anyone in their 20s doesn’t envision the possibility of owning a home shortly.
Brandon Hepworth and his partner have accepted that they will not own a house.
“It’s not within our budget,” he said.
Hepworth and Lorie Ganley, both 28, live in a one-bedroom living space in Montreal and pay $1,200 monthly. While homeownership was once something they thought about, the rapidly increasing costs of housing have made homeownership a non-starter for them.
“We would like to have a home; however, it’s not something we’re working on,” said Hepworth.
The couple recently returned to college and now work part-time. Hepworth has been studying engineering in electrical fields while working as an administrator in the hospital. Ganley is finishing her master’s degree in theater and is employed in a local theater.
The next goal for their finances? A car or a holiday, according to Hepworth.
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As the cost of housing rises exponentially faster than wages, homeownership is becoming increasingly expensive for Canadians.
February’s housing statistics obtained from Canadian Real Estate Association show that the median home price in Canada increased by 20 percent in the past year.
According to a study by Mustel Group and Sotheby’s International Realty, more than 80 percent of those between 18 and 28 living in urban centers were concerned that they wouldn’t be able to afford homes in the neighborhood they prefer due to increasing home prices. Half have abandoned the idea of owning a one-family home. The survey, which included 1,502 respondents, was conducted in 2021.
A place where you can be your own
For Hepworth having a house could give him a sense of security that the space was his. But Hepworth and his wife are aware of the substantial expense of having. Hepworth claimed that Ganley’s parents were nearly bankrupt due to expenses for maintenance related to their roof.
“I’m not going bankrupt because the property I lease has a leaking roof,” he said.
In Toronto, Javan Wang and his wife, Khrystyna Skira, 26, do not see them purchasing a house shortly.
- Rising prices for housing could force middle-class buyers out of the market, PBO warns
The couple rents the two-bedroom apartment in North York for around $2,500 monthly. Wang, who is a product designer, and Skira, who is employed in IT, says that If they wanted to purchase their own home, they’d be able only to be able to afford a home that was half the size of the current one and may have to relocate further.
This is in stark contrast to their current situation where they live near their subway lines, close to eateries and shops, and live in a rental-controlled apartment.
“Renting currently appears to be the most effective alternative all-around,” said Wang.
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The couple wants to buy a house within six and seven years. However, if the prices increase, the timeline could be further delayed, Wang said. Wang.
As children of moms who were single, Wang and Skira are shocked to be in this position while making more than they’ve ever had before seen entering their homes as they grew older.
“I was raised in a semi-detached house,” said Skira.
“There’s no way we can even get similar to this size today.”
- PRICED OUTA landlord increased rents repeatedly and repeatedly. Canada’s housing department rewarded him each time.
For Wang, the owner of a house, having the home gives her a feeling of security that renters do not have to worry about when dealing with landlords who could decide to let the property go or make repairs.
“It’s an idea of the North American dream,” he said.
“You’re somewhat taught that you own an individual yard.”
The right decision depends on the stage in life, says, real estate prof
Murtaza Haider, a professor of property management and the director of the Urban Institute at Ryerson University, said that buying and renting could be beneficial at various times in a person’s life.
If you’re in your 20s or 30s, renting could be the best option since it allows flexibility.
“When the time comes for you to be young, I’d suggest that it’s best to rent until you are sure that you’ll be there for five to 10 years. That’s when you decide to invest in owning your property,” said Haider.
As people progress to other phases in their life, like having a child, Haider said pursuing homeownership is logical.
If there’s a reason not to buy in favor of rental, Haider doesn’t believe so.
“I am aware that people have written books on it, arguing for the rich renter. I wouldn’t consider it even a second time,” he said.
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Haider reported that the data show more wealth accumulation for homeowners than renters. And even though not all of the prosperity is directly related to the home’s ownership, a portion of it is due to building equity through “forced saving.”
“Your month-to-month mortgage can be a compulsory savings plan,” he said.
Haider stated that younger people might be too optimistic regarding their homeownership options. A more realistic goal includes looking into condominiums as an alternative to single-family homes, moving out of the city, and then commuting to the morning, he suggested, which could be better.
Inquiring about the conventional homeownership
Ben Felix, a portfolio manager and director of research for the wealth company PWL Capital, provides different views on the rent-versus-own argument.
“There’s no definitive answer,” he said.
Felix, who runs a YouTube channel and is into topics related to personal finance, such as this one many people consider renting to be “throwing cash away.”
However, homeownership also comes with unrecoverable costs, the homeowner said.
The portfolio manager applies the “five percent rule” to evaluate renting versus owning. If renting a home is 5 percent of the cost to purchase it, then both alternatives are financially similar.
By the five percent principle, Felix said renters who do not spend more than the five percent are financially better off than if they purchase.
In terms of finances, many people underestimate the happiness that was owning a home would bring them, according to Felix. Felix claims that research indicates inconsistent results on whether homeowners are happier than renters.
Felix says that those who decide to leave the city to purchase homes face long commutes, negatively impacting their quality of life. In addition, there is the time spent in taking care of the maintenance and other obligations associated with homeownership.
“I believe that taking other aspects such as that into consideration is vital for both the financial and the side of life satisfaction.”
