BC Sunshine Coast real estate by Menno at Royal lePage Real estate on the BC Sunshine Coast

Most Canadians appear to believe that owning one’s own home is more desirable than being a tenant. As a tenant, you live somewhere temporarily; as an owner you are perceived to be making a home in your community, for now and later.

Home ownership can take various forms: a house, a strata-unit (condo or townhouse) and even a mobile home on owned land or rented land. A shack would also be possible.

In some countries, most people rent their living quarters. In Canada, the vast majority of people live in a home they own – it’s generally seen as a smart financial decision to stop being a tenant. Truthfully, it’s usually more of an emotional decision to shift from renting to owning. The perceived freedom and status of home ownership are strongly felt by most.

If renting a home costs about the same as contributing to your own mortgage for your own home, the choice is fairly simple for most people: they will choose their OWN home. Of course, there are still some hurdles to be taken. A down payment is required to get into home ownership – setting you back Thousands of Dollars even before moving in to your new home. Also, you will need to qualify for a mortgage loan – not always the easiest thing to do. And you need stability in your life: an income that’s probably going to last and a desire to stay in the same place for a longer period of time.

Even when home ownership is much more expensive than to keep on renting, most people will seek to purchase their home. Renting is seen as a way to make the landlord richer – even though that’s not always the case. Owning is seen as a way to contribute to one’s own future; people will want to pay a premium for that.

Home ownership does NOT solve all your housing problems. It changes them - most people would say that the change is for the better.

ALWAYS A HAPPY OWNER?

Rents have been going up and up. It’s a virtual certainty that rents will go up again in the future. Property values may also go up – but once you’re an owner that’s not a problem any longer. You’re “in” the market. It’s because of the simple equation that home ownership, even when it’s more expensive at first, will eventually beat renting. Of course, once the mortgage is paid up in full (may take a few decades), you really got one-up on the renters, who are still making their monthly contributions until they can’t any longer.

Renting is viewed by many as temporary while home ownership makes a positive step towards the future. Many people believe that it’s better, in the long run, to become and remain a home owner. You could well be a happy renter for a very long time. Yet, it’s viewed by many just as a temporary measure “until one can afford to purchase a home“. Even home ownership isn’t for ever – many people sell their home after a few years, usually to purchase another – rarely to become tenants again.

In all, about 1 in 4 renters say that they are planning to buy a home in the next two years. This doesn’t necessarily mean they’re all going to do this. After all, most smokers would like to quit too. Or many people would like to take a trip around the world and never do. However, it’s an indication of the perceived general desirability of home ownership. If this actually were to happen, this could translate into a major growth in home ownership inclusive of certain pressures on the real estate market.

As tenants eventually become owners, will there be no more tenants, at one point? Not true, because people that are new to the (rental) market are also added all the time.

WHERE HAVE THE TENANTS GONE?

How would landlords fare when many renters disappear into the real estate market? Some say it’s not the best time to be or become a landlord. Although many renters say that they would likely buy sooner if they expected interest rates to rise substantially in the next year. This philosophy is not surprising. A major rate increase would cost a borrower a fortune. To beat that increase makes a lot of sense.

When buying a home, everybody needs to collect a substantial down payment and also create an emergency fund (for home expenses that may come up). Also mortgage rates change, they can go up or down. If rates stay low, that might give the tenant more time to save for the down payment and closing costs;

Even house prices change, they too can go up or down. House prices and mortgage rates could move in tandem or opposed to each other. Any movement creates its own set of challenges. If there’s one single piece of advice about mortgages, it should be to not get your advice from just one source. You can talk to a number of specialists.

If you want to, eventually, become a home owner, it's very advisable to have some savings to get started. It's not cheap to enter the real estate market.

NEED HOUSE MONEY?

Almost all new home owners will need mortgage financing. Some will get their information from mortgage brokers, others from their banker. A small group will seek help from both (and that’s completely legal, possibly even a very smart thing to do). Of concern is that most current renters consider themselves quite educated in the buying process. In itself, that could stop them from learning more about this complicated process.

Of those renters that also have RRSPs, most appear to realise that it’s possible to use these as part of their down payment. That’s great – but it has to be paid back into your RRSP at regular intervals or your past withdrawals become taxable again (which could be quite costly).

There is a tremendous variety in mortgage products on the market, these days. There are MANY different providers of mortgage funds and there are even more mortgage specialists (individuals who know much about money, particularly mortgage money).

To become more knowledgeable in the field of real estate and mortgage financing is a smart choice, if you would like to enter the market at one point.

TO KNOW MORE IS GOOD

In this financially fluid world, it’s good to keep on reading on financial topics, below are some examples of prior blog articles touching on this topic:

What about asking price and selling price: http://www.mennorealty.ca/Blog.php/list-price-difference

Will come up too: home insurance: http://www.mennorealty.ca/Blog.php/insurance-tips-more

From rate hold to mortgage confirmation: http://www.mennorealty.ca/Blog.php/rate-hold-to-approval

Owning one’s own home and the ever changing real estate market: http://www.mennorealty.ca/Blog.php/market-when-to-change