First time home buyers – why owning is better than renting!
The Calgary Real Estate Market has had its fair share of ups and downs over the last 5 years. As a first time home buyer looking to make the jump from renting to owning, you might be wondering when is the best time to buy.
Will the market go up …? Will the market go down…?
No one really knows for certain. Factors that contribute to the direction of the real estate market and the overall economic health of Calgary’s economy seem to have stabilized and rebounded. I personally think the long term prospects for Calgary are very bright. One reason for my optimistic forecast is that Canada and Alberta specifically have the world’s largest investable oil reserves and the world’s 3rd largest total oil reserves after Saudi Arabia and Venezuela but before Iran and Iraq in 4th and 5th places. So that brings us back to our question. Should you rent or own ?
Here are 7 key reasons I believe owning is beneficial:
Be your own landlord: As a first time home buyer you will have the security knowing the bank can only kick you out of your home if you don’t pay your mortgage; In a rental scenario landlords can be much less dependable – deciding to sell (at which point you could have people coming in your home every day to look at it), your landlord could also renovate, raise your rent or sometimes actually move in to live themselves. Owning provides the peace of mind and security knowing you control where you live and no one can take that away from you!
Build Equity: What you pay towards the principal on your mortgage (monthly or bi-weekly) increases your equity in the home. Wouldnt you rather become a first time home buyer and pay yourself first! Your home acts like a piggybank saving the amount of principal you pay off the mortgage with each and every payment. Then over the years, as the value of the house increases, your equity also increases. When renting, all of the money you pay to your landlord is his or hers, providing you with zero benefit.
Build Wealth: Yes, the real estate market will have its ups and downs but historically over many years prices have risen. Yes it’s possible that home prices will fall in the near term but it is also possible that your RRSP will lose value as well. The big difference between an RRSP/TFSA and owning a home is they don’t provide any material physical benefit to your day to day life. Your account statements will have numbers on them but even then, your investment accounts are still only a “paper gain” until you sell and put the money in your bank account. Ultimately over the long haul, both are likely to enjoy positive growth (based on the historical trends over the long term) but the benefit of owning a home: Build Wealth while providing for all of your basic needs.
Taxes: If you own your own property as your main residence and the value of the home goes up from what you paid for it, when you sell you make keep that gain, tax free. Capital gains taxes are not applicable on the sale of your principal residence. Another advantage to owning your own home. When you make the decision to become a Calgary first time home buyer this is another one of the many benefits!
Retirement: Mortgage Rates are very low and over time you pay off your mortgage. That coupled with long term appreciation can provide you with a nice nest egg for your retirement. Almost all retirement scenarios assume you own your own home with no mortgage. Home ownership is a pillar of retirement.
Pride of Ownership: When you own your own home, it gives you the pride in saying the home is yours. That also means you can paint, renovate, and customize it anyway that you like. If you want to build a solarium, then build it. If you want to paint the bedroom in a zebra print, do it. If you want to turn the basement into a theatre room, you can do that too. You can do whatever you want because you own it, it its your property.
Your Basic needs: Owning a home gives you the ability to care for your family, provide for all of your basic needs and live a comfortable life. Yes , renting does provide shelter but you don’t control where you live and you don’t own the roof over your family at night. What if the house is sold and your kids have to switch schools ?
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