Should you Buy or Rent?

While there are pluses to either position; buying a home has resulted in wealth generating returns over the years. Yes there are cycles in the market and sometimes the advance of prices slows.  But over time, home prices have had huge gains.

Here is a comparison of actual August sales in the Parksville - Qualicum Beach area and what the same house sold for previously.

Many homes show gains of over 10% per year on the original purchase price.

Area	Sold 2018	previous sale	year	% increase	%/Annum
	(000)	(000)
Parksville	$444	$290	2015	53%	18%
Deep Bay	599	247	2007	143%	13%
French Creek	439	356	2016	23%	12%
Parksville	530	130	1991	308%	11%
Eaglecrest	594	358	2012	66%	11%
Qualicum Beach	510	327	2012	56%	9%
Qualicum Beach	550	370	2011	49%	7%
Sandpiper	500	325	2008	54%	5%
Corfield Glades	615	401	2008	53%	5%
Parksville	400	245	2005	63%	5%

That is nice to know that home prices have gone up.

Everyone knows that.

But what does that work out to as a return on the amount invested?

Let’s assume a buyer put 20% down and took a mortgage for the balance.

Using an example from the middle of the chart:

Purchase price          $358,000   in 2012

20% down                    $71,600 

Mortgage                    $286,400

Selling Price               $594,000  in 2018

Net increase               $236,000

The return on the $71,600 invested is  330%!!!

Which is 55% per year over the 6 year period.

That is an AMAZING return.

Ralph Kirby’s comment is “I am not aware of any investment that can beat the return of home ownership. There is no question that Buying is better than renting, financially.”