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archer
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archer Thu Jul 28, 2011 12:11 pm EDT Report Abuse
There are a few is common fallacies in this article.
1) They only compare rent to mortgage cost in the present. Rent goes up, every year, forever. Typically a modest homes rent will equal mortgage costs within 5 years.
2) The real value in home ownership is not its investment value . That’s not a given (see the US picture) . The value comes once you pay it off. Living with no rent and no mortgage. Your costs then become much cheaper, and your savings multiply year over year compounded by inflation. Even counting taxes and maintenance the cost of living in a house you own is much less the cost to rent an equivalent space. A smart person once they pay it off invest that freed up mortgage payment, so they don’t end up spending it.
To make it sense the objective has to be that you will continue to own a fully paid for residence for years after the mortgage is gone. The early years cost is higher but you reach a minor tipping point when the rents catch up with the mortgage cost. You reach a major tipping point when you pay it off.
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P
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P Thu Jul 28, 2011 12:03 pm EDT Report Abuse
to A Yahoo- guess what- there is no guarantee you'll be even alive for retirement. Also..smart move..but ever thought that its technically the bank that own ur house?? Loose ur job, then u see. ALSO..of the 1800 per mth u pay- how much is interest (income to the bank?). I say..use the 20 yr rule, and weigh in all other factors. Divide value of home..by annual rent. If more than 20..Financially, at least for now, ur better off renting. IF less..better off buying, considering all other factors of course
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A Yahoo! us....Willy Mack.
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A Yahoo! us....Willy Mack ... Thu Jul 28, 2011 12:49 pm EDT Report Abuse
I have bought and sold houses for 30 years and I agree
it is usually better to buy .but now in major hot markets
renting may be worth looking at until prices come down.
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shahnawaz
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shahnawaz Thu Jul 28, 2011 12:01 pm EDT Report Abuse
ok, so writer is concluded that renting is better than owning a house. writer is not a good consultant. the conclustion is purely childish. just do a small maths.
known factor:
year= 2004
250,000/= House ( 3 rooms 2 story finished basement house )
down payment= 10%
mortgage= 900 C$ average.
tax= 2,200/ year ( 183/= C$ per month)
electricity, water and other expenses= 250/ month average.
prime plus 1 variable mortgage for 5 years ( imortization 25 years )
average 3.5% interest.
-----------------------------------------------------------------------------------
totoal monthly average expenses.
mortgage+ tax+ energy and water bills= 1,333/ month.
1,333- principal average amount= 1,083 / month
------------------------------------------------------------------------------------
Now tell me in Toronto or any other city do you have any chances to get any house or any 03 rooms apartment less than 1,083/ month.
Well 03 rooms apartment value is 1,300/= minimum pluse 50 C$ parking. So you are savaing 1,350-1,083= 267.00 C$, net profit everymonth.
--------------------------------------------------------------------------------------
in addition to that over the year of 6-7 years time period the value of house will be increased and the present value of our house in neighbour hood of toronto is 400,000/= and above. so average we will be in profit of 150,000/= net profit.
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yes there are some pro and cons. but please make sure the down payment should be not less than 10-15%. better first time buy homer contribute money in RRSP. and withdraw the same and put as a down payment. If your down payment is good you are the one who are saving money. also location, pluse proper maintenance will bring a lot of money in your pocket. basically equity which built up bring you a very good IRR ( internal rate of return ). Good luck. do maths first and take careful steps. you are definetely will be winner in long run.
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maminka
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maminka Fri Jul 29, 2011 12:17 am EDT Report Abuse
You're thinking like the majority of people. Remember: the majority is almost always wrong.
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A Yahoo! User
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A Yahoo! User Thu Jul 28, 2011 12:01 pm EDT Report Abuse
It surprises me, seems many the people in Canada do not learn from US housing history, no bubble here.. yeah....no one listened until they get their own experience. May God help us.
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Many Possibilities
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Many Possibilities Thu Jul 28, 2011 12:45 pm EDT Report Abuse
I think there is a bubble. Just look at the multiple of Purchase Price as a multiple of Annual Income at the time of purchase. About 12 years ago it was closer to a multiple of 3. For the same house today it is closer to 5 or 6.
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lina22346
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lina22346 Thu Jul 28, 2011 08:19 pm EDT Report Abuse
Prices are going to fall 25%. Just watch!!
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Beata
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Beata Thu Jul 28, 2011 11:58 am EDT Report Abuse
It is not fair to compare renting vs owning a house or a condo even if the comparison uses same size of a property. The problem is that it is often quite impossible to find a condo for rent in the same condition as one you would buy. This is why there is a distinction between appartments and condos. Makeing the decision to rent often implies making such compromises as carpets on floors, laminent counters, outdated kitchens, bathrooms, etc. The minute you chose to rent something that looks like an actual condo that you would buy (wood floors, granit counters, renovated kitchen and bathroom, etc.) you are getting yourself into "luxury rentals" or so they are often called (although I find this is hardly luxury, but just normal standards) and now you are talking about approximatly the same price as the mortgage & other expences.
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A Yahoo! User
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A Yahoo! User Thu Jul 28, 2011 11:44 am EDT Report Abuse
I thought I've give the author the benefit of the doubt and I checked for local rental properties. I'm currently paying $1800/mo property taxes included for a 2000 sq foot 3 bedroom home. The equivalent home, in my area, and they are very rare (unlike towns & condos) will cost anywhere between $2500 to $3000/mo. Granted I'm no mathmatician but a two year old could figure out which decision to make. Also, come retirement and downsizing, I'm "in the market" and will make a killing off my home, or heaven forbid something happen to my wife and I, our kids will inherit a nice nest egg. If I'm renting, I'll never be able to get into the market, and have zero to show, ever!
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IT'S MY OPINION
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IT'S MY OPINION Thu Jul 28, 2011 12:26 pm EDT Report Abuse
you, unlike the write of the article, have common sense...lol
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Kevin
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Kevin Thu Jul 28, 2011 11:44 am EDT Report Abuse
What is it with every Yahoo article that involves numbers at all? They need to send all of their writers back to grade 7 math class to learn basic addition, subtraction, multiplication, division and word problem skills.
I own a large townhome outside of Toronto (just over 2000 sq feet), and the monthly cost is nowhere near $8000. I know this because I net nowhere near $96,000 a year. To think someone needs a salary of $160,000 just to barely maintain a townhome is insane. I have no idea where they get these numbers.
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IT'S MY OPINION
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IT'S MY OPINION Thu Jul 28, 2011 12:26 pm EDT Report Abuse
Amen to that
o
IT'S MY OPINION
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IT'S MY OPINION Thu Jul 28, 2011 12:26 pm EDT Report Abuse
and after the math class, COMMON SENSE class...he!he!..
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stuck in this format
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stuck in this format Thu Jul 28, 2011 11:42 am EDT Report Abuse
No matter what this article says you are better off buying. That's why I rent!
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IT'S MY OPINION
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IT'S MY OPINION Thu Jul 28, 2011 12:26 pm EDT Report Abuse
lol you funny
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Andy
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Andy Thu Jul 28, 2011 11:34 am EDT Report Abuse
What a propoganda!
I never considered my house as an investment. I just love live in a house. I love not to have paper walls and be forsed to listen to some crazy neghbours 24 hrs a days 7 days a week. I like to be able to fix and renovate my house when I need. You can't do anything in apartment even if it falls apart and landlords don't care. I like to have my own parking; in apartment there was always someone parking in my stall. Just few little things I find attractive in owing a house...
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nomad
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nomad Thu Jul 28, 2011 12:16 pm EDT Report Abuse
Yes ... sadly, this was the primary reason I bought as well. For me, its a forced investment, one I'm aggressively paying off ... and once the mortgage is done: bliss! I calculate it will be like an equivalent $20,000-$25,000 raise of my salary (in terms of disposable income) ... can't wait for that!
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Vince PERILLO
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Vince PERILLO Thu Jul 28, 2011 11:23 am EDT Report Abuse
First off a mortgage amount of 450k is not 3k per month its about $2,500. I'm a mortgage advisor for one of the major banks of Canada and there are ways to lower your payment as well.
Wow 5k a month for taxes and maintenance. The taxes in Oakville must be taxes the highest in the world or the house is going to fall apart. On an 800k dollar home you should expect to pay 7k per year which is about 585 per month.
Also he is comparing how much money you will have after 25 years as a renter. The answer is how much did you save? Typically most renters can't save for a downpayment. That is the reason most people rent. I know this as an investor in condos and multi residential housing.
He also compares what value your place will have or Return on Investment (ROI). ROI is usually dependant on how markets go. Usually it is the same rate as inflation. How you can say you make no money as a landlord is mind boggling. To make it simple. Someone pays your mortgage every month. Some of it goes to interest and some goes to principle. The Principle is your profit. Furthermore after 25 years its all profit minus expenses.
Most important!!!! The person who wrote this article is a writer not an economist. Ask your Financial Planner for advise not a writer. You wouldn't go to supermarket to ask for advise about your car. You would take it to a mechanic or your local dealer.
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Allen
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Allen Thu Jul 28, 2011 11:49 am EDT Report Abuse
Yes, you're a mortage advisor alright. That's evident about how you've defended home ownership.
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