The question of when to buy and when to rent is one that people across all income brackets have debated for decades. For many years, prevailing wisdom held that renters should look to buy as soon as they have the financial capacity to do so. However, given the meteoric rise in Canadian home prices over the past few years, many people—including large numbers of younger professionals—are challenging that assumption by renting even though they technically have enough money to buy.

In short, there is no universally accepted right answer to this age-old question. Choosing the option that’s best for you requires a careful analysis of your financial situation, your priorities, and your short-term and long-term goals.

The advantages of buying

Buying a home is a great way to build equity in a valuable asset. When you buy at the right time and for the right reasons, home ownership can stabilize your financial situation and create an unmatchable sense of emotional satisfaction. You’ll also enjoy tax benefits, and personal finance experts unanimously agree that over the long term, owning saves you money compared to renting, even after you factor in the costs of carrying a mortgage.

The advantages of renting

When you rent, you enjoy more flexibility than you would if you owned your home, and your monthly costs are predictable and controlled. You won’t have to worry about maintaining your property, and you remain mobile if other personal or professional opportunities necessitate a move.

It might be better to buy if:

• You have a steady income and you want to stay in your current city for the foreseeable future
• You are eligible for a mortgage loan at current interest rates, and can comfortably afford the monthly payments you’ll be responsible for
• You have enough money saved to make a down payment
• You’ve found a great deal on a home that needs some tender loving care, and you’re willing to put in the work to improve it

The bottom line: If you’re staying put for the long term and you can afford to, buy a home.

It might be better to rent if:

• Making a down payment would leave you with very little money in the bank to cover day-to-day living expenses and emergencies
• You’re not committed to staying in your current job or city for the long term
• You don’t have the time or inclination to maintain a property and make all the necessary repairs that will spring up from time to time
• Your financial situation is in flux, and you cannot accurately predict how much income you will have a year or two down the road

The bottom line: If you want flexibility, or if your personal and professional situation might change on short notice, renting might be a better option.

At the end of the day, you and you alone can decide whether it’s better to buy or rent. These principles will help you make an informed decision that safeguards your long-term personal and financial interests.

Would you rather buy a home instead? Give us a call or email us.

About Jethro Seymour

Jethro Seymour, one of the Top Davisville Village Real Estate Brokers, is a midtown Toronto residential specialist with over 20 years of sales experience in real estate, marketing, construction and publishing. He has helped many families find homes in Toronto’s great neighbourhoods, and has extensive knowledge of local markets, new home construction, resale home sales, and the condo market. Living in midtown Toronto, Jethro previews many of the homes that come to market for his clients and inventory knowledge. Jethro specializes in Midtown, Davisville Village and Leaside neighbourhoods. For more information, call Jethro Seymour, Broker.