Renting is the obvious alternative for someone who is unready for the financial blood-sucking that home ownership entails.Tell us how you really feel.
Renting isn’t a quick and easy alternative to buying, though. Canada Mortgage and Housing Corp.’s latest report on the rental market says the national average vacancy rate for apartments was 2.3 per cent in April, which compares to 2.5 per cent a year earlier and a long-term average of 3.2 per cent. Regina, Winnipeg and Montreal are among the cities with smaller vacancy rates than the national average, but Toronto stands out on the low side at 1.5 per cent in April. The city’s vacancy rate for condos is even lower at 1 per cent.I personally know of Chinese condo owners who have given up on having renters. Hard to imagine with 58,000 condos coming in Toronto that the vacancy numbers are relevant except for house rentals.
CMHC measures rental costs in terms of two-bedroom apartments. Toronto’s average was $1,164 per month last spring, second to Vancouver’s $1,210. You could carry a $250,000 mortgage at today’s five-year rates for those rents, not that there’s much of anything in this price zone in either city.
As tough as the rental market may be, it’s still a better option for Gen Y than buying prematurely. Renting, at least, is a finite expense each month. Housing is infinite – there are fixed costs, plus endless discretionary expenses. Buying is not the solution to difficulties in finding a place to rent, at least not without further price declines. Instead, find a roommate and pool your resources to cut rental costs.Tough love. Although, with tightened lending rules, this may be irrelevant advice anyway.