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Owning suits those staying put
Staying put
Staying in one place is the clearest case, because owning is the way to do it. It also protects against being priced out: in some Canadian cities rents went up so quickly that long-time renters could not keep pace, though that has since reversed and it depends on the rental market, since some are controlled.
The double-edged part
It is a double-edged sword, because anyone who later decides to leave can end up stuck. A family of six with four kids all in the same school, unlikely ever to move, is the kind of case where it fits.
Taxes change the math
Taxes change the math too. For someone paying a lot of tax on their investments, the opportunity cost of tying money up in a house shrinks, because real estate tends to be tax preferred. In Canada, gains on a primary residence are tax free.
Why are home sale gains often tax free?
Canada began taxing capital gains in 1972, and gains on a principal residence were exempt from the start. The United States took a different route: a 1997 law lets sellers exclude up to $250,000 of gain, or $500,000 for married couples, replacing an older rule that deferred tax when a seller bought another home.
How does rent control affect who stays?
A 2019 study in the American Economic Review by Rebecca Diamond, Tim McQuade, and Franklin Qian looked at the expansion of rent control in San Francisco in 1994. Tenants who gained coverage were 10 to 20 percent more likely to remain at their address. Landlords reduced the supply of rental housing by about 15 percent, which raised citywide rents by roughly 5 percent.
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