Quote:
Originally Posted by bizaro86
I doubt it. I'm significantly invested in real estate for a number of reasons, but I do think people do themselves a disservice when they think buying is the only choice. For many/most people home ownership will make sense at some point in their lives, but I get tired of my friends getting pressured into it too soon in their lives.
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I agree. It's become too automatic for people to assume that buying is always the right answer for everyone with no attention paid to the external market conditions and their own situation. A new grad probably shouldn't buy real estate, so they can be more flexible in the labor market and so that they can buy with a real downpayment providing them with a margin of safety in case of real estate price declines or stagnation (20% not the customary 5% down with CMHC insurance).
I come off as extremely anti-buying. I'm not, I'm only for the alternative that fits one's life and financial situation best. With considerations with interest rates, rental costs, and house prices right now it points to renting. That doesn't preclude me from buying when it makes sense personally and in the right market conditions.
For example if I lived in many US makets I would be buying a house and it would most definately be the right move. In many US markets the price to rent ratio favors buying:
- interest rates are at all-time lows
- house prices are below the average mean inflation adjusted prices
- Due to many people losing their homes in the credit crisis, rents are actually more expensive monthly than a mortgage plus other costs on the same property in many cases (A lot of renters cannot buy because they can't qualify for a mortgage post 2008)
- You can actually take out a 30 year mortgage in the US and not have to renew every 5 years (Which means you can lock in your monthly interest payment for 30 years not 5!!!)
- In the US you can deduct the interest portion of your mortgage payment off your taxible income