WHICH IS BEST?
Is it better to rent or buy a home? Most adults ask themselves this at some point as they form their goals and plan for the years ahead. Before you answer the question, here are some things to ask yourself. Owning and renting each have advantages, but what’s best for you depends on your circumstances. What will be the duration of your stay at home? Each market is different, but whether the time you plan to spend in the house warrants its purchase is possible to predict. Generally, it takes five years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and ownership). If you’re considering buying and selling a home in two years, buying is unlikely cheaper than renting. Do you think of or need your house as an investment in your retirement plan? Canadians are used to their homes being a store for wealth to liquidate in retirement when downsizing their lifestyle. According to Jacob Passy, a recent Federal Reserve Bank of New York study examined consumer preferences toward home ownership and how their perceptions have changed throughout the COVID-19 pandemic. Survey participants were asked to rate the better investment: a home or stocks. The results showed that over 90% of the respondents preferred owning their residence over investing in the stock market. Most survey participants also favored being a landlord over buying stocks, with more than 50% of the participating households preferring to own a rental property. Are you financially ready? Owning a home is a financial commitment that requires planning how home ownership fits into where your life is headed. Ask yourself about your budget and whether buying or renting would require you to stretch your finances. Crunch all the numbers. A frequent mistake of first- time home buyers is comparing a month’s rent to a month’s
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