Buy or Rent

My roommate/landlord became a real estate agent last year. As much as that job sounds like fun, I don't think I would be able to tell people the housing market is great to get into right now. My brother has been telling me for years that it's not a great idea to purchase a house right now. It just doesn't make sense when rent is so cheap. This article has a great explanation of the rent vs buy equation.

The rental ratio is computed by dividing the average price of a house by the annual cost of renting. When the figure falls below 17, the monthly cost of a mortgage, taxes and maintenance is less expensive than that of signing a lease.

Read more: http://curiouscapitalist.blogs.time.com/2011/05/31/why-are-house-prices-are-double-dipping/#ixzz1NxLIxLjE

I pay $480/month which is $5760/year. If I bought a house right now, which would probably have to be a town house/shitty starter home/condo/trailer/, which i wouldn't reallllly want to be in for a long time, I would be paying about $2000/month which is $24000 a year. Most of that is not going towards your premium on a $350,000 house. Depending on the home, add in utility bills, maintenance, strata fees and I am left with almost nothing and no savings and no fun. Goodbye snowmobile, motorbikes, mountain bikes, etc... hello yard work, spaghetti every night and spam. ok...maybe not that bad.
There is a lot of pressure out there for us 20 somethings to purchase a house, but look at the signs, do yourself a favour and wait. Unless you can put down 30% and pay your mortgage off somewhat quickly, there is no point. Invest in something worthwhile. You have a better chance in stocks right now than gaining an advantage in life from investing in a house.

From 11 Spring