2021, so nope

Haha I meant 2026 not 36

Haven't you seen all the debates on forums, reddit, social media that renting always puts you ahead of buying a home?

Gosh

revscene ballers with houses increasing 300k/yr have entered the chat

If your HH income is average, the best thing you can do is purchase some sort of property by the time you are 40. 40 + 25yr mortgage = retire at 65 w/o having to pay rent. Average HH income + a lifetime of renting = a very difficult retirement.

He's forgotten the password to his Mr happy slip account.

You gotta expand the group of people you know. After reading this comment I started to think about it in relation to the people I know, specifically white people which honestly is most my friend group. Every single one of my friends either owns a house or a townhouse, not a single one of them got it well saving a down payment living at home and not one of them was given a down payment. Mind you most of them bought in the last ten to fifteen years not the last two so that does change things a bit but like Kevin Garnett said, "Anything is Possible!!"

Just an observation but could JDMDreams = Mr. HappySlip? :suspicious:

You are one of many of us that has that theory.

I thought it was HappySilp?

Yah it was, his fingers silpped while spelling his name cuz he thought he heard his wife’s footsteps

The extra $1k-1.5k/month I could save is not worth the mental health though :lawl:

But on a serious note, the debate on renting vs buying is so situational. You can't assume all renters are poor or making a bad financial decision. You need a place to live and you do with what you got. I prefer renting over home ownership because I'm confident I can find a rental home that is similar to how much I pay on mortgage interest, strata, property tax, insurance.

Me: *looks up what a whole house rental in my area goes for these days

Also me: :heckno:

More like you can always rent a nicer place than you can buy, assuming your rent payment vs all-in mortgage payments are the same

Vancouver:
2000$ gets you a nice 1bed to rent with ocean views in a 20 year old building

2000$ of mortgage strata etc gets you a 1bed, in a 60 year old unrenovated dump on the 2nd floor

This holds true for the last 5 years for condos, prior to that and for houses, I can't comment

The renting+invest over buying argument had validity about 8 years ago (look back to when 4444 was active in this thread). Since then rents have gone way up as occupancy rates went lower where it no longer makes sense today if you're able to get a down payment saved up.

I’m not so sure… I mean you’re not paying into something you own at the end of the day but rents in my building are $1750 for a 1 bedroom… but as an owner you’d be paying $630,000 for a 1 bedroom and then be paying $350 strata plus other taxes.

I think renting is a lot cheaper month to month than owning right now… unless you have like a 50% down payment haha.

Rent prices are going to shoot up like crazy with the new inventory being built, buyers of these places can’t break even with current rents… and if they don’t, well, there’s either a tonne of people parking money here that don’t care if their money makes money OR real estate is super over valued and will collapse.

Man if I had listened to 4444's dooming 10 years ago, I'd be so fucked today.

If you can land a decent house for $4.5 - 6k/month that's a steal vs DP + Housepayments. I work with clients who are renting 4 to 5 suites in dinky 50 year old houses for close to $7k Gross a month.

My friend just started renting a $4K/month 2BR condo with views of DT at the new Concord building at false creek. Equivalent to buying it would be close to $2M after taxes. He's getting it for less than 2.4% of property cost per year.

Even $1,066,667 in a 4.5% GIC can pay for that rent compared to buying that property lol. From what I noticed at work, a lot of wealthier clients doesn't care too much about 1 - 5% in ROI when their portfolio is so big.

Yeah, idk about that. My older 720ish sqft unit rents for $1,800 all day, $2,000 - 2,200 if you wait and try to sell it as a 2BR 1 BA.

Buying it today at $600K assuming you offer 5%-10% below listing. $120K DP + $13K set for property taxes. ($130K DP in a 4.5% GIC = $5,850/year in interest income or used against your rent for about $488 discount per month)

Payments would be
$2,310/month 3.2% Variable or $2,710/month @ 4.79% Fixed, $1,916 @ 1.49%, if you got in during Covid dip (Current rates on RFD Mortgage Thread)
$430 Strata (Even if this could be lower like $350, that's only $80)
$100 Property Tax (Includes home owners grant)
$55 Insurance with max deductibles (Because we all got $10K lying around)

Total cost to own: $2,895 @ 3.2% Variable - $3,295 @ 4.75% Fixed - $2,501 @ 1.49% Covid Dip
https://gyazo.com/a37fd1678be0e01e225607d65e5ad557

$2,000 Market Rent with 1.5% market increase of $27/month per year.
less: $488 4.5% GIC Monthly Income from $130K downpayment, we must assume we have down payment already to compare apples to apples between buying and renting
$50 x 2 Parking Spot Rentals (Live next to Skytrain + Street parking isn't metered, could park and walk to save money)
$80 Renting Storage Unit

Total cost to rent: $1,400 - 1,512

Renting is currently lower than buying by $1,895 to $1,383 per month

^
Can someone provide a better analysis how sonick could be correct about buying is better in the current climate? The calculation is under the assumption that I am renting the same unit I'm buying. In my personal situation, I would go even cheaper and roommate a brand-new condo and split the $1,000 - 1,500 in rent which is more savings.

I'm one year away from being a Gen Z so I never had the option of buying 10 years ago or even 5 years ago. Even today, I feel privileged that I'm in a position to have education, employment opportunities and online resources to figure out a way to buy on my own at 25. But no matter how much I plan and how far I get ahead I feel like the younger generation is being fucked.

With cooling housing market and increasing interest rates definitely it's levelled out the Rent vs Buy playing field today.

But definitely the last 8 years until the last few months the value proposition of renting was much lower.

What about inflation and capital appreciation? You sure aint getting 4.5% for a gic in the last 10 years. That $600k condo now was probably $350k 5 years ago. So your cost of entry would be much lower assuming you had that 100k all this time. And you would have depreciated your money away all these years with inflation.

The calculation takes into consideration today, because we can only make moves today for the future. If I could go back in time 10 years and do what I'm doing today, I'd be dripping in a detached house with single income, with 4 roommates in my house lol. I'd probably have a GT4 too like KayC :ilied: but I get to only buy cars that are steals / low depreciation / reliable

Your GIC's will soon be 5 - 6% by EOY 2023 if the next 1.75% of expected rate hikes are implemented.

https://www.eqbank.ca/personal-banki...MaAjYAEALw_wcB

5 Years ago, the condo was sold for $480K in 2017, but irrelevant to most younger people because I was 21 and I didn't have $100K+ DP nor $76K salary in school to get a mortgage.

That's a you issue, if you don't keep your money invested. But rent only goes up 1.5% on 2018 and below units if we experience high inflation, so that's another win with renting.

Yah tbh if you got the cash and balls for it, might be a good time to dump cash saved for a down payment into some index funds. Might go down a bit more as we head into recession but in the long run it always recovers stronger.

Note I am not a financial advisor and this is not meant to be financial advice.

I think it has to do with your life style, do you want to live with random people in a one bedroom? Or risk getting evicted and have to move every 12 months? How long do you plan to do this? Let's say you're still dropping $1500 at minimum on living, what about everything else cars insurance gas etc?

If you did that for 5 years assuming numbers stayed the same. You would have paid $90k just in rent. Your $100k gic at 5% a year is worth $127628. Assuming you didn't take any principal out. So you still paid $62372. If inflation was 5% you basically made nothing.

At only 3% inflation, appreciation the $600k apartment will be worth $695k.

So the landlord let's say just made $90k in capital appreciation plus grossed $90k from you. :pokerface::notbad:

So you're saying being a landlord makes you immune to inflation? :seriously:

Which economics program did you go through?

I think your analysis is based on a few flawed assumptions/details which are skewing your result significantly.

1) Taxes. Owning your primary residence is highly tax efficient in Canada, while interest income from a GIC is taxed at your highest marginal rate. Obviously there are some choices around RRSPs, TFSAs, etc but for the sake of an apples to apples comparison, this should be analyzed as a taxable account and on that basis, you'll be getting WAY less than your GIC's posted rate when you consider the tax you'll pay each year.

2) Actual interest rates used for both your "investment" assumption and your debt assumption. While you can probably find a few odd mismatches here and there, generally speaking the rate you can earn in a GIC is significantly lower than what you'd pay on a mortgage. Basing a 25 year decision on a promo GIC rate from a very small niche institution is probably a risky decision at best.

3) Appreciation in real estate. What are your assumptions here? These will move the needle a LOT.

To accurately build a financial model for this that is worth a damn, you need good inputs and to consider:
1) Reasonable assumed investment return for your cash in the "rent scenario"
2) Your projected income tax rate over 25 years
3) Assumed annual real estate appreciation
4) Assumed debt costs (suggest these be linked to your estimated investment return such as investment - 1.5%)
5) Net monthly cashflow difference between renting and owning

With that, you can do some actual math. For me, I might consider something like:
Investment return: 5% (I am going to assume it's not a GIC, it will help this argument)
Real estate appreciation: 3.5%
Projected income tax rate: 35%
Net cashflow difference: $1000 cheaper to rent per month

Therefore, the math for that scenario looks like:

Rent Scenario

Future value of:
$130,000 starting balance
$1,000 monthly investment
5% annual return, compounded monthly
=$1,048,077 in your investment account, 25 years from now. However, to access it, you'll pay capital gains taxes of $108,163 which leaves you with $939,914.

Own Scenario

Future value of:
$700,000 starting value
3.5% annual growth, no tax consequences
=You own an apartment valued at $1,654,271 with the mortgage paid off, 25 years from now

In your roommate scenario, the math is even more powerful towards own as you can put some cash into an investment account at the same time as enjoying the real estate appreciation.

-Mark

Scratch this comment.