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  • Writer's pictureJose Gustavo Salcedo

Is it Cheaper to Rent or Buy a House with a Monthly Mortgage in Canada? Prices Analyzed in 26 Markets

Updated: Feb 14


Comparing Renting and Buying

To rent or to buy a home in Canada? It's a question many Canadians ponder, especially in today's landscape of shifting rents and mortgage rates. A recent report by a real estate website has delved into this question by analyzing 26 different markets across the country, aiming to determine whether renting or owning is generally more cost-effective in these areas based on specific criteria.


Comparing Renting and Buying

To conduct this analysis, Zoocasa, the real estate agency behind the report, made certain assumptions to ensure consistency. They used average rent prices sourced from Rentals.ca, focusing on listing prices from December. These rates reflect new lease agreements. For rental comparisons, Zoocasa considered the average prices of one- and two-bedroom units.


When it came to mortgages, Zoocasa calculated payments based on a set of assumptions: a 20% down payment and a fixed five-year rate of 4.84% over 25 years. Mortgage amounts were determined using the average home sale benchmark for each city in December 2023, along with the best interest rate available at that time. It's important to note that these mortgage amounts are based on historical data and may not reflect current rates.


Additional expenses like utilities and property taxes were not included in the study's calculations.


Markets with Lower Cost of Living

Among the 26 markets analyzed, Zoocasa found that in Winnipeg, it was cheaper to own a home than to rent. With an average rent of $1,526 per month in December, compared to a mortgage payment of $1,521 based on the average home cost, Winnipeg stood out as an exception.


Other cities like Regina and Quebec City came close, with the gap between renting and mortgage payments being relatively small ($54 and $62, respectively). Regina also boasted the smallest monthly mortgage payment among the markets analyzed.


Edmonton followed as the next most-affordable market for mortgage payments, with an average monthly payment of $1,697, compared to rental rates around $1,444.


However, in major Canadian markets such as Vancouver, Toronto, Surrey, B.C., Burlington, Ont., and Calgary, renting was found to be cheaper than paying a mortgage.


Down Payments Present a Barrier

While Zoocasa's report provides insights into the rent vs. buy dilemma, Carolyn Whitzman, a housing researcher at the University of Ottawa, cautions that the decision isn't straightforward for most Canadians.


Whitzman highlights the challenge of saving up for a down payment, particularly for younger Canadians. Given the current high rates of renting and increasing home prices, the traditional model of saving while renting is becoming untenable for many.


Solving Canada's Housing Crisis

Whitzman emphasizes the need for government intervention to address Canada's housing affordability crisis. Simply increasing housing supply won't suffice; long-term renting must be made more affordable, and home prices need to be tackled as well.


In conclusion, the rent vs. buy debate in Canada is complex and multifaceted. While there are cities where owning may be more affordable in the short term, systemic changes are needed to make homeownership feasible for more Canadians.


Source From: Wealth Professional

Adapted by Jose Gustavo




 

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