Renting vs Buying a Home: Which Is Right for You?

The debate over renting versus buying a home continues to divide financial experts and prospective homeowners, with no single answer that fits everyone. Traditionally, buying a home is presented as a way to build long-term equity and stability, while renting is promoted for its flexibility and lower upfront costs. But as homeownership becomes increasingly out of reach for many younger Canadians, a growing question remains: can renting for life be a practical and financially sound choice?

Author Alex Avery, who wrote The Wealthy Renter, argues that it can. “Housing decisions are personal and change over time,” he says. “For many people, renting remains a strong option.” Avery points out that even though rents have risen since his book was first published in 2016, renting often carries lower overall costs and less financial risk than buying. He cautions that comparing mortgage payments directly to monthly rent rates misses many hidden costs of ownership, such as legal fees, real estate commissions and region-specific taxes at purchase, plus ongoing expenses including interest, property taxes, insurance and maintenance.

For Avery, part of the motivation behind his book was the speculative bubble he saw in some housing markets, which created a widespread belief that buying was a guaranteed shortcut to savings and wealth—especially in big cities. “Many young Canadians felt pressured to buy a condo even when the numbers didn’t add up,” he says.

Should you rent and invest the difference?

Not everyone agrees. Vancouver realtor Owen Bigland highlights the stark cost of long-term renting in high-rent markets. With average rent for a one-bedroom in Vancouver around $2,800 per month, Bigland estimates a lifetime renter could spend well over a million dollars by age 65—without owning an asset at the end of that period. “You’ve paid a lot of money into housing and you have nothing to show for it,” he asks. His concern is that many renters will spend any monthly savings over a comparable mortgage payment rather than reliably investing the difference.

Behavioural research backs up Bigland’s skepticism about automatic saving. Sebastien Betermier, an associate professor at McGill University who studies Canadian household spending, says many people lack the discipline to save consistently. He notes that housing is already a significant budget item—rents can account for a third of household spending—while homes can represent 70% to 80% of homeowners’ net wealth. That concentration exposes both renters and homeowners to financial risks.

Survey data cited in the article from the Healthcare of Ontario Pension Plan and Abacus Data points to fragility in Canadians’ savings: more than a third report under $5,000 in savings, and an increasing number of homeowners plan to rely on home equity as a retirement resource. These findings underscore that housing strategy matters both for immediate affordability and for long-term financial security.

The advantages of home ownership

Proponents of buying stress the advantages of building equity and accessing the tax benefits tied to a principal residence. Owen Bigland emphasizes that gradually paying down a mortgage can create a form of forced savings and that principal residence tax treatment provides an important shelter for gains in Canada. Homeownership can also offer borrowing options—such as a home equity line of credit (HELOC)—that make capital accessible without selling the property.

Supporters also point out non-financial benefits: owning a home can provide stability, predictability in housing costs over the long term (depending on the mortgage structure) and the freedom to renovate or alter your living space. For many, these lifestyle factors weigh heavily in the decision.

Avery acknowledges these points but warns against assuming real estate is inherently safer than other investments. “Housing markets can fall, and local employment conditions change,” he says. His broader view is that housing serves two distinct purposes—shelter and investment—and conflating them can lead to poor financial decisions.

Investment alternatives if you’re not buying real estate

If you choose to rent, Avery recommends deliberately investing the extra money rather than treating it as disposable income. He suggests tax-advantaged accounts such as RRSPs, TFSAs and FHSAs and learning about low-cost index ETFs as viable ways to grow wealth outside of real estate. These options can be used to save for retirement, build emergency funds or pursue other financial goals without tying all your savings to a house.

Avery, who has been a homeowner himself, says buying isn’t inherently wrong—just that it shouldn’t be relied upon primarily as an investment strategy. “Housing provides shelter; investments produce wealth,” he notes, urging people to treat those objectives separately when planning their finances.

Bigland recommends a balanced approach: pursue homeownership when it aligns with your life plans and you can commit to a location for at least eight to ten years, while also investing outside of real estate. He advises first-time buyers to consider older buildings near public transit that may sit on valuable land and could be attractive to developers over time. His practical advice is to prioritize saving a meaningful down payment—even suggesting temporary lifestyle adjustments if necessary—to make a purchase feasible.

Making the decision: factors to weigh

• Financial readiness: Do you have an emergency fund, stable income and enough for a down payment and closing costs?
• Time horizon and mobility: Will you stay in one place for several years, or do you expect job or lifestyle changes?
• Risk tolerance and diversification: Are you comfortable concentrating substantial net worth in a single asset class like real estate?
• Discipline to invest: If renting frees up cash, will you consistently invest it rather than spend it?
• Local market fundamentals: Consider local rent trends, home price history and employment prospects when evaluating the buy-versus-rent trade-off.

Read more about real estate:

• Home appraisal vs. tax assessment: What every Canadian property owner needs to know
• Where to Buy Real Estate in Canada
• Looking for a mortgage in B.C.? Don’t limit your options to the big banks
• Canadian home sales forecast downgraded—but the market may be turning a corner