikinut>Money>Property

A brief guide to buying and renting a house, summing up pros and cons of both transactions.

To Buy or Not to Buy?

A Hamletesque question, indeed, especially for young people starting to move to the next phase of their lives after having completed the whole educational process. Making the decision whether to buy or to rent a property can be rather intricate for inexperienced people, who have only a slight idea of how it works. Therefore it is useful to consider everything properly and to know the pros and cons of these options.

The first step you should take is thinking of your future and your plans. Have you already decided what should it look like or are you still indecisive, waiting for what life brings? If the latter is your case, it would be better for you to go for a temporary solution. Rent a property and stay in it as long as you need to be prepared to settle down. The reason for taking this step is very simple. It is the costs you will pay (a down payment, legal fees, etc.) when buying a home. And that is just the beginning. When you become the proud and happy owner of a property, you should bear in mind that you also will have to pay taxes, utility payments, and every now and then pay for repairs or renovation, etc. Simply a long list of expenditures. But if you rent it, you will not pay the property tax or the utility payments. Still, the majority will get a mortgage and slowly pay the money back, being content with the fact that they are giving away money for something what belongs to them – their property. But that is not the case of renting and this important aspect play a great role in the decision making.

When we take a look at the development of the real estate prices in Canada and at the Toronto MLS listings, the past ten years show that house prices are rising much faster than rents. This is a scenario resembling the housing bubble in the USA a few years ago. The buyers, actually, play a significant role in the whole process. The more people are buying instead of renting (because they don’t regard it as an investment), the more grows the difference and a bubble emerges.

An interesting fact is that there are still cities where renting a home is the better choice. Unfortunately, the already mentioned prejudice (renting=throwing away money) has a great impact on people’s thinking, what is probably going to remain unchanged for some time.
Should you be too indecisive, there is a calculator on the internet that will compare for you the costs for both variants.

Tags

Buying, Costs, Investment, Real Estate Price, Renting, Toronto Mls Listings

Meet the author

author avatar julieK
I am Toronto realtor and green enthusiast

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