The Labour Day weekend saw the Vancouver Sun attempt to redeem itself with articles admitting not all is well in the world of Vancouver real estate. Max Fawcett’s “Real estate collapse? Bring it on!” raises a number of critical questions, including why it takes a writer from Toronto to get a bearish perspective published in the Sun. The next day, the paper ran an even more intriguing piece called “Should I buy or should I rent?” though in the tradition of the “15 Myths” debacle, the article fails to deliver the goods.
Rather than address the headline question, the buy/rent article concerns itself with market timing. The implicit assumption is that the reader is someone who intends to buy. Never is renting presented as a viable, standalone option with its own benefits. Instead, it’s a pit stop on the track to ownership. According to the hype machine, to rent is to give your money away. By this ideology, there’s no choice other than to own.
It’s time the levees broke on Vancouver’s ownership myth. A hard look at the numbers shows renting is vastly superior to the choice of becoming a homeowner. How do I know this? Because every month, I have $1,500 more in my pocket than I would have if I owned the same, brand-new apartment that I live in. I’m also off the hook for any building deficiencies, maintenance or the risk of being unable to move out when I want to. If I get a job somewhere else and need to relocate, the state of the market has no effect on me. In short, I have the fullest level of control over my lifestyle. Without owning.
But what about accumulating wealth? Well, you don’t get rich paying dump trucks full of interest to the bank. Today’s housing prices ensure a life sentence of mortgage payments. (Isn’t the point of owning a home to own a home, not rent it from the bank until you die?) For me, the better strategy is to live debt-free and invest the savings I gain as a renter. Just because I rent doesn’t mean I burn my extra cash on hookers and coke — I’m into stocks, bonds and dividend-paying investments that perform better over the long-term than real estate. (They also don’t leak or need extensive repairs.)
If you’re not cool with “sophisticated” investments like those I’ve described, there’s always an ING Direct savings account. Sure, the high interest barely keeps up with inflation but even then, it pays better than rental income based on current housing prices.
So long as the price-to-rent ratio remains out of whack as it is today, it makes no sense to become a homeowner in Vancouver. Don’t worry about never being able to get in. If you live here, you’re in. That’s all it takes to live the lifestyle, no matter what the condo hypers say.