Fewer Canadians living abroad are choosing to buy property in the United States, with many opting to rent before taking the purchasing plunge, according to recent data from BMO Financial Group. But new information indicates that it may be better to buy.
As U.S. home prices fell over the last few years, rent prices increased, according to the January Zillow Real Estate Market Report. Nearly 70 percent of metropolitan markets saw rents increase between January 2011 and January 2012. Gains were as high as 11 or 12 percent in some areas.
Whether south of the border or just in the next province, skyrocketing rent and plummeting house prices are a sign to buy, and the window may be a small one. As rents increase, more people start taking advantage of competitive mortgage rates, often turning their new home purchases into rental properties of their own. This can simultaneously open up the rental market and reduce the amount of low-cost homes available for purchase, driving rental prices down and home prices up.
In addition to the investment possibilities, buying a home versus renting a home often makes good fiscal sense over the long term. As homeowners pay down their mortgages, home equity improves. Home values also tend to appreciate over time, meaning homeowners will be able to increase their net worth over the course of owning a home. Renters, meanwhile, will not see a return from the money they've spent on their temporary living situation.