Montreal is known to have some of the lowest rents across Canada and at the same time the province of Quebec has the lowest rate of people who own their own homes. As rents are going up and property prices are breaking records, the decision of whether to rent or buy in Montreal is a tough one. The choice you make will likely be decided by 2 factors and account for 50% financial and 50% lifestyle.
For many, if they find a low enough rent, and still have money leftover to invest they choose to rent. For others, renting a place that suits their lifestyle may be as costly if not more than owning a home.
Millennials I speak to tell me their main challenge is affordability. With prices in Montreal increasing in the past 2 years, along with tightening of the mortgage rules, coming up with a decent down payment and qualifying for the mortgage is challenging for many millennials.
I have met baby boomers who also struggle with the debate of renting versus buying, however they usually have a bit more disposable income and will decide based on their lifestyle needs.
Letâ€™s look at both sides of the debate from a financial and lifestyle point of view and not necessarily from an investment point of view as many articles tend to focus on.
Owning a home in Montreal:
Pros of Ownership:
- Forces you to save money by building equity in your home
- When you sell the home, there is a sizeable TAX-FREE GAIN
- Value of homes tend to increase over time.
- The asset (property) can act as a means of providing lower interest loans (if needed, such as refinancing to pay higher interest debts or a Home Equity Line of Credit for major renovations.)
- Many feel they need the stability of owning, not being evicted or having to move every year.
- Some feel that building wealth is secondary to the emotional security of owning a home in a nice neighborhood near good schools.
- Many have been raised within their familyâ€™s culture to seek out home ownership as a building foundation to their overall success. (Their parents want them to buy a house and may even help them to do so, because it is important in their culture).
- Once you start a family and have children, owning your own home seems to be easier than finding a 3-bedroom home to rent with a yard.
Cons of Ownership:
- Out of pocket expenses such as the one-time Transfer Taxes
- Out of pocket expenses such as closing costs when purchasing
- Out of pocket expenses for municipal and school taxes (yearly)
- Out of pocket expenses for cost of maintenance and repairs (about 1-3% of the value of the home yearly).
- Costs of breaking your mortgage early if selling
- Added responsibility of managing and maintaining the property over time.
- Mortgage payments may fluctuate depending on interest rates and market
Renting in Montreal:
- If you are disciplined enough, you can use after tax income to invest in the stock market, which some say yield higher returns than real estate.
- You do not have the extra responsibility of maintenance and managing of building repairs.
- You have a bit more freedom and can travel around more whether for work or pleasure.
- Monthly costs could be more stable
- No out of pocket extra expenses such as yearly tax bill
Cons of Renting:
- Culturally speaking, it may not offer a very stable type of living situation
- Rising cost of rents may make it unaffordable at one point
- A tenant can be evicted and take on the stress and cost of moving more often
- Many tenants in large cities are evicted to allow for renovations or short- term rentals.
- Rising cost of RENTS are a valid concern in large cities
- Shortage of quality affordable units is becoming an issue as less people can afford to buy.
If you can afford to carry a mortgage and home ownership expenses and do not mind the responsibility, then in the long run, I believe that owning your own home offers more benefits both financially and lifestyle wise. I may be very biased since I was raised in a family that truly valued homeownership and am truly passionate about everyone owning their own home! It may not be your dream home, but with a little sacrifice you can be a homeowner.
Helen Akrivos is a Montreal real estate expert who is passionate about educating and inspiring everyone to succeed in real estate! She holds a Chartered real estate broker license and is President of North East Realties agency in Montreal. As a lecturer in the Residential Real Estate Program at College Lasalle, Co-Host of The Real Estate Show on CJAD AM800 radio and contributor to the MTL Times newspaper, Helen shares her stories of real estate success to help as many people as possible! E-mail your comments to firstname.lastname@example.org
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