Reasons to keep renting!

Recently I read a newspaper commentary about Canada’s over-inflated housing prices. At times, these articles can be pretty flat, but this one really sparked my interest.

In short, the writer used rental property prices in Toronto and compared them to what people would expect in a return on their investment from a bond portfolio. He estimated that housing costs in that city are inflated by $100,000.

What’s more, the writer, a finance prof, added that he expects prices to tumble in the next few years. If that’s the case, people buying homes in the near future could find

themselves sorely disappointed in the value of their property and may lose a significant chunk of money if they decide to sell.

Not long ago I wrote in another blog that I bought a condo in Victoria – a market that was touted as being very resilient to economic ups and downs, and generally wouldn't stray from an upward trend – when the market was softening. I expected that the low price I paid for my investment would turn into a profit when I sold three years later. Not so.

What I take from the commentary the professor wrote is renting is far more financially sound still. There may come a time when buying is the best bet for your money, but in the meantime, rental rates are right where they should be, whereas price tags are way out of proportion with what you’ll get for your buck.