RENT VS BUY - THE RENTAL MOVEMENT
Should you rent or should you buy your home? It takes more than looking at your mortgage or rental payment to answer this question.
Trending… Rent more… own less.
Citysearch can help by providing relevant information for you to make a comfortable educated decision.
Traditionally, many people rent when they are not ready to settle down in a location and do not have long term plans about where they want to be, cannot afford the deposit and the monthly carrying costs of ownership, and when they are carrying high interest debt where it makes sense to pay off that debt first versus a lower interest rate mortgage. However, the movement has shifted from traditional thinking, and many are renting for other reasons and investing the differential. Also, most corporate relocation clients rent a home when on a job transfer or assignment; employers encourage their employees, through their relocation policy eligibilities, to be ‘renters’ to provide greater mobility if and when the employee is transferred out. Moreover, home purchase guarantee programs can be costly for employers as opposed to ending a tenancy agreement invoking a transfer clause in the lease agreement.
Common wisdom has it both ways when it comes to the rent versus purchase dilemma. Many debate that renting is a waste of money… you’re not building equity in your home and your housing operating costs will never go down. Others argue that since rent is often less than the carrying costs of owning a comparable home, you can build wealth by investing the amount you are saving by not having to pay for property taxes, maintenance and property insurance. Both arguments can be erroneous, depending on your individual situation and the conditions of the market. Crunching some preliminary numbers may provide some information regarding whether renting or buying makes better sense in your specific case.
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In today’s world, more and more ‘would be’ purchasers are renting as opposed to owning the property they reside at. With the millennials, it appears home ownership is trending down to free up money for other things as renting can come with lower carrying costs as opposed to owning. Typically a tenant only pays rent and some operating expenses. The caveat is that one needs to be financially disciplined for this strategy to work. When you rent, you typically need less money such as only a deposit equivalent to one month's rent. For many, coming up with the deposit required for a home purchase can be difficult.
The misconception many people have is that not buying a home means you are throwing away money on rent. When you buy a home, it can be viewed as ‘forced savings’. Furthermore there is the added benefit… if your Landlord decides to sell the property, your dream home suddenly becomes someone else’s dream home… and you may be forced to move from a place you otherwise would stay in for years.
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