The Wealthy Renter. Alex Avery

is important to Jennifer and Chris. It’s also close to work, which means that, with their busy work schedules, they don’t spend any more time than necessary travelling to and from work. And that means they can spend more time taking their daughter to the local parks and to visit friends and family. Jennifer and Chris have traded the space they could have gotten in a larger house in a more affordable neighbourhood for the opportunity to be close to friends, family, and work. They’ve also decided not to commit a huge multiple of their net worth to a home they think might not meet their needs in a few years if their family expands again.

      The choices each of my friends have made have created dramatically different effects on their lifestyles, their costs, and the way they spend their time.

      The right home for each of us is different. We can all imagine our dream home — our society is obsessed with real estate. It might be a beautiful country home with a veranda stretching all the way around the house, overlooking a gurgling creek. Or it might be a luxurious penthouse condominium downtown with stunning views of the city. Odds are that your dream home is somewhere in the middle.

      These dream homes we have are normal. I’ve got a dream home. I’ve also got a dream car, a dream job, and a dream life!

      This isn’t unusual or abnormal. We’re conditioned to admire and want beautiful places to live. Home ownership is aggressively marketed to make people want to buy homes in the same way car companies run commercials featuring their cars racing through hairpin turns with their engines roaring. Vacation resorts are marketed with shots of attractive people smiling and joking around on the beach or around a candlelit dinner. Cigarettes used to be promoted with ads featuring glamourous actresses and actors having fun and looking sexy — until lawmakers put a stop to that harmful practice.

      This marketing makes understanding housing a difficult thing in today’s world. There really isn’t anyone we can turn to for good advice. The people who we typically ask about housing are generally unqualified or too biased to give us good, impartial advice.

      Whether it’s our parents, our friends, or our co-workers, or whether it’s real estate agents and mortgage brokers, the people we look to for advice on housing generally are not very good advisors. It’s not their fault. Our family and friends think they’re giving good advice. But they’re not likely to know much more about housing than anyone else. As for real estate agents and mortgage brokers, they stand to make money when you buy a house, and since that’s the case, and because the more you spend on housing the more money they’ll make, there’s obviously a real incentive for them to persuade you to buy a big, expensive home. That kind of advice is a recipe for a bad housing decision.

      As if making a decision about a home wasn’t hard enough already, our perspectives on housing get further skewed by our society’s consumer culture and the media’s focus on housing as a status symbol — in other words, the idea of “keeping up with the Joneses.” Media picks up right where the industry marketing efforts stop, profiling condominiums in London, England, selling for over £100 million, the beach house in Miami that a rock star sold, and the semi-detached house down the block that just sold for twice what it sold for two years ago. Housing can inspire envy and excitement. And there’s a lot of money at stake.

      On top of all that, there’s government. What does government have to do with it, you ask? Everything. Government is coach, referee, cheerleader, and fan in the game of housing. In virtually every developed country in the world, governments have stepped into the business of promoting home ownership. They do this by changing the rules of the housing market. In Canada, this is done by offering mortgage insurance through Canada Mortgage and Housing Corporation (CMHC), the principal residence capital gains exemption, allowing first-time buyers to use their RRSP savings tax-free for down payments through the Home Buyers’ Plan, and providing tax rebates on transaction costs.

      Why would governments do this?

      Isn’t it time to take a look at whether the old, conventional views on housing still make sense?

      The reasons are many, and most are honourable. But by changing the rules, governments make it more difficult to understand the housing market.

      Nonetheless, pro–home ownership housing policy is so pervasive and prevalent that it has become a part of the fabric of our society. It’s enmeshed in our belief system.

      For generations, Canadians have dreamt of owning their own homes. Call it the Canadian Dream. Canadians aren’t alone in having a dream. There’s also the Australian Dream, the American Dream, the European Dream, the Russian Dream, the Croatian Dream, the New Zealand Dream.… Around the world, the belief in the value of home ownership is deeply rooted.

      All of these belief systems revolve around the idea that freedom to determine our own destiny is best demonstrated through owning our own homes.

      In fact, the dream of home ownership has become more than just a dream of a safe, secure place to call home. It a business. A big business.

      All of this pro–home ownership propaganda might make you rule out renting, even though it’s often cheaper — much cheaper — and it might just be the right decision for your housing needs. But until you know more about housing, you probably won’t know if you should rent or buy.

      It all sounds pretty scary so far, right? You might be thinking this book is about how evil the world of housing is and why no one should ever buy a house.

      It’s not.

      What this book is, actually, is a celebration of the virtues of renting. Not in a home ownership–bashing kind of way, but rather in a way that explores the appealing advantages renting can offer. It makes the seldom-heard case for renting and helps you figure out if renting makes sense for your life. I’ll debunk some of the myths about renting and discuss strategies for making a renting lifestyle create the kind of financial security and personal wealth so often associated with home ownership.

      The world has changed a lot in the past twenty-five years, and even more in the past fifty years. Isn’t it time to take a look at whether the old, conventional views on housing still make sense?

      With this book, I hope I can help you better understand housing and help you make better housing decisions that will improve the way you live your life. You might decide to rent or you might decide to buy. But after reading this book, you’ll better understand how renting can shape your life and whether renting is right for you.

      CHAPTER 2

      The Cult of “Why Rent When You Can Buy?”

      You may not know it, but there are cult members among us. Not just one or two, but many. It’s not your typical cult. There are no meetings, no official cult leaders, no rituals or initiation. Not even a clubhouse. At the same time, we can see signs of the cult all around us, if we only know where to look for them.

      Its members are committed. They are believers. When they get the chance, they will try to get you to join the cult and adopt their beliefs. In fact, you might already be in the cult and you don’t even know it!

      You’ve heard the pitch. You might have even made the pitch.

      The first time many people hear the pitch is when they are moving away from home, when they’re most impressionable and vulnerable. It goes something like this:

      “So, I heard you’re thinking about getting your own place?”

      “Yeah. I think it’s time. I just want a place of my own, where I can come and go as I please without having to worry about waking up anyone else.”

      “Well, that sounds like a great idea. Have you thought about where you want to look?”

      “A friend of mine is renting an apartment downtown. It’s nice. I’ll probably look for something down there.”

      “You say your friend is renting? That’s too bad.”

      “What do you mean?”

      “You know that renting is a waste of money, right? You’d just be throwing away your money.”