In Vancouver some homes are now selling for $100,000 and more over asking price as eager buyers wage bidding wars for the most sought-after properties. Across the border in Seattle some 34 per cent of homes are worth less than the mortgages still owed on them.  And in Ottawa, the government has introduced tightened mortgage rules, a move that is expected to squeeze some first-time home buyers out of the market and push down prices.

It all adds up to a dilemma for people who are trying to make the decision: Rent or buy?

As money coaches, it's a question we hear a lot.  Mortgage rates are at historic lows and that has convinced a lot of people that buying is the best option. But, that aside, the debate over rent versus buying isn't clear cut.

Let's look at both sides.

Five reasons why buying a home may make sense:

1. Interest rates are forecast to rise but they are still at historic lows and it could be a good time to lock those rates in.


2. Real estate is an asset that could appreciate considerably over time. A Vancouver home that was worth $296,000 in 2000 was worth $676,000 in 2010, in a decade that saw a compounded annual return of 7.8%, outpacing the major Toronto stock exchange index.  Across Canada, the national average was 6.82%, according to the latest RE/MAX Housing Barometer Report.


3. Pay yourself instead of a landlord:  Paying your mortgage will increase your equity, in effect an enforced savings plan.


4. You have security of possession, no fears of being forced to move at the whim of a landlord.  


5. Home ownership is an important personal goal for you and your family.

 Five reasons why renting may make more sense for you:

1. You give up flexibility when you buy, particularly in areas where homes are not quick to sell. What happens if your dream job comes up across the country and you can't find a buyer for your house? Or you lose your job, or your income drops -- it could be quicker and easier to seek cheaper rental accommodation than trying to unload a home.


2. When you rent, your costs are fairly predictable - you don't have to worry about paying for hot water tanks that fail or sudden assessments from your strata for unforeseen expenses.


3. It's not just mortgage payments that take a chunk out of your budget; there are ongoing maintenance, strata fees and property taxes. Not to mention, real estate, legal fees and other costs to consider in buying and selling.


4. While you hope your home will increase in value, you can't always count on it and a forced early sale could end up seeing it go for less than you paid for it. Before you buy, consider: Are you planning to stay in your home for the long run? Is your job secure? How important is home ownership to you?


5. You may be able to squeeze into the market with the current low rates but only just.  Interest rate hikes could cost you your home. Almost 20 per cent of Canadians don't know if they'd be able to make their mortgage payments if interest rates go up according a recent poll released by the Bank of Montreal.

There's no right answer; only a right answer for you.

A simple financial plan and a realistic look at your cash flow can help you decide the best strategy for you and your family.

To get a good handle on your money, check out the Smart Money Essentials program.