I have always thought that renting a house is a bad decision since money is gone once spent, unlike buying a house where the cash is converted into another form of asset. This article provides reasons why renting is better than buying (perfect for Vancouver’s expensive houses!).

In terms of finance, we need to determine whether the money saved has a higher value now or in the future. There are three key points:

1)      Renting is usually cheaper than paying for mortgages every month plus owner expenses

2)      House prices are high and should fall in the future

3)      How high are mortgage and savings rates?

Simply put, assuming house prices are at its peak, the cash being used to buy a house would have a lower value in the future once house prices drop. It would be better to save the cash and invest it or earn interest in the bank until house prices drop (meanwhile I rent a house). Secondly, if mortgage and savings rates are high, I would definitely keep my money in the bank until mortgage rates and house prices drop. Not only am I not paying for the high interest, I’m also not losing asset value once the house price drops because I never purchased one yet.

 

 

Bibliography:

• “Comparing Neighbourhoods – Vancouver.” Www.cmhc-schl.gc.ca. Canada Mortgage and Housing Corporation, n.d. Web. 06 Oct. 2012.

• Neary, Claire. “The Globe and Why I’m Going to Wait to Buy a House and Keep Renting.” Www.theglobeandmail.com. The Globe and Mail, 17 Sept. 2012. Web. 06 Oct. 2012.