Is it better to rent or buy in Toronto? Financial expert breaks down the pros and cons
Despite Toronto's sky-high real estate prices, one financial expert says she still believes buying a house is a smarter decision than renting.
CTV News Toronto asked Chief Financial Commentator Patricia Lovett-Reid what she believes is the best move for prospective buyers who are currently able to afford a house in Toronto's red-hot housing market.
Lovett-Reid said that while it always depends on individual circumstances she is "typically in the camp of homeownership."
"I'm a big fan of home ownership," Lovett-Reid said. "I love the capital gains tax exemption on your principal residence. That tax break alone tips the scale for me."
But Lovett-Reid said there are several factors to consider before deciding whether home ownership is right for you.
"Buying a home doesn’t guarantee wealth creation," Lovett-Reid said. "It might be hard to believe, but we could see prices fall."
She said homeowners need to be prepared for unexpected costs that most renters wouldn’t be on the hook for.
"With a home, your mortgage costs might be a known for you, but the wildcards with home ownership can be if the roof leaks, the pipes burst or the furnace breaks down," Lovett-Reid said.
For those who can buy a house, Lovett-Reid stressed that it's not always the right option.
"I think you need to look at your individual situation. Is your life stable? Is your job stable? Is your employment stable?" Lovett-Reid said.
She believes that people must ensure all parts of their life are "stable if you're making a commitment into real estate."
"I always think purchasing real estate is one of the best decisions for the long term, but I don't always see it that way for the short term," she said.
RENTERS CAN GENERATE WEALTH TOO
While Lovett-Reid said she leans towards home ownership being a smarter financial move, she still believes there are many benefits of renting.
"Renting doesn’t always mean you’re just throwing money away and just making your landlord richer," Lovett-Reid said.
She said the major benefit of renting is that it can be more financial stable for people not wanting to foot the bill for unexpected home repair costs.
Lovett-Reid also said renting offers people better flexibility if they ever need or want to relocate, as selling a home can be very expensive.
She also said renters with discretionary income can generate wealth if they are smart with their money.
"It comes down to not spending every dime coming in," Lovett-Reid said.
For people who still have discretionary income after paying their rent, Lovett-Reid recommends tucking that money away.
"It's a decent strategy to take that money and invest it in the market. You can be renting and still have wealth creation," she said. "Particularly if you’re young."
WHAT IF YOU CAN ONLY AFFORD OUTSIDE TORONTO?
Lovett-Reid said moving outside Toronto just to chase the dream of home ownership isn't always the right move.
"You could still get there and the reality is you still may not like it, no matter how hard you’ve tried to convince yourself that it’s the right financial move," Lovett-Reid said.
She suggests that anyone who is considering moving out of the city just so they can afford a house should rent in the area first to make sure they like it.
CTVNews.ca Top Stories
Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Stormy Daniels describes meeting Trump during occasionally graphic testimony in hush money trial
With Donald Trump sitting just feet away, Stormy Daniels testified Tuesday at the former president's hush money trial about a sexual encounter the porn actor says they had in 2006 that resulted in her being paid to keep silent during the presidential race 10 years later.
U.S. paused bomb shipment to Israel to signal concerns over Rafah invasion, official says
The U.S. paused a shipment of bombs to Israel last week over concerns that Israel was approaching a decision on launching a full-scale assault on the southern Gaza city of Rafah against the wishes of the U.S.
Former homicide detective explains how police will investigate shooting outside Drake's Bridle Path mansion
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
Northern Ont. woman makes 'eggstraordinary' find
A chicken farmer near Mattawa made an 'eggstraordinary' find Friday morning when she discovered one of her hens laid an egg close to three times the size of an average large chicken egg.
Susan Buckner, who played spirited cheerleader Patty Simcox in 'Grease,' dead at 72
Susan Buckner, best known for playing peppy Rydell High School cheerleader Patty Simcox in the 1978 classic movie musical 'Grease,' has died. She was 72.
Jeremy Skibicki has 'uphill battle' to prove he's not criminally responsible in Winnipeg killings: legal analysts
Accused killer Jeremy Skibicki could have a challenging time convincing a judge that he is not criminally responsible for the deaths of four Indigenous women, a legal analyst says.
Bye-bye bag fee: Calgary repeals single-use bylaw
A Calgary bylaw requiring businesses to charge a minimum bag fee and only provide single-use items when requested has officially been tossed.
Alcohol believed to be a factor in boating incident after 2 men die: N.S. RCMP
Two Nova Scotia men are dead after a boat they were travelling in sank in the Annapolis River in Granville Centre, N.S., on Monday.