Owning a Home Officially Cheaper Than Renting, Report Says
It’s no secret that renting is expensive, but the astronomical increases are—believe it or not—working to ensure that renting is no longer (or at least rarely) a cheaper alternative to homeownership.
As rent prices increase, homeownership may actually be your best bet.
Earlier this month, Mortgage Professionals Canada released their comparative report, Owning versus Renting a Home in Canada.
In the report, Will Dunning, Mortgage Professionals Canada’s Chief Economist, looks at the expected costs of Canadians who rent versus Canadians who own their homes.
The report examines 266 different housing scenarios throughout different regions of the country.
Most of these scenarios showed that the monthly expense of homeownership is actually less than the cost of renting similar housing.
The report also showed that owning a home may be more cost-effective over time and that people who own homes may be better off in the long run.
“The report demonstrates that the money Canadians are spending on monthly rent, if used instead to finance a home, would be a very beneficial investment over time,” Dunning said in a recent press release.
“The costs of owning and renting continue to rise across Canada. However, rents continue to rise over time whereas the largest cost of homeownership - the mortgage payment - typically maintains a fixed amount over a set period of time - usually for the first five years.”
“The result is that the cost of renting will increase more rapidly than the cost of homeownership.”
According to a recent press release, if mortgage rates stay at 3.25 per cent, in 10 years the cost of ownership (on the net basis that takes out principal repayment) will be lower than the cost of renting in almost 98 per cent of cases.
Despite this information, according to the press release, more and more Canadians are becoming used to the idea of never owning a home and being permanent renters.
However, the report highlights that in all of the cases explored, when mortgages are completely repaid the cost of owning will be significantly less than the price of renting.
Read a copy of the report here.