It was on a rainy Saturday night and I was home alone, nice and cozy. I could hear the thunder storm and I could see the lightning flashing across my bedroom’s window. There was not much to do, I was comfortably lying on my bed with my laptop on my lap. I was casually browsing on the web; checking my emails, looking at my social medias and reading the news. Accidentally, I stumble across an article on the declination of house ownership in Canada. The rate of ownership is now 67.8% across Canada. As a commerce student, this article quickly captivated my attention. I was surprised, but my mind was filled with worries about the economy of our country. I quickly did some research… and to my surprise, there were much more justifications beside the financial aspect that caused this drop.
For example, the mindset, the responsibilities and the restrictions of house ownership. Due to these various reasons, a lot of people would rather choose to rent rather than to buy a house.
It is not the same anymore, time has changed. In the generation of our grandparents, home ownership was very important. Being a house owner meant a lot, it showed that they were financially stable, it represented financial success. Some say it’s a rite-of-passage, while others insist the forced savings are a ticket to a secure retirement. The thought of knowing that there is a stable place to live in is relieving to many. However, in the new generation, house ownership is not as important anymore. It is not a priority and certainly not essential either.
For the longest time, house ownership has always been popularly known as one of the best long term investment. Jenny Mazzaferro, an expert in the real estate market confirms the previous statement as she mentions that a profit can be gained “ after 3 years of ownership and that only increases the longer you own”. However, three years may appear to be a very long time to a lot of us. We are living in a hypermodern society where we want to receive returns as soon as possible. The faster, the better. That is why people believe there are other better investments that can fulfill this requirement. Short term investments with higher returns are now much more appealing.
Funds, bonds and stocks are the new ways to invest. Obviously, these investments are more risky and profit is not guaranteed. However, people are willing to take more risks with the possibility of gaining more. The possible high opportunity cost restraint them from buying a house.The opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. As this way of investment becomes more common, more investors choose renting over buying a house.
There are obviously numerous benefits in house ownership, but they are rather a long term investment. Most home buyers expect to pay off their mortgage after 25 years. While many believe that once their mortgage are paid, they do not have anything to worry about anymore. The house is officially theirs and they are finally free. Buying a house comes with much more responsibilities than simply renting a house. When renting a house, the only worry is to pay the rent.What we often neglect are the other responsibilities that come with a house ownership.Even when the mortgage is paid, there are other annual fees that are necessary such as a property tax and school tax. Depending on the value of the house and the neighbourhood, the cost of theses taxes could start from 1000$ per year to 10 times more. This is not to mention any other cost in the maintenance such as reparation of the roof or house insurance.
Also, renting gives the flexibility that buying cannot give us. Nowadays, people often choose to live closer to their job. While some change jobs every few years, renting facilitates moving. Being able to move every few years allow us to be in a new environment. As we get bored of our house, a new house would be absolutely exciting. Imagine moving out every year to a new house and a new neighbourhood, it is a whole new experience that a lot of us enjoy. Renting also gives more choices in term of location.Most people wish to live next to places with easy transportation and fast access to shopping malls and supermarkets. Rural houses are limited and most of them are only available for rent.
While there are still a lot of citizens who wish to own a house, the price of houses does not allow them to. The real estate market is constantly fluctuating, typically increasing, the houses are less and less affordable. There are different types of houses; bungalow, duplex, apartment, cottage, etc. Prices go up and go down, they can be as cheap as 200 000$ or they could cost thousands and millions of dollars. With that in mind, there is in fact a 39% increase in home prices over the last ten years, compared to a 5.92% increase in median wages. Price of houses have been increasing so quickly that it is becoming impossible for a regular person to own one, and has become an unreachable goal for people from the different social classes. It is not an option anymore, citizens are trapped to rent a house. As people are paying rent every month, it is even harder to put aside money aside for a mortgage. Living in a home is a blessing, but owning the house, it is a dream.
In order to encourage home buying, the Canadian government offers some benefits plan such as the Home Buyers’ Plan (HBP). If the potential house buyers’ meet the requirements established by the government, they will be eligible for the plan. The Canadian government has also taken other initiatives by giving different sorts of benefits to home buyers by implementing home buying programs.
Since January 1st 2018, the Canadian buyers who desire to borrow money from the bank need to pass a mortgage stress test. The stress test is a way to calculate the ability for the buyers to pay the mortgage in case of an unexpected problem that could occur. This test allows to evaluate the ability of the buyer to pay off the debts under other circumstances.
What is truly important in a house is not the ownership. That being said, there should not be a debate between renting and buying, because a house is simply a home. It is a place where comfort and warmth are felt. It is the coziest place where most of your emotions occur. It is a place where you can truly be yourself. Home is often the place where all the family members gather together at the beginning and at the end of the day. Sadness, joy and laughter can be heard throughout the walls. At the end of the day, emotion is what defines a home.
Don’t you ever go somewhere and you immediately feel like you belong to that place? Or on the contrary, you do not feel comfortable at all and you have a bad feeling about the place? Comfort is the most important aspect that makes a place, a home. It is all about designing your own place the way that you want it to be. When time has come to do the renovations, it will be the most exciting moment. Imagine the smell of the freshly painted walls, the sound of the constructions, the touch of the new furniture,the view of your new house. Those are the highlights of YOUR dream house.