To buy, or not to buy?

That is the question, but there is no easy answer that's right for everyone

It's an age-old question that still gets hotly debated, particularly by young adults who are determining where they are going to live: should I rent or should I buy?

It's not an easy question to answer, and there are no clear right or wrong answers.

"One of the big things to contemplate is your time focus, because when you do buy a home, it is a long-term commitment. It does involve a five-year mortgage that's amortized over 25 years," said Tim Gensey, a market analyst with Canada Mortgage and Housing Corp. (CMHC) in Calgary. "On the other hand, renting allows you to be a lot more flexible. You have to really consider where you are in your life and what your needs are.

"For first-time homebuyers, we're typically looking at that 25-to-34-year-old age cohort. They're starting to establish their careers and be more permanent so homebuying starts to make more sense."

Renters are most commonly individuals in the college age range of 18-25 years old. However, in Calgary, this cohort has long been outnumbered by those who have chosen to buy. According to CMHC data, in 2011, 73 per cent of Calgarians were homeowners.

"Calgary actually has a higher percentage of homeowners than Canada has as a whole. One part of that is that Calgary is very geographically large compared to say Vancouver or Toronto," said Gensey. "That means just a lot more room to build single-detached [homes], duplexes and townhomes, which will provide people with more housing options and make them more accessible."

So, what should one consider then when seeking to answer this complicated question? CMHC has a consumer document that outlines the pros and cons of renting and buying, emphasizing the importance of understanding the benefits and responsibilities of each option before making a decision.

CMHC recommends people start by finding out the average home price in the area where they want to live. Next, they should make a list of the pros and cons of owning versus renting to see which option is best for them.

"This is not just a simple math equation. If it was, it would be an easy choice." - Don Campbell, Real Estate Investment Network senior analyst

For example, the advantages of renting include less maintenance and repairs; lower monthly and upfront costs; a shorter commitment, making it easier to move to a new home, neighbourhood or city; protection from any decrease in property values; and the possibility to free up cash to invest or to save up a larger down payment for a home purchase down the road.

On the other hand, the drawbacks include monthly rent payments that might increase year after year; the risk that a lease won't be renewed; the fact that the renter is paying someone else's mortgage rather than building equity of their own; and restrictions around painting or remodeling the home.

Meanwhile, the advantages of buying include the freedom to renovate or modify a home as one wishes; the opportunity to build up equity in a safe, secure investment while paying down a mortgage; the potential for rental income if a home includes a secondary suite; and the stability and peace of mind that come from being in control of a major investment and owning the place where one lives.

However, just like with renting, there are drawbacks to buying, including the risk of financial loss if a home's value decreases before it is sold; responsibility for all ongoing costs, such as mortgage principal and interest, property taxes, insurance, and maintenance; the fact that monthly payments can increase significantly if interest rates go up at renewal time; and the possibility of unexpected, and potentially costly, repairs.

"Some people try to boil it down to a simple math equation," said Don Campbell, senior analyst with the Real Estate Investment Network. "But, as most families know, this is not just a simple math equation. If it was, it would be an easy choice.

"When considering the prospect of buying or renting, one must consider the additional components to the equation: emotions, pride, confidence. If one is considering whether to rent versus buy on a strictly economic basis, 90 per cent of the time the math answer would be to buy. But when real life components are factored in, each family must make that decision based on their reality, not just an online calculator."