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House prices throughout the country rose sharply during the pandemic and the interest rate hikes over the past year have made it more expensive to carry a mortgage. Combine this reality with the return of international students to in-person learning and the resumption of immigration post-pandemic, and the rental market has exploded.
In fact, the Canada Mortgage and Housing Corporation’s annual Rental Market Report showed the national vacancy rate for purpose-built apartments fell to 1.9 per cent in 2022 from 3.1 per cent the previous year, the lowest in over twenty years. And, with lower supply comes higher prices. Rent for two-bedroom apartments also jumped significantly by 5.6 percent in 2022.
Given the current rental and housing markets, is it better to rent or buy today? Here’s how to find what works best for you.
The case for renting
While rents have risen, renting may still provide a more affordable short-term housing option, as well as flexibility for those seeking more mobility. For example, if you’re considering a job in another location or extensive travel over the near-term (for work or for play).
It also offers a practical and more accessible option for those who are new to Canada as they settle into their new country.
Without the maintenance costs that inevitably come with ownership, renting offers a predictability for those who want — or need — a stable living expense month-to-month.
The case for buying
Financially, the long-term investment value of a home is one of the most attractive reasons to buy. The value of the average Canadian home has steadily increased over the last 25 years so owners have been able to build equity over time. This can help contribute to their net worth and future financial security.
Emotionally, owning a home may offer the opportunity to put down roots, decorate and landscape as you wish and build a life in a community you. It’s peace of mind that doesn’t necessarily come with a short-term lease.
Over the long-term, owning — versus renting — a home tends to put you ahead financially, even though interest rates will inevitably fluctuate.
If you’re contemplating the question of buying versus renting, there are a couple of helpful tools to help you along in your decision-making process.
Ultimately, it’s a great idea to speak with a mortgage specialist, who can look at your full financial picture and help you determine if buying is right for you.
Diane Amato is a Toronto-based freelance writer who loves to talk about finances, travel and technology.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.