Renting vs Buying Vancouver : Which is Better?

The debate over renting or buying a home is similar to the discussion around index vs active investment. Both generate a lot of emotional arguments from both sides, but the answer comes down to the individual personal situation and the real estate market they rent or buy in.

According to Statistic Canada, 63% of Canadian families owned their homes as of 2016. Therefore, the conversation around rent vs buy tends to be highly emotional. Often, existing homeowners find it challenging to look at this conversation objectively, leading to them taking a position that often seeks to validate their existing decision to buy a home.

As Canadian home prices continue to increase year over year, homeownership appears to be a surefire investment. Given continued higher home prices, proper due diligence is avoided as everyone has developed a mentality of getting it, and it will go up. This mentality has been further validated by the low supply of homes, which has made homeownership a scarce resource, especially in Vancouver.

Therefore, my goal with this post isn’t to argue against homeownership but instead to break down the cost of homeownership to ensure when considering renting or homeownership as your means of providing shelter; you are making an accurate comparison between these two forms of shelter for you and your family.

Mortgage Payments to Rent Payment is not an Accurate Comparison.

One of the primary reasons people often give for not wanting to rent is that they feel as though they are throwing away money. They wish to put their money to work, and by renting, they think they are throwing their money away when they could buy a home with a mortgage payment that’s the same as their rent payment while building equity. I will first tackle the rent payment vs mortgage payment and then tackle the second concept of throwing away your money.

When talking about money, it’s helpful to use real examples whenever possible. To illustrate why comparing mortgage payments to rent payments isn’t an apple-to-apple comparison, let’s use a real-life example for renting vs buying in Vancouver.

According to CMHC, the average rent for a two-bedroom condo apartment in Vancouver is $2,498. The average Vancouver condo apartment’s benchmark price as of July 2022 was $755,000. I went on MLS to locate a property within that price range and found one well below the benchmark price in North Vancouver, as I couldn’t find one in Vancouver within that price when researching details for this post. Here’s the complete breakdown of the property.

Vancouver Property Detail
Location North Vancouver
Property Price $589,000 (MLS R2707975)
Year Built 1959
Down Payment $33,900 (5% on first $500K, 10% on remaining)
Interest Rate 5% (based on the current 2022 rate market)
Mortgage Payment $3,357.63
Property Tax $133.46 ($1,601.46 annually)
Heating $200
Strata Fee $633.31


Below is the total housing cost for owning the home compared to the total rental cost of renting a property in North Vancouver. I’ve assumed that the average rent amount doesn’t include utility. I’ve estimated $200 for both the homeowner and the renter while excluding additional costs such as maintenance. It is important to note that a renter is likely not responsible for maintenance unless those included in their lease or damage resulting from their usage. A homeowner is responsible for all maintenance regardless.

Homeownership Cost (North Vancouver) Rental Cost (North Vancouver)
Mortgage Payment $3,357.63 Rent Payment $2,498
Property Tax $133.46 Property Tax N/A
Heating $200.00 Heating $200
Strata Fee $633.31 Strata fee N/A
Property Insurance $150 Tenant Insurance $100
Total Monthly House Cost $4,474.40 Total Monthly Rent Cost $2,798.00
Cost Savings Per Month Compared to Owning a Home $1,676.40

As shown in the chart breakdown. Comparing mortgage payments to rent payments isn’t an accurate comparison. A homeowner isn’t just expected to make their mortgage payment but also have to pay additional expenses to maintain and keep their home.

Costs such as property tax, heating, strata fee, and property insurance are not optional for the homeowner. These costs must be paid; therefore, the mortgage payment isn’t the only thing the homeowner has to pay. If a homeowner could pay the mortgage only and live in the home, then comparing rent to mortgage payment would be fair, but that’s not the case.

When someone rents a place out, the landlord sets a price that captures all the homeowner costs into the rent’s prices while leaving expenses such as heating or tenant insurance to be paid directly by the tenant, whenever possible.

A landlord cannot set a rent price equivalent to owning a home, as when the number gets too high, people would not see the value in renting and would instead attempt to buy. However, based on our example, even with a $1000 increase to the rent price, it will still be cheaper than in North Vancouver.

Now, I want to acknowledge that while the CMHC report advised of a rental rate of $2,498, the reality is that rental prices are not this low in Vancouver. These reports were from commercial landlords; therefore, I went to the real marketplace to better understand the actual rent figure. When looking at Craiglist, prices for two-bedroom condos range from $3,100 to $5,999 for higher-end rentals.

But since our homeowner isn’t buying at a premium price, I revised the rental figure based on a $3,600 rental, which I saw as an average to rent a reasonable two-bedroom rental in a good location in North Vancouver.

Here’s the updated mortgage payment to rental payment based on current market rental rates.

Rent vs Buying in Vancouver Comparison for Market Rent

Homeownership Cost Rental Cost
Mortgage Payment $3,357.63 Rent Payment $3,600
Property Tax $133.46 Property Tax N/A
Heating $200.00 Heating $200
Strata Fee $633.31 Strata fee N/A
Property Insurance $150 Tenant Insurance $100
Total Monthly House Cost $4,474.40 Total Monthly Rent Cost $3,900
Cost Savings Per Month Compared to Owning a Home $574.00

If you’re renting and think the rent payment is too high and you would rather own a home at a similar mortgage payment, it’s critically important to understand that a homeowner’s housing cost isn’t just the mortgage payment. If you take nothing else from this blog, please avoid thinking mortgage payment to rent payment is the same as housing cost between owning and renting a place.

You can see that even with a market rent of $3,600, you still come out ahead at $574 monthly savings compared to owning a home in Vancouver.

Is Renting Money, Really Throwing Away Money?

There are many things we spend money on that don’t necessarily have an investment return, but we still spend money on them anyways. When people make a case for homeownership, often it’s a case based on investment return, and throwing money to a landlord when you could be building equity is not smart.

For now, I will avoid the incomplete assumption that everyone has an equal opportunity to own a home. We all don’t have equal opportunity to own home equally.

However, the position seems odd to me, considering we all spend money on many things in this manner. For example, some people enjoy drinking liquor which isn’t good for our bodies. Yet, there seems to be little problem with restaurants, events, and liquor companies making a case for us to spend money on something that’s of no value to us and causes us harm over the long term.

When I drink a bottle of wine, I do it for the experience it adds and which I may value more than the fact that I may be damaging my body long-term. Alcohol companies are aware of this emotional reasoning behind drinking, and it’s why all commercials around this product are based on the emotional experiences you get to help you overlook the apparent harm.

The point is that sometimes what brings you much joy in life doesn’t always have a monetary return or value. If renting works for you and the lifestyle you want, you don’t need to feel wrong about renting or rush to buy a home simply because someone tells you; you are throwing away your money.

Renting can be the best investment decision in some cases compared to owning. Based on our example above, you can see if the individual rents, they save money. The savings from not buying could be put towards the stock market to have those saving grow over time, which would not be throwing your money away.

Renting requires the individual to be more disciplined with their savings, unlike a homeowner, who is indirectly in a forced savings plan through their mortgage payment.

People rent when they vacation, people rent machinery, people rent vehicles, and people lease vehicles. The choice to own something or rent something is a matter of preference sometimes. Renting shouldn’t make you feel less than someone who owns, as that person who owns a home might be leasing their vehicle because that makes sense for them rather than owning.

It’s Generally Better to Rent in High-Price Markets and Better to Own in an Affordable Market

As a general rule of thumb, it’s usually going to work out better for you to rent in a high-price market, such as Vancouver, than to own. But if you live in an affordable real estate market, it is usually better for you to buy as the saving spread between owning and renting is smaller.

This is because higher price markets tend to have higher mortgage costs, and all the other associated costs tend to be high. In lower price market, you start at a lower mortgage payment, and the associated ongoing cost of the home also tends to be lower. Remember, while real estate appreciation is a good thing, it also means that a home’s operating expenses increase, such as property taxes, increase, city services, and insurance are all likely to increase as well.

Let’s run with a real example to illustrate what I mean. Calgary is a much more affordable real estate market compared to Vancouver. The median sales price for a single detached home for Calgary in the second quarter of 2022 was $596,000. I’ve opted to use a single-family home for Calgary as you can purchase a detached house for a similar price to a condo in Vancouver. As such, we will not need to account for strata payment, but I’ve kept the price point similar for the purchase.

Finding a home at this price point was not difficult. I was able to find one actually below the medium price. Here are the property details below

Renting vs Buying in Calgary

Property Detail
Location Calgary, AB (NW)
Property Price $585,000(MLS A1254455)
Year Built 1998
Down Payment $33,500 (5% on first $500K, 10% on remaining)
Interest Rate 5% (based on the current 2022 rate market)
Mortgage Payment $3,335.85
Property Tax $339.84 ($4,078 annually)
Heating $200
Strata Fee N/A


Now, let’s look into rental prices for Calgary. According to CMHC, the average rent for a purpose-built two-bedroom apartment in Calgary is $1,355. Now, let’s compare the total cost of owning a home in Calgary vs renting a home.

Homeownership Cost (Calgary) Rental Cost (per CMHC)
Mortgage Payment $3,335.85 Rent Payment $1,355
Property Tax $339.84 Property Tax N/A
Heating $200.00 Heating $200
Strata Fee N/A Strata fee N/A
Property Insurance $150 Tenant Insurance $100
Total Monthly House Cost $4,025.69 Total Monthly Rent Cost $1,655.00
Cost Savings Per Month Compared to Owning a Home $2370.69

As you can see, the renter remains ahead in Calgary compared to owning a home. But as with the Vancouver example, let’s find out the actual market rent people are paying for a home. I’ve chosen to look for a detached house to rent. If someone can purchase a home at this price point in Calgary, they will seek a similar rental home.

The prices for home rentals ranged from anywhere from $2700-$3050. I’ve opted for the higher end as the locations appeared better. There also tend to be few homes for rent as most people still find homeownership affordable in Calgary and would rather own. But here’s the updated breakdown based on rental Craiglist rent prices.

Homeownership Cost (Calgary) Rental Cost (Per Craiglist Search)
Mortgage Payment $3,335.85 Rent Payment $3,050
Property Tax $339.84 Property Tax N/A
Heating $200.00 Heating $200
Strata Fee N/A Strata fee N/A
Property Insurance $150 Tenant Insurance $100
Total Monthly House Cost $4,025.69 Total Monthly Rent Cost $3,350
Cost Savings Per Month Compared to Owning a Home $675.69

As you can see, the renter still comes ahead but is much smaller when taking market rent rates. But as you can see with this example, generally, because the difference between owning or renting is likely to be smaller, it often makes more sense to try and own. Homeowners in Calgary are less likely to see a large percentage of their income going towards housing compared to someone living in Vancouver while being able to afford a detached home.

If You Rent, You Must be Disciplined and Invest your Savings

As you can see from the examples provided, the renter often comes out ahead. While that might be true on paper, most renters do not see these gains. Why? If you rent and you are saving money by renting compared to the total housing cost of owning a home, you must put that savings to work.

A homeowner doesn’t have to consider saving because their home is like a forced savings program. By making mortgage payments, they indirectly save money, and their capital appreciation is similar to the saving rate they receive on their investment. In the future, they will cash in their investment (home sale) to use those savings to generate an income stream.

The renter can also do this, but they don’t have a forced saving program. They have to be disciplined and set up their own program. Essentially, the renter has a TFSA set up, while a homeowner has an RRSP set up. Both allow you to save towards retirement, but an RRSP will penalize you if you withdraw money from it before retirement, giving people a friendly nudge to pause before pulling out money.

A renter will need to put away their savings by not owning a home into an investment such as the stock market. When they do that consistently, they will also have a significant investment when retirement comes, and they can then live off that stream of income, which will pay their rent payment when they retire.

For example, suppose the renter in Calgary was to put the rent savings of $675.69 per month into an investment that provides an annual return of 5% over 25 years. In that case, they will have $395,956.54 from that savings based on a yearly compounding period. This doesn’t include any other savings they might be able to put away to increase their investment holdings further.

Everyone is a renter in Canada from a legal standpoint.

By reading this blog, I hope you understand that mortgage payment to rent payment is not a complete comparison when deciding if you should rent or buy. If you choose to rent, you must put away the savings you gain by not owning into an investment; otherwise, you will not come out ahead as the homeowner will have an asset they can convert to cash upon retirement while you will not. To avoid this, you must invest your savings.

Generally, renting is likely to be the better option from a number standpoint if you live in a high-price market. Buying a home in these markets could take up more of your income, putting you in a challenging financial position. However, if you find yourself in an affordable market, it might be better to own as the difference between owning and renting might be closer from a number standpoint.

But most importantly, remember that there is no absolute ownership in Canada. Absolute ownership refers to the idea that someone owns the land and home they bought forever. That’s not the case in Canada, as we do not have absolute ownership. Instead, we use a fee-simple structure to transfer property while providing landowners with certain rights and privileges. All land in Canada eventually reverts to the Crown.

As such, everyone is a renter in Canada, but some renters have lenders as their landlords while they have a mortgage, while some have another human being as their landlord and that human being renting has a lender as their landlord. But the lenders and everyone owns nothing, as the Crown ultimately owns the land.

I say that to remind everyone that renting or owning is a personal preference and should be made based on your specific situation. Both can be great, but what makes one better will be based on your individual situation, the real estate market you find yourself in, and doing an objective comparison.

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