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Big Decision for Toronto Condos: Rent or Buy?

Oct. 25, 2020
5 mins
Woman casually working from her bedroom in modern condo

Toronto house prices may be climbing, but rents are plunging. And they have been since the start of COVID.

Does that make it more financially sensible to rent or buy? Below we investigate.

A Major Downtrend

At $1,967, Toronto rentals have now fallen below the $2,000 threshold for the first time in several quarters, having started the year at almost $2,300.

That’s a 14.9% nosedive from 12 months ago, according to, making Toronto’s rental market the worst-performing major marker in the country.

"It's crazy. We've never seen anything like it,” Paul Danison of told CTV News Toronto. “The stock market refers to this as a black swan event, where you can't predict it. A once-in-a-lifetime kind of thing."

Comparative Cost of Buying

Meanwhile, home prices in Toronto (and much of the country) are still rocketing higher.

“We doubt that this recent sizzling strength can persist amid some of the building headwinds…” wrote BMO chief economist Douglas Porter. “The underlying economic conditions simply do not support such a piping hot market over a sustained period.”

Despite steep prices, historically low interest rates have made some housing more affordable. The carrying costs of a one-bedroom condo, for example, look something like this:

Rent (Toronto one-bedroom)

  • Monthly Rent: $1,967

Insured purchase (with minimum down)

  • Purchase price: $581,000
  • Down payment (5.7%): $33,100
  • Mortgage amount: $569,816
  • 5yr fixed interest rate: 1.40%
  • Monthly mortgage payment: $2,251
  • Monthly property tax: $317
  • Monthly condo fee: $429 (Avg. 1-bedroom condo size at avg. condo fee per square foot)
  • Opportunity cost of down payment: $55
  • Total monthly payment: $3,052 *

Conventional purchase (20% down)

  • Purchase price: $581,000
  • Down payment (20%): $116,200
  • Mortgage Amount: $464,800
  • 5yr fixed interest rate: 1.69%
  • Monthly mortgage payment: $1,645
  • Monthly property tax: $317
  • Monthly condo fee: $429
  • Opportunity cost of down payment: $193
  • Total monthly payment: $2,584 *

*Mortgage rates based on the lowest rates currently available in Ontario for the respective mortgage types. Property tax estimate calculated using the City of Toronto’s Property Tax Calculator. Amortization is 25 years (insured) and 30 years (uninsured). Opportunity cost of down payment assumes a 2% annual return on funds that could have been invested instead of deposited on a home purchase.

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Compare Mortgage Rates

Engaging a mortgage broker before renewing can help you make a better decision. Mortgage brokers are an excellent source of information for deals specific to your area, contract terms, and their services require no out-of-pocket fees if you are well qualified.

Here at RATESDOTCA, we compare rates from the best Canadian mortgage brokers, major banks and dozens of smaller competitors.

Decision Time: Buy or Rent?

If you can’t scrounge up the needed down payment and want to live in downtown Toronto, the answer is easy, rent.

Even if you have the minimum to put down, renting costs the least in terms of mandatory monthly payments. But there are two more things to consider:

1) the equity you’ll build through mortgage payments

  • In year one, that amounts to $1,599 a month (on the insured mortgage) and $1,257 a month (on the uninsured mortgage) of forced savings.
  • On a net monthly cost basis, this gives buying an economic edge, other things equal.

2) future price appreciation potential

  • Downtown Toronto Condo prices have risen about 4.9% a year for the last 20 years. On a $581,000 typical one bedroom, that’s about $2,300+ per month in theoretical appreciation.
  • Theoretical is the key word, as numerous economists now expect lower prices in the next year.
  • The question then would be, how long does the market stay down. No one knows, but we’ve never seen the bearish market dynamics we’re seeing in today’s downtown condo market (the flight out of the city, the “race for space,” immigration delays, Airbnb collapse, etc.).

End result: While renting has the undisputed advantage in terms of monthly cash flow, buying builds you a bigger net worth. That is, assuming prices don’t plunge—and fail to rebound before you sell.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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