Toronto real estate is having its hottest—and most reported on—spring and summer in approximately forever. With the argument between purpose-built rental, private rental, and putting down that money to buy a place right this second raging in the papers, it’s harder to get a sense of when renting a condo—or buying—makes good sense for you. So if you’re torn between hitting the real estate pages or the rental listings, here are some considerations to help you decide what’s best for you right now, right here.
When you balk at the cost of real estate
It’s the big one: Article after article through 2014 and 2015 have laid out how expensive real estate is getting in Toronto, with bidding wars and skyrocketing prices talked over in excruciating detail. Find a handy online mortgage calculator or talk to your financial advisor about what sort of mortgage terms you’re eligible for with your projected down payment, and if they’re worse than what you can pay for monthly rent—which skips the condo fees, repair bills, and more—it might be in your best interests to renew the lease rather than buy.
Likewise, look at the price point for units in your neighbourhood of choice. As sellers have got wind that it’s their market in Toronto right now, real estate prices have gone opportunistically up. If the cost to buy in your neighbourhood outstrips the cost to rent there, prudent investments might be a better destination for the cash you’ve saved.
When you don’t have concrete plans for permanence
You don’t know whether you’ll stay at your company in a few years—or if they’ll transfer you for a stint at an international office. You don’t know if you’ll stay single, childless, or at your current family size forever. You don’t know if this neighbourhood is where you want to plant your permanent roots.
That’s when it’s time to hold off on buying a home.
One of the primary benefits of renting a home is its flexibility: If you need to pick up and move to another city, a bigger space, or another neighbourhood, it’s as simple as giving your legal notice and hitting the rental sites. Selling a home is a much more complicated endeavour, and if your life still hasn’t set in shape in certain ways, it’s a simpler and much less expensive proposition to settle down before you physically settle down.
When you haven’t budgeted for the fine print
Buying and selling houses isn’t a fee-free, tax-free transaction, unfortunately. When one buys or sells a property, some of that money goes to land transfer taxes, your real estate agent, your lawyer, home inspectors, and more. If those necessaries of doing real estate business aren’t in your budget, it’s best to hold off—and not get hit with a bad surprise.
If you’re not prepared for maintenance
One of the best things about owning a home is you can do pretty much whatever you want to it, as long as that’s within city building codes and you don’t make the house fall down on your head. And one of the best things about renting one is that if something starts trickling down toward your head parts, it’s not your financial responsibility to fix.
Home maintenance is an ongoing, lifelong responsibility, and it’s the kind of thing you want to do right: hire qualified contractors, make long-term decisions, use the best materials. If you aren’t financially or emotionally prepared to sink time, money, and effort into keeping that home in great shape, this can produce a whole lot of stress and grief, and considerable life disruption.
If the thought of hiring roofers gives you hives, it might be best to stick to a rental situation, where any repairs land straight on your landlord’s desk.
Property taxes and insurance
Home ownership also comes with the question of insurance and property taxes. If the property values in your neighbourhood go up—and Toronto’s property values don’t seem to be inclined to go down—that shows up in your property tax bill, if, unfortunately, not your pocketbook. If you’re unsure you can carry the year-to-year load of property taxes and insurance on top of your other responsibilities, it might not be the right time to buy a home.
As your stern grandpa would say: A home is a responsibility. The tradeoff we make for permanence and equity is a whole lot of financial juggling and the burden of making sure everything is legal and works right. There’s no stigma in not being up for fitting that into a busy life just yet—or, bluntly, ever. Consider the factors, make the decisions that work for you, and don’t look back.
Best of luck!