[URBAN NOTE] “Why renting makes more sense than buying in Toronto’s real estate market”
NOW Toronto‘s Lucy Mazzuoco argues that, in Toronto at least in current conditions, renting makes more financial sense than buying property.
I’m sure many of us grew up with the mentality that buying is always the best option when moving out on your own. The argument has remained consistent: renting means throwing away money, while purchasing is investing.
In Toronto’s real estate market, people often assume the value of their houses and condos will inevitably go up in value. Although many factors contribute to the flux and flow of condo prices, including a building’s location, age and condition, the reality is that the value of many condos either remains the same or drops by a small percentage over time. This can make the real estate market a roulette game for aspiring young buyers and first-time home owners.
“I recently sold my condo in the downtown core after about three years of ownership. My overall profit was negligible given the condo market saturation,” says Toronto native Josie Sorelli. “In retrospect, I wish I had crunched the numbers more accurately before buying. If I’d had a more conservative estimate of my return on investment, and given all the additional costs I incurred, I would definitely have opted to rent. Closing costs, real estate fees, property taxes and condo fees put me in the red. Hindsight is 20/20!”
Brand new condos are coming onto the market every day, so some condo owners hoping to buy bigger homes may face difficulties when attempting to sell their condos for a price comparable to a house. Those who do successfully sell their condos and choose to purchase again often have to look outside of the city for houses they can afford.
So why has renting been stigmatized as not a smart option?