Own Your Life Episode - RENTING VS. BUYING IN 2022

Own Your Life Episode - RENTING VS. BUYING IN 2022

In this episode of Own Your Life, we plan to cover the current hot topics: 

~ Renting vs Buying in 2022 √ 

~ July’s sales data √ 

~ A Real Estate Market Update √ 

~ Freeing up cash flow to survive inflation √ 

Rental rates are up 20-30% (in various markets) in just one year 

– Specifically, Vancouver is up 25%, but some surrounding areas are higher 

– Vancouver averages $2,900 vs about $1,750 in Calgary 

– Keep in mind, that this is all property types so one-bedroom and studio condos bring these numbers down 

According to stats website Insurdinary, income in British Columbia actually went down 5% over the last year! This is, sarcastically speaking, perfect timing for our insane inflation 🙁 

If you are a family looking to buy a nice home, Vancouver is likely out of the equation for most families. Considering how expensive homes are these days, we will look at one of the more affordable cities, Surrey. As of now, to rent a large newer home in Cloverdale, a very nice area of Surrey, will cost you over $4,000. However, to purchase this same home, currently valued well over $2,000,000, you would need $500,000 cash and would be paying around $12,000 a month in mortgage payments and annual property at the current mortgage rates. That equates to paying $144,000 annually. At a 40% tax bracket, someone needs to make $240,000 to “just pay the mortgage”. In this situation, it makes more sense to rent this property and then purchase one or two rental units so you are still in the real estate market. 

According to CMT (Canadian Mortgage Trends), the average two-bedroom condo in Vancouver rents for $3,600. Living downtown is a luxury so let’s look at slightly older condos. We can still find a two-bedroom condo, 10 years of age or less for $900,000. With the minimum down payment you would need $65,000, so that would need to come from your savings, investments, RRSPs etc. Let’s not forget about the required PTT (property transfer tax) of $16,000. So with closing costs, let’s assume $85,000 is needed. At current mortgage rates, strata fees and annual property taxes, the monthly cost is around $5,000. Is it worth it to pay an extra $1,400 a month to own? Let’s do some math… $1,400 multiplied but 12 months is $16,800. Now, $16,800 times 10 years is $168,000 in additional payments. However, Vancouver properties traditionally double every 10 years meaning your $900,000 condo is now valued at 1.8 million! You have also paid off 10 years of a 30 year mortgage, equating to $145,783. 

Your net worth has now increased over $1,145,783. So, subtracting $168,000 from $1,145,783, you are now $977,783 richer! This is also tax-free income if it is your principal residence. YES, buying is WAY better than renting, if you can pull it off How about buying a home, on a budget? Do houses still exist below $1,000,000? They do for now, but … Want to chat? Book time to chat with Jessi here: https://calendly.com/jessirealestate Searching for real estate? Look no further than http://realestatevancouverbc.com 

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