Rent vs Buy in Canada: The Net Worth Math Nobody Shows You

“Rent is throwing money away” is a slogan, not math. Here’s the actual comparison — and it’s closer than either side admits.

The comparison everyone gets wrong

Monthly payment vs monthly rent is meaningless. The mortgage payment includes forced savings (principal); rent doesn’t include the owner’s property tax, maintenance, insurance, and transaction costs. The honest question: after N years, who has more net worth?

• The buyer ends with home equity: appreciated value minus the remaining mortgage minus ~5% selling costs
• The renter ends with a portfolio: the down payment plus every monthly dollar saved versus owning, invested and compounded

A worked example

$600,000 home, 20% down, 4.5% mortgage, 25-year amortization, versus renting the same place for $2,400/month:

• Owning costs roughly $3,600/month all-in in year one (a $2,656 mortgage payment + 0.9% property tax + 1% maintenance), about $1,200/month more than rent
• After 10 years at 3% appreciation, 3% rent increases and a 6% tax-free return on the renter’s invested savings (including the down payment and closing costs): buying is ahead by roughly $10,000–$15,000, close enough to be called a near tie
• Buying pulls ahead around years 7 to 9 and leads clearly by year 20; drop appreciation to 1% and renting wins at every horizon

Run your own city and assumptions: the rent vs buy calculator models both paths monthly and finds your breakeven year.

The three numbers that decide it

1. Home appreciation. Canada’s long-run national average is ~5%/year — but Toronto and Vancouver skew that; plenty of markets have delivered 1–2% for a decade at a time.
2. Investment return. The renter’s whole case rests on actually investing the difference at equity-market returns. In a chequing account, the strategy dies.
3. Time. Transaction costs alone run 6–8% of the price round-trip (see the land transfer tax calculator for your province’s slice). Short horizons kill the buy case.

What the spreadsheet can’t weigh

• Forced savings vs freedom. Mortgages make average savers wealthy; renting keeps you mobile and liquid. Both are features.
• Renoviction vs renewal shock. Renters can lose their home to a landlord’s plans; owners watched payments jump 40% at 2023–2024 renewals. Neither side is “safe.”
• The life variables. Schools, stability, a dog, a garden. If buying wins by $40,000 over a decade but the rental fits your actual life, take the rental — $4,000/year is a fair price for the right life.

Bottom line

Stop asking whether rent is wasted money — interest, tax, and maintenance are wasted too. Simulate both paths with the rent vs buy calculator, find your breakeven year, and only then let lifestyle break the tie.