Weighing the Benefits of Buying versus Renting

Deciding whether to rent or buy typically comes down to personal and financial circumstances. If you don’t have a down payment, are not sure where you’ll be in the next three to five years, interest rates are high, there’s no inventory of homes you like for sale or you simply can’t afford something you want to live in, then waiting to buy may be the best option for you. However, if you’re in a position to purchase but on the fence, you should consider both the pros and cons of renting before committing to the process.

The upside of renting is there are fewer maintenance hassles and associated expenses; often a single predictable payment each month (no need to factor property taxes into your budget), with, perhaps, the exception of utilities; and you can easily move every year at the end of the lease term with proper notice (60 days before expiration). It’s also cheaper to relocate when you rent as you’re not on the hook for land transfer taxes, real estate commissions or legal fees.

On the flip side, you’re paying down someone else’s mortgage and not building equity when you rent. What’s more, if property prices go up, your landlord reaps the rewards, not you. Over the long-term, housing prices generally double every 10 years, though this may occur even more quickly in some urban markets.

In Toronto, for instance, the average selling price for a single-family home (detached, semi-detached and freehold townhouse) was $456,147 in March 2011, according to the Toronto Regional Real Estate Board (TRREB). Last month, it was $1,106,307 — more than two times what it was a decade ago.

Condominium apartment values have experienced similar growth over the same time period. In March 2021, the median price was $616,000, compared to 10 years prior when it was $295,000.

While these figures illustrate it’s best not to delay if you can afford to get into the Toronto real estate market, it doesn’t mean you should buy right now as there may be legitimate reasons to wait. However, if you’re holding off in the hopes prices will come down, especially at a time when interest rates are so low, it will very likely only cost you more down the road.