There are compelling reasons for Metro Vancouver residents to buy into the region’s real estate market.
Prices keep going up, meaning housing will be a more expensive investment in the future, and that also implies that potential buyers are letting a good investment opportunity pass them by unless they jump in now.
But some say there is also real value in renting and investing the difference between that and buying, as reporter Kirk Williams explains in the fourth instalment of the CBC News real estate series, "Priced Out."
Rafael Reis and his sister Cynthia Reis admire their parents for buying a home and paying it off soon after arriving in Canada from Portugal.
"When my parents go to Portugal, my dad always has a set of keys in his pocket because he's so proud of being a homeowner," Rafael said.
Cynthia has bought a condo in New Westminster.
"I like owning," she said. "At the end of the day, I am working towards something that gives me structure."
But Rafael runs a financial consulting business and for him, the numbers don't add up, and that's why he's renting his accommodation in downtown Vancouver.
CBC News asked him to put his theory to work and determine if someone who is making $61,000 a year would be better off renting or buying.
Reis used as an example a loft in a multi-unit building in Vancouver’s Gastown neighbourhood.
The 700-square-foot suite rents out for $1,200 a month, while a similar suite in the building is listed for sale for $479,000.
To make it a fair comparison, it has to be assumed that the renter or buyer has $95,800 cash on hand — either to invest or to use as 20-per-cent down payment on a mortgage amortized over 25 years.
In the first year, the renter comes out ahead, as rent is $1,253 a month versus $2,687.10 a month for the mortgage, taxes and condo fees.
That yields a saving of $1,434.10, which it’s assumed the renter would invest with a return of five per cent a year.
It's assumed the value of the condo will go up over time, as will rents.
At the end of 25 years, the renter has total investments worth $1,244,380.
The homeowner has higher net worth, at $1,622,064, but Reis said that all those mortgage payments have come at a price.
"That takes up 74 per cent of their take-home pay, and what kind of a life does that give them? A very restricted one, so [with] any unforeseen expenditures, there is a very high probability that they are going to increase their consumer debt," Reis said.
That means the buyer would likely have little money for retirement savings, operating a vehicle or travel.
Reis recommended the buyer wait until they make at least $10,000 more a year before purchasing something in the $450,000-to-$500,000 price range.