Is it Better to RENT or BUY in a Housing Bubble?

[@corinayuen2487]

Jon, thank you for your honest analysis. You're a realtor. When people don't buy, you don't make commission. Most realtors tell you to buy when you have the money or whatever. If you go broke later, or lose your home, it's not their problem. They've made their money. I can't believe you're advising people to not buy in an overheated market, against your own financial interest. I respect you for this. ❤

[@elisakeiper4107]

I've been an investor in Apple, gold, housing market as well because I strongly believe in them, I've always believed in the stock but now I don't know if to re-distribute my portfolio and put some money in Nvidia or Tesla especially now that we are experiencing a market correction

[@britneyfoster-b]

Both stocks have a long term potential, The most important thing is the ratio of the distribution based on the financials of each company. There are many other companies that are also doing well. You could just hire a financial advisor to guide you. A financial advisor really does help me do the distribution even between different asset classes. I don't even understand technical financial terms much. I just know I make really good profit, and I don't have to stress myself a lot

[@elisakeiper4107]

I've got similar problems and I have also considered using an FA but I don't know how to go about it. Please, what are the steps for getting one? Like a really good one

[@britneyfoster-b]

My financial adviser is Gabriel Alberto William , he is not just a broker, he is a financial adviser that gives advice on any financial matters

[@elisakeiper4107]

I just google the name and found his website and I'm really impressed with his credentials; I have set up an appointment with him

[@paulbarton5322]

7:33 Slight math nerd point but a ratio isn't a percentage but they are kind of similar. In this case 12*$2550=$30,600 annual rent. House Price Ratio is $709,999/$30,600=23 times. You could potential do a rental percentage with the inverse by switching the numbers around. $30,600/$709,999=0.043 or 4.3%. To use a percentage for this you could equate the 20 times ratio to 5% (1/20) and the 15 times ratio to 6.7% (1/15). So you where annual rent is less then 5% of the equivalent house price then you should see that as the indicator to rent, you're getting a deal. If the rent is around 7% or more of the equivalent house price that would indicate better to buy. Pick whichever method you're most comfortable with and can do on the fly. I memorized a ratio of 16 or less being a time to buy years ago after the GFC and it's stuck in there now so I don't fight it.

[@Observer168]

Here’s an example breakdown of the mortgage over the span of 25 years: Year 1 • Starting Balance: $500,000.00 • Monthly Payment: $2,639.18 Year 5 (After 5 years of payments) • Remaining Balance: $435,523.08 • New Monthly Payment (if refinanced): $2,298.85 Year 10 (After 10 years of payments) • Remaining Balance: $356,796.98 • New Monthly Payment (if refinanced): $1,883.31 Year 15 (After 15 years of payments) • Remaining Balance: $260,672.69 • New Monthly Payment (if refinanced): $1,375.93 Year 20 (After 20 years of payments) • Remaining Balance: $143,305.24 • New Monthly Payment (if refinanced): $756.42 Year 25 (Loan Paid Off) • Remaining Balance: $0.00 • Monthly Payment: $0.00

[@ferncoutu2099]

Thanks Jon, I live in your area and as an almost home owner / current renter...I appreciate your perspective!

[@ElectronicWasteland-p2x]

Buying a house to live in should be a lifestyle choice, not an investment one. If you can only justify the price you're paying if the house price gains in value it's a poor reason to buy a house, now more than ever.

[@Observer168]

Owning a home is a long term investment in your family

[@mad_basics]

@@Observer168 It has also destroyed so-called "family wealth" when the house prices went down (2008 US) and people had to sell their homes in a hurry or lose them because they went underwater + whatever they had already invested in them and the amount of interest they had paid on them. The same scenario is happening in Canada now so if we don't learn from what happened in the US, we are sure to face the same fate. Most of the money that you are spending when you first get a home is going towards interest, so you don't really have much of an investment to begin with.

[@Observer168]

@@mad_basics how much are those homes worth now? 3 or 4 times as much right? They shouldn’t have sold

[@mad_basics]

@@Observer168 Not much of a choice when you don't have the money to pay for the mortgages and when banks want to reassess your loan or pay a lump sum to them because your house is worth less than the mortgage owed.

[@Observer168]

@@mad_basics guess they missed out on a ton of gains since prices are much higher than 2008 now

[@FJKWood]

Great video on a seldom talked about subject - great job Jon! However, you have overlooked something in your cost to own. If you buy, your closing costs are invested in the house, while if you rent, that money could be invested in a high interest savings investment vehicle (all major banks have all-cash mutual funds or ETFs that pay in the 4% to 4.5% range calculated on daily balance & compounded monthly). With $80k invested in closing costs, that money earns nothing, whereas if you rent, that $80k could be invested at 4% to earn over $3200 per year (thanks to monthly compounding) which is more than a free month's rent. It's quite significant.

[@lettuceforbuns]

Good point. Another thing that isn't covered is percentage of mortgage payment that is interest (and not going towards equity). Still a useful video, thanks!

[@letitallout123]

Hey Jon, been following you since you had like 200 subs. Seriously! We got our first home by listing to you for over 3 years now, by following your news on mortgage rates and the housing market. I think we got a great deal of a house, and you were a big part of it all. Thanks Jon!

[@jonflynn]

Awesome, thanks for letting me know

[@coryw4220]

My mom has no mortgage, but her utilities, taxes and maintenance fees add to what I pay for rent. I have rented since 2014 and have saved my money. It is the greatest feeling to be debt free and being able to pay cash for what ever your want. Having a house you are definitely a debt slave, increasing taxes, home insurance, house repairs etc. Does not make sense.

[@jonathankent6877]

I'm been thinking about this conundrum for a while. As a first time home buyer, no over priced home to swap for another overpriced home, and I've been leaning towards just investing my nest egg long term and renting. This video just adds more reasons to my list. I don't really see many upsides to owning.

[@sergeszk8815]

John , appreciate your thoroughly done analysis!

[@2_Bike_is_Life]

In GVA, I pay $2500 (all utilities incl.) rent in a home valued at $2.8M. The maintenance, city fees, property taxes, utilities, etc would be well above that, in addition to carrying a mortgage per month. I am prepared to move anytime however, with 20% saved for a house down payment, but I'll continue to keep stacking cash. Not only would I be sharing my name on the mortgage documents with my financial institution if I bought, but I'd be on the hook for 20+ years. It's just not worth taking on risk with an asset that is constantly depreciating.

[@MegaJiat]

You have an extremely nice landlord. Consider yourself extremely lucky

[@lynb1022]

Yes sounds like you are lucky. A couple of years ago I watched more than a few harrowing news stories about people being forced to pay upwards of $5K/mo. in the GTA & GVA (for a house/townhouse), and $2500/mo. is now 'normal' for Deadmonton too, without all the other GTA/GVA 'benefits'.

[@argeldelacruz9545]

How much is your property tax? Does that even cover it? 😂

[@ZackHa-l9l]

@Jon Flynn you should take examples from Metro Vancouver area to see what a crazy bubble it is right now. And the strangest thing is, while other areas like GTA is busting, Metro Vancouver is having only minor adjustment from 1-5%.

[@GGTanguera]

For now.😊

[@handle32491]

I recently moved to the GTA and rent. It was a somewhat unique situation where the property was listed for sale and for rent. My realtor was pushing to buy, but the price to rent ratio was 24! Monthly mortgage payments would be close to double the rent, plus realtor fees, taxes, expenses etc. Happy to keep renting in this market.

[@handle32491]

Also the opportunity cost of a big chunk of cash for the down-payment

[@althunder4269]

@@handle32491 $500,000 can earn you $20K a year or even more with some GICs.

[@jupitereye4322]

So what if the payments would be double? The purchase of an asset has appreciation potential, and now is the perfect time to buy. You don't buy when everything has already gone up, you eat the cost for a year or two, yes you would spend 50k more, but the price of the unit will go up by more than 50k, and you will pay off some portion of the principal, and interest rates will come down. Renting now is a short-term gain and makes perfect sense on paper, but if you want to build something now is the time to buy. Or soon at least.

[@richardli5530]

We are receiving 75k in dividend per year. I don' t see the point of buying a house at this point in time. Yes, our net asset is 7 figures, just like most mortgage free homeowners in Canada. We rent by choice. Former GTA homeowners here. I was preparing for a retirement cashflow situation, which was to be 10 - 15 years away. Now, it is going to be as soon as our youngest one finish university, in 5 years time. (This is his last year in high school)

[@WillPC]

I’m renting by choice as well. It’s a much better use of money at this time. If the market changes, I’ll buy again as soon as the numbers make sense.

[@josephlim8941]

I'm currently renting after I sold last year. It's been a year now. I pay $3000 for a Richmond BC detached upstairs 3 bed 1 bath. I've invested my equity. Dividends pay $2500 (taxable) per month add $500 from my paycheque and rent is paid. Majority of my paycheque is to live. After a year, GIC redeemed $30000(taxable). Basically, instant savings. Something I'd never be able to do had I have a mortgage. Compared to mortgage of eg. $1m, with $1m down payment is $5200 plus property tax and city utilities. And lost opportunity cost of making a return on $1m downpayment which I do not have, just a very conservative estimate.

[@WillPC]

Great video. I’ve had to explain this to several of my friends over the past couple years.

[@pramodbhargav4140]

As someone in real-estate yourself, I really respect your objective analysis and the way you put the community's interest over yours. I was running these numbers in my mind prior to watching this video but the video reinforces my thinking ! Also though I know most people might not fully appreciate this, I live in a rental building in the heart of North York with all amenities in a walkable radius and yet pay very less in rent as compared to even the condos in my neighborhood with not having to face any threat of evictions. People have lived their entire life in this building and have spent way less as compared to owning a house. I know there's a downside in living in these rental apartments but luckily some of these are fairly well maintained and we have someone fixing things for us with just a phone call and not having to bear those costs. Plus the areas of the units are big ! But everything boils down to personal choices and what we're willing to trade off !

[@MR007-r3f]

The price to rent ratio is a concrete indicator. Everything here is around 23 points or more which indicates how big of a bubble we have.

[@Observer168]

Here’s an example breakdown of the mortgage over the span of 25 years: Year 1 • Starting Balance: $500,000.00 • Monthly Payment: $2,639.18 Year 5 (After 5 years of payments) • Remaining Balance: $435,523.08 • New Monthly Payment (if refinanced): $2,298.85 Year 10 (After 10 years of payments) • Remaining Balance: $356,796.98 • New Monthly Payment (if refinanced): $1,883.31 Year 15 (After 15 years of payments) • Remaining Balance: $260,672.69 • New Monthly Payment (if refinanced): $1,375.93 Year 20 (After 20 years of payments) • Remaining Balance: $143,305.24 • New Monthly Payment (if refinanced): $756.42 Year 25 (Loan Paid Off) • Remaining Balance: $0.00 • Monthly Payment: $0.00

[@Frodo_T_Bagginz]

One thins a lot of renters find out too late is they have to pay for hot water rental, some charge maintenance fees/condo fees on top of rent etc. Renting now is the way to go as home ownership for people under 35 isn’t very obtainable unless you have parents paying your downpayment which might make the rent to purchase ratio a lot better

[@lynb1022]

As a stuck-renter imo there is no "better" - in a bubble both options suck, because perpetually paying someone else's mortgage, and never being able to save enough for a downpayment to buy your own, is no better than being a debt-slave. Even if property value goes down and it's not purely an equity-builder/occasional ATM (HELOCs), at least with the latter you have a more secure roof over your head that you can't be no-fault evicted out of in 60-90 days. "Not buying" always reinforces the power of the parasitic rentier-class. Either way average people lose.

[@rpmatt2022]

Another job well done with facts and non biased opinion

[@jasoncarpenter2878]

When the whole country is like this it's not a bubble anymore, just reality. It's never coming down. Might stall out a bit. I've waited years for a downturn.

[@mikehogan1827]

The only way the buy scenario makes sense is if the house is going to increase in value, substantially. And as you say, there is more downside price risk than upside risk in buying. And your estimated home insurance cost is low. I find it strange that so few people actually think this through.

[@althunder4269]

Most people don't actually know how to run the numbers.

[@Kala12326]

There is also the question of what will the cost of rent be when you are older?

[@Observer168]

Buying a home is an investment in yourself and your family. I think it’s worth the premium over renting

[@mrbpis]

I agree its better to rent right now if youre a first timer. I bought in 2021 and would like to sell and rent, but I would take around 100K loss so probably not worth doing.

[@KJ-fv1oz]

Hi Jon, Thanks a lot for this analysis. Please consider option buy for cash in next analysis

[@tonykennedy1615]

My son bought a 3 bedroom 2 bath built in 1990 in Grande Prairie, AB. Excellent condition. It was $290,000. I thought it was overpriced. I wouldn't buy an $800,000 townhouse to save my life. :)

[@marcf8792]

What year did he buy ?

[@tonykennedy1615]

@@marcf8792 This year.

[@mr2_mike]

GP is pricey. Oil worker money running the show in those parts.

[@chellappaveerasekaran8546]

Good video, thanks. One small correction - the price to rent ratio is a number, not a % that you indicated.

[@markfox5171]

I did the math with a friend who wants to buy their matrimonial home after separation. To own their house it would be about 4200. To rent a nicer newer townhouse is 3000. I asked her if she things that she will have a good ROI on the 1200 extra per month. Even if you just bought a GIC instead, you would be so far ahead in 10 years it would shock you. Just rent and let the market do whatever. Real estate is no longer a good investment

[@Observer168]

It’s worth the extra few grand and treat it as a investment towards yourself, much better than paying someone else mortgage and renting into retirement

[@tonykennedy1615]

Sell it, buy a cheaper house invest the difference and as has been said, you have a place to live.

[@AnitaSridhar]

@@Observer168exactly.

[@inthezoneeeechief]

@@Observer168 Yes that would be the case but if you are overpaying for a home, or taking on a bigger mortgage (for the overpriced amount) those extra few grands are minused out and then some through interest and if there is a correction in the market. I for one will not be overpaying 100k+ for a house, that decision is for the birds and there seems to be a lot of birds in Canada right now. We all have our current Government to thank for this mess.

[@Observer168]

@@inthezoneeeechief over paying is debatable since the value of currency depreciating is faster than you can make it. That 100k now might not get you very far 10 years from now. You are easily out 250k-300k just by renting for 10 years if you get priced out for that long. Owning a home is long term investment in your family.

[@beuladegraffenreid4210]

*Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires*

[@lattices22]

bought a house in 1990 for 260,000, sold it 20 years later for 250,000. see same thing happening again

[@waheeb_m]

Thanks for the detailed breakout. Much appreciated

[@nastythomashobbs]

I remember when I bought my first Condo in 2004 or 5 in New West it was actually cheaper to buy a 2 bed condo than to rent one. lol. Most condo buildings had no rental rules as well. Good times.

[@tedebayer1]

My nickel's worth of advice is to buy. Long term you'll ALWAYS come out ahead (minus a tornado/war). Even if you're forced to sell in ten years, and lets say values drop, you'll still have some equity in that house. Rent money is gone forever. The only extra cost in ownership is maintenance...but with the high rental costs these days, you'll still be farther ahead down the road, not to mention you can actually do a lot more with personalization than if renting (condos aside). Rent a room to an annoying cousin if need be, but buy if you can.

[@bigvalexander8917]

The amount of bots or shady people shilling in your comments is disturbing. You put out such good quality informative vids, it’s a shame to see that, nothing is organic anymore!

[@kfairhurst1]

Better to rent than buy a freehold since 2014, yet if you have been sitting on the sideline since then you have missed out on hundreds of thousands in gains. I think the market is over priced, but trying to time the market with your home is a fools game.

[@T-Bone.]

Do you need to takeoff what you are paying down the mortgage a month? Increase in rent every year? First five years hurt as a new owner for sure. But with inflation I hardly think things will crater long term. GLTA

[@burtbakerack1110]

I’m in my mid-40s, single, in Edmonton. Couldn’t afford to buy anything I’d actually want to own at this point so I rent a modest place and put away a bit for the future. Can’t imagine I’m alone.

[@belovedmakesmusic]

have you tried bitcoin?

[@lattices22]

@@belovedmakesmusic another ponzi scheme which will implode once all the suckers are in

[@lattices22]

my rent 1600 pays owners taxes,insurance, repairs. its falling apart so time to move soon to someting newer

[@althunder4269]

Don't forget the lost opportunity cost of the down payment. $500,000 can earn $20,000 a year in interest. Or even more with some GICs.

[@Observer168]

That same $500k can get you a $2 million dollar detached home. It only needs to go up 1% because 1% of 2 million is $20,000 to beat that GIC especially if you rent out every single room. 5% appreciation puts you at $100k…. You’re way ahead with real estate if appreciation is 5% or more over 10 years.

[@althunder4269]

@@Observer168 And yet you ignore interest expenses, taxes, maintenance, etc. You'll end up paying 3X the purchase price over 25 years renting from the bank. This is why uneducated people think over priced houses are an "investment". Rent out every single room? Yeah what an experience that would be. lol. And don't forget to declare all that rental income. Also houses are not appreciating at 5%. Boo!

[@tonykennedy1615]

@@Observer168 Except it all falls apart when the bubble bursts.....which it will :)

[@Observer168]

@ it won’t burst, Bank of Canada won’t let it happen. Watch interest rates drop like a rock if things go bad. Detached homes in Vancouver have only come down about 5% after going up 50% in 5 years even with interest rates double and rates have already peaked. Chances of a burst go down further as rates keep coming down.

[@KnowledgeCurse]

​@Observer168 deduct 2.5% buyer agent commission when selling, mortgage penalty, lawyer fees and then let me know how much will be the profit

[@carocarochan]

I am being renovicted in Ottawa 😢 Where can I find a 2-bedroom for $1,500 or less ? I don't want to be homeless. Oh Canada...

[@Observer168]

One of the reasons why it’s best to own if you can

[@lattices22]

@@Observer168 and pay 4200/month mortgage ,,insurance,taxes,repairs

[@markb8360]

This is usually a ploy to get around rent control. But, your lease in Ontario survives a reno. You have first right of refusal on the place when it’s complete, and your landlord cannot set the price, they must apply to the LTB for an over guideline increase. Don’t leave. Tell them your rights as stated above and they will likely back down. If not, consider following through - find an interim place, then take yours back at your current rent until the LTB agrees an increase. Too many bad faith evictions going on these days so the LTB will have seen this a 1000 times and will decide in your favour. Although you will see a modest rent increase when it’s all said and done, staying is likely the best option.

[@carocarochan]

@markb8360 Thank you!

[@mad_basics]

Definitely note what @markb8360 had to say. Home owners can get big fines if they try to renovict you and don't offer you the home after renovation at the same amount that you were originally paying but you have to give them a notice that you intend to exercise the right of first refusal in writing, before moving out. Do not move out until you do that unless you find a secondary place that suits you better and you don't intend to return to the same unit.

[@jupitereye4322]

Jon, please, let's be serious about this topic. These price-to-rent and income-to-rent ratios are hardly the main considering factor. If we go back 5-6 years to 2018 incomes were relatively higher when considering the CPI. Interest rates were lower, price-to-rent was a higher, great time to buy correct? Well, people did buy back then and now they are facing this wreck of an economy and rising CPI. On another point, the price-to-rent ratio could remain the same and yet everything else can change, like inflation eating up the value of income, then the ratio doesn't really matter, it is what you can get for your hard-earned money. But the real parameter to consider is the market itself, are prices lower than in the previous few years, if yes then the probability for positive returns is higher in the upcoming years. Then purchasing makes sense. Is it more probable for the interest rate to go down or up in the coming years? We buy and we consider the FUTURE, which is the domain in which investments live, not in the past. Now is the PERFECT time to buy, no matter what the price-to-rent says, because you can negotiate the purchase better, you can look forward to market recovery and lower interest payments.

[@Elevatevisiondigital]

There are way more costs in owning a home other than the mortgage. Property taxes, repairs, etc.... And if your new to the housing market and you have a good job in canada, how can you pay off a $700,000-$800,000 mortgage in 5 years ?? Maybe if make $300K per year, how many canadians make that much? There are some but definatley not the majority

[@Observer168]

A typical mortgage is 25 years and you can sell it in the future

[@walterpen371]

The Latin meaning of the word MORTGAGE when you break it up to MORT & GAGE. GAGE is a total commitment to a specific thing. As an example think about an engagement before getting married. Then the word MORT means DEAD?????? HMMM???

[@LisaSmith-i9c]

Calgary rental prices are just as expensive as Ontario now, crazy…

[@lipsEdwardPhil]

Thanks for the breakdown! Just a quick off-topic question: My OKX wallet holds some USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How can I transfer them to Binance?

[@eugene-semenov]

John, why don’t you subtract the principal part from the payment and leave only the rate that goes to the bank? I think this is much better comparison, since principal part of it is yours it put towards the property that remains in your possession…

[@johnnylongstocking128]

That was pointed out to Jon in a previous video, and he purposely chose to not include it because it doesn't help his narrative.

[@kylefordinvest]

Thanks for sharing your perspective!

[@Pill-AI]

This was very informative ... thank you

[@Insightfulshorts611]

Great video dude 👍

[@jonflynn]

Awesome thanks

[@christianchellis9057]

I’d say rent when rates are high, then sell when rates are low.

[@maxpayne7419]

My best advice has always been to only buy a house when you are ready to live there for a minimum 10 years. Otherwise it is much better to rent.

[@tommoss7223]

Joe I was with you until you started quoting Price to Rent ratios as percentages. I think you made a error here the ratio in your first example should be 21x or 21:1 not 21%.

[@jonflynn]

Oops, you know what I meant, got a lot going on when recording videos.

[@MortgagesBy_Tom]

Good info & detail in the video 👍

[@DJRS2178]

I rent in kelowna a 5500sqft home for 5500/month... 3.5mil is what they tried to sell it for 2 years ago

[@richardli5530]

Nice.

[@MR007-r3f]

Which is f..king 53 points!!

[@richardli5530]

@MR007-r3f If that house truly costs 3.5 mil then the return is less than 2% on the money for the owner. That is below inflation. Yet, you are the one getting the benefit of living there. Nice.

[@althunder4269]

That's a good deal.

[@Kala12326]

It probably didn’t cost that much when the owner originally bought it

[@erink7837]

Within these five years, more ppl move into alberta. From my observations these two years in Edmonton, the rent is slowly rising up. Just in 2024, my newly hired colleagues are ALL from other provinces. I am guessing the renters' market will be even soon.

[@LisaSmith-i9c]

Calgary rent is atrocious now, some of these Ontario examples are on par with Calgary rent prices, the first one in Niagara is exactly on par with Calgary townhome prices, Bananas….

[@auslander1026]

The first example is a recent new build. Typical scheme - builder (shark) put it for rent at drywall stage (mudroads, constant construction noise). Donkey rent it out, kids starts the school. Site is finished, second layer of asphalt is there. Shark gives donkey notice in 6 months that property is sold (for sale). Donkey need to cover moving costs again and find a new place to live. * You can LTB in that ratio, but donkey will end up paying court fees in the end if he/she decides to sit it over (not moving) until eviction. Long term rentals are usually broken 15+ houses with leaky windows, old appliances and multiple issues that "landlord" does not want to fix. Renting is all peachy and golden for retirees or singles. Real family with children are basically forced in to the bubble.

[@dankirby173]

Can you find stats for average Ontario condo fees-per-square-foot? Our building is 11 years old and I'm concerned about one-time sur charges as buildings age. Thanks.

[@andrewkruse6061]

in Vancouver the average good building is 0.69 per sq foot... so $414 for a 600 sqft place.

[@AG-hl1ni]

Makes a big difference when you put 2O% down.

[@althunder4269]

But lost opportunity cost on the 20%

[@Observer168]

@@althunder4269 wrong… people say that but are still poor. Most people talk about investing and possible gains but don’t actually invest or have very little invested.

[@Observer168]

@@althunder4269 rent for 10 years and you are easily out $250k or more over a span of 10 years

[@kshin625]

Do you see the bank of canada increasing rate should trump impose tariffs and we import inflation?

[@127gentry]

There is a gross assumption in all those calculations: you are 'eligible' for both options (e.g. YOU choose if it is better to buy or rent, not YOUR bank or landlord)! How many people are there, who have enough/stable income to actually get a mortgage, have that 10% - 20% down payment etc and are actually asking this question? It if is just another 'RE market indicator' than fine. But is has nothing to do with the real choice, because that primarily depends on duration of your stay there and your cashflow possibilities. To make financial sense you need to deduct your principal payment, since you are not 'giving that money away' to somebody, you accumulate it. In your scenario it is 1650$ a month that is 'stored' as equity and available upon sale

[@johnnylongstocking128]

That was pointed out to Jon in a pervious video but he chose to not include it because it doesn't help his narrative.

[@127gentry]

​@@johnnylongstocking128 Yes, everybody has his own narrative, intentionally hiding the 'details', such as inflation of financial assets, capital gains on primary residence (lack of thereof), etc, etc. I wrote some details in another thread, but hey! Who cares?

[@johnnylongstocking128]

@@127gentry Jon sure doesn't care. He needs to sell the market is crashing and buying a house is a bad idea narrative.

[@guymtbski]

Landlords in my area are getting desprate for tenants. First time since 2020 I've seen this. Reason being is everyone is leaving Canada.

[@hagbard72]

What if you're not borrowing money to be a house?

[@ivannightly1919]

working as an engineer the best money was in moving I rented for the last 30+ since I didn't want to rent out my house to someone else and tax reasons if you go over seas with out Canadian ties like property the tax is very low. Anyway I'm getting older don't feel like moving and they are selling the place I'm in and I will be evicted. So now Im buying a house it will not be exactly what I wanted but at least it will be mine and no one can toss me out on my ass and Id like to raise my own food and go off grid so we will see how it all works out. thing is over the last 5yrs I've seen investors get heavy into property they force people out or agree to higher rents even though that's supposed to be protected I don't want to be in this position ever again.

[@abbeykalio9037]

how did you get the price/rent ratio? formula isn't giving 21 or 23%

[@jonflynn]

You need to time the monthly rent by 12 months so you have yearly rent. House price divided by yearly rent

[@abbeykalio9037]

@@jonflynnthanks

[@gijo1609]

When you give your house versus rent examples, you mentioned percentage instead of ratio. Did I miss something.

[@T-Bone.]

It was way cheaper to rent for me in1994 $1200 for a house . Bought for 202000 same house to rent $3500+. Same in 1998 2007 and 2018 all times I bought. Now looking for my kids.

[@offgridwanabe]

Sure you pay more to buy but at the end of 5 years you will have some gain in value but renting you get zip.

[@k4t1155]

The point of the Price to Rent Ratio is that it indicates when we're in a housing bubble. When in a bubble (such as now), at the end of 5 years, your home will likely be worth less, since the bubble will likely pop. So you'd actually lose potentially a significant amount from buying, whereas with renting, your downpayment can be put into savings where it can make a bit of money over 5 years as opposed to losing a lot of it by investing in a real estate bubble.

[@offgridwanabe]

@@k4t1155 Well we have seen a 20% pull back and I suppose it could go lower but likely most of it is in place after a correction prices start going back up again and then people will be saying they can't afford to get in again.

[@althunder4269]

"renting you get zip." No, you get a place to live which is worth something. There is no guarantee in 5 years the value will be up, and anyways you been paying mortgage interest for those 5 years renting from the bank.

[@PaulSun-b9m]

a lot of these condos are not rent controlled. what if the government starts printing money again like they did in covids. Everything could inflate super fast

[@o2kala649]

Renting is okin the short term but not as a long term thing and def. not as a general norm. Renting will make us all poorer. Let me explain, buying allows people to build equity. At the end of your mortgage you’ll have an asset. You have taken your income and saved it via mortgage and at the end you have a house and equity. This is not possible with renting. After 25 years of renting you don’t have the equity a home buyer accesses. Renting is cheaper yes. But without a tax advantage renters are wasting their money. Most renters take the rest of their money and spend it - they don’t save and invest it.

[@user-pq3v2yw3v]

Are you building equity if the the price of the asset is going down every year?

[@althunder4269]

"Most renters take the rest of their money and spend it - they don’t save and invest it." This is where most people go wrong. They can't manage their money so a mortgage is forced savings. But for the last 15 years of so, renting has been the better option financially... if a person can invest the difference. Once the housing market turns, then buy when there are bargains to be had.

[@Observer168]

@@althunder42699 times out a 10, people talk about investing but actually put very little into it. It’s owning a home that builds wealth that you can sell at retirement if you like.

[@marcw4931]

Jon, thank you for all your efforts to provide information. If you can find an area that you can afford to buy (yes buying in an affordable area is an option, you aren't trapped in your location) it will always make sense to buy vs rent. The accumulation of equity is always better than not doing so. Bottom line, move to an area where the house prices are more affordable for your situation.

[@TheNewMediaoftheDawn]

It’s not a recession, but it sure feels that way,,,🎉

[@Sandeep14736]

I would take out equity portion from the mortgage payment to get the ratio assuming the prices would stay stable…. So interest + mun tax + hoa + diff in insurance vs rent ….. then interest rate sensitivity is important? How about at 3.75-4% mortgage rate? …. Spend 50k more to develop your basement and rent it out for 1200-1400 bucks a month ? How about now….

[@stephenn88]

It is like comparing leasing a car vs buying 😂

[@WrenchMonkey88]

You can’t advertise other people listings, why?

[@cbarfoot8456]

I've been saying for yrs, it's better to rent over age of 65. Plus 74% of Germans rent. It's not a bad thing. Besides most ppl rent from the banks.....

[@Observer168]

The point of buying a home in your 40’s is so you don’t need to rent it to retirement especially if renting will be much more expensive 20 years from now.

[@johnf321]

Wrong it's always better to own than rent my mortgage payments in early 90,is equivalent to rent payments and comfort of home compered to chip apartment, purchased for 148,000 beautiful house now value only 1,million dollars, good luck renting flashing money.

[@althunder4269]

Houses are wealth traps for the elderly. That's why there are reverse mortgages so they can get some money out to live on.

[@tanweerahmed6861]

Just wondering do you include rent of basements also in your calculations? Thanks

[@shanmarg]

John, being in the industry you should know, housing is not like the stock market with instantaneous gains. Housing is a long haul and inirtial house purchase always has a spurt in costs and can never equal rent outlay. If you are waiting for that equality you can reach your grave and still wait 😊 .You reap the rewards in the long run 5, 10, 15 years. Imagine you pay just a few thousand a month and pave your pay to home ownership which could appreciate to double or three times the prices depending on the economic turns. This can never in renting which equals water down the drain paying someone elses mortgage. I dont know why you are hell bent against home ownership when you are a relator selling houses. Its so contradictory.

[@rodbautista5805]

You forgot property tax.

[@markb8360]

Yes. And insurance is far too low. Tenant ins is like $50 per month and house ins is around $300. But he didn’t consider mortgage principal either, which outweighs both ins and tax

[@rodbautista5805]

@markb8360 Plus, you have to set aside money for maintenance like roof shingles. My friend borrowed money for his clogged pipe under his driveway.

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[@JohnSmith-eg1sj]

There is one gigantic flaw in looking at this ratio. It compares "renting" to "mortgage payments." As long as someone is paying a mortgage they are in reality renting their home. If someone can purchase a home and have it payed off within a 5 year mortgage than it is a no-brainer to purchase it. This ratio only applies if someone can't payoff a home within a few years. Even if the price to rent ratio is higher than 20 it is still better to have a mortgage. Let's do some simple math: if someone pays $2000/month in rent rather than a mortgage for 30 years then they will have payed $720,000 over that time period. It is much better to take out a mortgage and pay it off as quickly as possible than blow cash decade after decade on a rental. Edit: I would like to add that basing a home purchase on the Price to Rent ratio is like trying to time the stock market. The price to rent ratio changes and does that mean that once it changes to an unfavourable degree people should just sell their homes and start renting and vice versa? It is foolish to make massive financial decisions such as this on a numerical ratio that only looks at one instance in time and cannot be extrapolated to the future.

[@AnitaSridhar]

Agree

[@priuss6109]

Lol, child math

[@paulbarton5322]

I don't know anyone who could pay off the house they live in (at the current inflated values) on their current incomes within 5 years. If they could I'd assume they'd want to diversify their savings over a number of assets rather then putting all of that money into 1 that can take months to sell if you want take money out of it to invest in something productive for instance. All of my older neighbors say the same thing, they couldn't afford to live in the area if they hadn't bought 10-15 years ago. The only young people moving in are those who have parents who can gift down payment money or co-sign or both. Regarding your example I would mention that for those who can manage their money and aren't spendthrifts the renter would be saving the initial $72K deposit (10%) + closing costs and likely saving the difference in rent to mortgage/insurance/maintenance (I'd estimate $3K/month on a $720K house for a total) then with the power of compounding they'd have close to $2.5million saved by the end. They're different lifestyle choices and as prices become more and more ridiculous it's much easier to leave the country if you don't own a residence.

[@JohnSmith-eg1sj]

@@paulbarton5322 Your analysis assumes that "investments" always go up. You also indirectly presume that someone will be constantly employed. If a person looses their job then what? They will have to dip into their investments to cover their mortgage. What happens if the market is in a downturn or their stocks aren't performing well? Then they will have to sell off at a loss. Over a 20--30 year period investments don't go up in a straight line. The best thing to do is to actually own your home rather than rent it from the bank. When you own your house even if you loose your job you can probably find someway to make ends meet. If someone doesn't own their home, but instead pays interest to the bank the moment their life takes an unexpected turn they might have to start selling off stocks or other investments. Anyone who has put money into the gigantic gambling machine known as the stock market will know that stock prices fluctuate and sometimes a "sure bet" goes south very quickly. Food and shelter should come before "investing." If you put investing above food and shelter than I have no sympathy for you.

[@paulbarton5322]

@JohnSmith-eg1sj I think we have some crossed wires. If anyone is capable of buying a house with cash they can't find a productive use for then I agree having a paid off house, if you lose your job, is a blessing. However for the vast majority or new buyers keeping the market afloat they, are as you say, are renting the house for 25 year or likely longer at this point until they own it. Renter or mortgage holder they're both as likely to struggle with a job loss unless your organized and have an emergency fund. My $2.5million savings estimate used a historic average of a diversifed 60/40 portfolio so I thinks it's pretty reasonable to say in a downturn the bonds should be going up to balance the portfolio. Just like having a mortgage if the worst happens at a bad time it's going to suck whichever you've gone with. Its not like equities and bonds/gold will aIl be going down and housing will still be fine in that scenario. I just feel like buying housing now seems like buying into a stock after the rally. Yeah it might keep going up but your risk of loss is now much higher as well. Thanks for engaging.

[@sooryas3125]

thank you for the information. Vancouver and Victoria will never come down from sky high prices :(

[@surprisek3918]

Guys, the economy is on the verge of a collapse. Play it safe and rent! This idea that proces will go up? How exactly? Wages have not gone up yet prices for everything else have. There is no harm in waiting, dont bury yourself in debt

[@Marcella88841]

Just move to Edmonton already, jeeze.

[@althunder4269]

What's in Edmonton?

[@thomasmatthews4261]

Hopefully, prices in the large cities continue to increase. Canada needs an exodus out of it's large cities. Capitalism is unemotional. Hopefully the prices force people out to populate this massive country.

[@AnitaSridhar]

Ottawa is very affordable and buying is a great idea

[@michaelt1535]

You left out that you can invest the down-payment money in a high interest saving account at 5.5%, which in turn makes renting even better!

[@KarenEssential]

Where are you getting that? 5.5?

[@michaelt1535]

@KarenEssential Tangerine

[@Observer168]

You automatically get 5% even if the price of a home goes up 1% a year because of leverage. House goes up 2% a year and you’re getting 10% returns since you’re only putting down 20%.

[@Sandeep14736]

Also, investors rent out main floor and basement separately … families with young kids aren’t generally welcome on main floors….. some landlords leave no doubt in your mind about that factor

[@vitaliebruma5886]

There was a report recently home owners net worth is much higher than renters. So owning is better

[@Js-kt7sr]

CBC report😅

[@althunder4269]

on paper net worth is higher.

[@vitaliebruma5886]

@@althunder4269 money is also paper that get worthless with time

[@chriswiens9706]

Terrible argument to go for the renters. If you own, you actually have built some equity and have an asset. After renting somewhere for 5 years, tell me what you have financial wise?

[@andrewkruse6061]

compounded returns for 5 years $$$$ - plus no realtor commission to sell. if you know how to invest that is...

[@althunder4269]

S&P 500 beats housing all the time.

[@priuss6109]

Liquid assets like stocks gold and bitcoin. And peace of mind

[@WillPC]

Huge market investment returns instead of an overpriced asset.

[@althunder4269]

financial wise? A big investment portfolio.

[@knowmenomo]

The only ones that can afford a house sre the HINDUS and thats the game plan GO INDIANADA

[@AliKhan-bu1fp]

Buy but don’t live in it rather rent it out. It’s cheaper to rent and going forward it will be much more cheaper to rent than living in one’s own residence given the spike in property taxes, maintenance & insurance

[@Stephanopjose]

I think its better to buy a house and rent it out.

[@EricAlHarb]

Yeah subsidize someone’s rent, great idea.

[@Sandeep14736]

Buy a house, live on main floor and upstairs and rent the basement…, just hedges you against FJT and Free-land’s stupid policies

[@ElectronicWasteland-p2x]

@@Sandeep14736 Yeah until all the students and TFW's get kicked out of the country and the pool of quality renters completely dries up. Being a landlord isn't a one-way bet, and counting on rental income to afford your house is a foolish way to buy property.

[@Sandeep14736]

@@ElectronicWasteland-p2x well try telling that to investors who are buying properties in Edmonton sitting in Toronto …even without visiting those ….

[@Sandeep14736]

@@ElectronicWasteland-p2x Affordability is a separate discussion…… rental income from basement is a big help with mortgage costs…..

[@dianakonstantopoulos3862]

I like your videos and content....but the saying "And What Not" completely drives me up the wall, therfore not able to finish watching, as I hear this unbearable phrase 3 times already. Maybe next time

[@johnnylongstocking128]

Another Jon Flynn video with meaningless charts and graphs. Any comparison that doesn't include mortgage paydown and asset appreciation is a completely useless one. No wonder Jon doesn't sell any houses and his agents keep leaving.

[@althunder4269]

You again? Same old tired message. His agents keep leaving because they are losers like you are. A good salesman can sell in any market. There is no asset appreciation at this time. Mortgage pay down (equity) doesn't enter into a cash flow calculation. Stop embarrassing yourself.

[@jimbentein6337]

You don’t like him. Could that be because he’s an honest realtor?

[@jimbentein6337]

Always interesting content, Jon. My wife sold her townhouse in Calgary two years ago, near the peak. We rent now in a secure high rise and winter in Mexico and cruise. Good timing. Your analysis is bang on.

[@johnnylongstocking128]

@@jimbentein6337 you mean he says what you want to hear. Jon is as dishonest as they come. He preys on fear to try and scare people into selling their homes for his own persnal gain. He uses fear, manipulation and misinformation in every video. If your wife sold her townhouse in Calgary following Jon's advice you missed the biggest price increases in Calgary's history. Probably the worst example of tryinig to time the market possible. Terrible timing. But hey Jon is honest right.

[@johnnylongstocking128]

@@althunder4269 back licking Jon's boots hey. Prices up year over year and you try and say no appreciation at this time. Stop embarrasing yourself. Mortgage pay down doesn't matter. Stop embarrasing yourself. Sproken like a true lifetime renter. Don't forget to pay your 100% interest rate Dec 1.

[@dman9416]

Always buy in any bubble

[@user-pq3v2yw3v]

Such bad advice! I hope you're being sarcastic!

[@danbutcher8879]

'giving the tenants the upper hand'...wtf? How EXACTLY are tenants getting the upper hand? Demand for rental units (as NO ONE is qualifying for mortgages currently, and rampant immigration continues despite the gum flapping), means skyrocketing rental costs for EVERYONE. This doesn't drop prices. It drives them UP. I'm a renter, living the reality, not wishful thinking. Landlords are SQUEEZING, and no amount of gaslighting is convincing anyone. I've said it a million times. The universe itself will intervene to ensure Canadian real estate remains artificially high FOREVER, no matter what the planet is doing. Period. Sure, there will be dips, here and there. But prices for houses and rentals have gone up 4x in the last decade. So, a drop of 40%-60% is NOT a correction. It's a mild drop, a blip in the inexorable climb ever upwards.

[@stevejunior7343]

I hope all these scammers lose their money including the whole interest based housing mafia....! These scmbags have made housing a commodity !

[@shanmarg]

In view of my remarks below this vedio is disliked. It makes no sense to sane people who wast to build equity. Like the south Indians say 'you never sell a house to buy' keep it.

[@shanmarg]

In view of the below please do us a favour do an analysis and separate vedio of home ownership potential of anyone who is ready to stick around through thick and thin plus enjoy home ownership. Its not for the faint hearted. For your example John Doe bought a house in 2008 for $560k now worth 1.8MM never in his life could he magine saving that money plus his family have enjoyed the lovely house and want to leave it for their5children. Another example same guy bought a rental town house for $590k in 2012 now worth 1.4MM. Who needs to win the lottery with figures like this. If John doe had to stick to your stupid rent vs own math he would be still renting having put $350K down the drain renting and nothing to show for it. So pl we look forward your vedio on long term gains with short term pains and the joy and fulfilled feeling of home ownership. True to your profession of selling houses 😂 ha ha.

[@Munchieez]

You will own nothing and be happy 🥲