Monthly cost of mortgage not much more than renting for piece of real estate
Local Input~ Dean Bicknell, Calgary Herald CALGARY AB: MAY 5, 2011--Stephanie Gough stands outside of her new condo building on Thursday May 05, 2011 which she takes possession on June 1in Calgary,for a story about more people looking at homeownership and why . Dean Bicknell / Calgary Herald) For Business story by Mario Toneguzzi¿ 00032973A
Stephanie Gough had been thinking for a number of years that she should buy a place to live rather than rent one.
Like many young people these days, the thought of home ownership is enticing, particularly with low mortgage rates.
In April, the 24-year-old Gough decided to take the plunge, as she purchased a one-bedroom condo in Calgary’s Connaught neighbourhood near downtown for $245,000.
She has been renting a one-bedroom apartment in West Hillhurst for $850 a month, not including utilities, phone, cable, since September 2006.
“I had been thinking of buying for quite awhile, but since I was in school I wanted to wait until I had my job situation firmed up before I purchased anything,” says Gough, who takes possession of her new place June 1. “Since I finished my degree and got offered the full-time position (in the field of public relations) in March, I had started seriously looking for a place. I had been hearing from all different areas that the market was going to go up and the prices were going to go up and interest rates were going up. So I thought it would be a good time to jump on it if I could find a perfect place.
“The cost of my mortgage a month is going to be $900, so it’s not very much more than renting. And to be able to have my own asset in a piece of real estate is fantastic . . . Paying $850 a month is one thing if you’re owning the place. But if it’s just going to rent and disappearing once it’s gone then that’s kind of not fun to deal with for five years.”
The 18th annual RBC home ownership study, released recently, found younger Canadians are more likely to purchase a home than other age groups, as 43 per cent (aged 18-34) are looking to buy in the next two years compared with the national average of 29 per cent.
However, the FIRM residential mortgage survey, conducted quarterly by the Altus Group, an economic consulting firm, and Ipsos Reid, says first-time buyer intentions among those who currently rent were down from a year ago and were also below the average level of the 2002-2009 period. Softer homebuying intentions are tied to the additional tightening in mortgage insurance rules in recent years.
Also, the level of house prices could keep more potential first-time buyers on the sidelines “until there are affordability improvements.”
In the fifth annual Turnover Rate Survey in 2010 by the Calgary Residential Rental Association, home ownership was found to be the third reason tenants moved out of their rental units. The first reason was tenants moving to a different rental building, followed by tenants leaving due to job relocation.
In its 2009 survey, the rental association found that purchasing a condo or a house was the main reason for tenants leaving their rental units, followed by job relocation and moving to a different rental building.
Ian Campbell, regional assistant vice-president for sales and service with First Calgary Financial, says both renting and owning a home have advantages and disadvantages, “but almost always you’re better off becoming a homeowner versus continuing to rent.”
Like many young people these days, the thought of home ownership is enticing, particularly with low mortgage rates.
In April, the 24-year-old Gough decided to take the plunge, as she purchased a one-bedroom condo in Calgary’s Connaught neighbourhood near downtown for $245,000.
She has been renting a one-bedroom apartment in West Hillhurst for $850 a month, not including utilities, phone, cable, since September 2006.
“I had been thinking of buying for quite awhile, but since I was in school I wanted to wait until I had my job situation firmed up before I purchased anything,” says Gough, who takes possession of her new place June 1. “Since I finished my degree and got offered the full-time position (in the field of public relations) in March, I had started seriously looking for a place. I had been hearing from all different areas that the market was going to go up and the prices were going to go up and interest rates were going up. So I thought it would be a good time to jump on it if I could find a perfect place.
“The cost of my mortgage a month is going to be $900, so it’s not very much more than renting. And to be able to have my own asset in a piece of real estate is fantastic . . . Paying $850 a month is one thing if you’re owning the place. But if it’s just going to rent and disappearing once it’s gone then that’s kind of not fun to deal with for five years.”
The 18th annual RBC home ownership study, released recently, found younger Canadians are more likely to purchase a home than other age groups, as 43 per cent (aged 18-34) are looking to buy in the next two years compared with the national average of 29 per cent.
However, the FIRM residential mortgage survey, conducted quarterly by the Altus Group, an economic consulting firm, and Ipsos Reid, says first-time buyer intentions among those who currently rent were down from a year ago and were also below the average level of the 2002-2009 period. Softer homebuying intentions are tied to the additional tightening in mortgage insurance rules in recent years.
Also, the level of house prices could keep more potential first-time buyers on the sidelines “until there are affordability improvements.”
In the fifth annual Turnover Rate Survey in 2010 by the Calgary Residential Rental Association, home ownership was found to be the third reason tenants moved out of their rental units. The first reason was tenants moving to a different rental building, followed by tenants leaving due to job relocation.
In its 2009 survey, the rental association found that purchasing a condo or a house was the main reason for tenants leaving their rental units, followed by job relocation and moving to a different rental building.
Ian Campbell, regional assistant vice-president for sales and service with First Calgary Financial, says both renting and owning a home have advantages and disadvantages, “but almost always you’re better off becoming a homeowner versus continuing to rent.”
“As buying a home is most likely going to be the most significant purchase someone will make in their lifetime, there’s certainly a few key questions you have to ask yourself before you proceed,” says Campbell.
One of those is how often people expect to move in the future. If they expect to move frequently in the coming years, then buying may not be for them, because every time they buy or sell a property they incur significant costs.
“When you talk about payments, renting a home can be a challenge because the landlord could conceivably increase your rent each year,” says Campbell.
“If you’re taking out a mortgage to buy a home, you can fix your principal payment for a specified period of time up to 10 years as a maximum. Property taxes may increase a little bit year-over-year but the general expectation would be that your family income should also increase during that period of time, which benefits the homeowner. So you’ve got a little more control than you do as opposed to being at the whim of what may happen with the landlord and an increase in rent on an annual basis.”
Campbell says important considerations for home ownership are employment stability and lifestyle. Does a potential buyer have the time to devote to maintaining a home?
“Buying a home can really be considered somewhat of a forced saving plan with a portion of each mortgage payment you make going towards principal and that builds equity in the property and increases your net worth,” says Campbell. “Over time with the equity building, when it comes time to eventually sell the property, you’ve actually got money in your pocket from the purchase. When you rent, all the money you pay goes to the landlord and you end up deriving zero benefit from this.”
Cody Battershill, a realtor with Re/Max House of Real Estate, cites several benefits to home ownership.
They include being your own landlord, building equity, not paying capital gains on the sale of a property, building a nest egg for retirement, pride of ownership and providing a home for your basic needs.
For first-time homebuyers, financial considerations are always at the top of the list when contemplating home ownership.
How much of a down payment do you have? Can you get a pre-approved mortgage? What about the monthly costs of owning a home? How do you factor in rising mortgage rates? What about the possibility house prices could decline and so could the value of your home after you purchased it?
“Buying your first home will be exciting and will be one of the most memorable and largest purchases you ever make,” says Battershill. “The key to avoiding regret or cold feet or buyer’s remorse is to be 100 per cent happy and completely comfortable with your decisions every step of the way.
“If you are unsure of something, simply take some time, don’t rush and don’t let anyone push you around or pressure you. Sleep on your decision or take some extra time to think. This will let you relax and really evaluate every option. You will make the best decision for yourself.”
Source http://www.theprovince.com/One of those is how often people expect to move in the future. If they expect to move frequently in the coming years, then buying may not be for them, because every time they buy or sell a property they incur significant costs.
“When you talk about payments, renting a home can be a challenge because the landlord could conceivably increase your rent each year,” says Campbell.
“If you’re taking out a mortgage to buy a home, you can fix your principal payment for a specified period of time up to 10 years as a maximum. Property taxes may increase a little bit year-over-year but the general expectation would be that your family income should also increase during that period of time, which benefits the homeowner. So you’ve got a little more control than you do as opposed to being at the whim of what may happen with the landlord and an increase in rent on an annual basis.”
Campbell says important considerations for home ownership are employment stability and lifestyle. Does a potential buyer have the time to devote to maintaining a home?
“Buying a home can really be considered somewhat of a forced saving plan with a portion of each mortgage payment you make going towards principal and that builds equity in the property and increases your net worth,” says Campbell. “Over time with the equity building, when it comes time to eventually sell the property, you’ve actually got money in your pocket from the purchase. When you rent, all the money you pay goes to the landlord and you end up deriving zero benefit from this.”
Cody Battershill, a realtor with Re/Max House of Real Estate, cites several benefits to home ownership.
They include being your own landlord, building equity, not paying capital gains on the sale of a property, building a nest egg for retirement, pride of ownership and providing a home for your basic needs.
For first-time homebuyers, financial considerations are always at the top of the list when contemplating home ownership.
How much of a down payment do you have? Can you get a pre-approved mortgage? What about the monthly costs of owning a home? How do you factor in rising mortgage rates? What about the possibility house prices could decline and so could the value of your home after you purchased it?
“Buying your first home will be exciting and will be one of the most memorable and largest purchases you ever make,” says Battershill. “The key to avoiding regret or cold feet or buyer’s remorse is to be 100 per cent happy and completely comfortable with your decisions every step of the way.
“If you are unsure of something, simply take some time, don’t rush and don’t let anyone push you around or pressure you. Sleep on your decision or take some extra time to think. This will let you relax and really evaluate every option. You will make the best decision for yourself.”
No comments:
Post a Comment