If you’re considering a move to Victoria you might be wondering is it better to rent or buy; also, is a condominium or single-family house a better option?
There are a lot of things to consider when you’re moving, whether it’s just across town or across the Province. If you’ve never been to Victoria, renting might be the better option so you get a feel for the lay of the land and you understand the different cities and communities better. This might give you a better idea of where you would want to buy in the future.
Those that travel a lot or relocate often understand that they probably will not be in Victoria for long so renting makes the most sense. However, if you plan on staying any longer than two or three years, buying might be a better option since homes tend to gain decent equity within 2 to 3 years and you may actually gain a profit when you sell. There are many things to consider including appreciation, tax savings, a positive impact on your credit history as well as the stability of homeownership.
Renting however gives you the flexibility to be able to move easily without having to sell another property and you may be able to live in a nicer home for the same amount of money as a mortgage payment. However, you cannot make changes to the home, extensive improvements and you are under your landlord’s rules about what you can do to the home.
Renting versus buying might be slightly different depending on what type of market you are in. Overall, buying a home is typically 30% cheaper than renting but that’s not the case in Victoria. Use this method to determine which is better financially. Take the house price and divide it by what it costs to rent for a year to get the price-to-rent ratio: Price divided by (Monthly rent x 12) = X.
If the number is higher than 15, it’s generally not a good time to buy.
If the ratio is less than 15, buying is a better deal than renting, if you plan on living there for at least five years to offset moving and closing costs.
By the time the number hits 20, renting is apparently the way to go, except if buyers expect to stay put for at least 15 years, according to a formula used by trulia.com to rank major urban U.S. centres every year. [Source]
Nevertheless, you will have the added benefit of gaining equity and a home of your own should you buy. On the flipside of that, should you need to move, you will need to sell that home.
It really comes down to a personal decision on the future of your housing. If you plan on staying in the area for at least 2 to 3 years I would encourage you to buy. You can easily get a condominium or single-family home for about the same monthly payment as you would renting or buying.