Owning a home in Canada costs way less per month than renting
Despite the sky-high prices of homes in major Canadian cities, the fact that most residents will never be able to afford them, and the trend of homeowners carrying way more debt than non-homeowners given the hefty mortgages needed to acquire those expensive homes, Canadians who own are spending way less per month than renters.
Some people barely make that much in a YEAR 🤡 the housing market’s fucked y’all— Aaron 🥟 (@imaaronlo) August 21, 2021
A new study from Royal LePage examined hundreds of different scenarios of homeownership vs. non and found that 91 per cent of the time, people who are lucky enough to be able to scrounge a down payment of at least 20 per cent have way lower home-related monthly expenditures than tenants do — that is if a mortgage payment is looked at as saving, rather than money that is spent.
It is a valid point that money given to a landlord for rent is money that, for the tenant, essentially goes nowhere as far as their long-term future is concerned, obviously.
Money spent on a mortgage, meanwhile, is what the realty giant calls "forced saving," with the principal (the actual mortgage payment, to which interest — another expenditure that can be considered thrown into the abyss as far as the owner's future is concerned — is added) considered "not a true cost."
This is a global issue, it's not only in Canada but in most developed countries right now, Australia, UK, Western Europe, etc. Turn on Euronews or BBC... House prices have gone through the roof..— Epo (@Epo18047977) September 4, 2021
LePage found that the net cost of owning a home in Canada per month, which is the total ownership cost minus the saving that occurs through principal repayment, is lower in almost all cases than the cost of renting, by an average of $769 per month for equivalent dwellings.
In this sense, the company assures residents (in their own best interest, of course) that even if the cost of your home doesn't appreciate over time, the purchase can still be considered worthwhile, and you are still far better off financially than a renter (which someone who has the capital to purchase a home usually already is).
"Although supply has reached historic lows and home price appreciation continues to trend upward, the findings of the report show that owning a home remains financially advantageous for most people," Royal LePage says, noting that even if home prices decline by 10 per cent, half of owners would see a positive rate of return on investment.
Though the report goes on to preach the benefits of homeownership, it also notes that "swift and material government action" would help the housing supply crisis, making the dream more affordable for more people.
It also appears that things like maintenance fees for condo owners — which can be even higher than $769 — are not considered in this analysis.
There is also the fact that more than 30 per cent of people who own homes in Ontario can hardly afford their mortgage payments with the amount of money they're making.
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