Rent vs buy

[hannamarin]

We currently rent a too small apt $1600- month

We would like to move.
Option A - rent a small house $2100 /mth

Option B - buy a smaller house/townhouse. 2500/mth mortgage plus insurance/condo fees/taxes $400/mth. $3000ish total

Housing market in Toronto is only going up, it may slow, but supply/demand - homes on the ground will increase in value.

Would you consider putting off buying and trying to save more? Do you think it is ever smarter to just rent forever? My H thinks real estate in our city is such A sure thing and also believes you may not save the same way you are forced to pay off a mortgage.

Not just my situation, but rent vs buy in general....thoughts?
Dont suggest staing here or buying a cheaper place.

[Deleted]

I would choose option A. Purchasing a home makes me nervous, even though in our area it would be cheaper. Plus that way you could save more for a house that you love.

Are you planning on staying in Toronto for the long term?

[mollybrown]

Renting doesn't have to be forever. Why not rent a similar house for a few years, save the difference, and buy when you have a large down payment? You can bring down that mortgage payment that way.

[hannamarin]

Our rent is tax deductible, but our mortgage is not. Opposite to the US
Supply and demand - what I meant. In Toronto proper, there is really no more room for houses. So the houses that are here are in short supply. Especially in certain neighbourhoods. They can sell within days of being on the market usually with abidding war. I dont expect the bidding wars to continue, but the supply of homes will always be less than the buyers. A big city isnt going to suddenly have a mass exodus of people.

Yes the buy option would be smaller than the rent option but has to be bigger than our current place.
We are 99% sure this is oir forever city. We would only move if we both lost our jobs and there were no options. Very unlikely.

[aspentosh]

Jul 9, 2012 8:28:26 GMT -5 @msstarry said:

If rent is tax deductible + bigger house, I pick Option A.

Taking into account your original post plus the new info, I agree totally. Better for taxes. Better for monthly budget. Better for space. Win-win-win.

[bunch]

Jul 9, 2012 8:29:57 GMT -5 aspentosh said:

Jul 9, 2012 8:28:26 GMT -5 @msstarry said:

If rent is tax deductible + bigger house, I pick Option A.

Taking into account your original post plus the new info, I agree totally. Better for taxes. Better for monthly budget. Better for space. Win-win-win.

yes. If you saved the difference, you'd prob still come out ahead even if prices go way up.

[Deleted]

Ditto Starry et. al. Option A for sure.

[SJ]

Jul 9, 2012 9:03:11 GMT -5 RockNVoll said:

I definitely don't think buying a house is a must do. And in your case, where renting vs. buying means spending less money, having better cash flow, getting tax deductions, getting a bigger house, having fewer responsibilities and more options...I'd really consider renting forever.

I completely agree. This is a no brainer for me.

Just set up automatic savings or investment transfers if your H is worried you won't "actually" save.

[hannamarin]

Thanks. This is my argument to my H. I just wanted to make sure I wasnt just scared to buy. My H is on the fence.
Now I am excited because we can hopefully move before I go back to work so I can pack while I am at home. Less stress.

[LoveTrains]

Definitely keep renting. It doesn't make sense to buy if it is going to cost you $900/more and your rent is tax deductible.

[hannamarin]

Jul 9, 2012 9:30:44 GMT -5 LoveTrains said:

Definitely keep renting. It doesn't make sense to buy if it is going to cost you $900/more and your rent is tax deductible.

Well, it costs more but you are buying a house. Some say rent is dead money

[mrshandy]

We were in almost the same situation a year ago (even the same prices lol)

and we went with Option A. I'm happy with our decision.

It's great to have more space with DS as he gets older. Also, I really didn't want to have to deal with our downstairs neighbors once DS started running around. Thank God we moved because it would have not been pretty.

We're planning on buying a year from now.

[LoveTrains]

Jul 9, 2012 9:54:38 GMT -5 RockNVoll said:

Jul 9, 2012 9:46:01 GMT -5 @hannamarin said:

Well, it costs more but you are buying a house. Some say rent is dead money

Except that they are wrong because you're paying money for a roof over your head and someone else to deal with maintenance/upkeep. Seems to me like you're getting something for your money.

Exactly.

Renting is not "throwing money away." However made that line up should be publically shamed. Renting is paying money for a place to live and for someone else to deal with the maintainence.

You should google up a "rent vs. buy" calculator. It will help you figure out how many years of owning will take you to "break even" with the costs of renting.

[M]

I'm a renting advocate. I would only ever suggest buying if you plan to live there more than 10 years (average break even point in the US which could be different where you're at) or if you find a super great deal like a foreclosure in great condition that you will eventually turn into rental property.

With the tax breaks and saving $900/mo for a larger house, I'd absolutely rent.