Many people hold the opinion that renting a home is a sucker move that only serves to enrich your landlord. Buying a home is seemingly the smart money. But is buying a home all that it’s cranked up to be? Is there a case for renting rather than buying a home? Buying a home is only beneficial if you are certain that you will not need or want to sell the home in a few years time. It is important to think long and hard about buying a home before you actually do it. So, is it better to rent or buy? It depends on a lot of factors. Let’s explore some of the reasons for renting.
1. The Real Estate Market Is Unstable
A few years ago, the real estate market took a plunge which affected a lot of investors negatively. While the market seems to have improved in the years following the recession, there are still signs that there may be another crash on the horizon. Zero and low down-payment mortgages are becoming common again and the cost of real estate has gone up while incomes remain the same. This combination of factors is what contributed to the market crash. Therefore, it may not be a wise idea to invest in the market at this time.
2. Low-Interest Rates Are Mixed Blessings
Interest rates have gone to as low as 4%, which makes it possible for someone to get a better house than they would have settled for under different circumstances. However, this is only beneficial for someone looking to invest over the long term. Considering the fact that the interest rates may go up, this will see home prices go down. This means that with time your big home may be worth less than you owe in debt. While you may decide to wait it out until the prices go back up, it may be a long wait.
3. You Don’t Own Your House
While buying the house makes it yours, missing a few mortgage and tax payments can present a problem. Your house can be repossessed by the bank. Therefore, if you do not have a stable source of income, you’d be better off renting than buying.
4. Owned Homes Come with Unpredictable Expenses
Should you decide to move out of the house you own to another, you can consider renting it out. While this is a good idea if a house won’t sell, it also comes with extra expenses. It is very hard for you to rent out a house for an amount that covers all the bills and expenses. Most rented houses only cover the mortgage, insurance, and taxes. The maintenance and repair costs are most of the time from the landlord’s pocket.
5. There Are Better Ways to Invest
There are numerous other ways to invest your money rather than buy a home. Stocks outperform any other type of investment, and when done right can guarantee a better return on investment.
Is it better to rent or buy? Whatever you choose to go with, a trusted Toronto condo team of real estate experts can help you find your next home.
