By Cathy Miyagi
The standard argument holds: Whereas shopping for a house can construct long-term fairness and stability, renting can present flexibility and fewer upfront prices. However as residence possession turns into a far-fetched dream for a lot of younger Canadians, can renting for all times be a viable choice?
Alex Avery, creator of The Rich Renter, thinks so.
“It’s completely different for each individual, and every particular person’s wants change over time, however I’m nonetheless a agency believer that renting is a good choice,” he mentioned.
Regardless of rental costs having soared since publishing his guide in 2016, Avery says renting continues to be cheaper and carries much less threat than shopping for.
“Individuals examine mortgage funds to month-to-month rental charges, however mortgage funds don’t start to cowl the total prices of residence possession,” he mentioned. These prices can embody notary charges, realtor commissions and region-specific taxes when buying the property in addition to ongoing prices akin to mortgage curiosity, property taxes, insurance coverage, and numerous upkeep and restore bills.
Avery was impressed to write down his guide throughout what he calls was a “speculative bubble” within the housing market on the time that he mentioned created a notion of residence possession as an “straightforward out for financial savings,” particularly in city centres like Toronto and Vancouver.
“[Young Canadians] have been being pressured to purchase a rental when the maths by no means made any sense,” he mentioned.
Vancouver realtor Owen Bigland’s calculations paint a special image nonetheless. With common month-to-month hire for a one-bedroom unit in his metropolis now hovering round $2,800, a lifetime renter might spend no less than $1.3 million by the point they’re 65 (not accounting for hire will increase or inflation), based on Bigland.
“And also you’ll have zero to indicate for it. The place’s the financial savings right here?” he questioned.
Even when month-to-month hire was cheaper than a mortgage cost, Bigland mentioned many Canadians will doubtless spend any financial savings relatively than make investments it and develop their wealth.
“Lots of Canadians don’t have the self-discipline to avoid wasting as a lot as they need to,” mentioned Sebastien Betermier, an affiliate professor at McGill College who research Canadian family spending.
With rents making up no less than a 3rd of family expenditures, and houses making up 70% to 80 % of householders’ wealth portfolios, Betermier says each renters and owners alike are exposing themselves to massive dangers.
Latest information from a survey by the Healthcare of Ontario Pension Plan and Abacus Information suggests the identical. Greater than a 3rd of Canadians report having lower than $5,000 in financial savings, and those that personal a house are more and more counting on their residence fairness to fund their retirement.
Bigland preaches residence possession for this very motive. He encourages chipping away at your mortgage and constructing fairness so you may profit from any value appreciation sooner or later.
“The one actual money shelter we get in Canada is the principal residence exemption,” he mentioned.
Put one other method, “you’re primarily renting [the home] from your self,” mentioned Betermier. He provides that your private home can act as collateral ought to it is advisable to borrow in opposition to it sometime. Most mortgages from massive banks sometimes embody a built-in residence fairness line of credit score at a beneficial charge, based on Bigland. “It’s accessible cash with out promoting your private home.”
Avery, nonetheless, doesn’t purchase this argument.
“It presupposes that housing is a safer funding than different investments,” he mentioned. “There are lots of locations the place home costs have gone down, the place employment prospects change over time.”
As an alternative choice to counting on your private home as an funding, Avery suggests placing your cash into an RRSP, TFSA, and the FHSA which doesn’t essentially must go towards a house buy. “You possibly can find out about index ETFs too. There’s a variety of other ways to speculate your cash,” he mentioned.
Avery, who’s gone the house possession route himself, doesn’t assume shopping for is a nasty determination, however warns in opposition to it when you’re banking on it as an funding instrument.
“That’s conflating two completely different aims,” he mentioned. “One is to accommodate your self, and the opposite is to generate wealth.”
However Bigland, who’s additionally written a guide on actual property and inventory investing, says you ought to be doing each. He agrees renting could make sense in some conditions like when you’re anticipating a change in jobs, however you must think about shopping for when you can decide to a location for eight to 10 years.
He suggests first-time consumers begin with older buildings near public transit typically sitting on useful items of land. “You’ll in all probability have a developer [buy] in 10 or 15 years, and that could be your exit technique,” he mentioned. “Even when you’re a blue-collar man, if you may get $40,000 down, perhaps even forgo the automotive for a short time, you are able to do it.”
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Final modified: August 19, 2025
