Should Homeownership be the Ultimate Goal?

Conflicting statistics, advice, and anecdotes seem to be the name of the game when it comes to the idea of homeownership.

Is it the ultimate goal?

Should I buy, or should I rent?

As a millennial who has many life milestones still ahead of me, I feel increasing pressure to find an answer that – frustratingly – feels ever more elusive.

Breaking it down, being a homeowner has three primary benefits; security and stability of residence, an equity stake in the community, and pride of ownership. 

Security & stability of residence

The first benefit of homeownership, having a stable and secure residence, is fairly straightforward; you can live your life secure in the knowledge that you don’t need to worry about being evicted.

Conversely, renters find themselves in a more precarious position as they are at the whims of their landlords. As the Canadian real estate market has soared, there have been many stories of landlords trying to get tenants out, so they can reset rents to “market value”.

Who knew landlords had so many family members attending UofT?

 

An equity stake in the community

You can’t deny the benefit of having an equity stake that comes with homeownership. Historically, homeownership has been a path to wealth accumulation; the Federal Reserve’s Survey of Consumer Finances from 2013-2016 found that a typical homeowner will be ahead of a typical renter by a multiple of 44 on a lifetime financial achievement scale.

 

Pride of ownership

Pride of ownership may be the hardest to quantify, but it may also be one of the most powerful benefits of homeownership. Studies have speculatively attributed increases in political and social community involvement in those who own homes to a heightened attachment to –and, therefore pride in – their environment. 

 

Barrier to entry

Homeownership isn’t all smiles and sunshine. In fact, the first steps to becoming a homeowner could better be characterized as frustrating, expensive, and quite frankly, out of reach. A fragmented listing system, ever-increasing down payments, and a lengthy closing process all play their parts in ensuring that entry to homeownership is more complicated than it seems. The best part? If you want to move, you get to do the dance all over again.

 

Long term commitment

Congratulations – you’ve bought property! Now you have to pay for it. For a long time. “In total, Canadians have $1.49-trillion in outstanding mortgages, equal to 65 percent of all household debt”. This can have profound consequences, with a 2019 RBC consumer survey finding that one-in-four Canadians consider themselves ‘house poor’. Of those Canadians who self-identified as being ‘house poor’, a whopping 92% reported suffering mental stress as a direct consequence.

Furthermore, homeownership ties you to… your home!

Steep mortgage interest rates, an onslaught of fees, and a plethora of middle-men in the transaction process all come together to shackle you to your home for years.

 

Maintenance and upkeep

Finally, even those who find themselves comfortable homeowners, mortgages-in-check, and roots firmly planted, are subject to the day-to-day upkeep of their home. Tax, insurance, utilities, and maintenance costs take a toll on homeowners’ headspace, leisure time, and wallets.

A popular rule-of-thumb – known as the 1% rule – dictates that on average, homeowners should put aside roughly 1% of the value of their home annually for ongoing maintenance and upkeep costs. With home prices in Toronto averaging just shy of $1 million for a detached home at the time of publishing this, that one-per-cent begins looking rather large rather quickly.

 

A flexible approach

Ultimately, the question of whether homeownership should be one’s goal does not have a one-size-fits-all answer. Instead, it depends heavily on one’s lifestyle and circumstances.

It’s worth asking yourself, should I continue renting, or is it time to buy? 

For me, the ideal would be a hybrid solution offering the benefits of ownership, whilst maintaining the freedoms that come from being a renter. Many of my peers feel the same way but none of us ever thought it would be an option. That’s why Key’s patent-pending model resonated with me when I first learned about the company.

Now that I’ve joined the team, I’m really looking forward to sharing Key’s innovative approach with the scores of those like me for whom traditional housing solutions have fallen short.