HawthorneVillager.com

Absolutely correct. Renting is not 'dead money' and makes more sense than owing for a certain percentage of people.
I've mentioned in the past how I have encouraged some people to rent due to their situation, and a very close family member being one of them!

Some people should buy, some people should rent - it is completely situational, and has very little to do with 90% of the posts in threads like these, which are either anecdotal, or as you said, driven by emotion.



The onslaught of HGTV showing in the past 5-7 yrs and brought on many a flip / reno rookie, who often make BAD decisions. These houses sitting are not an example of a crash starting - they are a sign of market sanity returning. You should SEE some of the so called 'renos' getting done these days. People making some BAD decisions...

Housing can be pruchased or rented, so it is not really a service (unless you are a renter). With that being said, it is a necessary service.
There is a huge difference between renting a movie, and leasing a car, vs. renting a house. In the case of a Movie, most movies will be watched once or twice and then left in a drawer if purchased, much more economical to rent a movie vs. buy one at full price. A vehicle depreciates the minute you drive it off the lot and continually depreciates during the entire time you own and drive the car (with the exception of collector cars). A house/condo on the otherhand, generally appreciates and is concumed every day you live in it. Is it an emotional purchase, maybe, maybe not, depends on the purchaser. In the case of purchasing, you are paying your mortgage to pay down principle to actually be debt free and own your home, where in the case of renting, you no longer have any of that equity. Some fiscally resopnsible people may invest the difference, but come on, let's be realistic, the majority of the population doesnt. There have been numerous reports over the last few months that the younger generation isnt saving for their future. (And I wouldnt attribure that to them buying an expensive house). The comment that yo umade about using the 4% return on paying for 6 months of your rent. While a good idea in principle, it is somewhat flawed as you are forgetting about the capital gains tax, so in reality, you are paying 3 months rent, and having to pay 9 on your own.

The most important sentence in the entire paper.

"This result is conditional on an individual taking any residual money from renting and reinvesting at a rate equal to, or greater than, the risk free rate."


There in lies the kicker. I'd probably say 95% of people aren't going to invest any residual money... they will take vacations... drive better cars... have bigger TVs.. have cooler cell phones...

Then the "rate equal to, or greater than, the RISK FREE rate."

What's risk free in this day and age? Surely not stocks.. not mutual funds.. not the money market... not even cash... nothing is risk free.

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a house is forced savings for many, you would require great restraint to put money away, if you had that you would buy and not rent. good article in the sun today. owning a home is still the wisest investment you can make.

If you have two people, a renter and an owner who don't have common sense and don't save anything over and above their housing costs (you keep reminding everyone of the credit bubble -- does that show common sense?) -- who will be better off in 25 years when the owner has the mortgage paid?



Completely based on my own PERSONAL view of friends and co-workers, I see many invest a small chunk into RRSPs every year to get a nice tax return (why leave money on the table) and then usually use the tax refund to go on vacation. I also don't see any of my "renting" friends and co-workers investing $500.00 a month into investments. I do see them all driving BMW's and Mercedes while I drive a Ford. I do see them all wearing Lacoste golf shirts while I wear my Costco TH.

Remember, there is a limit to RRSP/TFSA contributions every year as well -- at some point, to invest over that limit you need to put it in NON registered investments whereby you WILL pay taxes on ALL money earned.

Again, personal opinion. I find for most people, the mortgage is forced savings. They have no choice. With investments, unless you are very focused and dedicated, it's easy to say "Oh, I'll invest next year -- let's go to Disneyland"



You do realize the situation in Europe and the United States? There is MAJOR risk to cash and the money market -- Why do you think gold is so high right now? Cash isn't safe. I believe Ol Skool went into detail a few posts up about how all this is/can playing out.

In my personal view, the entire economy is always fragile just as the RE market. It can change on a dime and usually a small event can trigger mass change/issues. It used to be just locally and with trading partners, now it's globally.

This is why in my PERSONAL opinion it doesn't make sense to pay down the mortgage debt faster. Most will disagree, but I feel it's best to be diversified -- Have housing equity AND RRSP/TFSA/Cash/whatever else. This way you can weather the different conditions.

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On the flip side, looks like it's hit rock bottom -- time to start buying again and repeat the cycle.

http://business.financialpost.com/2011/ ... ap-houses/

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Looks like rent is going up as well....

http://www.ottawacitizen.com/business/O ... story.html



I believe I mentioned earlier, when house prices go up and the cost to service them, the government will have no choice but to authorize a large rent increase (they have been keeping it artificially low) because otherwise those holding rental units will simply sell them off leaving more people without a place to live.

Thankfully those with 5 year fixed mortgages will see a 0% increase.

3% a year for the next 25 years -- ouch. That could get pricy.

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Rent prices are artificially being kept low. Theres alot of upward pressure that will 'burst' that ceiling one day. Its good the gov't is relieving it but one day, it may inrease 10%

Rents are established by landlords and capped at the guidelines set out by the Ontario government.

If the cost to maintain a house goes up, so will rent. To think otherwise is foolish. People don't rent properties out of the goodness in their hearts -- they do it to make rental income.

Rental income = rent charged - cost to cover property.

Do you really think landlords care how much of your income you spend on rent? LOL. 20% -- 50% -- 90%. It means nothing to a landlord.

What establishes "rent" is the supply/demand of rental units/tenants and then the guidelines put in place by the government.

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The guidelines really only apply to existing tenants.. I can buy a property and rent it out for whatever I want to.. But once they are in I am capped as to how much I can increase it on a yearly basis.

The problem with this is rents typically do not increase as much as the cost to maintain them.. Hydro is supposed to almost double in the next few years, HST caused many of our maintenance costs to go up and of course every year property taxes go up etc etc.

Often landlords don't do the right thing to keep their properties up to spec even in the best of times and the rental guidelines only make it harder for those of us that do.

Ultimately this is why I switched all my properties from rentals to rent to own and all new properties I buy are chosen by the tenants I pick before hand. So they are pre-qualified by a mortgage broker, assigned a credit counselor to keep in touch and of course do their own home inspection etc.. They pay rent and 20% of it is credited back towards their down payment when they buy the home from me in 2-3 years.

The flip side of this is most of my tenant buyers are folks who are tired of living in run down properties, dealing with bad landlords and often bad neighborhoods. As much as some people on this thread like to recommend renting most tenants simply don't maintain their properties and often the landlord is losing money every month simply banking on the appreciation.

So carpets etc don't get replaced as often as they should and in many cases even on my own middle class street here in Milton tenants will pay the rent and the landlord doesn't pay the mortgage and defaults.. I had a neighbor a few houses down move in this past March, in May the property was listed under power of sale and the tenant had to find a new home and move at their own expense.

So renting isn't all it's cracked up to be either..

Then they forfeit their initial down payment (2-3% of the purchase price) and the 20% rent credit.. They go on with their lives and we sell it or find a new tenant buyer. If they just need an extension, then we give it too them.

If your interested you can look at our website at www.fairhomebuyers.ca, the video on the homepage explains the process pretty well.

This is YOUR personal situation -- overall, I do see rent going up. It has to -- everything else is.

$600 may not be worth it for him, but this is one year. Do you think a 3% raise is not worth it for the average worker?

That 600$ turns into $3000-4000 more a year in 5 years. (keep adding 3% a year) Do you think your landlord will still think of it as not worth it? Rent is affected by inflation, just like anything else.

Your mortgage isn't affected by inflation. This is where a mortgage payment generally takes up less and less of your income year over year while renting for most people is affected and continues to usually go up at least with inflation (when not rent controlled) thus continues to take up the same percentage of your income.

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Gentlemen, gentlemen, why is this conversation going on all the time? It's as though you're trying to convince someone to buy or rent. Let people do what they want. Hopefully they're not reading your expert opinions. I will tell you this, that there are factors that a lot of people aren't aware of in this economy. Because we are such a stable country, overseas money is coming in by the truck loads. I have an example of an immigration lawyer who is rolling in the dough. He purchased 29 units in a Mattamy development in the past year and a half and just recently purchased another 50 units in a development next door by another developer. There a lot of unseen factors that are driving or sustaining new house pricing that none of us are privy to including how money gets into this country.

That's your opinion and I resent the fact that you guys think you're the resident experts in this matter regardless of the so called good data and articles you think people should read. If individuals want to make that sort of investment decision I would hope that they're not influenced by 2 guys on the blog.

this thread has gotten blah, blah, blah! same rhetoric by same person, give it a rest.