Should You Rent or Should You Buy

Holy smokes, NYT has created a rent v buy calculator (https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) that is easy to use and yields believable results.

Here’s one scenario I just ran:

If you can buy a home for $408,000, that you plan to stay in
for at least 6 years, with a mortgage interest rate of not more than 3.13%, with a 15%
downpayment, a 25-year amortization period, with home inflation of 3.5% pa,
while rents are growing at 1.7% pa, and your investment portfolio returns 4.1%
pa, and inflation is at 1.9%, while your property tax rate is 1.08%, your personal
income tax marginal rate is 20%, with closing costs of 1.5%, and selling costs
of  6%, then you would have to find a
comparable house that you could rent for $1,320 per month (or less) to be better off
renting than buying.

In a town like Ottawa, a home like the above would be a 3 or 4-bedroom, 1 and ½ to 2 and ½ bath house, 15 or 20 minutes from downtown in a decent neighborhood. It would rent for anywhere between $1,550 and $2,100 a month so, at least in this city, you’d probably be better off buying than renting.

If you are prepared to add something like an in-home suite, you will be far better off buying than renting, IMHO.

@ profbruce