10.13.2022 | Buyer Resources

Crunching the Numbers and Answering the Question: Should You Rent or Buy in Canada?

Share This Post:

Which would you choose: taking $2,000 every month, throwing it away and never seeing it again, or putting that same amount of money in a safe place where it will actually go up in value over time? That’s the rent vs. buy argument boiled down.

For as long as I can remember, it’s always been a no-brainer that the better investment is to buy real estate rather than rent. But are there some cases when you should rent instead? 

In this post, I’m talking about buying vs. renting and doing the calculations so you don’t have to! 

Before we dive into it, are you subscribed to my YouTube channel? Subscribe here and be the first to know when I release a new video!

When Is Renting Better Than Buying? 

This might be a tad click-baitey, but there actually is one specific instance where I would recommend renting rather than buying. The biggest factor that you should consider when deciding? How long do you plan to stay in the property? 

Strictly from a financial perspective. The longer you stay in your home, the more cost-effective it will be to buy, and the better chance you will have of getting a great return on your investment if you plan to sell. 

Let’s Break it Down 

Before we crunch the numbers, there are a few key things you need to know:

  1. Buying a home costs money over and above what you spend on your down payment and mortgage. There are a bunch of fees you have to come up with ahead of time like legal fees, closing costs, land transfer taxes, moving costs, and more. 
  2. The average home price growth in Canada since 1970 has been about 4-7% per year.

Renting Vs. Buying Calculator

Let’s pretend you’re buying an entry-level condo in Fort York. (Check out all the reasons I looooove Fort York right here.) 

The price of the condo is $600,000

Typical closing costs for a property like this might be 5% of the total purchase price–$31,000

Now, if we assume that the value of the condo goes up 4% year-over-year. We can find out at which point, we will start to see a cost-benefit. 

Is it in one year? Nope. In one year, the value of the condo will only be $624,000. It won’t have gone up enough to outweigh the cost of buying. 

What about 10 years? Now we’re talking! In 10 years, the value of the condo will have gone up to about $880,000, which is way more than you spent on closing costs, and therefore, better use of your money. 

Are there “cheap” homes in Toronto? You bet! Read our blog here to learn more about finding a cheap Toronto home!

Is there a Sweet Spot for Recouping Closing Costs?

If the idea of living in an entry-level condo for 10 years doesn’t fit into your life plan, that’s ok. This was just an extreme example of how appreciation works compared to the costs associated with buying.

If you’re thinking about renting that same entry-level Fort York condo, you’re looking at a lease of about $2,500 per month or about $30,000 per year. Now, remember that 4% annual appreciation? If we look at the leasing cost vs. appreciation, we can do some magic math and come up with a relatively sweet spot for how long you need to stay in that condo for it to be a fruitful financial investment. 

That number is about 3.17 years. Doesn’t sound so bad now, right?

Is now a good time to buy a home in Toronto? Here are a few blogs to answer your questions:

Other Reasons You May Want to Buy Vs. Rent

So we’ve just established that buying is better if you plan to stay in your home for a longer period of time, but what are some other reasons why you should buy vs. rent or vice versa? 


  • You have more security as a buyer and don’t need to worry about getting evicted or the costs associated if you have to move every year. 
  • Homeowners have the potential for rental income. Maybe you have a second property you can rent out, or you rent a room in your home. Maybe you have a secondary suite or laneway home? 
  • When interest rates are low, you can borrow against the equity in your home to fund renovations or purchase another property. As a renter, you can’t do this because the money you are paying in rent is going to pay down your landlord’s mortgage. 


  • You need flexibility. You know you won’t stay long in an area and you want the flexibility to move if your situation changes. 
  • You don’t need to come up with a large down payment. 
  • There is less maintenance. Since you don’t own the home, any repairs or issues are the landlord’s responsibility. 

Are You Ready to Kiss the Rental Market Goodbye? 

So what do you think? Are you ready to buy a home or do you want to keep renting? Saving up a down payment is hard, but the benefits of owning real estate really outweigh the costs if you’re ready. 

Toronto is a hard market to get into, but working with a financial advisor and real estate expert can make all the difference in helping you go from tenant to homeowner. 

Whether you’re ready to make a move or you just have some questions about the Toronto real estate market, I’m always happy to help! Call or text me at 647-973-8392 today! 

Interested in learning more?

Reach out by filling out the form below

  • This field is for validation purposes and should be left unchanged.