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Tenants don't pay these costs directly but much of it is embedded in the rent. That all said, I agree home ownership is a money pit. There is no end to it and I don't want to begin to add up the numbers over the past 9+ years.
We have lived in our area (now in just second home) for almost 50 yrs. Our current property is now worth 350x the deposit we put down in 1972. That's a 12.4% pa return that we could monetize if need be. Or we could leave it as a legacy to our family. Try to do that while renting.

We have not spent anything near what it would have cost to rent even a basic property on maintenance, financing and taxes. Rentals would have to have cost less to come out ahead. They would not have. Besides, equivalent properties are just not available for rent. Apartments and condos may be available for rent, but not HOMES.

From a financial view, landlords don't rent properties out of the goodness of their hearts. They want to make a return. Renters have to pay for that return along with all the other property ownership costs that a homeowner would have. So rentals have to cost more than owned properties of exactly same type.

Maybe the youngsters here that have no roots and want to be mobile are better suited to renting? We did when we were young. Others who favour renting perhaps just don't understand what a family HOME really is. Luckily most young Canadians aspire to home ownership.

Some light reading for ownership-deniers:



 

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Apartments and condos may be available for rent, but not HOMES.
You can always rent a house. You can make condo/apartment/cave a HOME too.
There’s really no need to worship a North American plywood huts/HOMES.
I understand your zeal, you and millions of baby boomers gotta sell their “treasure” one day. Don’t worry you will find your greater fool.
 

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We have not spent anything near what it would have cost to rent even a basic property on maintenance, financing and taxes. Rentals would have to have cost less to come out ahead. They would not have. Besides, equivalent properties are just not available for rent. Apartments and condos may be available for rent, but not HOMES.

From a financial view, landlords don't rent properties out of the goodness of their hearts. They want to make a return. Renters have to pay for that return along with all the other property ownership costs that a homeowner would have. So rentals have to cost more than owned properties of exactly same type.
There are other threads on home ownership so we don't have to re-hash old ground here. There is plenty of evidence that says capital markets (on average) have appreciated more over time than real estate markets (on average), certain urban centres like GTA and GVR being obvious exceptions. One's view is influenced by their regional market.

Rentals don't necessarily cost more than home ownership. Landlords make a profit off tenants due to high leverage and write off of interest and operating expenses and CCA that is not available to owners of principal residences. Further, the opportunity cost of capital sunk in a house could otherwise be put to use in the capital markets and done well can result in long term CAGR of 8-9% net of MER. Owned homes have large MERs*. As an example, our neighbour's house of circa 4000 sq ft was rented for 5 years while they were overseas. For what the rent was, I could have made more in capital markets and paid the rent being asked than what I would have had to pay to buy the house outright along with its high MER, and still have money left over. It was not even close once the costs of ownership were fully factored in.

It really doesn't matter though since home ownership is an emotional subject more than a mathematical rational one. For the time being, we prefer to own as well. BTW, there are plenty of houses to rent in many regions of our country.

* property taxes, insurance, maintenance, replacement and renovations. We probably have spent about 3% of house FMV per year over the past 9 years on such items.
 

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fwiw, I'm a lifelong renter and my returns (on capital freed up from not having to pay a downpayment etc) in financial markets are multiples of what i would have made plowing that same capital into home equity. my landlord's cap rate is barely better than a GIC and while there is obviously appreciation and strategies available to the RE investor as AR pointed out, I am very comfortable taking my side of the trade.

My guess is the economics will skew in favour of renting for the foreseeable. the low hanging fruit for politicians on housing affordability is to cap rents, and all of the FOMO money tends to go towards home buying, i.e., on average purchase decisions are more likely to be made emotionally than decisions to rent. This suggests to me a market inefficiency that could be exploited by people willing to make housing decisions for purely financial reasons (not for everyone, obviously).
 

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I do not know why any of these companies forecast returns for the year ahead. None of their crystal balls are any better than throwing darts at a board simply because there are far too many real life variables that throw curve balls.
Because they must. ¯\(ツ)/¯ Even a shoddy forecast is better than no forecast at all. (Source: used to work in Finance before retiring.) People's heads will more or less explode if some big publicly traded company, let alone a bank, sends "there be dragons" as their next-year prospectus hahahaha
 

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Because they must. ¯\(ツ)/¯ Even a shoddy forecast is better than no forecast at all
Yeah, imagine they said the truth:

"We have absolutely no idea what the market will do in the short-term. But please pay us the 1% or 2% fee anyway."

I think these forecasts and newsletters are a way to demonstrate value to the customer. Here's what you're paying us for... we've got all these smart people doing research and coming up with strategy. Your money is in good hands, we're on top of things. LOL
 

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Are you kidding or something?

Home ownership means constant payments. Constant property taxes, also constant maintenance. Replace the roof, fix the basement, fix the leaks, fix the electrical, fix the furnace, fix the HVAC, and then spend thousands of dollars renovating ...
Some are definitely constant payments ... but like those who ignore the total costs - you seem to be under the impression maintenance happens more often then I have experienced.

Taking a look at your list:
1) replace the roof - one bundle of shingles to replace individual ones ripped in half by the wind and one roof replacement in over thirty years. A decade of replacing individual shingles left more than eighty percent of the bundle when the house was sold.

2) one basement fix - it was needed due to a problems one hundred feet outside the house. Insurance not only covered it but waived the deductible.

3) fix the leaks - one so far where the parts cost about thirty dollars.

4) fix the furnace - twice in thirty years with a total cost for both fixes of three hundred (i.e. no need for a furnace replacement).

5) fix the HVAC - isn't this the same as the furnace, just including more than the furnace?
Expanding the category means adding an extra hundred for bathroom fan replacements but nothing for the central AC (over fifteen years).

6) thousands for renovations - the few I've done have been more like three hundred or so with my own work instead of hiring someone.


As for "Renters don't pay any of these extra costs", I guess you don't think your landlord is running a business then. Just because you don't see a line item, does not mean the landlord hasn't factored these costs into the rent. At least the landlords I rented from indicated they were doing so.


Cheers
 

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Some are definitely constant payments ... but like those who ignore the total costs - you seem to be under the impression maintenance happens more often then I have experienced.

Taking a look at your list:
1) replace the roof - one bundle of shingles to replace individual ones ripped in half by the wind and one roof replacement in over thirty years. A decade of replacing individual shingles left more than eighty percent of the bundle when the house was sold.

2) one basement fix - it was needed due to a problems one hundred feet outside the house. Insurance not only covered it but waived the deductible.

3) fix the leaks - one so far where the parts cost about thirty dollars.

4) fix the furnace - twice in thirty years with a total cost for both fixes of three hundred (i.e. no need for a furnace replacement).

5) fix the HVAC - isn't this the same as the furnace, just including more than the furnace?
Expanding the category means adding an extra hundred for bathroom fan replacements but nothing for the central AC (over fifteen years).

6) thousands for renovations - the few I've done have been more like three hundred or so with my own work instead of hiring someone.


As for "Renters don't pay any of these extra costs", I guess you don't think your landlord is running a business then. Just because you don't see a line item, does not mean the landlord hasn't factored these costs into the rent. At least the landlords I rented from indicated they were doing so.


Cheers
These examples just mean that you had a second part-time job as a home handyman. There is nothing wrong with that but many are not capable.
 

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I decided to take a different view on the home ownership/ renter discussion taking place. Try to put it in the context of those that do a a proper analysis of buying a rental and doing a cost analysis on cash flow. I have seen this discussed on several real estate threads here and elsewhere. Some do this with their other investments as well. If we factor out the non financial considerations (a home not an investment, preferring a certain location over another despite it being not as beneficial financially etc.) each property would provide a different cash flow percentage. Some owners will foolishly own property that provides negative cashflow with the speculation that the property will appreciate enough to compensate for that loss. If a tenant is able to find such a place it definitely would be cheaper than owning. Many landlords forget to include the time cost of being a landlord which is what I believe Keith is alluding to above. It is difficult to calculate the cost of one's time if it is not their regular job that their time is being allocated to. If I make $100 an hour at my place of employment does that mean an hour spent elsewhere is $100 as well? One typically prices it at what it would cost to have another person do that same task.
 

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Are you kidding or something?

Home ownership means constant payments. Constant property taxes, also constant maintenance. Replace the roof, fix the basement, fix the leaks, fix the electrical, fix the furnace, fix the HVAC, and then spend thousands of dollars renovating.

And in the case of condos, endless monthly maintenance fees, just like paying rent! Plus special assessments and extra surprise costs because the neighbours want to upgrade the balconies, or some damned thing.

Renters don't pay any of these extra costs. People dramatically underestimate how much home ownership is going to cost them, when they do these "rent vs mortgage" calculations.
James, first off, I will admit I have never kept track of what we have invested in our homes. (Interest payments, improvements, upkeep, sweat equity, etc). With that being said, living in the GTA for 30+ years, I know the sale price of our current home is substantial compared to what we paid for it.

As for renting, I haven't followed the rental market so I can't say whether all those costs mentioned above are passed along in rental rates or not.

With that being said, I can share a few things which are solely from my perspective.

Buying a home is pretty exciting as is making it a home for your family. Making your final mortgage payment is a life moment you don't soon forget. Also, owning your own home brings you some sense of security.

As much as enjoy managing my finances and creating wealth, I also want to enjoy life and work to do things that are important to my spouse. My motto has always been to manage my money instead of it manging me. Some of my decisions are financially silly, but they made me damn happy. Pick which path appeals to you and push forward. Cheers
 

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Renters don't pay any of these extra costs. People dramatically underestimate how much home ownership is going to cost them, when they do these "rent vs mortgage" calculations.
Yes, and that's part of why renters feel they're getting screwed.
I can say, confidently that compared to a a nice 2/3 bedroom apartment I'm substantially ahead buying my house.
 
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