Everyone knows that buying a home is better than renting one. When you rent, you throw your money away every single month by giving it to someone who can invest it for themselves. When you own, you use a little money every month to make an investment for yourself. Obviously, ownership wins. But for the last several months, we’ve seen a switch in the market, with more people looking for rental units in some areas of the country than they are looking for “For Sale” signs. But,a new report says that’s all about to change; the only question is, do you agree?
The report comes from The Mortgage Group Canada, who recently conducted a study among renters, asking them about their living situation and if they had any plans on changing it. Turns out, one-third of the participants said that within the next two years they were going to buy a home. But at a time when areas such as Vancouver and Toronto are seeing an increase in rental units, due to the high prices on the market, can this data be correct?
It very well could be, seeing as how the increase in rental units is something that’s happening now, and the participants of the study are looking at home ownership within the next couple of years. And it’s not as if these soon-to-be homeowners have their heads in the sand about the current market, either. Many said during the study that the only thing that’s kept them out of the market so far are the high prices. And if they’re not looking to take out a Vancouver or Toronto mortgage for the next two years, that falls right in line with the “leveling off” that many economists and housing market experts have predicted.
But it’s not only home prices that renters are looking at, but the interest rate too. Many participants in the study (over half of them at 54%) also said that if the rate were to increase even by 2% in the next 12 months, they’d be compelled to buy a home even sooner, within the next 12 months. And along with that interest rate, it seems that homebuyers aren’t just looking for an investment that they can tap into using a home equity loan or HELOC for extra cash; paying off their mortgage is also of high priority to these study participants. No, instead these renters want to make sure that they can pay back their mortgage with as much flexibility as possible, meaning few early repayment fees and of course, not borrowing against the equity in their homes.
So what’s the debate? Well right now, Canada currently has a 70% home ownership rate. And if that many renters are really looking to come onto the market, that number is going to increase even more by about 12%, according to The Mortgage Group. And many analysts just don’t think that’s going to happen. So, do you think all of these renters are really about to flood the market? Or do you think it’s wishful thinking on their part?
And, what would be so bad about our home ownership rate being bumped up to 82%? Doesn’t that bode well for us, and our economy? Shouldn’t we actually be hoping this will happen, rather than doubting it?
