Is it better to buy or rent?

Buying a property is the largest purchase most Canadians make in their lifetime. For many, it is also their biggest investment. But strictly financially speaking, are you better off putting down a large down payment and facing higher monthly costs as an owner, or staying a rental and investing your savings elsewhere? Who has more money in their pocket at the end of the day?

Don’t miss our simulator below. Read on to understand how it is used.

To answer this question, we analyzed over two decades of historical data on real estate prices, rents, inflation and interest rates across 22 Canadian metropolitan areas, alongside long-term stock market returns.

With this data we built an interactive simulator. Every time it runs, it calculates the monthly expenses and financial profit for three different ways: an owner with a fixed rate mortgage, one with a variable rate mortgage and a tenant. Whenever the renter’s monthly expenses are lower than the homeowner’s, those savings are automatically invested in stocks and bonds to compound over time.

The simulator projects these financial paths over a 25-year period over 1,000 unique scenarios. Some scenarios feature high rent and low interest rates; others simulate average inflation paired with weak stock market returns.

The calculations factor in mortgage payments, insurance, property taxes, maintenance fees, condo fees, rent and any sales fees. Each result represents a possible future based on historical patterns and the options you choose.

Of course, no one can predict the future. This tool provides probabilities, not guarantees, and should not be used for major financial decisions. Below is a simplified version of our simulator. You will find a more comprehensive version with extended options and a detailed methodology breakdown at the end of this article.

House prices fall, while stocks rise

Our simulator is not perfect. The past is no guarantee of the future, and many macroeconomic factors are bound to change. Canada’s population is aging, the immigration outlook remains uncertain, an AI bubble could crash stock markets and countless variables are continually reshaping the broader economy and housing markets.

Because comprehensive historical data is limited, our tool is based on the last 25 years, meaning it does not take into account Canada’s last major housing crash in the early 1990s. Several experts also pointed out that the cost of maintaining a property is often higher than estimated, especially if a roof unexpectedly starts leaking. Moreover, realistically, few Canadians stay in the same home for a quarter of a century.

Nevertheless, house prices have fallen in recent years, while interest, average taxes and maintenance costs have risen.

Meanwhile, the stock market soared. An investment made in 2005 would be worth about seven times more today, compared to just three times more for a property bought at the same time.

Based on this, our calculations show a clear trend: if you rent an average studio or one-bedroom apartment and aggressively invest the money you save by not owning a condo, you have a strong chance of pulling ahead.

But as soon as you move up to a two-bedroom apartment or larger, that math changes quickly. Rental prices swallow the surplus, making it almost impossible to save and invest meaningfully.

In fact, in many scenarios, the monthly cost of renting ends up being the cost of ownership. A homeowner’s biggest monthly expense is their mortgage, typically locked in for a five-year term. Adjusted for inflation, the real value of that payment actually decreases over time.

Rents, on the other hand, almost always rise, often more than general inflation. Eventually the lines cross. The tenant starts paying more per month than the owner, wiping out their monthly savings and stopping all new investment contributions.

Of course, the location dictates everything. In some regions, owning a condo loses the least amount of money after all cumulative expenses, compared to renting a two bedroom or larger. Buying a condo and then selling it is not a guaranteed profit. Single-family homes or townhomes offer a higher likelihood of financial return, but they come with a much steeper upfront purchase price.

‘2 housing crisis in Canada’

But for millions of Canadians, this debate is purely theoretical, and renting is their only option. Half of all couples in the cities we analyzed do not earn enough to qualify for an average condo in the city they live in—a figure that jumps to two-thirds for a house.

The outlook is even stronger for the growing demographic of single-income households. Most Canadians are forced to rent, even if it is the less financially advantageous route.

“I would argue that there are two housing crises in Canada,” said Aled ab Iorwerth, deputy chief economist of the Canada Mortgage and Housing Corporation (CMHC).

“One is the housing crisis for the middle class who can afford a condo in places like Toronto, Vancouver and increasingly in Montreal, especially since the pandemic. But there is also an affordability crisis for low-income Canadians who really need help just finding a place to live.”

Affordability is one factor causing younger generations to live longer with their parents, a May 2026 Statistics Canada study found. They also tend to settle on a career, form a family and buy property later in life, a phenomenon described as “life straddling”. And when they finally leave the family nest, they also typically live alone or with roommates more often than previous generations.

This purchase delay observed among younger Canadian generations can have massive compounding consequences.

“Timing is everything,” said Jean-Philippe Deschamps-Laporte, assistant director of the Center for Housing and Income Statistics at Statistics Canada, who was involved with the report. If younger generations buy their first property later in life compared to their parents, this investment has less time to bear potential fruit.

“Younger generations could face returns that are not what they would have had if they had been born earlier.”

His own research found that when people quit during a recession, it has consequences for the rest of their lives. The same logic applies to housing and the stock market. If you are lucky, you buy when prices are low and sell when they are high. But more often than not, you can’t really choose, he says, because it depends entirely on your current life stage.

So, should you buy or should you rent?

“The calculations made here are very useful for many Canadians, but the most important thing is to do some introspection about how much owning a house will improve your life,” said James Macek, assistant professor at the University of Alberta School of Business.

Kiana Basiri, assistant professor at Toronto Metropolitan University, had a similar sentiment.

“We push people into ownership at the expense of them being tighter financially and less resilient, simply because they really want to own something,” she said.

“We just assume that ownership is the best way for people to accumulate wealth over time, but I think we need more education for people on how to invest their savings in different ways.”

Furthermore, when people move to the suburbs to find more affordable real estate, they sometimes forget to consider other costs, such as maintaining two cars instead of paying for public transportation.

As Jean-Pierre Lessard, economist and partner at Aviseo Conseil, put it: “We are crazy about property ownership in Canada, but there is no link between a nation’s economic growth and its home ownership rate.”

A key point he made during a talk at a conference in May 2026 was that it is possible for the average household in Quebec City and Montreal to build more wealth by remaining renters rather than becoming owners.

“Originally, public policy to stimulate purchase was meant to stimulate construction. We lost sight of that,” Lessard said. “We have to go back to something more rational.”

In some nations, it is quite normal to be a lifelong tenant. Germany and Switzerland, for example, are famous for having populations where more than half of all residents rent, backed by robust regulations that raise rents and protect tenants’ rights.

“Overall, we need to increase the supply of both homeowners and rental units quite significantly,” said ab Iorwerth. The challenge, he said, is balancing supply with measures that encourage homeownership, such as the First Home Savings Account, which tends to push prices up, while ensuring there is enough inventory to keep homes affordable.

In June 2025, the CMHC published a report which predicted that around 250,000 new homes would be started each year over the next decade, while twice as many would actually be needed to restore affordability.

methodology

The detailed data sets and calculations used can be found here. Our methodology was shared prior to publication with the experts cited in the article above, and their suggestions helped inform the analysis.

Do you have data that tells an important story that you would like to share? Write to nael.shiab@cbc.ca.