Rent vs Buy: A reality check


By now most of you have read or heard about the CBC article How a 30-something couple got rich and retired by not joining home ownership ‘cult’. So I figured it’s time to get my 50 cents in, albeit from the perspective of a semi-retired boomer. And unlike the many “haters” who have commented on the article, I totally admire Kristy Shen and Bryce Leung for saving $500,000, doubling their savings by investing wisely and deciding to follow their dream by ditching their jobs to go traveling.

But the dream they are living is not shared by everyone. I was always a homebody who wanted to settle down and have a family. For me that  meant having a home with enough space to accommodate the needs of a growing family and not having to move every several years at the whim of a landlord.

Also, we are very house proud. My husband and I have owned three homes (including the current house) since we got married — one a two-bedroom post war bungalow we renovated and two brand new houses we helped to customize. From what I can tell, the rental stock in Toronto is very limited. House rentals are very costly and large two or even three bedroom apartments are few and far between. Furthermore, you can’t do a custom paint job, up-date kitchens or bathrooms or change the basic layout of a rented house. So the fact is, that renting is definitely not the preferred solution for many families over an extended period.

It is also important to recognize that the “rent vs buy” dilemma is particularly acute in cities like Toronto and Vancouver. As I outlined in a Rent vs Buy : A Reprise, on, housing costs have actually gone down in Saskatchewan and Alberta so for millenials who have already saved a 10% or 15% down payment, it may be an ideal time to buy a first home or trade up.

From a strictly dollars and cents perspective renting may appear to be a more logical, less expensive option that is right for some people. But there is an also an emotional component that has to be factored into the “rent vs buy” decision. That’s why others are willing to scrimp and save in order to put down roots.

There is no one right answer and we all decide on the compromises we are prepared to make. When we moved to the wilds of Thornhill in 1979, we compromised on location for more space, three bathrooms and a pool-sized yard. If we had it to do again, would we make the same decision? I’m not sure. The message I take from Shen and Leung’s story is that saving and investing wisely gives people choices. Anyone with a $500,000 down payment can afford a lot of house with very low carrying costs, if that’s how they choose to spend their money.

Rent vs Buy? What do you think?




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