Better to Rent Than Buy Real Estate in Toronto Right Now

How quickly times change! Just a few years ago Toronto financial experts were advising renters to start looking into the Toronto real estate market to buy their own home so that they could invest what they were paying in rent into equity of their own. Today, it is truly a renter’s market and real estate experts are advising that it is better to rent than buy during the current economic climate and radical downturn in the Toronto real estate market.

Consumers in Toronto are realizing this fact as well and that financially they are better off renting rather than taking out a large loan. This is especially true of those working in areas of Toronto where the future of jobs may be uncertain. At least with renting if you do lose your job, you don’t have a high mortgage payment hanging over your head and you can always look around for cheaper accommodations. There are still many areas in which rent is much cheaper than that of a mortgage payment – often as much as 40% or 50% less.

The reasons for cheap rent in Toronto and many areas of the country is that buyers who did purchase homes when real estate prices were at their highest are now realizing that in order to avoid foreclosure or encountering difficulties with trying to sell the real estate at a lower price, they are able to find renters for the properties. In many cases they are able to get the amount of the mortgage in the rent they collect each month.

In most cases, in order to come out on top when selling Toronto real estate, the homeowner has to realize the same amount as the purchase price and consumers are not willing to invest large amounts of money into a crumbling market. Those who are renting are unwilling, and rightly so, to buy Toronto real estate that is priced far above the value of the home on the real estate market.

Many renters in Toronto are finding it increasingly difficult to meet the criteria of lenders in order to obtain approval for a mortgage today. Even if they are able to obtain a mortgage, most are realizing that it is more beneficial to rent even if they are paying the homeowner’s mortgage. This is because by renting you are not responsible for paying the property taxes associated with the home nor are you responsible for paying for any problems that arise, such as leaks or replacing windows.

Some who are currently renting and aspire to owning their own home some day are holding off because they feel that Toronto Real Estate prices have not reached their lowest level just yet. There is a fear in the real estate market that buying a home at the prices of today may not be the best option if house prices continue to decline. This would leave them with negative equity in that they would owe more on the mortgage than the house is actually worth on the market. They are being cautious and taking a wait and see attitude before taking the plunge with a mortgage.

There are areas of Toronto and the country where there are not enough rental units available, but at the same time there are areas where there is an abundance of units. These are not just apartment buildings because those who invested heavily into Toronto real estate in recent year see the wisdom of renting out the large homes in an effort to see some income from their real estate investments. They know that to sell at the present time will bring them a loss and so they rent out the homes. However, the mortgage payment on the properties is sometimes higher than what the average renter is willing to pay or can afford to pay. This means that some investors and homeowners do have to take a loss on the rent in order to keep the property solvent until the market starts to stabilize and Toronto real estate prices start to rise.