When it comes to the buy vs. rent argument, we typically tend to lean to the “buy” side, but not without watching the market first.
We’re living in the middle of a hot housing market here in Vancouver. It’s quite crazy, and there’s very little rhyme or reason to prices. One bedroom condos are selling anywhere from the mid $300’s, to well over $700,000. The price per square footage is even more cloudy – one place goes for $800/sq ft, and two doors down sells for $700/sq ft in a building of similar age!
And the detached home market is even crazier; however, that market has cooled drastically.
It’s definitely an emotional market here. Prices can soar easily with multiple offers, and if you don’t keep those emotions in check you may end up writing a cheque you can’t cash!
The amount of money we’ve been pre-approved for is, to be completely honest, absurd. Like, $750,000 absurd. I’m not stupid, we can’t afford that. Well, we could, but we’d be house poor and wouldn’t be able to enjoy all the fun life experiences we brag about!
So we started looking at places under five hundy – modest one bedroom condos. Only they get snatched up very quickly here in Vancouver, and more often than not there’s a bidding war involved too.
Time to Rent?
As mentioned, we’re going to settle here in Vancouver for a while and put our house sitting lifestyle on hiatus. Which means that come mid-October, we’d be homeless, so we started looking at the rental market. It too is a sellers (owners) market, with a minimal supply of rentals and a maximum pool of potential renters. It’s quite crazy.
Time was running out, but we managed to score a wicked-good deal. We’ll be renting a cozy one bedroom condo in an eclectic neighborhood, and we’ve already sourced out a wicked-awesome sushi place. The best part is that it comes furnished because the owner is going away for 5 and half months. In this instance, paying rent buys us time!
So what’s better – Rent or Buy?
In a hot market like this, people tend to get a little excited. Testosterone flies about like…flies on a hot day at the fish market in Panama. People think they need to buy a place right away because someone else might snatch it up, which is true, but they also tend to sacrifice some of their desires.
We’ve bought houses before. All the houses we’ve purchased we knew we wanted them the minute we saw them. We’ve only had one house like that here in Vancouver, unfortunately it was a month after we got here and not all our ducks were in a row, so we lost out on it.
Buy and renting are two completely different animals, obviously. Our must-have list is much less strict when opting to rent. We’re talking half a million dollars to purchase property here folks, if the place doesn’t have in-suite laundry, well, as Tina Fey says…Deal Breaker! And don’t try and pull off this “solarium” bull$hit – if I’m in a condo a balcony is a must!
Renting during a hot market can help because you can ease your way onto that scorching market as you wait for the place you REALLY want. This can help reduce those sacrifices on your “must-haves”.
As for the monetary difference in the rent or buy argument, well, everyone has their own opinion of that, so here’s mine…
It all depends on the market.
At one point in my life I thought I’d buy property down south. After living in Panama during the peak and subsequent cooling of their hot real estate market, I learned that probably wasn’t the wisest investment (unless you’re 100% sure that’s where you’re making a life or you have money to burn). I met many expats who are still trying to sell but can’t (side note, I touch base on this in more detail in my book; Sell All Your Stuff and Move Abroad).
And now we have Vancouver. It was just recently reported that the city has a housing bubble most likely to burst. It may even be bursting as we speak. The BC government recently passed a law and implemented a 15% tax on foreign purchased property, and the mayor is ready to add a vacant dwelling tax on top of that. This has scared many foreign – okay, Chinese – investors to look elsewhere, mainly Seattle.
Where does that leave us?
We’re not going to sacrifice our “must haves” just to get on the market here in Vancouver. Sure, we can afford it, but just because you can afford something doesn’t mean it makes sense to buy it.
Renting here makes sense for us right now. We’re in a hot market (although it seems to be cooling somewhat), and we’ve seen dozens of condos and only loved one out of all of them. So we’re fine paying someone else’s mortgage if it means we have very little risk and/or sacrifices of those “must haves”. Plus, we needed to find a place to live for November (and beyond). Closing dates are typically between one and two months from offer acceptance. Yeah, we were running out of time!
So when is a good time to buy?
Easy, when the price is right! I understand why so many expats purchased property in Panama. The prices were great a few years ago. Now, not so much. Only you know your comfort level when it comes to the almighty dollar, so when it comes to choosing if you should rent or buy, I usually go with whatever makes the most cents!
Now go sell all your stuff and do what makes sense to make cents…just don’t make scents!