Raynor Powell
Sales Representative
m. 647-716-1276
e. citylife@raynorpowell.ca
The Rent vs. Buy Debate in Today’s Market
Raynor Powell • January 27, 2020
With the price of housing today, especially in Toronto, it’s no wonder we hear more and more discussion about the benefits of renting vs. buying. There are many different opinions and perspectives. How do you know which option is right for you?
I don’t believe there is one right answer to this question. There are benefits to both. It comes down to your individual circumstances - finances, lifestyle and long-term goals.
The best way to decide which option is right for you is to look at both sides of the argument and be clear and honest about your goals and your finances.
Let’s look at the debate from both sides, given today’s market:
Renting in Toronto
Pros
- Lower cost of entry
- Lower monthly payments on average
- Fewer maintenance costs
- Freedom to move
- Invest your savings
Cons
- No equity-building
- Lower quality unit
- Less-desirable neighbourhood/location
- Ability to customize
Buying in Toronto
Pros
- Builds equity
- More choice in quality/location
- Can customize to taste
- Have full control of property
Cons
- Higher cost of entry/downpayment
- Maintenance & repair costs
- Carrying costs - insurance, taxes, etc.
- (Potentially) less freedom
Now let’s break some of this down:
Finances
With a minimum 5% down payment required to purchase a property (and 20% the preferred), you would need at least $50,000 to purchase a $1,000,000 condo. With the average rent on a 1-bedroom condo (as of Dec 2019) at $2,300, your entry point is $4,600 (first and last) plus any additional security deposit.
So, depending on your financial situation and savings, renting may be the best option for you, at least for now. With typically lower monthly costs, you could invest those extra savings to build up a future down payment. Or, if home ownership is not a must, you could use those savings to invest in potentially higher-yielding stocks to build equity. However, this is easier said than done
and will depend on your overall goals, financial savvy and comfort level.
Lifestyle
If you tend to move a lot or don’t like to be tied down, then renting offers you more freedom to both move around and do more of what you like. Without the stress or financial responsibilities of home ownership, you can spend more on travel, entertainment and other hobbies.
However, in Toronto’s current market there is limited rental supply, meaning it is harder to find a suitable unit in the location or neighbourhood you desire. And a recent report
indicates that rents in Toronto may increase as much as 7% this year and that demand will exceed supply.
There is some good news here, however, with more purpose-built rental units being developed in the city, such as the Mirvish Village project.
As I said at the beginning, there is no right answer to this debate. It comes down to your individual circumstances and preferences. Where are you at?
Let me know in the comments below and as always, don’t hesitate to give me a call on 647-716-1276
or drop me a line
to help find the right condo for you - whether it’s a purchase or lease!
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