Recently, I have learned that renting an apartment can be as tough as buying a place in this city. As a landlord, I did minimal advertising for my main floor, recently renovated, one bedroom apartment in a house with no tenant parking in a west end neighbourhood. The response to my ad was the best I have ever had in my 10 years of being a landlord. Usually around 10 - 20 % of the folks who go through to see a given apartment express an interest. I had everyone who came through fill out an application form. I think the rent was set near market value, but I had folks offer me more than I was asking. No doubt it appears that the rental market can be competitive in this city. I had to pick from some pretty magnificent renters to the point where I felt bad telling certain people they cannot live in my available apartment.
As a real estate salesperson, I'm overwhelmingly associated with buying a property, but there are some circumstances where it may be smarter to rent than to buy. If, for example, you are not sure if you will be staying in Toronto for a longer period of time, then you should probably rent. Maybe you are arriving in Toronto for the first time and you want to get to know the city neighbourhoods a little before buying. Then by all means, rent. And it's possible that you don't like the stress of home maintenance or maintenance fees. Then you should be a renter.
Still, those are not the renters I usually come across. I come across the hardcore renter. Those who have the means to buy but who just don't want to pull the trigger. Some are concerned the market will crash. Many will say that they can find more space in a better location if they rent than if they get a mortgage. And to a certain extent, they're correct. However, over a ten year period, your rent will likely increase, and the principal on your mortgage will decrease. In other words, the unit that cost $1800 now to rent, may cost $2500 in 10 years. There's a very good chance it will cost more than your mortgage.
And then there are those who argue that they make more money by investing with a financial advisor in stocks or bonds instead of real estate. And though the returns have been weak for those investments over the past twenty years on average, I suppose there are still some out there who can rent and invest their money wisely. Not all equity is built in real estate. There are other options out there.
But let's be honest. Most renters are not avid savers. When buyers purchase a property, they do pay a lot of their mortgage payment to interest, but a portion of their payment builds equity in their property. So, you are building equity instead of giving your landlord the money. And I'm a landlord. So, thank you renters.
Also, most renters who have been renting for forever and have the money to buy a property have some anxiety around commitment. Not to their significant others, but to committing to stay in the same place for five or more years. They may have rented the same place for 20 years, but they still don't want to have the responsibility.
My point with all this: Sometimes you have to rent. You don't have the money yet. You're retiring to make your life easier. You're not ready to commit to a long term plan or you are not planning on staying in Toronto. But if you do have money and you can get started, buy. If I could have bought earlier than I did, I would have. Sure, your place may feel smaller or further away than when you were a renter, but with enough time, you will have a nest egg and you'll be astonished at what some people pay in rent in future Toronto.