Short-Term Comfort vs. Long-Term Reward

We work with a very large group of buyers who are purchasing their first home in their late 20's, early 30's, or even later. With increases in prices of housing everywhere, this is unfortunate but not surprising.

As we've looked at why this is, a common pattern we've come across is that often times people severely delay their purchase process by renting something which EXCEEDS THEIR CURRENT NEEDS.

What we mean by this is that people will rent a place that is "comfortable" for them but comes with a higher rental price, rather than living in a rental that provides for their basic needs without a bunch of extra dazzle.

If this is you, we recommend finding the least expensive rental option that most satisfies your basic needs. By doing this, you will discover two main benefits:

1. You will be able to put more money away each month for your purchase. This not only speeds up the process, it also gets you into the market sooner and probably at a lower price.

2. There's more motivation for you to move to your own home if you are currently living in something that checks fewer of your "Perfect Home" boxes. People are generally more eager to move when there are motivating factors. The desire to move to something more comfortable, better located, bigger, or whatever else we're looking for, often creates more urgency in many of us. People who are renting something the suits all their needs and their preferences generally aren't motivated to moves as quickly.


We recently spoke with a family of three who aspire to purchase a home. They currently rent the upper two floors of a 3-level home for around $2400/month and have been doing so for a few years now. This family could probably easily find what they need for around $1800/month in a townhome, or (to be extreme) a basement suite for $1300 in the same neighbourhood. This would allow them to save much more.

If they put aside that extra $7200 per year (if they rented a tonwhome) along with an additional $200 or so per month in budgeting, over three years they would have their $30,000 down payment!

The basement suite option would put them closer to $50,000 in three years! That's if they simply put the money into a savings account each month and didn't use any other short-term investment options over those three years.

My question is: would this family really suffer by renting something just a little smaller or further out of town with the same number of bedrooms while preparing to buy their own home? Probably not.

Short term discomfort is better for long-term gain.

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