Listing Pros and Cons of Buying Vs Renting

Deciding Between Buying vs Renting

This guide should help you determine the answer to the all-important question: What are the benefits of buying vs renting a home in Fredericton? A third of Canadian households rent their properties, many of whom are young professionals and families. In this demographic, the choice to be a tenant or homeowner is a deeply personal one that is often determined by more than the cost of purchasing a property.

The Benefits and Downsides of Renting A Home

The two-thirds homeowner one-third tenant ratio that defines Canadian households has been a staple feature of our property market for nearly three decades. However, in recent years there has been a slight shift in who rents and why. Some families are gleefully choosing renting over buying because of the benefits that tenantship brings.

Benefits of Renting A Home

Increased Flexibility

Homeownership is a long-term decision that can be complex to untangle once you own a property. If you are a frequent traveller or could relocate, the flexibility offered by a rental property is far more appealing. You can reside in a home without committing to the neighbourhood, address, or amenities long term. This means if you’re not fond of your neighbours, have the possibility for career advancement elsewhere, or need a change of scenery, moving out is straightforward. There is no additional paperwork or planning required to make these types of decisions, as is the case if you owned the property.

Lower Costs

Because rent and mortgage costs are comparable, renters may be asked why not buy a house?

While the mortgage costs may be identical to your rent, it’s the hidden costs where tenants make the most savings. Tenants are not subject to pay for home insurance, maintenance, or property taxes, nor do they need to include these costs in a budget. In terms of upfront cost, renters are not subject to a down payment (beyond a security deposit) or a longer amortization period, which lead to additional savings.

Access To An Idealized Lifestyle

Since tenants are not subject to the associated expenses of homeownership, many tenants have more disposable income, which can be put toward living their ideal lifestyle. aFor professionals and families that prefer convenience, the immediate benefit of living closer to the city and its amenities outweigh owning property in a suburb.


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Downsides of Renting A Home

But considering all these benefits, significant downsides remain. These downsides may not seem consequential now but can affect your long-term plans.

Lack of Control

When you don’t own the property you reside in, you are not able to make any changes to the property without consent from the owner. You are unable to personalize the home to your tastes as you would in your own home. While this may seem inconsequential now, there are times when making modifications with short notice will be preferential; a few examples can be renovating a walk-in closet to create a small office space or changing the layout of countertops to improve space efficiency. Even getting a pet is more of a hassle when you are a tenant.

Non-Existent ROI

“Return on Investment” refers to the potential value added to a property by renovating or making repairs to the home. It’s not uncommon that while you reside in a home, you spend a few extra bucks here and there doing the basics to upkeep the property, including repairs, replacements, or cosmetic changes. While the changes you make to a rental property may benefit your immediate needs, the changes you make or the maintenance you conduct has no long-term benefit for you.

The Benefits and Downsides of Buying a House

Many of the benefits – and downsides – of buying a home, contrast those of renting a property. Essentially, buying a property has long-term benefits that positively impact your quality of life and your finances.

Benefits of Buying A Home

Building Home Equity

Once you start paying a mortgage, you’re building equity in your home. This equity can be realized through refinancing or on resale. Therefore, every mortgage payment you make directly impacts your financial liquidity and increases your net worth, in turn facilitating additional opportunities.

Enhancing Resale Value

While the few extra bucks you spend on maintenance, personalization, and repairs do not have long term material benefits as a renter, they are worthwhile as an owner. Because any maintenance and repairs you conduct on your property directly impact the value of your home. When the value of your home increases, it instantaneously impacts your equity, while having tangible consequences when it is time to realize your home’s value through resale.

Protection from Market Changes

Unfortunately, renters still form part of the least protected households in Canada. They are subjected to ever-increasing rents and fees. As an owner, you will likely have a five-year fixed-interest mortgage followed by a 25-year amortization. This predictability makes you less susceptible to unpredictable housing and market trends.

Downsides of Buying A House

Unforeseeable Cost

As a homeowner, you must have enough savings for rainy days and unexpected expenses. A leaky pipe, an HVAC system needing repair, and winter preparations all fall squarely on your shoulders. If you do not have sufficient savings to cover these costs, owning a home can become detrimental to your financial well-being.

How to Save Up for a Home While Renting

While it’s easy to list the benefits of owning property, for many renters, the financial implications of being a homeowner make homeownership unfeasible. But, there are steps you can take if purchasing a home is one of your goals.

Make Lifestyle Changes

Skipping out on buying a coffee and Timbits from Tim Hortons or a Grande Latte from Starbucks won’t do much in the way of helping towards a 5%+ down payment on a home. However, creating smart money habits will. For example, consider reducing the number of times you eat out or order-in. Furthermore, making other lifestyle changes like choosing a fuel-efficient vehicle or choosing cars with cheaper insurance can also help you reduce your monthly expenses and enable you to put aside more money toward buying a house.

Find A Cost-Effective Apartment

If your rental is taking a large portion of your income, perhaps consider a more cost-effective option. Choosing to downsize your lifestyle while you’re still a tenant can help you make significant headway for that deposit. Considering that the average property price in New Brunswick is $203,000 according to data as recent as November 2020, you would only need $10,150 (plus additional closing costs). Depending on the type of apartment you choose to rent, you could end up saving up a 5% deposit in a few short years.

Consider Living in The Family Home for Longer

While your parents may expect you to pay rent when you have a job, it’s more than likely that it will be far beneath market value. This gives you some time, while you’re still a young adult, to make substantial contributions toward your home deposit.

Find an Entry Level Home

Perhaps the best method to get into the property market is to climb the property ladder. While you may not have the funds for your dream home, it’s far easier to save up for a starter home that has many of the basic amenities available in an apartment. You can then make changes to that home that will affect its resale value and help toward purchasing the home of your dreams. If the conversation of buying vs renting has you leaning toward the former, take a look at our guide for first-time homebuyers in Fredericton and Oromocto

Renting vs Buying: What is the Right Choice?

Renting is possibly an ideal choice when you still require flexibility and may need to relocate at short notice. It also can make financial sense while you have fewer financial responsibilities. However, to make a beneficial decision it’s critical that you consider how renting will impact your lifestyle, finances, and opportunities. If you can envision yourself settling down in a region for more than five years, choosing to buy property will have a material impact on your finances. Five years is a good benchmark, as it is ample time to build sufficient equity in the home and benefit from a buoyant market on resale.

But, buying a house is never a cut-and-dried decision. Get advice about the choices that make the most sense for your circumstances by contacting our team of expert Fredericton REALTORS® at The Right Choice Realty


At The Right Choice Realty, we’re a small team of passionate real estate agents in Fredericton, New Brunswick, with a focus on personalized service and local expertise. We’re here to help you achieve your buying or selling goals, whether you’re looking for a commercial or residential property. Our team is highly familiar with the different neighbourhoods in the area and can offer personalized recommendations you can trust.

We have a team to help with administrative tasks and an in-house photographer to capture high-quality images of properties. Our marketing specialist helps us understand and plan how to best market listings and make informed decisions for buyers, and we use innovative multimedia marketing tools such as Matterport 360 and a drone to showcase properties to their full potential.

If you’re looking to buy or sell a home in Fredericton, don’t go it alone. Call The Right Choice Realty and see how we can help you reach your real estate goals. Contact us today to learn more.

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