My spouse and I recently transitioned from long-term renters to first-time homeowners. Throughout my entire adulthood, the common advice I’ve heard is that renting is equivalent to squandering money while purchasing a property is a more prudent choice. This prompts the question, why would you willingly pay off someone else’s mortgage for years?
However, looking at this situation with a financial lens, one quickly realizes that renting can be more economical than buying, depending on your region’s cost of living. This was certainly the case for us. Indeed, I am confident we will now be incurring greater costs for our accommodation and living expenses, since we now own a home instead of renting one.
So, why did we opt for homeownership in spite of the lower costs of renting?
Additional Space:
Yes, we might now face a heftier mortgage and have the responsibility for repair and maintenance costs. But we are acquiring more value for our expenditure by transitioning from an apartment to a house. We now have more room, an additional bedroom, a yard, a garage, and more. Our previous rent was below $900 per month, and we wouldn’t be able to rent our current home for anything close to that price. Rental properties in our neighborhood range around $1,700 – $2,000 monthly. Meaning, since our rent was so affordable, the only way to acquire more space was to accept higher costs.
Decreased Debt:
Living in an apartment for the previous six years allowed us to save a significant amount. Consequently, I managed to pay off my student and car loans, and my spouse was able to clear his car loan and credit card debts. Hence, we now harbour much less debt than we did in the past. Currently, we have to deal with my spouse’s student loans and some medical bills. With minimal debt, we can afford a higher accommodation payment and still manage to save and pay off the remaining debt.
Better for Raising Children:
Being parents played a significant part in our decision to buy a house. Our son, who has lived in an apartment with us since he was young, is growing up quickly, driving our decision to provide him with a stable home.
Maintenance-Free Lifestyle:
While apartments have their merits, I no longer wanted to restrict our son’s indoor activities or prohibit him from personalizing his bedroom with stickers. Purchasing a house was a well-thought-out decision for us, entailing financial preparation and adjustments to afford a higher housing payment.
Building Equity:
Another factor behind our decision to buy was the prospect of owning and accruing equity. Though we understand that the house we live in might not be considered an investment, our philosophy is different. We believe that the annual increase in the value of our home, though unpredictable, equates to a form of savings.
Lifestyle Inflation:
Some may view our decision as lifestyle inflation, and we agree – it was intended. There’s a connotation that lifestyle inflation is negative, often tied to advice to avoid unnecessary purchases. However, we believe there’s a time and place for everything. If you’re financially stable and have a good savings cushion, why not indulge a little? Nevertheless, we feel it’s important to spend intentionally and on things you value. We valued the additional space and freedom that homeownership offers.
What’s your take? Do you own or rent, knowing the cost implications of both? Have you ever deliberately upped your lifestyle for plausible reasons?
