Rent Vs. Buy Toronto Edition

| Buying

Whether you’re finally striking out on your own, or ready to renew the lease on your apartment, you might be pondering whether it makes more sense to rent or buy.

Here we look at the rent vs. buy conundrum in Toronto to help you decide what housing option feels right for you.

Pros & Cons of Renting in Toronto

Renting is more of a carefree life with zero financial responsibility for the home or property upkeep. That said, there are both pros and cons of renting/lease renewal.

Pros:

  • You just need the first and last month’s rent as opposed to a massive down payment
  • If renewing, you can just carry on without the need to provide last month’s rent again
  • You have almost zero concerns about home maintenance
  • If something breaks, your landlord pays to fix it
  • Condo rentals include maintenance fees in the rent, simplifying the bill paying process
  • You have more flexibility to move if you’re unhappy in your home or your life situation changes
  • Depending on where and what type of home you rent, you might find renting a more affordable housing solution

Cons:

  • You often have no control over how you decorate your apartment
  • You live at the mercy of your landlord’s whims including “renovictions” or the home being sold
  • You might be tied to rules and regulations under your lease agreement that don’t suit your lifestyle
  • You’re paying a large sum of money each year with “nothing” to show for it (we should point out you have a home, so that’s something!)
  • You’re paying someone else’s mortgage, so your landlord reaps all the financial gains
  • You could face annual rent increases

Looking for more home-buying advice? Keep reading these posts next:

Pros & Cons of Buying in Toronto

Buying a home is a major investment that generally provides an increasing return year over year. So, what are the pros and cons of buying in Toronto?

Pros:

  • It’s generally a solid investment that continues to build equity as you pay down your mortgage
  • You’re queen (or king) of your domain allowing you to decorate as you wish (some condos might have bylaws limiting certain renovations)
  • Depending on what and where you decide to buy, you might find a more affordable, or at least comparable housing solution budget wise
  • It feels good owning your own home compared to paying your landlord’s mortgage!

Cons:

  • You’re susceptible to fluctuating interest rates when it’s time to renew your mortgage
  • It can be hard to qualify for a mortgage
  • You need substantial savings for a down payment
  • Your monthly expenses will increase compared to renting
  • You’re responsible for all repairs and replacements both physically and financially
  • You could become a slave to your home as one of Toronto’s many “house poor”
  • There are way more upfront costs when buying compared to renting
  • There is a slight risk housing prices could drop, and you could lose home equity

How do interest rates affect home prices in Canada? Read this blog to find out.

When Does it Make More Sense to Rent?

Despite home ownership being the ultimate dream, there are situations where renting might make more sense, including:

  • You love your current lifestyle and aren’t willing to sacrifice anything for home ownership!
  • You’re a retired homeowner who can easily live off the profits of your home sale in a desirable, maintenance-free rental community
  • You’re downsizing but high interest rates or housing prices will reduce your wealth
  • You don’t have a down payment
  • You’re a new Canadian/just starting out and need to rent while establishing your credit history
  • Your plans for the next few years are up in the air so you can’t make long-term commitments
  • You simply can’t afford to buy a home right now
  • You need to pay down your debt and improve your credit rating
  • You’re moving in with a new partner and want to “see how things go” before buying a home together

When Does It Make More Sense to Buy?

You can feel safer buying when:

  • You have saved a respectable down payment
  • You have established a good credit rating
  • You have zero/minimal debt
  • You’re secure in your relationship and ready to buy together
  • You’ve done the math and can afford it
  • You pre-qualify for a mortgage
  • You have a solid plan to live in Toronto
  • You’re psyched about the prospect of maintaining and decorating a home
  • You have an established career and are earning a comfortable income

Still on the fence? Here are some more posts you might find interesting:

The Bottom Line

Your decisions are strongly influenced by the housing market and economy. It can help to discuss your housing needs with a real estate team who understands the Toronto market. We can help you decide what side of the rent versus buy debate you ultimately land on.

The Christine Cowern Team is here for all your Toronto real estate needs! If you’re thinking of buying a home, get in touch with us by calling 416.291.7372 or emailing hello@christinecowern.com today.