I ran into a friend at Wal-mart last Friday. He said that he and his girlfriend are going to start living together. They are getting a townhouse in Clayton Park West. That's good for him. He's a good guy and his girlfriend is nice. So it looks like a positive change.
He also said that they will be renting the house. I was glad and relieved to hear that. He said he checked the local market and comparable places are currently listing for around $250 thousand. Then he checked an online mortgage calculator and he determined he was saving several hundred dollars a month by renting over what a 30 year mortgage would have cost him. In addition he saves paying the property tax and his insurance will be much lower as he only has to insure his possessions and the landlord has to absorb the insurance on the house itself. Plus if he bought he would be out of pocket $25 thousand down payment plus several thousand closing costs.
The fact that mortgage payments are higher than market rent demonstrates that houses in that neighbourhood are overpriced. In fact all of Halifax is overpriced so markdowns will be coming soon to a street near you. The arrived recession; plus the end of 40 year, no money down, cashback mortgages pretty much ensures that the long overdue price correction will now happen.
It would be crazy for him to buy a house right now. Prices could easily fall 30% in the next 30 months. Let the landlord face that risk and eat the loss if it occurs.
So he and his girlfriend are off to a good start. They get all of the benefits of being in a house; with none of the downside costs and risk. They have avoided making a potentially disastrous financial mistake.