Buying vs Renting in the Current Toronto Market; Which is the Better Choice Right Now?
Monday Dec 19th, 2022
Are you trying to decide whether to purchase or rent a home in the current Toronto market? With the recent interest rate increases by the Bank of Canada, rising inflation and low inventory, this decision can be overwhelming, so it’s important to consider all of your options. Let’s take a look at the pros and cons of buying versus renting in the current market.
Buying a Home in the Toronto Market
The biggest benefit of buying a home is that you are investing in an asset that can increase in value over time. This means that when you eventually sell your property, you can expect to make a profit. Additionally, making monthly mortgage payments allows you to build equity in your home. As long as you continue making payments on time, your credit score should improve over time as well. These are all great reasons to buy rather than rent if you are able to.
Beware, however, that there are some drawbacks when it comes to purchasing property in a hot real estate market like Toronto. For one thing, prices are still quite high which means it could take years for your investment to pay off if it ever does. Additionally, homeownership also comes with additional costs like property taxes, maintenance fees, and home ownership which also have to be considered before purchasing a property.
Renting in the Toronto Market
On the other hand, renting is often seen as an easier option with fewer financial risks compared to buying a property outright. When renting, there is typically no need for an upfront down payment or closing costs which makes it more affordable for those who don’t have access to large amounts of capital upfront.
Additionally, renters generally have more flexibility when it comes time to move since their lease doesn’t require them to stay put for any length of time beyond what they agreed upon initially with their landlord or rental company. The downsides of renting include not being able to build equity or improve your credit score by making timely payments each month as well as having less control over customizations that you may want to make to the space.
What About the Current Market?
Yes, interest rates have affected affordability but the major factor affecting the real estate market is still supply and demand. Demand for homes has been rising steadily since 2018, driven largely by increased immigration to Ontario and historically low interest rates (yes, this has changed recently but not enough to decrease demand). This demand has put pressure on supply as there are simply not enough homes being built to meet this need.
In addition, many existing homeowners are choosing not to sell because they can’t find anywhere else to move within their budget range – further exacerbating this shortage of available homes for buyers looking to purchase in 2021 or 2022. Since demand does not seem to be going away, at the end of the day, if you can swing your mortgage payments, it is worth it to buy as it may only get more difficult to enter the market later and you can start to pay down your mortgage.
The Right Guidance Is Essential
When deciding whether it’s worth taking a shot at buying or waiting for prices to come back before you make your purchase, there's no perfect answer. It’s important to consider both the positives and negatives associated with each option before moving forward with anything too quickly.
Talking to a mortgage broker and financial adviser is essential to understand your purchasing power when it comes to real estate. If you are able afford it financially and plan on staying put for at least several years then purchasing might be best, but if mobility is more important then renting might make more sense given its shorter-term commitments and lower upfront costs. Ultimately only you know what makes sense for your individual situation so take some time researching all available options with a good realtor before settling on one over another!
If you’re looking to rent or buy, let’s connect! I have helped tons of clients find their ideal homes–whether it’s short-term rentals or long-term purchases–that suit their lifestyles and needs. If I can help you do the same, contact me at 416 820-3006. You can also email me at firstname.lastname@example.org.