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home buying

Should I rent an apartment or buy a place?

It's a tough time to be a renter. I was rejected – and yes, I'm feeling pretty sorry for myself.

After searching for a bigger apartment on and off for the better part of a year, my partner Don and I finally put in an application for a place we liked. We have excellent credit scores, steady jobs and good references. We were confident the landlords would choose us. Why wouldn't they?

Then we waited. We started picturing our furniture in the large, bright rooms and imagining all the ways we could arrange it. We got excited about living in a new neighbourhood and adopting its vibrant streets, coffee shops and pubs as our own. And after 10 days of anxious anticipation, we got word: "We had an overwhelming number of applicants and an enormous number of strong applications. Your application was seriously considered . . .but we have decided to choose another applicant."

We were crushed.

We had spent hours staring at rental listings on sites like Craigslist, Viewit and Kijiji, and trekking around our city to see dozens of apartments, most of which turned out to be letdowns. The thought of doing this again was exhausting.

Renting wasn't always this challenging. But now, with the exception of a handful of cities, vacancy rates across Canada are at near-record lows and prices are at all-time highs. In Toronto, where I live, the vacancy rate sits at 1.7 per cent and the average two-bedroom apartment rents for $1,183 per month, according to Canada Mortgage and Housing Corp.'s most recent data.

As a recovering Craigslist-addict, I challenge anyone to find a decent apartment in a transit-friendly or at least somewhat-desirable neighbourhood for $1,183. I've seen bachelors listed for more than that – including basements.

I've been searching for a centrally-located, large one or two-bedroom apartment for months and most of the ones I've seen have been either run down and dirty, far smaller than the descriptions in their ads, or ridiculously expensive.

I'm no statistician, but the average price of the listings I've looked at seems to lie between $1,700 and $2,200. It's discouraging to say the least.

Lucky for me and Don, we don't have to move. For three years, we've lived in a one-bedroom apartment in a trendy and walkable neighbourhood and at $1,200 plus hydro and gas, it's extremely affordable. (We recently received notice of our first rent increase, but the 2.5-per-cent Ontario government guideline means it's a measly $30 extra per month.)

Sure, our apartment is on the small side and we wish we didn't have to share the backyard, laundry, some walls and garbage duties with the three other couples who live in our house, but it's nice enough and the cheap rent allows us to save a huge percentage of our incomes for a down payment on the home we hope to buy.

Still, I've been shocked at how much rental prices in my area and others I'd consider living in have risen in the three years since we found our current apartment.

Spending $2,000 on rent seems wasteful – it would seriously hamper our ability to save money and have fun. If we were to spend more than $2,000 a month on housing, we figure we might as well get a mortgage. And financially, we're not ready for that. Home prices in Toronto are too high and we think we're better off saving for a bigger down payment.

Of course not everyone has the luxury of apartment hunting "just to see if we can find anything better," like Don and I have been.

Some people have no choice. If you're one of them, you have my sympathy.

My theory is that the sky-high cost of housing in major cities has forced my generation (I'm a 29-year-old member of Gen Y) to rent for longer than past cohorts. Ten or twenty years ago it was normal to buy a home in your twenties – now we're more indebted, jobs are harder to find, house prices keep rising and we're stuck renting from landlords who can gouge us all they like because there are so few places available. The result? Stiff competition means it's harder than ever to find a good place to rent.

Financial advisers and personal finance writers like my colleague Rob Carrick extol the virtues of renting for Gen Y and waiting longer to buy a home. I agree with them. Ra ra renting! But when is the last time any of them actually had to find a place? It's a lot harder than it sounds.

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