Due to my ongoing speculation of Vancouver’s housing market, Gordon Feng’s blog post on the financial perks of renting a house captured my rapt attention. Indeed, the act of home ownership used to be a prominent investment, where one could accumulate huge profit after selling it 15 years later. However, in today’s economic situation, one is likely to lose a large sum of money due to the possible “bubble bursting” of Canada’s housing market.

“Canadian home prices are up nearly 100% since 2000.”

(Source: Euro Pacific Capital)

To reinforce Gordon’s insights, there is more financial freedom and flexibility associated with renting a house. In addition to mortgage payment, owning a home means that you’ll also have to pay for property tax, insurance, and utility bills. For many homeowners, the value of their home occupies a significant portion of their net worth; whereas, renters can achieve more investment diversification from the amount of free cash they possess. Furthermore, renters have the advantage that annual rent rates are regulated (in some provinces). Some may believe that renting a house means that money is being thrown away, but buyers do the same, since they have to pay interest. Besides the financial reasons to rent instead of buy, comes with the flexibility of moving, fewer worries about high property tax rates, and monthly spending will be more predictable. The housing market in Canada has boomed for quite some time, but the question is, when will the bubble burst? Perhaps in the wake of a crash, buying a house will seem more reasonable.