Quote:
Originally Posted by blankall
Here's a question. Don't you think the decision is different right now? You can buy a nice place in the burbs for $600k, with 20% down, that's a mortgage of $1,723 at 1.79%. Now let's look at how an uptick in the economic market might affect rents. Your landlord evicts you, you are forced to pay $3,000 for rent. The math changes again.
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I fully agree with you about the current market. I recently almost pulled the trigger on a house that cost $575k because at that price for an equivalent house, my rent looks expensive.
That's why the thesis of my post was that the rent vs. buy argument is always a nuanced one because the math is constantly changing. There isn't a 'general rule of thumb' or 'more often than not' argument that applies because when one sits down and models the decision correctly (includes all costs of home ownership and rent costs (property taxes, condo fees, maintenance, insurance, moving a couple of times if you need to switch rentals etc) it's highly sensitive to a number of assumptions that, again if you're being honest with yourself you cannot accurately predict (market returns, price appreciation assumptions, rent inflation assumptions etc.)
With regards to the purpose of the thread, Calgary and Edmonton are not anywhere close to a housing bubble. They've been beat up so badly over the last 10 years while the rest of the country has bubbled that these are some of the only markets with high affordability relative to incomes. The issue in these markets is maybe the terminal value argument ie. Does it really make sense long term that an inner-city duplex should cost $850k- $1 million in a small prairie city whose major industry is in long term decline. If you're a 20 or 30 something couple are you going to get your money back with a decent return in 25 / 30 years that it makes sense compromising retirement savings to squeeze into the house you want to live in?