Why we prefer to rent…for now!
Jessica Gares is a producer of the popular CKNW Radio program, The Bill Good Show. Recently, Jessica spoke with Bill about why she and her husband have deferred homeownership for the immediate future in favour of renting. I know many of you who visit The Thirties Grind, share Jessica’s view, so I asked her to share her rationale with us as to why she prefers to rent…for now.
I was born and raised in Port Coquitlam and was accustomed to my long commute downtown. I didn’t know how much better life could be until I sold my car and moved into the city. Oh the freedom! My husband and I are currently renting a stylish, new 690 square foot apartment at Homer and Robson and we’ve been here since December of 2010.
We adore the downtown lifestyle and are happy to be renters right now — that’s right, we don’t want to buy a place at this time. This is something that shocks some people who aren’t shy about pushing their opinions on real estate on us: “you NEED to get into the market as soon as possible because it’s the best investment you can make. How long are you going to pay someone else’s mortgage?” The truth is that my husband and I really value the flexibility that renting provides. Having initially signed a one-year lease we weren’t committed for any amount of time beyond those twelve months. Renting also provides more cost certainty because outside of our monthly rent, there isn’t much else to worry about; any special assessments or repairs are the responsibility of our landlord. We also feel that when you consider all of the costs associated with a real-estate transaction, such as property transfer tax, conveyancing fees, realtors commissions, and in some cases high-ratio mortgage insurance premiums, a home purchase makes more sense when you’re intending to hold it for five years or more. The real estate boom we’ve seen in Vancouver over the last ten years has made it possible for people to make big gains on short-term transactions but it isn’t reasonable to think that prices will keep going up at the same rate forever. I should also mention that before we made the decision to rent we compared the cost of renting with the cost of paying the mortgage for an equivalent apartment. Not surprisingly renting allows us to bank about seven hundred dollars per month, so while we’re not building up equity in a home, we are certainly building our savings.
So, for now, we’ll continue to ignore the people in our lives who are pushing us to buy a place. We’re happy to rent our trendy little place downtown and we’ll continue to enjoy all the city has to offer. We have a small place but we treat the city as our backyard and did I mention that I have a five minute walk to work?
- Jessica Gares
Jessica is right, in the sense that if you don’t know where you want to be in 3 years it makes no sense to buy for the short term. Unless, of course, you have enough equity that you can hold it as an investment when you move up into a townhouse or house (as many people do). Real estate is the best investment over the long term but it is not a short-term investment. Transaction costs are too high.
I totally agree with Jessica. We live in such a changing world now, and being married is enough, without having to be married to a piece of dirt. By the way, I am a Realtor and Property Manager, so I’ll plug here a bit. Anyone can contact me through here if they need any help with renting or selling/buying. I also think that rents are going to come down, with all the stock that is going to become available soon.
Not to put too fine a point on it, but there are times in history where it is not true that “a home purchase makes more sense when you’re intending to hold it for five years or more”.
This is all fine if you are a couple, but when you have kids, 690 square feet downtown is not going to cut it. If you also have a dog, who doesn’t want to piss on concrete and be on leash during every walk, downtown is also less of a possibility.
I think more and more people are weighing the pros and cons of home ownership in Vancouver these days. I definitely am. The costs related to home ownership in the Lower Mainland definitely weigh in favour of renting for the reasons Jessica lists.
I want to live close to work, in a walkable neighbourhood and have some green space to walk my dog and generally de-stress after work. There are a lot of neighbourhoods like that but if you work downtown then your options are focused on the West End, Yaletown, False Creek north and south, Kits, Cambie Village, South Granville. I know families who live in many of those neighbourhoods. The big yard, white picket fence thing is not for everyone.
Have you seen this calculator? http://www.nytimes.com/interactive/business/buy-rent-calculator.html
When we were renting before at 700 per month it decided we were better off renting and would save over 10,000 a year for 30 years!
Our current much higher rent, the tipping point wouldn’t be for 17 years! Personally my husband and I would rather grow our retirement savings and do a bit of travelling rather than tie ourselves to a property. Besides we would have to move much further away to have anything nice with what we could afford!