Crawl Across the Ocean

Tuesday, March 21, 2006

Rent vs. Own

I ran across this article which looks at the question of whether you are better off to own or rent:

"A handy rule of thumb that emerged from our analysis is the 0.6%: if you can rent a home for anything less than 0.6% of its purchase price, you are likely to be further ahead as a renter; if your rent is above that 0.6% level, the balance shifts in favor of owning."


So I looked up the Vancouver real estate listings and saw that someone next door was selling their place which was quite similar to ours (newer, and with a nicer view, but smaller) for roughly $450,000. Allowing for the age difference, we could knock it down to say $400,000.

0.6% of 400,000 is $2,400. Thankfully, our rent is not $2,400 a month.

Of course, if this news article is right and the average house in Vancouver is going to cost $1.2 million by 2010 then maybe buying is the right decision! (via Vancouver Housing Blogger)

2 Comments:

  • Speaking of 2010: I just looked up some tourist info, and it seems that I could easily take in $40K for renting out my new place for the duration of the Olympics. Changes things a bit.

    (My parents, though, want to visit me and stay at my place during that time. I am trying to decide whether my parents' love is worth more or less than $40K.)

    By Anonymous Moebius Stripper, at 10:00 AM  

  • Hey, nobody likes the winter Olympics more than me (well, few, anyway), but I think the tourist info is pulling your leg.

    See the experience in Atlanta (1996) for comparison:

    "A two-bedroom apartment typically is renting for about $165 a night."

    165/night * 15 nights = $2,500 total - not $2,500 per night as tourist info is suggesting.

    Also consider this article on Turino:

    "Currently, on eBay, interested parties can bid on rooms in Turin, starting at $255 a night. There are more options on Craigslist.org.

    For instance, two people who currently rent an apartment in downtown Turin and just "a two-minute walk from the main railway station and close to the venues where events will take place," are looking to rent a room in their apartment for $85 euros a night, about $102.54 U.S."


    I'm guessing that you'll get $2,000 - $3,000 in 2006 Canadian dollars, which has to be offset against half a month of whatever your monthly cost of occupancy is at that point, plus the cost of not being able to live at home during the Olympics, plus the cost/effort/hassle of arranging alternate accomodation for two weeks.

    I'd go with your parents.

    By Blogger Declan, at 3:31 PM  

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