Renting Is Throwing Your Money Away PDF Print E-mail

A house is a really smart investment, one of the best you'll ever make. A house is a solid structure and a "continuing asset" that has increased in value (appreciates) an average of 6% per year, over the past 30 years. (according to the National Association of Realtors).

Homes create wealth in several ways. Buying a home requires you to make payments over time- this creates a form of "forced-savings" and even if your home never appreciates at all, you will build up more "equity" over time with your payments. Homeowners also experience a sense of richness in developing a property, building their own vision out of the one the previous owner left behind.

It's no accident that most people prefer to buy rather than rent. Statistics Canada reports an astonishing 73% increase in average dwelling value between 1986 and 1991, which only dropped 8.3% in the hard economic climate of the early 90s. Rents from 1986 to 1991 rose a staggering 38.7% and continued to climb.

An interesting statistic to review is the Average Net Worth of Homeowners vs Renters.

Annual Income Owners Renters
$80,000+ $451,200 $87,400
$50,000-79,999 $194,610 $25,000
$30,000-49,999 $126,500 $10,600
$16,000-29,999 $112,600 $ 4,240
$16,000 - $ 73,000 $ 500


You can make money buying a home...

If you plan to stay put at least three years and preferably more. In most markets it takes from 3-6 years for a home to appreciate enough to offset the costs of selling and moving. If you're psychologically prepared. Homeowners have to deal with whatever arises- from the noisy dogs down the street to clogged drains. You can't just pack up and leave or call the landlord.

If you have some extra savings. Smart home buyers try to have an amount in savings at least equal to two mortgage payments after the deal closes.

If you manage your money fairly well and make your monthly mortgage payments.

The comments contained on this site are for information purposes only and do not constitute legal advice.

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