louisa Cochrane logo

Our Team

Renting vs Buying - Louisa’s Honest Guide

There’s too much divisiveness in this world already. We split ourselves into different camps of opinion based on what we feel is right. Nowhere can this be seen more clearly than the housing options we find ourselves in during the 21st century. Is it better to rent or buy?


The truth is that there are unique benefits and drawbacks to each situation. It’s not uncommon for long-time homeowners to rent property in unique circumstances. It’s also not unusual for long-time renters to find out how attainable a home is and make the switch sooner than later. 


It all depends on your needs, preferences, and the situation you find yourself in today. Finding out where you stand now is the first step to figuring out tomorrow. In this blog post, I’m going to try and help kickstart this initial conversation. Instead of fear-based motives, I’ll stick to the facts so you can decide the rest for yourself. I will also use our local Vernon market as a case study, giving you tangible examples of benefits and drawbacks.


Renting

There is nothing inherently “wrong” with renting property, whether it be short-term or long-term. It all depends on your preferences, needs and financial situation. Let’s go over some pros and cons of renting property.

Pros

  • Predictability - when you rent property, you’re generally not responsible for general maintenance and upkeep. Your payment is pre-arranged and fixed for a set time period (typically one year, at least). You’re also protected by law against excessive rent increases in most Canadian jurisdictions. Sometimes, even your utilities are worked into this arrangement, further increasing the predictability factor.

 
  • Less Short-Term Financial Burden- As a renter, you don’t need a down payment like a mortgagee. The extent of your financial obligations are the first-months rent (and sometimes the last months, but not in British Columbia), damage deposit, pet deposit when applicable, and the monthly rent cost. 

 
  • Location Flexibility- Did you accidentally end up in the wrong area of town? As a renter, you have the freedom to move without excessive repercussion, especially if you carry out your lease term, at the very least. You avoid the stresses and market fluctuations homeowners experience, and you often have more choice of where to settle next. Moving from a lower-class area to a middle-class area as a renter is usually far more attainable than for a property buyer. 

 
 

Cons

  • Lack of Investment Potential - It’s true that when you rent, you’re indirectly paying someone else’s mortgage. Landlords generally rent their home out with the assumption of gaining value through equity over time. With a renter paying the mortgage each month (and sometimes, hundreds of dollars per month over and above this baseline cost), the landlord’s investment prospect is financed by the tenant. The tenant may have more predictability in their immediate financial obligations, but they also lose out on the increased equity that property might gain over the years.

 
  • Less Freedom - When I say freedom, I’m talking about property customization. For homeowners, the ability to customize their home to suit their unique tastes is a huge factor in purchasing a home. Renters do not generally enjoy such freedom. The extent of a renter’s renovation freedom is usually the painting of some walls or furniture arrangement.

 

Buying

Buying a home is a stressful but gratifying experience for most homeowners, new and seasoned alike. The decision to purchase property requires extensive planning and several professionals (in most cases). Let’s go over some pros and cons of buying property:

Pros

  • Investment Potential - As a homeowner, your home purchase represents an investment in the local real estate market. While fluctuations in the market are highly dependent on location, most real estate markets will provide investment gains in the long-term. Earning equity allows you the freedom to make additional investments based on your goals, and often this means upgrading your properties over time. Sometimes homeowners begin in a condo or apartment; then as their property increases in value, they earn enough equity to afford the down payment on a single-family house. You are paying your mortgage instead of somebody else’s. 

 
  • More Freedom - When you own your own home, you don’t need to ask permission to make changes and upgrades. It is always wise to make smart renovation decisions but you have the utmost freedom to put your unique touch on important property aspects. Sometimes these are aesthetic changes; sometimes they’re functional. Want a treehouse in the backyard? Skip the permission stage and head to the hardware store. Need 200 amp service for a hot-tub? Start the process as soon as you’re confident in the outcome. 

 
  • Investment Reliability - There’s a saying that goes something like this, “the best investment on Earth, is Earth.” Real estate  is, in most cases, an immovable asset. Investing in stocks or other speculative assets can be inherently risky, based on perceived value and other factors out of your control. Aside from the real estate market forces in your particular area, your investment gains over time are highly reliable, especially as you upgrade the home to make it more desirable for the next buyer. 

 


Cons 

  • Hefty Financial Obligations - The largest barrier for most aspiring homeowners is the dreaded down payment - which is a minimum of 5% of the purchase price. You also must have adequate credit and income in proportion to the home you seek. If you manage to purchase a house successfully, you now owe the lender that provided you with the mortgage for the foreseeable future (most of today’s amortization schedules are 25 years long!). You’re also responsible for all utilities and property upgrades, as well as the pesky unforeseen repairs. 

  • Moving Stress & Limitations - It is considerably more stressful to move as a homeowner, especially if you’re currently a homeowner relocating. You not only have to coordinate the selling of your property and the subsequent purchase of another with a variety of paid professionals, but you also have to plan for moving arrangements. You’re responsible for the home you move from being in substantially the same condition as you left it. As well, if your home hasn’t gained any value since you bought it, you may not be able to relocate as readily as you’d planned after paying all expenses. 


Local Considerations

When it comes to real estate in Vernon, or even real estate in the greater Okanagan region, we have unique market conditions. We have a greater proportion of seniors than most other Canadian areas, for example. The Okanagan is also known for hilly terrain, creating situations where houses on the same street and of similar build quality, can be vastly different in price. This is simply because some homes will enjoy a more expansive view!




As a Vernon Realtor, one scenario I run into often is helping clients navigate a new build while trying to sell their current home. In this scenario, the renting vs buying conversation comes into play. Some clients have enough financial stability to undertake construction loans while still living in their home for the duration of the build. However, many people do not. In this case, people often choose to sell their home using a Realtor, freeing free up equity to finance construction.


When it comes to seniors moving into long-term care, they’re essentially choosing to rent instead of own. They approach the renting vs buying scenario in a completely different way than a 25-year old couple would. For them, owning real estate is less important than the benefits of long-term care. In the Okanagan, we see this all the time!

 Conclusion

As a Realtor, it’s not my job to dissuade people from renting property if it’s truly the better option. There are so many myths surrounding the renting vs buying process that we end up getting lost in perception rather than steered by fact. The truth is that for some, buying property is preferable. For others, renting is preferable! It all depends on your lifestyle, current financial situation, and your appetite for things like freedom and risk. 



Whatever the case, I’m always here as your trusted Vernon Realtor! If you need help in dealing with anything real estate related, please feel free to give me a call. 




Comments:
No comments

Post Your Comment:


Declaration period to Begin for BC Speculation & Vacancy Tax ...


Here is important, time sensitive information on the completion of a declaration and registration of an exemption regarding the speculation and vacancy taxation.... click on the link below for detailed information....


Speculation & Vacancy Tax declaration - click here




_________________________________________________________________





BC Home Sales Continue at Slower Pace

Vancouver, BC – December 14, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 5,179 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in November, down 33.1 per cent from the same month last year. The average MLS® residential price in BC was $718,903, a decline of 1.9 per cent from November 2017. Total sales dollar volume was $3.7 billion, a 34.3 per cent decline from November 2017.


“BC households continue to struggle with the sharp decline in purchasing power caused by the B20 mortgage stress test,” said Cameron Muir, BCREA Chief Economist. “Most BC regions are now exhibiting relative balance between supply and demand.”

Total active residential listings were up nearly 31 per cent to 33,500 units in November, compared to the same month last year. However, it should be noted that this compares to 2017, when active listings for the month of November were at their lowest level in more than 15 years.

Year-to-date, BC residential sales dollar volume was down 23.1 per cent to $53.4 billion, compared with the same period in 2017. Residential unit sales declined 23.6 per cent to 74,847 units, while the average MLS® residential price was up 0.7 per cent to $713,302.

-30-

For more information, please contact: 

Cameron Muir  
Chief Economist  
Direct: 604.742.2780  
Mobile: 778.229.1884  
Email: cmuir@bcrea.bc.ca  

The British Columbia Real Estate Association (BCREA) is the professional association for about 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province's 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

To demonstrate the profession's commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada's real estate boards to ensure maximum exposure of properties listed for sale.


__________________________________________________________

Zoning By-Law changes for cannabis

approved by Council



(December 11, 2018  ... News)

Vernon City Council has approved the changes to the Zoning Bylaw to permit cannabis sales, processing and cultivation in many of its commercial and industrial zones....


Click Here - for full story........


_____________________________________________________________________



RLP Downtown Realty

Disclosure of Representation in Trading Services Form

A complimentary introduction to the Real Estate Council of British Columbia's new requisite form meant to inform consumers about the types of representation they may receive from a REALTOR in a real estate transaction.


Helping You is What We Do!


Click Here -  Disclosure of Representation in Trading Services


__________________________________________


BC Home Sales to Rise in 2019 
BCREA 2018 Fourth Quarter Housing Forecast

Vancouver, BC – November 8, 2018. The British Columbia Real Estate Association (BCREA) released its 2018 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 23 per cent to 80,000 units this year, after recording 103,768 residential sales in 2017. MLS® residential sales are forecast to increase 12 per cent to 89,500 units in 2019. The 10-year average for MLS® residential sales in the province is 84,800 units.


To read the entire article -  click here..


______________________________________________

New Legislation makes it clear:  Farmland is for Farming.......




Legislation introduced on Monday, Nov. 5, 2018, makes it clear that land in the Agricultural Land Reserve (ALR) is for farming and ranching in British Columbia, not for dumping construction waste or building mega-mansions.

To read the entire article, see below....


Click Here to read entire Article


_____________________________________________________________


Province targets speculators and vacant homes, supports housing affordability


The British Columbia government has introduced legislation to tackle speculation in B.C.'s housing market and help turn empty properties into homes for people...


https://news.gov.bc.ca/releases/2018FIN0075-002014

BCREA’s Position on Drug Operations

When a property has been involved in drug production, it can pose serious health and safety risks to the public resulting from mould, chemicals thrown out in the backyard, electrical fires and invasion by criminals looking for drugs, even if the property is no longer being used for drug production. It’s important for members of the public to be informed if a property they are interested in moving into was ever identified as having a history of drug production. Unfortunately, there is no consistency across the province on how municipalities make this information available, nor is there a provincial standard of remediation for buildings used to produce drugs.


To read full article - Click Here

Renting vs Buying - Louisa’s Honest Guide

There’s too much divisiveness in this world already. We split ourselves into different camps of opinion based on what we feel is right. Nowhere can this be seen more clearly than the housing options we find ourselves in during the 21st century. Is it better to rent or buy?


The truth is that there are unique benefits and drawbacks to each situation. It’s not uncommon for long-time homeowners to rent property in unique circumstances. It’s also not unusual for long-time renters to find out how attainable a home is and make the switch sooner than later. 


It all depends on your needs, preferences, and the situation you find yourself in today. Finding out where you stand now is the first step to figuring out tomorrow. In this blog post, I’m going to try and help kickstart this initial conversation. Instead of fear-based motives, I’ll stick to the facts so you can decide the rest for yourself. I will also use our local Vernon market as a case study, giving you tangible examples of benefits and drawbacks.


Renting

There is nothing inherently “wrong” with renting property, whether it be short-term or long-term. It all depends on your preferences, needs and financial situation. Let’s go over some pros and cons of renting property.

Pros

  • Predictability - when you rent property, you’re generally not responsible for general maintenance and upkeep. Your payment is pre-arranged and fixed for a set time period (typically one year, at least). You’re also protected by law against excessive rent increases in most Canadian jurisdictions. Sometimes, even your utilities are worked into this arrangement, further increasing the predictability factor.

 
  • Less Short-Term Financial Burden- As a renter, you don’t need a down payment like a mortgagee. The extent of your financial obligations are the first-months rent (and sometimes the last months, but not in British Columbia), damage deposit, pet deposit when applicable, and the monthly rent cost. 

 
  • Location Flexibility- Did you accidentally end up in the wrong area of town? As a renter, you have the freedom to move without excessive repercussion, especially if you carry out your lease term, at the very least. You avoid the stresses and market fluctuations homeowners experience, and you often have more choice of where to settle next. Moving from a lower-class area to a middle-class area as a renter is usually far more attainable than for a property buyer. 

 
 

Cons

  • Lack of Investment Potential - It’s true that when you rent, you’re indirectly paying someone else’s mortgage. Landlords generally rent their home out with the assumption of gaining value through equity over time. With a renter paying the mortgage each month (and sometimes, hundreds of dollars per month over and above this baseline cost), the landlord’s investment prospect is financed by the tenant. The tenant may have more predictability in their immediate financial obligations, but they also lose out on the increased equity that property might gain over the years.

 
  • Less Freedom - When I say freedom, I’m talking about property customization. For homeowners, the ability to customize their home to suit their unique tastes is a huge factor in purchasing a home. Renters do not generally enjoy such freedom. The extent of a renter’s renovation freedom is usually the painting of some walls or furniture arrangement.

 

Buying

Buying a home is a stressful but gratifying experience for most homeowners, new and seasoned alike. The decision to purchase property requires extensive planning and several professionals (in most cases). Let’s go over some pros and cons of buying property:

Pros

  • Investment Potential - As a homeowner, your home purchase represents an investment in the local real estate market. While fluctuations in the market are highly dependent on location, most real estate markets will provide investment gains in the long-term. Earning equity allows you the freedom to make additional investments based on your goals, and often this means upgrading your properties over time. Sometimes homeowners begin in a condo or apartment; then as their property increases in value, they earn enough equity to afford the down payment on a single-family house. You are paying your mortgage instead of somebody else’s. 

 
  • More Freedom - When you own your own home, you don’t need to ask permission to make changes and upgrades. It is always wise to make smart renovation decisions but you have the utmost freedom to put your unique touch on important property aspects. Sometimes these are aesthetic changes; sometimes they’re functional. Want a treehouse in the backyard? Skip the permission stage and head to the hardware store. Need 200 amp service for a hot-tub? Start the process as soon as you’re confident in the outcome. 

 
  • Investment Reliability - There’s a saying that goes something like this, “the best investment on Earth, is Earth.” Real estate  is, in most cases, an immovable asset. Investing in stocks or other speculative assets can be inherently risky, based on perceived value and other factors out of your control. Aside from the real estate market forces in your particular area, your investment gains over time are highly reliable, especially as you upgrade the home to make it more desirable for the next buyer. 

 


Cons 

  • Hefty Financial Obligations - The largest barrier for most aspiring homeowners is the dreaded down payment - which is a minimum of 5% of the purchase price. You also must have adequate credit and income in proportion to the home you seek. If you manage to purchase a house successfully, you now owe the lender that provided you with the mortgage for the foreseeable future (most of today’s amortization schedules are 25 years long!). You’re also responsible for all utilities and property upgrades, as well as the pesky unforeseen repairs. 

  • Moving Stress & Limitations - It is considerably more stressful to move as a homeowner, especially if you’re currently a homeowner relocating. You not only have to coordinate the selling of your property and the subsequent purchase of another with a variety of paid professionals, but you also have to plan for moving arrangements. You’re responsible for the home you move from being in substantially the same condition as you left it. As well, if your home hasn’t gained any value since you bought it, you may not be able to relocate as readily as you’d planned after paying all expenses. 


Local Considerations

When it comes to real estate in Vernon, or even real estate in the greater Okanagan region, we have unique market conditions. We have a greater proportion of seniors than most other Canadian areas, for example. The Okanagan is also known for hilly terrain, creating situations where houses on the same street and of similar build quality, can be vastly different in price. This is simply because some homes will enjoy a more expansive view!




As a Vernon Realtor, one scenario I run into often is helping clients navigate a new build while trying to sell their current home. In this scenario, the renting vs buying conversation comes into play. Some clients have enough financial stability to undertake construction loans while still living in their home for the duration of the build. However, many people do not. In this case, people often choose to sell their home using a Realtor, freeing free up equity to finance construction.


When it comes to seniors moving into long-term care, they’re essentially choosing to rent instead of own. They approach the renting vs buying scenario in a completely different way than a 25-year old couple would. For them, owning real estate is less important than the benefits of long-term care. In the Okanagan, we see this all the time!

 Conclusion

As a Realtor, it’s not my job to dissuade people from renting property if it’s truly the better option. There are so many myths surrounding the renting vs buying process that we end up getting lost in perception rather than steered by fact. The truth is that for some, buying property is preferable. For others, renting is preferable! It all depends on your lifestyle, current financial situation, and your appetite for things like freedom and risk. 



Whatever the case, I’m always here as your trusted Vernon Realtor! If you need help in dealing with anything real estate related, please feel free to give me a call. 




Comments:
No comments

Post Your Comment:

Housing Supply Not Keeping Pace With Demand in Most BC Regions...

 

 

Vancouver, BC – June 13, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 12,402 residential unit sales were recorded by th

e Multiple Listing Service® (MLS®) in May, down 7.9 per cent from the same period last year. Total sales dollar volume was $9.33 billion, down 4.0 per cent from May 2017. The average MLS® residential price in the province was $752,536, a 4.2 per cent increase from the same period last year....

 

Click here to read entire article...

The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are member’s of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.