Buying vs Renting Calgary Real Estate

Posted by Justin Havre. on Wednesday, November 14th, 2018 at 9:31am.

Should You Buy or Rent Calgary Real Estate?If you are weighing your options in terms of buying or renting Calgary properties you should carefully consider all aspects of the debate. Depending on your financial situation, your choices should be fairly straightforward.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Should You Rent a Home?

Reasons To Rent a Home

Renting a home means that you will have no major renovations or maintenance to do in the house. You will not be held responsible for major damage unless you have caused it as a tenant. This means that you do not have to worry about large and small expenses arising with little or no warning that can personal financial distress. Also, you do not have to worry about making a down payment other than first and last month’s rent. This is better for people that have less money saved up or cannot get the approval for a mortgage.

Reasons Not To Rent a Home

There are a lot of reasons that you should not rent a house. For starters, you cannot do any major changes to the premises without prior consent from the owner. This can be a hassle for even the smaller things like adding a backyard patio or even changing the color of your walls. You’ll also be paying into something with no long-term results. At the end of your lease you will have nothing to show for the thousands you have paid other than the memories accumulated over the time spent in the residence.

Should You Buy a Home

Reasons to Buy a Home

The best reason to buy a house is you will actually end up owning something and will have a large asset that you can pass down to your children or other relatives. Unlike renting, when you pay your monthly mortgage bill you will actually be reducing your debt on the house until you hit a point when it is entirely yours. You can also make changes and do small renovations at your own pace without first getting permission from a landlord. Larger renovations may require a city permit. Owning a home means that you can use the equity when necessary to make other large purchases on credit such as an investment property or a car.

Reasons Not to Buy a Home

If you do not have any financial security or the funds required to make a down payment you should not buy a house. You need to have a steady income and money saved up to make a deposit towards the total amount owed on the house. When looking at your options in regards to buying vs. renting a Calgary home you should take a good hard look at your financial situation since this is one of the most influencing factors that will lead you towards your final decision.

When is it Time to Stop Renting and Start Purchasing a Home in Calgary?

There are two things that you need to have before you're ready to get off of the renting treadmill and hop onto the home ownership podium. The first one is a deep want that is constantly nagging you and simply won't go away. It's that little voice inside you that's telling you that it's time to stop wasting your money on rent and instead put your money towards equity in the future. The second? It's having the means to do it.

It's clear that buying your first home is one of the biggest decisions you are ever going to make in your life, if not the biggest. You want to do some careful planning to make sure that it gets done properly. When you have that deep want it will carry you forward to help you get through all of the logistics of a home purchase. Without it, you'll be left in doubt and may put off getting a home for smaller insignificant reasons.

You go home shopping and find the perfect home at the perfect price in the right neighborhood. Then, you find small issues that you need to deal with first and before you know it another offer has been submitted and you have lost out on the house. You blame yourself for taking too long to make a decision but in most cases it's just that the timing isn't right for you. You need to want a new house that you can call your own badly in order to get through all of the mixed feelings that purchasing a home can bring on.

Of course, you're going to need the means to purchase a home as well. You need to have enough of a down payment put aside, funds for the closing costs and money for the move and for any other incidentals that may turn up. Having a pre-approved mortgage is also one of the things that you should arrange so that you have proof to show that you do have the means to pay for the house.

When you have a combination of a deep want along with the means to purchase a new property here in Calgary, you'll find that things just kind of click together when you're looking for your new home and once you have put in your offer to purchase.

Difficulties in Breaking Into Calgary’s Housing Market for First-Time Homeowners

The Calgary housing market has been heating up during the last few years and with home prices on the rise some people are having a hard time breaking through as a first-time buyer. On average you'll need at least  $25,000 to get into a new home in Calgary and for somebody that is still paying rent while saving for this down payment, it can be tough.

Most people in the rental market are paying high rent payments every month and don't have a lot of disposible income left over. A low price of $1,000 per month will get you a one-bedroom apartment in the city but it won't be in great shape and may not be in the most desirable location. For anything better than that, you'll have to dig a lot deeper to meet your regular payments.

The other problem is that these $1,000 monthly apartments are in high demand and it's difficult to find one available in Calgary. As soon as a lower priced apartment is advertised it is grabbed. Most Calgarians that are looking for a rental will have to pay a higher price for their humble abode and this can get quite costly.

Even the higher priced units can be very difficult to find nowadays. The rental market has been overflowing, especially since the June floods, so finding any kind of apartment in the city can be a challenge. With so many people still migrating to Calgary on a continual basis, the market for rental units is in a continuous state of overwhelm.

If you're tired of paying high rent and are having a difficult time breaking into Calgary's housing market, there is a solution available. There aren't a lot of lower-priced condos available available right now in bedroom communities like Cochrane and Airdrie in the $160,000 range. 

For that price, you can often find a great condo in a nice part of town. The commute into the city isn't really all that bad and once you start living in one of these smaller towns you may just find that you love the lifestyle more than living in the city. At the very least, you'll have taken your first step into the housing market and will now have the opportunity to start building up equity that can be put towards a housing upgrade in the upcoming years.

The Majority of Renters Would Prefer Home Ownership

In a recent study that was conducted by Altus Group Canada, a Canadian real estate company, about 80% of renters under the age of 50 would prefer to own their homes. Only 20% of the survey participants said that they rented a property because they didn't want to take on the responsibilities that go along with home ownership or they preferred the lifestyle.

Just about 80% of the participants were holding back on a home purchase for reasons that included:

  • Afraid of not being able to qualify for a mortgage
  • Feeling that now isn't the best time to make a purchase
  • Haven’t been able to save up enough yet for a down payment

Most people do want to eventually become a home owner. Whether it's financially possible or not, the vast majority would still prefer ownership versus renting. The findings from the report also dug a bit deeper based on information from Statistics Canada.

This real estate firm concluded that there are currently about 650,000 renters under the age of 50 in Canada that would be able to afford a mortgage of $350,000. These figures are based on a 3.75% interest rate on a 30-year term.

Of course, a 30 year mortgage is no longer available and many renters will only be able to scrape together a 5% down payment. In this scenario, with a 25 year mortgage at 4.79%, approximately 250,000 renters could afford a $350,000 home.

According to Altus, about 300,000 people were purchasing a home for the first time from 2009 up to 2013. About half of these buyers ranged in age from 25 up to 34. The average cost for these first homes was approximately $268,000 while the average price for all buyers was closer to $303,000.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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