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Should I Be Saving Money to Buy a Home?

I started a fun conversation on Twitter this morning via this article. Granted, the US and Canadian housing situations are not identical. But as this is a topic that I sometimes think about, and because I like to challenge the perceived assumption that buying is always the best option, I want this convo to keep going!
So what are your thoughts? What are the pros/cons of owning or renting? What factors have influenced your decisions in this area?

Here is my initial list (subject to change):
Pro – mine!
Pro –control to renovate/improve
Pro – fixed monthly cost
Pro – hopeful financial asset over the longterm
Pro – perceived permanency
Con – down payment required
Con – impetus is on me for renovations/maintenance
Con – taxes /fees/other "hidden costs" of owning
Con – high emotional attachment may hinder my willingness to move in the future
Con - affordability in urban areas

Pro – lower immediate costs
Pro – renos/maintenance not my responsibility (cost or time)
Pro – lower emotional attachment
Pro – flexibility for changing location in the future
Pro -- more available/affordable in urban areas
Con – cannot ensure permanency
Con – no opportunity for financial benefit when moving
Con – less freedom in renovations/maintenance

Major factors in my decision making:
a.       Lack of down payment/income restrictions.
b.      Desire to have more open heart towards moving/fight tendencies to cling to things I "own."
c.       Ease.
d.      My life/urban living values. (This could be an entire additional post. And may become one.)
e.      I am not convinced that owning a house is the best/only way to prepare financially for the future.
Please share your thoughts! Conversations are only interesting if I'm not the only one talking.


Lisa said…
I was intrigued by the article, but I think the author's views are strongly biased by what has happened in the United States. I think the situation is quite different in Canada (as I think you've mentioned in your Twitter feed). I also think the risks of owning are lower if wise decisions are made during purchasing (e.g., getting a mortgage that you can afford as interest rates change, while still allowing you to save for emergencies such as job loss. Banks are generally willing to give you a much larger loan than you might actually need, which encourages people to spend more than perhaps they should).

I think the decision to rent or own depends on your situation - your future plans, your location, and prices for both renting and owning where you are. If you plan to move frequently, or want that flexibility, then I don't think it usually makes sense to own.

Those things were important when I made my decision. It also made sense to me to put my monthly living costs into something that I can one day sell and get back some (or even more maybe!) of the money I put into it. When my mortgage is paid off, I will no longer have any monthly payments (whereas a renter would never have that option). To me, an affordable mortgage over a reasonably short time period made more financial sense than continuing to rent - even with taxes and the "hidden" costs taken into account. For me, rental costs were not much less than owning, and with ownership, I have to opportunity to get back a portion of the money I've invested.

I think housing costs where you live can play a major role in this decision though!
Beth said…
Thanks, Lisa.

I agree that for your area, owning makes a lot of sense. And I think that you raise an interesting point with the amount of money the bank is willing to lend vs the amount of loan an individual can reasonably handle...Just because the bank says, "Here! Take it!" doesn't mean we should...
Russ said…
I encourage you to read this article on why buying a house is a bad investment and the response that is also linked from there. It's a little more informed and helped shape a lot of my thinking on this topic (although ultimately I did buy a house).

One of the strongest reasons I have for buying a house is that it's a forced savings plan and allows me to leverage myself. i.e. I can get 300k for 6k a year right now over time as my house appreciates I'm building equity with someone else's money.

Ultimately I would encourage you to be saving the equivalent of what you might otherwise be paying for a mortgage.

It's also ultimately a lifestyle choice. The "you have to live somewhere" argument the article I shared has is quite strong I think.

All that to say, I see both sides quite clearly. At the end of the day, it's likely a values decision on whether to own and either way you have to make intentional financial choices, which just look different depending on your values.
lalo said…
i lost half and hour and try to explain and lost it sorry ask me next time
Beth said…
Russ - thanks for the link. I will check it out! And I fully agree that saving is an important and related principle...reworking my budget & savings strategy is one of the things that has me mulling this over.

Lalo - I am so sorry your comment got lost! I will definitely ask you next time we hang out. Also: HAPPY BIRTHDAY!!!!!!!!!!!!!!
Jenn said…
If you are wise in your investment and take care of the property I would say owning a home is definitely worth it. This is not to say that it is a fail-safe (no investment ever is) but, historically real estate is the safest and most lucrative investment for your dollar (for more info. read The Wealthy Barber) :)
Steve Crewson said…
Hi Beth,

I would recommend you do 2 things. Read the "Wealthy Barber" and 2) attend a "Financial Peace Univeristy Course" offered by several churches in Southern Ontario. Last night I read a chapter in the Weathly Barber that spoke to this very question from the perspective a single person.

Hope this helps,

vanman91 said…
I think that the original article was over simplistic in it's view of renting (or maybe its a USA difference). The flexibility of renting works both ways - you can easily find yourself without a place to live or at odds with your landlord. Even with rent controls your housing expense can grow quickly (at least steadily).
Beth said…
Thanks for the recommendations, Jenn & Steve!

Vanman - I agree the first article is overly simple...

This post & its related conversations have been quite interesting and helpful to me.
Russ said…
I also highly recommend Financial Peace University. It greatly influenced how my wife and I think about money.

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