Property is ahead of rent when capital growth is accounted for, according to a report by Will Dunning Economics

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The decision to own versus rent has just gotten a little easier, thanks to a new report showing that landlords are getting ahead financially.


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“In every case in Alberta, the cost of ownership is less than the cost of rent,” says report author Will Dunning, a real estate market analyst and economist at Will Dunning Economics.

The Royal LePage-sponsored study examined the cost of home ownership with comparable rents in various types of housing in six provinces, including Alberta, and found that buyers pay $ 769 less per month compared to rent.

In Alberta, buyers see an average monthly advantage of $ 763, the report reveals, the third best among the provinces, behind Quebec with $ 806 and Newfoundland with $ 2,380 a month.

The property costs included the mortgage (25- and 30-year amortizations at 2.19 percent), property taxes, and other expenses such as utilities, while the rent calculation included the monthly rent and utility costs for 278 case studies across Canada.


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For home types, detached bungalows had the smallest property advantage at $ 687 a month in Canada, while high-end condos had the largest advantage at $ 1,198.

On the surface, total costs of ownership for 25- and 30-year mortgages were typically higher than total rental costs nationwide.

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“But the point I make is that when you make a mortgage payment, a large part of that payment is repayment of the principal, so it is a form of savings rather than a cost,” Dunning says.

Including principal payments, the total cost of ownership in Canada is approximately $ 700 more on a 25-year mortgage and approximately $ 400 more on a 30-year mortgage per month than the rent.

However, when the principal payment is removed from the calculation, since you are building wealth rather than reducing it, homeowners are better than renters, he adds.


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Even when principal payment costs are included, the cost difference in Alberta is generally more favorable to homeowners.

The report shows that the rent is just $ 33 more a month for buyers on a 25-year amortization calculation and $ 138 a month less on a 30-year amortization mortgage.

Dunning says the report did not break down housing types by province, nor did it offer prices for major Alberta cities.

Rather, the Alberta dataset, originally collected for a different purpose, only included Fort McMurray, Fort Saskatchewan, and Sherwood Park.

Even without data specific to Edmonton, real estate agent Nathan Mol says the report is of interest to first-time buyers.

However, it’s likely not a deal breaker, says realtor Liv Real Estate.


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“These first-time home buyers often base their decision not just on rent and purchase calculations, but also on what stage of life they are in or planning a family,” he says. “They’ve gotten tired of a rental property… in a noisy, busy place; they need more space … they want to update and (to) generate capital. “

Still, Edmonton’s low mortgage rates coupled with affordability relative to other major cities make buying more financially attractive than renting, he adds.

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Dunning adds that low interest rates certainly helped boost affordability in the study, even in the face of rapidly rising real estate prices.

“Because rates have dropped so much, the cost of ownership has also dropped a lot.”

Also, although the report’s sample size is limited, the findings are still useful to new buyers, says Royal LePage’s chief operating officer, Karen Yolevski.

“Our real estate agents are asked the ‘rent versus buy’ question all the time,” he says. “This is the biggest investment people often make in their lives, so this report offers a little more information to help them make a decision.”



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