do you really need to own a house?
can't you just rent instead?
all of my life I have dreamed of moving out from my mom’s basement into my own newly purchased home.
a 30-year mortgage, a large down payment with no one to tell me my lease has ended & that I need to find a new place to live.
A house to live in & build equity in as I pay off the mortgage.
Recently I’ve changed my mind about the idea that I need to purchase a house to be free, happy, or successful.
Would it be nice to buy a house? to have a mortgage that by paying down I’m also building equity in my home?
Yes, absolutely & it’s still something I will consider doing in my lifetime.
But it’s become more clear that: buying is only 1 option, renting may actually make a lot more sense in many scenarios. (I’m paying rent in the basement now & it’s not so bad!)
& this thought has also prompted me to really dissect the question: “What matters more than owning my own home?”
let’s dive in
My situation
In my area around Toronto Canada, houses are not only expensive, they are unattainable to 99% of people in their 20s or going into their 20s.
Even with a mortgage for 30 years, you’ll need a downpayment of more than a few hundred thousand to get your monthly mortgage payments below $5,000 a month.
This doesn’t even consider other costs you would need to pay (property taxes, utilities, internet, & repairs that come up)
Canada has some pretty bad housing markets, & likely around where you live it’s scary enough to weigh the options you have especially when surrounding the largest purchase you’ll ever make in your life.
That’s what this writing is about though, letting you know what I’ve discovered & come to grips with as someone who could at times be completely lost, discouraged & overwhelmed by the current housing markets.
Homeownership is not the only choice
If you’re reading this still then likely you’re someone who either a) thinks renting is a sham & you’re just throwing away your money if it’s not to a mortgage, or b) you’re looking for a way to find freedom in your thoughts of hopelessness around housing, home ownership, & renting.
Well, as the subtitle suggests: owning a home is not the only choice. I’m not saying you shouldn’t own a home, but I am about to list some very plausible reasons why one may consider renting instead.
My biggest scare around having a mortgage is that I know the monthly payment would be greater than $3000 a month, & that’s if I had a downpayment of $200,000 in my area.
This is a scary thought because as a young adult buying a house now means I would be constantly stuck doing whatever to make enough to pay a high mortgage with no signs of stopping the rat race here. Essentially for me, this means I’d be in a position I would like the least even though owning a home is something I do really want.
Aside from my fears of having a mortgage, someone may choose to rent because it is actually a great option.
Although all of what I mention is location & situational dependent, for the most part renting allows you to pay less to live in the same place in comparison to a mortgage + down payment + any other costs (which will be abundant, as things break often)
Then if you want a return on your money, you can put the positive difference between what you would pay to have a mortgage & invest it for similar returns or higher in the stock market rather than in real estate (I’m not a financial advisor, I put all my money in magic internet money)
The best way to decide logically though on this is to actually run the numbers.
You can do so using this calculator here
Using a calculator to run the numbers for your specific situation will show you if renting is more cost-effective for you, or if buying a house may actually be the better option. Instead of just blindly saying “renting is for shmucks” or “i’ll never buy a house” — run the numbers first.
Here’s what I got as a result of buying vs renting for me
ouchy mama! or in other words: oof!
Disregarding the numbers? (Following your own compass)
Even when calculating the numbers, then some things you can’t really put a price on: Safety, family, location, renovations, customization, a place you will always be able to call home, a home to pass down to your kids, & your kid’s kids & so on to all the things ones feels are most important to them.
Many things that you can use a calculator for to arrive at a perfectly logical answer can be completely disregarded if there is something more powerful than logic, which is your own compass in this case.
For location, in order to stay close to family I will need to dish out around $700,000+ to own a house here. This is an insanely high number so it makes a lot of sense to consider renting. I can rent & put aside money over time to save up a large down payment to the point where it makes sustainable sense, or there’s the other side to the coin where I go into a long-term mortgage that likely would put me under some financial stress with money being tight. So then the question becomes: Do I think owning a house is important enough to me for me to be under financial stress, & am I ready to lose the house in the event I can’t make mortgage payments?
Many people may be in the same boat & will only have hope to own a home if they move elsewhere with a much lower average house price. For Canada, people move to the east in many cases to do this, but my own compass tells me I need to stay close to my family, as that matters most to me, more than owning my own home in this case. So I’ve decided that home ownership is a good longer-term goal (10+ years, by the time in 33+, but for now its not something I would rush if the numbers didn’t add up at all to renting vs buying)
Either way If you go against renting I hope this article shows you how you can find middle grounds to step on your way to owning a house, & how renting actually can save you a ton of money through the distress owning a home can cause + the higher price tag in dollars.
Expand more housing horizons
I’ve watched quite a few videos, & read quite a few articles on home ownership in the last few years but this video my Matt D’Avella hit the most.
If you want a very complete video outlining some of the things I mentioned with more examples & experts on the topic featured
Then watch this video here: The True Cost of Buying a House
If you want more great finds like this video then subscribe to this newsletter.
that’s all that this house of words has in store for today, thank you so much for reading & here’s the link again to run the numbers on renting vs buying