Renting vs. Buying: Weighing Long-Term Financial Choices

The debate over renting versus buying a home continues to spark discussions among financial experts and potential homeowners, with no definitive conclusion in sight. As housing prices rise and homeownership becomes increasingly elusive for many, particularly young Canadians, the question remains: is a lifetime of renting a viable financial strategy?

Understanding the Dynamics of Renting

According to Alex Avery, author of *The Wealthy Renter*, renting can provide significant advantages. He argues that despite soaring rental prices since his book’s release in 2016, renting still offers a more affordable option with less risk compared to purchasing a home. “People compare mortgage payments to monthly rental rates, but mortgage payments don’t begin to cover the full costs of home ownership,” he stated.

These additional costs include notary fees, realtor commissions, property taxes, and ongoing expenses such as mortgage interest, insurance, and maintenance. Avery emphasizes that the traditional notion of homeownership as a straightforward method of saving fails to account for these financial burdens.

Avery’s perspective was shaped during what he describes as a “speculative bubble” in the housing market, particularly in cities like Toronto and Vancouver. He observed a trend where young Canadians felt pressured to invest in properties despite the unfavorable math behind such decisions.

The Cost of Renting: An Alternative View

On the other hand, Vancouver realtor Owen Bigland presents a starkly contrasting perspective. His calculations indicate that the average monthly rent for a one-bedroom apartment in Vancouver has soared to approximately $2,800. By the time a lifetime renter reaches 65, they could spend over $1.3 million on rent, not accounting for potential rent increases. “And you’ll have zero to show for it. Where’s the savings here?” he questioned.

Bigland argues that many Canadians may not adequately save or invest any perceived savings from renting, a sentiment echoed by Sebastien Betermier, an associate professor at McGill University. He notes that a substantial portion of household expenditures goes toward rent, leading to significant financial risks for both renters and homeowners. Recent surveys, including one conducted by the Healthcare of Ontario Pension Plan and Abacus Data, reveal that over a third of Canadians have less than $5,000 in savings. Meanwhile, homeowners are increasingly depending on home equity to fund their retirement.

Bigland advocates for homeownership, suggesting that it is essential for building wealth over time. “The only real cash shelter we get in Canada is the principal residence exemption,” he explained. He believes that consistently paying down a mortgage can lead to significant financial advantages as property values appreciate.

Despite these arguments, Avery remains skeptical about the assumption that housing is a safer investment compared to other avenues. “There are many places where house prices have gone down,” he warned. Instead, he encourages individuals to consider alternative investment strategies, such as contributing to registered retirement savings plans (RRSPs) or exploring index exchange-traded funds (ETFs).

While Avery acknowledges that homeownership can be beneficial, he cautions against viewing it solely as an investment. “That’s conflating two different objectives,” he stated, emphasizing that the primary goal is to secure housing, while wealth generation should be approached through varied investment channels.

In contrast, Bigland believes that buyers should strive to achieve both goals. He suggests that first-time buyers consider older properties near public transit, as these locations often present valuable long-term investment opportunities. “You’ll probably have a developer [buy] in 10 or 15 years, and that might be your exit strategy,” he noted.

As the debate between renting and buying continues, both sides present compelling arguments. Individuals must weigh their personal circumstances, financial goals, and market conditions when making this significant decision. Ultimately, the choice between renting for life or pursuing homeownership remains deeply personal and multifaceted.

This report was first published on August 19, 2025.