# Renting vs. Home Ownership



## edabdou (Feb 16, 2018)

When comparing owning to renting, you have to add up all of the figures, including the cost of your home, the size of your down payment, utilities, immediate repairs, interest rates and insurance, and compare them with how much you are currently spending on rent. Of course, you also have to place a value on the enjoyment and satisfaction that you will derive from owning your own home.


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## AltaRed (Jun 8, 2009)

Also include the cost of renovations and upgrades (not just repairs) in home ownership costs. Home owners almost always underestimate how much they pour into their homes. Plus you also have to take into account, the lost opportunity cost of having the down payment deployed in capital markets (as a cost of home ownership). 

With the exception of high capital appreciation areas like GTA and GVR, it is almost always cheaper to rent if you assume something in the order of 5-8% return on investment of capital deployed in capital markets. 

It won't change most people's decisions though given the emotional attachment to ownership for 'nesting' purposes AND as importantly, what one does to make their 'house' their 'home'. I've owned a dozen homes and rented 3 times (mobile corporate career) over about a 50 year period of my lifetime. Renting is a hell of a lot easier and less of an overall burden than ownership but I also got enjoyment out of some of the houses I have owned.


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## james4beach (Nov 15, 2012)

I'm in my mid 30s and my friends & coworkers are a mix of renters and home "owners" (I put owners in quotes because with such large mortgages, it will be decades before they truly own those houses).

Several of my friends have run own-vs-rent comparisons, and I have too. The results show you can grow your wealth about the same with both, assuming you properly invest the excess cashflow you have from renting. Generally this requires more self discipline in the renting case.

Some people don't have the discipline to save money and invest it. These people may benefit from a house and mortgage, since a traditional mortgage forces them to "save" by paying down principal.


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## spiritwalker2222 (Nov 7, 2017)

james4beach said:


> Some people don't have the discipline to save money and invest it. These people may benefit from a house and mortgage, since a traditional mortgage forces them to "save" by paying down principal.


That's assuming they don't use their house as an ATM, and actually pay down the principal.


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## lonewolf :) (Sep 13, 2016)

When the max length of mortgages goes back to 5 years or shorter it will be a better time to buy. When creditors are confident they will allow more leverage. The more leverage the closer to a top & the bigger the top.


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