Rising rents and failing mortgage rates are shifting market dynamics
Canadians are facing a familiar dilemma but with a new twist: to rent or to buy? The financial landscape has shifted as fixed mortgage rates dipped from 5.49% in October 2023 to 4.89% in January 2024, with the scales now tipping in favour of buying in some cities.
Zoocasa dove into this debate by analyzing 26 Canadian markets, comparing the cost of renting one- and two-bedroom apartments with the monthly mortgage payments of homes, assuming a 20% down payment on a 5-year fixed mortgage rate of 4.84% amortized over 25 years. Additional costs such as utilities and property taxes were not included.
Winnipeg emerged as the city where buying is slightly more affordable than renting, with an average mortgage payment of $1,521 compared to the average rent of $1,526. Close behind were Regina and Quebec City, where the differences between renting and owning were a mere $54 and $62, respectively.
Edmonton also stood out as a notably budget-friendly option for potential buyers, presenting only a $253 gap between renting and owning, positioning itself as a viable alternative to the escalating prices in Calgary. Meanwhile, Halifax, Montreal, and Saskatoon showcased gaps under $500, marking them as competitive markets for those weighing their options.
Read next: New home prices remain steady in Canada
While some cities like Kingston, London, and Ottawa showed slightly higher gaps, just over $500, they still represented markets where the lines between renting and buying costs are blurring. In particular, Kingston was highlighted as the most affordable Ontario market for purchasing a home.
On a national scale, the difference between the costs of renting and owning is surprisingly narrow. For condos, the average monthly mortgage payment is only $77 more than the average rent, suggesting that condo ownership remains an attainable goal for many. However, townhouses displayed a larger discrepancy, with a $669 difference between renting and owning.
While Vancouver boasts the highest average monthly mortgage payment above $5,000, it's Surrey that faces the widest gap between renting and owning. Burlington and Brampton follow suit, with significant differences, though Toronto's gap is slightly less stark.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
