To Rent or Own – That is the Question

I absolutely love the thought of home ownership, even though I no longer have a house. Not to say that I won’t again one day but likely only if I can design and build it myself to my exact needs. I just need a piece of land to put it on – no small feat in this day and age.

I don’t know about you but the goal of owning a home was a number one priority in my twenties and thirties. Home ownership was not only a good investment, but it meant that you had achieved a certain level of success.  Paying rent was a complete waste of money. After all, you were helping someone else build their nest egg instead of building your own.

With a healthy real estate market, the value of your house would steadily increase over the years, and you would make a tidy sum when you sold it.  For example, if you purchased an affordable home back in the nineties on the Halifax peninsula you might pay $125,000.  Twenty years later you could sell that house for let’s say $289,000. Now that’s a substantial profit. Well done!

What many of us may fail to realize is that is not the amount of money we made.  You need to deduct all the costs of maintaining that house over twenty years and the improvements you made before you put it on the market to ensure you got the maximum price plus any fees involved in the sale.  Let’s say you did the following.

  1. New back deck $5,000
  2. New fence $7,000
  3. New roof shingles $4,000
  4. Add a second bathroom $35,000
  5. Renovate the main bathroom $12,000
  6. New windows and skylights $5,000
  7. Annual maintenance and repairs  $2,000 x 20 = $40,000
  8. Close off a room to create a third bedroom $2,000
  9. New electrical panel $1,500
  10. Insulation $2,000
  11. Closing Costs and Agent Fees $16,950

Total Deduction $130,450

Good grief, that means the profit after twenty years was $33,550.  That doesn’t sound nearly as impressive somehow.

Had I paid rent for those 20 years I would be out let’s say $288,000.  Keeping mind that my rent included everything except a small power bill and a modest tenants insurance package. However, while I owned my house, I may have made a mortgage payment of perhaps $1,000 a month plus property taxes of $300 plus heat of $250 which adds up to $372,000. I know there are many more complex calculations that need to be in place for this exercise to be truly accurate and that is one of the many reasons that a knowledgeable real estate agent is such a valuable resource.

Obviously, in the last few years those numbers have changed exponentially.  Unless I’m missing something major, would I not have been much better off to invest all the money I spent on the house and rent instead?   I do have to say that despite all that calculating, there are days that I still miss owning a home. However, over the course of apartment hunting I discovered that if I wanted to have the perfect place to live without the concerns of constant maintenance, I would need to design and build a brand-new house.  Wouldn’t that be fun!

Perhaps it’s no longer about owning a house making financial sense or maybe it wasn’t in the first place. The freedom of home ownership means you can do whatever updates you want and customize your living space to your needs. Thankfully, lots of you choose to own a house or a condo and that keeps those of us in the design business gainfully employed, so thank you!



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