Buying versus Renting a Home: Pros and Cons
It’s an age-old question with valid arguments on both sides: Is it
better to buy or rent a place to live in?
The main argument for buying a home is obvious, why pay your landlord when you could be using your monthly mortgage payments to build equity in your own home? But there’s more to consider. For instance, there are hidden costs with homeownership. Let’s look at some of the pros and cons of renting and buying in the Halifax area to help you decide which option is right for you.
The pros of buying
Most Canadians prefer to own their own homes. Nationally, the homeownership rate has been fairly stable over the last decade at around 68 percent. The latest census data in 2016 showed 9.5 million of Canada’s 14.1 million households owned homes. The rate in the Halifax-Dartmouth area is below the national average but still runs at around 60 percent.
So why do so many people prefer to buy instead of rent? It’s because they do the math, says Sheila Cashin, a RE/MAX nova agent with more than 20 years of experience. “They realize they’re paying $1,500 to $2,000 dollars a month for something, and they could be putting that into the purchase of a home.” That argument is especially attractive to first-time buyers who want to break into the housing market.
Two of the big drivers in Canada’s housing market are millennials and new immigrants. A Canadian Real Estate Association study found that 85 percent of younger people and new Canadians want to own their own homes and have no intention of becoming lifelong renters.
The cons
of buying
There’s also a financial argument against buying a home. It has to do with all the money you have to spend on things like interest payments, property taxes and other fees. It’s money you’ll never see again, and it does nothing to enhance your financial investment. To understand the true cost of homeownership, you need to remember that the mortgage payment is just the beginning.
Rising house prices is another factor. While prices are falling in some provinces, house prices here in Nova Scotia are going up. The average price went up 14 % in 2018, and experts predict they’ll continue to increase into the end of 2019. According to the Canadian Real Estate Association, the average house price in Halifax-Dartmouth is now $339,397.
The pros of renting
More than 4.4 million Canadian adults and families live in rental accommodations – that’s about 30 percent of all households. The rate is even higher in the Halifax-Dartmouth area, where 40 percent of all households rent.
There are lots of good reasons people decide to rent. For one thing, some
may not have the five percent down payment required to purchase a home. Others
need to be mobile and choose to rent a place they don’t have to worry about
selling when they leave. As well, many older homeowners are selling their homes
and opting to rent instead, freeing up the equity in their homes to enjoy a
better lifestyle.
Apartment living is also much more attractive than it used to be. Apartments in new buildings are often spacious and have many of the high-quality features you’d find in condos.
The cons of renting
Renting in Halifax isn’t cheap, and It’s getting more difficult to find an affordable place in a good location. The vacancy rate in Halifax in 2018 was 1.6 per cent, the lowest rate in 20 years. And the rate is dropping, even though rental apartment construction in the city is at an all-time high with 4,020 units on the market as of March 2019. The Canadian Mortgage and Housing Corporation attributes the increased demand for rental units to more immigrants moving to the Halifax-Dartmouth area and more people moving here from other parts of Canada.
With the influx of new residents comes rent increases. Average rent in 2018 was $1,006, which was two percent higher than the previous year. And with rents going up, more people are having to spend a bigger chunk of their income on a place to live – In some cases, up to 30 percent of their earnings
Halifax market challenging for renters and buyers
As you can see, there are good reasons for and against both renting and buying. But whether you’re looking to buy or rent in the Halifax area, the tight market does pose some challenges. For one thing, the Halifax housing market is a seller’s market right now, so homes are selling quickly and prices are going up. But even the rental market is hot and competitive, according to Sheila, who is seeing the surge of activity from both sides, both as a real estate agent and a leasing agent for 200 rental units. “It’s really crazy. If it’s not real estate, it’s rental. Our rental market is absolutely insane,” she says. “We’re seeing a market like we’ve never experienced before, not in the years I’ve been around.”
So what does it mean for those looking to rent or buy? Well, it’s never been more important to do your homework and have a trusted guide to help you navigate the twists and turns of the current Halifax area real estate market.
We’re here to help. Contact us
today and one of our
experienced realtors will be happy to help you find the perfect home to buy or
rent.
