Buying a house in Toronto can feel like an impossibility sometimes, and not many people are able to own their own place in the city. For years, buying a house was known as cheaper, but not many people are able to actually save up the money needed to buy their own place. Now the tables have turned because for the first time in years, renting in Toronto is finally cheaper than buying your own place.
A new report from the National Bank of Canada revealed that renting has now become cheaper than buying in Toronto. It's the first time this has been the case for several years, according to the Huffington Post. It looks like 2018 has broken the longstanding trend that buying is cheaper than renting.
Their report found that mortgage payments can now be even more expensive than rent costs. In the last quarter of 2018, the median price of a monthly mortgage payment for a two-bedroom condo in Canada rose to approximately $2,000. In comparison, the median rent cost for a two-bedroom condo is around $1850, which is $150 less per month.
So how has renting become cheaper than buying in Canada? One of the big reasons for this new housing trend is that house prices have been rising at a significantly faster rate than rental prices.
Ever since 2015, house prices have been rising rapidly, and this, in turn, leads to higher mortgage payments. On top of the increasing house prices, the rising interest rates, which leads to higher mortgage payments, have also made it more expensive to buy a place than to rent one, according to the Huffington Post.
"With interest rates on the rise right now, it feels more safe to be in the rental market rather than buying," said Kyle Dahms, who is the co-author of NBF's report. "The portion of the cost going to interest payments, as a share of your debt, is getting bigger".
However, whether renting or buying is better for you is dependant on your personal situation. According to the Huffington Post, since house prices are now rising slower than before, it could be better to continue renting since you may be able to save up more money for a house later on.
Source: The Huffington Post