The decision to rent or own is one that faces many young adults at some point. For some, the reality of their local housing market means the decision is made for them. For others though, the road is a little less obvious. So how to decide between renting and owning a home? Here are five things to keep in mind.
Financial Implications
Owning a home comes with costs beyond the mortgage, such as property taxes, insurance, maintenance, and repairs. Renting, on the other hand, usually includes most of these costs within the monthly rent.
While in many major cities the gap between what it costs to rent versus own a home has narrowed somewhat in recent years, there is still very much a gap, particularly once you factor in all of the non-mortgage costs that go into owning a home.
Flexibility and Mobility
Renting provides greater flexibility, allowing you to easily relocate for job opportunities or personal reasons. If you anticipate needing to move frequently, renting may be a more suitable choice. However, owning a home offers stability and the opportunity to build equity over time.
Long-term Investment
Homeownership can be a valuable long-term investment. Over time, your home may appreciate in value, allowing you to build equity and potentially benefit from a significant asset. However, this is dependent on various factors such as location, market conditions, and the overall housing market.
It’s also important to bear in mind that all of those hidden expenses that come with owning a home eat away at the returns you get from owning your property. The math on this one isn’t as simple as it looks, so I’ll probably write another post on all of the factors that go into this next week. But yes, generally speaking, property is an asset that can generate positive returns over time.
Lifestyle Preferences
Consider your lifestyle and personal preferences. Homeownership provides the freedom to customize and personalize your living space, whereas renting often limits modifications and renovations. Additionally, owning a home often offers a stronger sense of stability and community. However, rentals in convenient locations (near transit and key amenities, for example) can often be more accessible than ownership in those same areas.
Maintenance Responsibilities
Owning a home requires regular maintenance and upkeep. This can involve time, effort, and additional expenses. Renting, on the other hand, typically shifts the responsibility of maintenance to the landlord or property management, reducing the burden on the tenant.
As someone who has done both, I can say that this is, in reality, probably one of the most important considerations, next to cost. As a renter, especially in a condo facility, you never have to worry about shoveling snow, installing security cameras, replacing a deck, or any of the million other maintenance jobs that homeowners have to worry about. Home ownership is a LOT of work.
As a homeowner though, I get some pride out of completing many of these activities myself, and actively make time for them. If you lead a busy lifestyle and prefer to keep the number of household chores to an absolute minimum, renting may align well with your priorities.
Wrapping it Up
Ultimately, the decision between renting and owning a home is a personal one. It’s important to carefully evaluate your financial situation, long-term goals, and personal preferences and circumstances to determine which option aligns best with your needs and aspirations.
