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Renting versus buying

Adriana Rolston doesn't see herself buying a house in the near future. Right now, she rents an apartment with a couple of roommates. And she likes it that way.

"I have no idea when I am likely to buy a house," says Rolston, a Toronto-based freelance writer. "Likely not for the next 10 plus years."

Buying a home has traditionally been seen as the way to build up assets, but with $500,000 starter homes, is this still the case? Real estate, including starter homes, has steadily increased in value over the last 20 years, says Claire Franceschetti, a real estate agent at Remax/Premier Inc. in Vaughan, Ont. But it's not something to be discouraged by, she says.

"Buying a starter home, regardless of price, is still the best way to preserve and increase your net value," says Franceschetti.

Here's the case for renting versus buying a home when housing prices are high.

The case for renting
"Renting means less financial stress for me right now," says Rolston. "I'm not tied down to anything and I can leave whenever I'm ready." She likens it to a relationship, viewing buying as more of a marriage and renting as staying at the dating stage. Simply put, she prefers less commitment at this point in her life.

"It's also practical because I don't require a lot of space for the little furniture that I own. Renting enables me to inhabit a small, comfortable space for myself. That's all I need. I try to keep it simple."

There are lots of upsides to renting. For example, you'll have more available cash on hand every month, you won't have to worry about repairs or maintenance costs and you'll have the ability to easily move if you so desire, says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc., in Toronto.

The case for buying
With the interest rates being the lowest they have been since World War II, it's a great time to buy, says Elena Jara, director of education at Credit Canada Debt Solutions in Toronto. But this is only the case if the consumer can afford a mortgage, both at the current rates and when mortgage rates increase (which they inevitably will). Buying a home is really forced savings -- which can be a good thing in the long term.

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-- Posted June 15, 2012
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