Is now the time to rent or buy a home? Experts weigh in
For many, owning their own home is the dream, but as interest rates spike, the question on minds is whether to buy or rent.
Geoff Walker with Walker Real Estate Group says that’s a deeply personal choice based on your own finances and situation.
Walker says renting can help keep costs lower.
He says right now, a $600,000 townhouse with a minimum down payment could cost you more than $3,350 a month. On top of that, there are property taxes, interest, and maintenance costs associated with home ownership.
Walker says, as that adds up, for some it may be better to rent right now.
“There’s a bit of a perception that renting is ‘lesser than’, when sometimes renting can put you further ahead,” he explains.
The real estate agent says if you want to buy, plan to be in the house for a few years to see your return, and focus on affordability, especially as everything becomes more expensive.
“I think you have to choose the right mortgage product very carefully,” he explains. “I think we’ve seen those types of buyers that have had those variable rate mortgages, where now all of a sudden, (they) have a bit of a pinch in their monthly payment, and that’s a squeeze right? That can really make an impact.”
If you are looking to buy, one benefit is that you have more negotiation power than in the last few years, according to Frank Napolitano with Mortgage Brokers Ottawa.
“Certainly now when you are looking to bid on a home, you’re not going to have to go $50,000 or $100,000 over list price,” Napolitano says. “You’ll probably get it very close to the list price or in some cases even below the list price.”
Napolitano says with some forecasters warning of a recession in the near future, some may want to wait.
“If interest rates can bottom out a little bit and get back to a traditional between 3 and 4 percent, then I think you’ll start to see young Canadians feel better about buying a property at that point,” he explains.