How do I determine whether to rent or buy?

Choosing between buying and renting a home can be daunting. There is so much to consider to make a sound decision that aligns with your financial health, lifestyle and goals. Here are a few things I would encourage you to think about.

Review the market. As reported in the media, Ontario’s residential real estate market has cooled from the heat it experienced at the height of the pandemic. While there are many reasons for this, a few notable ones are the rising cost of living, higher inflation and increasing interest rates.

If you are leaning towards buying a home, you may be able to get one for less than you could last year. There may even be some wiggle room to negotiate terms and conditions, but this will depend on your local market conditions.

Although buying sounds appealing and may be a dream, I would like to flag that interest rates are driving up the stress test qualifications and mortgage rates too (a stress test is a high interest rate used by a lender on a mortgage application to qualify you). For more about that, please see my column published two weeks ago.

This essentially means that the number of people eligible for a mortgage, and the amount they are approved for, will likely decline.

Reflect on the implications of buying versus renting. There are pros and cons for each. Purchasing a property is a major financial undertaking. As a homeowner, you will be responsible for everything from general maintenance to taxes, utilities, and repairs.

However, you can freely renovate the space to your liking, and build equity over time.

On the other hand, renting could be less financially demanding. Your landlord will manage most, if not all, of the maintenance and repair needs, and might even cover the cost of utilities. You may also have more freedom to move out whenever you please, with a relatively short notice period.

But, since you don’t own the property, you will likely not be able to do any major renovations and will not be able to accrue equity over time.

Crunch your numbers and assess your priorities. Here are some questions to reflect on:

    • How much responsibility are you willing to take on?
    • Do you have the financial means to afford a down payment, mortgage and other expenses that come with home ownership?
    • If you are paying low rent, are you someone who can save the money you would have otherwise paid towards a mortgage?
    • Do you have a good credit score?
    • Do you value the flexibility to move or are you looking to build equity?

Everyone’s circumstances are different. Giving these questions some thought may help you make a choice that’s right for you. If you are still not sure, consult a real estate agent or financial expert to help you decide.

Whether you end up buying or renting, as with any legally binding contract, make sure to review the fine print and seek the counsel of a real estate lawyer before signing.

If you have a question for Joe about the home buying or selling process, please email

This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at, follow on Twitter @RECOhelps or on YouTube at

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