It is impossible to look in the local paper, or community newsletter and not be distracted from the actual content by the full page ad campaigns from Fill-in-the-Blank Realty. Whenever I am driving I am bombarded with signs giving me directions to where my new future home is waiting for me. Every time I turn on the radio I hear another advertisement telling me that I am throwing my money away renting and that I NEED to buy the newest home in phase 13 of the swankiest “out-in-the-boonies” development.
Recently, we had a realtor come to our door asking “would you like to try to sell your home?…oh, you’re renting? Well, would you like to buy a home? No? Well, here’s my card, anyway.”
This is Calgary.
I like Calgary. I call it home and it is good to me and my family. But Calgary is crazy for real estate. It is obnoxious. Owning a home is not obnoxious, but the culture around needing to buy one and then needing to upgrade it and then needing to list it to buy a better one? That is obnoxious.
From all the home-buying advertisements I have seen they usually use one of a couple different strategies to make you think you need to buy:
You are throwing away your money if you rent
Wrong.
Renting vs. Buying is a much more complex conversation than one that can be summed up with some ignorant blanket statement that renting equates throwing money down a drain and buying equates putting money back in your own pocket. This is a huge topic that I cannot cover in this post, but I will say this much — if you are considering buying a home you must ask yourself these 4 things:
1) How much money do you have as a down payment?
If you have less than 20%, consider that you will be paying a much higher interest rate on your mortgage.
2) How long do you plan on living in this home?
Only a few years? Well, it probably isn’t worth it. The longer you live in your home, the more financially sound the investment is, and vice versa.
3) How much money do you make?
Do not buy a home outside of your budget. If you make $60k a year, you simply shouldn’t be buying a $400k home.
4) Consider the housing market before you buy.
If it is in a housing bubble then that bubble just may pop — and you might not like the outcome.
Some resources I have found incredibly helpful with this conversation are:
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Khan Academy: Renting vs. Buying a Home
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New York Times – Renting vs. Buying Calculator
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0
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Here’s a bold statement I’ve heard many times before:
You will be happier if you own a new home.
Not necessarily. Happiness is even more of a complex conversation than renting vs. buying, but one thing is certain — you cannot buy it. In some cases you can use money as a vehicle towards elements of happiness, such as buying experiences, certain possessions and a good craft beer. That being said, all it takes is watching an episode of “The Real Housewives of Orange County” for ten minutes to realize that living in a beautiful estate home filled with premium appliances and custom furniture does not equate to living a happy life.
Buying a home could make you happier, but buying a home does not guarantee you will be happy. Be aware that the same people who will charm you into believing that you bought a dream home will just as quickly turn around and remind you through hundreds of advertisements that there is something bigger, newer, and more luxurious right around the corner. Happiness was that townhouse you bought and loved, but now happiness is the single detached family home and shortly after — happiness will relocate to the estate home overlooking the mountains…and so on and so on and so on.
Does any of this sound familiar to you? Do you live in a place where real estate obsession and envy is a part of what drives the economy? Do you consciously or unconsciously feel a lot of pressure to buy even though you don’t match up with the above criteria I mentioned for buying a home? I get it. I really do. But before you make any decisions I encourage you to do your homework. Crunch the numbers. Evaluate your motives and then if everything lines up and you are excited to buy a home — That’s awesome! Congratulations! But otherwise just take a deep breath and realize that you are doing alright just where you are. Find happiness and contentment in the beautiful life you have been given and if you can do that then all of these advertisements will reveal themselves to be what they truly are – background noise to the happy life you are already living.
Your fellow renter,
Brad
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