Hey guys,

This is another one of those debates that I find very interesting and definitly emotionally charged on both sides.  Not sure how many people on these boards are of the age where this question rears its ugly head, but if not, feel free to put forward your opinions anyways

 So, essentially the question is this.  Does it make more financial sense to purchase a home or rent one?  What are the benefits and disadvantages to both positions?  Anyone have some personal experiences they want to share one way or the other?  Some of the things I'm interested in knowing are housing prices in your local community, as well as rental prices, things like that.

To get things started, I'll just give me personal situation.  I currently and renting the top half of a house.  We have approximately 1100 square feet and I am paying around $1010 CAD (canadian dollars) a month.  Two doors down from me, an 800 square foot house just sold for $333k CAD and the best interest rate on mortgages I can get is around 5.85% over a 5 year amortization period.  We can get mortgages up to 40 years up here in the big white north.

Well, in my city, houses start at 700k. Not too many apartment complexes yet, but they are in development. In my case, renting is much better.

In the end, it all depends on how you are now. Pay tons now, but pays off in the long term- buying. OR, rent, paying low now, but always paying.

It's often better to buy if you can afford it, but it depends where you live. Property taxes are killer, but rent is money that you will never see again.

Depends on the market ...

I live in Calgary where houses prices are now averaging nearly $500,000 with few houses below $400,000 ... at the same time most condos start at $200,000 with a "nice" condo starting at $250,000.

Right now I would say that it makes more financial sense to rent because Calgary can grow (pretty much) as large as it wants to and the only thing preventing new houses from flooding the market is a labour shortage; if the labour market becomes a little looser it is likely that the market will drop 15% or more (which would easily kill any equity you built by buying today.

If you ask me, the biggest factor depends on your long-term plans.

Buying almost always works better if you plan to be in the house for five years or more, because you build up equity much faster in the later years of the loan (unless you're making extra payments toward principal, always a good idea because interest dominates the payment structure in the early years.) If you sell the house at a later date, you've got some savings built up in terms of equity that goes back into your pocket plus any market appreciation that's occurred in the meanwhile. And if you succeed in paying off your house, you actually find yourself in a position of paying NO rent at all. (Just property taxes, insurance, upkeep, etc.)

On the other hand, if you're not sure about long-term plans, renting may be the wiser option. You're not gaining anything financially in the short or long term (rent usually exceeds an appropriate payment on the same property, or there would be no properties available for rent! The exception might be where the landlord has owned the property for a long time and it's paid for.) But you're also not tied down to anything but maybe a lease agreement. In the US real estate prices are stalling and falling in some areas as the market has been overheated in recent years, so some people who bought recently are finding they owe more than the house may be worth. People with poor or limited credit history may also find they need to rent for a while until they can establish enough of one to get a better interest rate on a home loan.

So I'd say -- if you're planning to stay for a while, look at buying. It's a good time to do so right now, at least in the US. And if you're not, rent until you make up your mind.

Costs of buying: Mortgage interest, maintenance, higher utilities, property taxes.

Costs of renting: Rent

Rent is usually higher than the total costs of buying, but you usually don't have to spend nearly as much time maintaining the place (no mowing the lawn, painting the outside, etc.). So depends on how busy/lazy you are and what your preferences and the actual price differences are. ;)

I just bought a house for 50,000 dollar (555,500 mexican pesos) its 10 miles away from my school and my "zone" but renting a place is 400 dollar or more a month for a 2 bedroom apartment. Credit is 500 dollar a month for 20 years, the thing is after I pay up, I got a property of my own and that by te time that happens its value would be over 100,000 dollar. I could rent it while I pay it for 500 dollar a month too... thus the property wou;ld be paying for itself. I now live on the school dorms and the school pays for it, son im not in a hurry to use my house right now.

i don't know why this would be an emotional charged issue... it's purely financial, and it's not chump change.

as a rule of thumb, if you can afford it, buying works out better in the long term. obviously it depends on your situation, but any financial advisor would tell you the essentially the same thing.

I agree: buying is always better if you honestly plan on being in the area for more than 5 years.

Your money is actually going somewhere (slowly at first), whereas renting, you never see your money again.

You have to live in a home for 11 or 12 years or so before it becomes better in the long run to buy.

Now for the USA we had 5 years of runaway price appreciation from 2000 to 2005 and it got really out of hand with a lot of speculators. So it makes no sense to buy here since prices are coming down now and likely will for a few more years.

If where you live the price hasn't gotten out of hand, and if you can afford a real mortgage (not any negative amortization, interest only, ARMs etc.) and plan to live in the home for a long time, then if you find the home you like go for it.

Otherwise just rent, and save as much money as you can each month.