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Should I rent or buy?

Andrew Goldman

Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.

Buying a house has long been one of the milestones of adulthood — along with having kids, carrying around 15 extra pounds, and an unaccountable newfound fondness for Elton John ballads. But is buying a home necessarily the best investment?

To be totally frank — no, it is not. Number crunchers like Wealthsimple investor and financial services icon Joe Canavan is a rent-don’t-buy evangelist who did extraordinarily well by pouring all of the money he would have spent on a house straight into the equities market, which historically has far outperformed the housing market. Nobel Prize winning economist Robert Shiller — the Shiller of the famous Case-Shiller Housing index that tracks residential real estate in the US — laid it out not long ago: "It would perhaps be smarter, if wealth accumulation is your goal, to rent and put money in the stock market." Others have obsessively run the numbers and similarly discovered that between closing costs, property taxes, realtor fees, and the interest you’ll pay with a mortgage, home ownership is just not a great investment at all.

But before you give up the dream of something inside a white picket fence that belongs to you, it’s important to ask yourself this question: will you take all that money you’re saving on home ownership expenses and actually invest it? Or might you rather be the type to spend that extra money on handbags or top shelf liquor at trendy bars? Because for many less disciplined souls, houses are really the only reliable savings plan that they can muster. Without that monthly mortgage payment, they might put away nothing at all. And for many, home ownership provides an incalculable joy. But a home purchase should never be viewed at as a pure money making scheme even though those reality TV flipping shows might suggest otherwise.

Like any major investment you should absolutely have a long term view. A house where you can raise your family? Great idea. An apartment you buy in hopes of making a killing by flipping it in a few years? Inadvisable.

Last Updated December 19, 2017

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