The Pressure to Buy
Everyone tells you renting is "throwing money away." My parents ask when I'm going to "get on the property ladder." Colleagues brag about their equity gains. But I ran the numbers, and for my situation in Vancouver in 2024, renting is the smarter financial choice.
My Financial Breakdown
I rent a 1-bedroom apartment in Mount Pleasant for $2,200/month. A comparable condo to purchase would cost around $650,000.
With 20% down ($130,000), a mortgage at 5.5% over 25 years would cost me approximately $3,200/month in principal and interest alone. Add strata fees ($450), property tax (~$250), insurance ($100), and maintenance reserve ($150), and we're looking at $4,150/month minimum.
That's $1,950 more per month than my rent. Per year, that's $23,400. That is a lot of sushi.
The Opportunity Cost of the Down Payment
If I invested that $130,000 down payment in a diversified index fund (I like XEQT) averaging 7% annual returns, it could grow to over $250,000 in 10 years, compared to uncertain real estate appreciation.
If I also invest the $1,950 monthly difference, that portfolio could exceed $600,000 in the same period. This isn't theoretical; I have a spreadsheet that tracks this monthly.
Why This Works for Me
I'm not saying buying is always wrong. Homeownership provides stability, forced savings, and potential appreciation. But the break-even calculation in Vancouver is brutal right now.
For buying to make sense for me, I'd need to stay in the same place for 10+ years and see consistent appreciation. Given my career might take me to other cities, that's a big bet.
My Strategy
I max out my TFSA and RRSP every year. I keep my rent reasonable by not upgrading to a fancier place. I reassess annually. Renting isn't giving up. It's a valid financial strategy when the numbers support it.