Is it better to buy or rent over the long term? – Toronto Star

If you can afford it, it’s generally better to buy a home rather than rent, says Adam Fisch, an associate advisor at Stewart & Kett Financial Advisors. ‘With every single mortgage payment, you’re building up equity in your home.’

By Josh RubinBusiness Reporter

Mon., Nov. 1, 20211 min. read

Article was updated 14 hrs ago

You’ve got enough saved up for a down payment, but you’re still not sure whether or not it’s a good idea to dip your toes into the housing market.

We asked personal finance expert Adam Fisch the eternal question: Are you better off buying or renting?

Fisch, associate advisor at Stewart & Kett Financial Advisors, said it’s generally a better idea to buy a home, if you can afford to.

“With every single mortgage payment, you’re building up equity in your home,” said Fisch.

By the numbers

73%

Growth in TSX Composite Index over last decade.

149%

Growth in average price of a GTA home over last decade.

Source: TSX, Canadian Real Estate Association

Star graphic

If you are tempted to rent, Fisch suggests taking a good, honest look at how disciplined you are with your money. Otherwise, he says, it’s not even a fair debate.

“It’s only going to be close if you’re really careful about saving or investing the money that would otherwise be going into a mortgage. The advantage of a mortgage is that it’s a forced savings plan,” said Fisch.

As for whether your investment will grow more in the housing market or the stock market, that’s a bit of a mug’s game to predict, he admitted.

“The real estate market in Toronto has really been rising for the last two decades. If it’s flat over the next 10 years, renting might end up being the better idea, financially. But nobody can know that, and I wouldn’t care to predict,” said Fisch.

Renting can be the better choice if you’re likely to be moving in the short term.

“The land transfer fees can really add up, so if you’re planning to move in a year or two, renting is a better option,” Fisch said.

Renting can also be a better short-term option if you expect to be starting a new job, and aren’t sure yet what your salary will be.

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