MONTREAL - While most Canadians pursue their dream of home ownership, Neil Jain is basking in the financial flexibility of rental living.
The financial consultant with Money Life Skills says some people can get further ahead by investing surplus income in the stock or bond markets than sinking it into a purchased residence.
"If you're smart, the difference you save between renting and owning a home you can invest that over the long term and make a lot more money and have a significant nest egg," he said in an interview from Toronto.
Investing in the markets holds risks, but there shouldn't be big fluctuations over a 20- to 30-year time horizon, he said.
Low vacancy rates show that many Canadians are opting for the cost certainty of rental living, he said. Government rent controls in many provinces limit annual increases. Ontario has set the 2011 rent increase, for example, at 0.7 per cent.
Far too many prospective buyers fail to look at the total cost of ownership and simply compare rent to mortgage, Jain said.
Home ownership includes property and land transfer taxes, fees for inspectors and lawyers, insurance, municipal welcome taxes, moving costs and real estate fees for sellers.
Condo owners are also on the hook for higher fees if the reserve set aside in new buildings fails to cover maintenance costs. But as a renter, Jain said he wasn't affected when his unit's owner saw fees for his Toronto condo soar by 80 per cent.
Jain acknowledges that home ownership is a lifestyle choice and a form of forced savings for those who wouldn't otherwise invest.
"I can see how it makes sense for people with young families to own a home in the suburbs and have the space that they need, but trying to time the market so that you can make money on real estate is a tricky business to be in."
While the affordability of homes may be forcing some potential buyers to shun the housing market, the dream is alive and well for many Canadians. Parents who have seen their property values skyrocket have long urged their children to follow their example.
And close to 70 per cent of Canadians have obliged, urged on by low mortgage rates and affordable prices in many parts of the country.
"Home ownership is something that everyone aspires to," says Farhaneh Haque, regional manager and a mortgage specialist for TD Canada Trust.
For many Canadians, especially first-time buyers, it's a question of timing, she said in an interview.
"There is a sense of pride and accomplishment in any ownership as opposed to not owning something, but it is a personal preference."
The key is to carefully assess your personal financial situation to avoid compromising lifestyle to get into a home, she said. Factors to consider include career status, financial health and credit payment habits.
Recent TD polls shed some light on the home buying views of Canadians.
Some 45 per cent of those surveyed said they will buy their first home independently, including 57 per cent men and 33 per cent woman. And one-third plan to buy a home with a rental unit to pay their mortgage faster or help them live more comfortably and boost savings.
More than 60 per cent of young, urban Canadians said affordability drove them to look for or buy a condo. But 65 per cent wished they had the money instead for a single house.
Many of those polled said they viewed a condo purchase as a stepping store to their ultimate home-ownership goal. Nearly 50 per cent said they planned to stay put for less than six years.
Many first-time buyers enter the market by purchasing a condo downtown and then move to spacious homes in suburbia following the arrival of children.
Moving quickly may not be the best strategy because of costs. And homeowners shouldn't count on higher selling prices to help them move up the real estate ladder, said Jain.
Toronto's real estate market didn't fully recover from the 1989-1990 crash until 2007, when accounting for inflation, he noted.
"That's a long period of time to wait to recover your investment so housing has much longer cycles than the stock market, so if you are on the wrong side of the cycle then it can be a long, long time before you recover you're money."
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