Brandon Hepworth and his partner have come to terms with never owning a home.
"It's definitely not within our means," he said.
Hepworth and Lorie Ganley, both 28, live in a one-bedroom apartment in Montreal and are paying $1,200 a month in rent. Although buying was once something they discussed, rapidly rising housing prices have made home ownership unrealistic for them.
"We would love to have a place, but it's not something that we're actively working on," said Hepworth.
The couple recently went back to school and are working part-time. Hepworth is studying electrical engineering while working an administrative job at a hospital. Ganley is completing her master's degree in theatre and working at a local theatre.
Their next financial goal? A car, or a vacation, said Hepworth.
With housing prices rising at a significantly faster pace than wages, home ownership has become increasingly unaffordable for Canadians.
February housing data from the Canadian Real Estate Association shows the average home price in Canada jumped 20 per cent over the last year.
According to a report by Mustel Group and Sotheby's International Realty, over 80 per cent of respondents ages 18 to 28 living in urban centres said they're worried they won't be able to purchase a home in the community of their choice due to rising home prices and half have completely given up on the dream of owning a single-family home. The survey of 1,502 respondents was conducted in in fall 2021.
A place to call your own
For Hepworth, owning a home would provide reassurance that his space was truly his. However, the couple is well aware of the hefty cost associated with owning. Hepworth said Ganley's parents almost went bankrupt because of maintenance costs relating to their roof.
"I'm not going to go bankrupt because the place that I rent the roof leaks," he said.
In Toronto, Javan Wang and his partner, Khrystyna Skira, 26, don't see themselves buying a home in the foreseeable future.
The couple is renting a two-bedroom condo in North York for around $2,500 a month. Wang, a product designer, and Skira, who works in IT, said if they were to buy, they could only afford a space half the size of the one they're living in and they'd probably need to move further away.
That's in contrast to their situation right now: they live along the subway line, near shops and restaurants, and are in a rent-controlled building.
"Renting right now seems to be the better option overall," said Wang.
The couple is hoping to buy a home in six or seven years. However, if prices continue to rise, that timeline will likely be pushed back further, said Wang.
Both raised by single mothers, Wang and Skira are surprised to find themselves in this situation while earning more money than they'd ever seen coming into their homes while growing up.
"I grew up in a semi-detached home," said Skira.
"There's no way we could even afford anything close to something of that size these days."
For Wang, owning a home gives an extra sense of security that renters don't have when dealing with a landlord who might choose to sell the home or be difficult with repairs.
"It's just kind of the North American dream," he said.
"You're kind of raised on this idea that you have a yard of your own."
Right decision depends on stage in life, says real estate prof
Murtaza Haider, a professor of real estate management and the director of the Urban Institute at Ryerson University, said renting and buying can each make sense at different points in life.
For those who are in their 20s or early 30s, renting might be a better option because it provides flexibility.
"When you're young, I would say that the better option is to rent until such time that you know that you are here for five to 10 years and that's where you invest in ownership," said Haider.
However, as people move into other stages of their lives, such as starting a family, Haider said pursuing home ownership would make sense.
As to whether there's a financial case to forgo buying in favour of renting, Haider doesn't believe so.
"I know people have written books about it, making cases about the wealthy renter. I don't buy it for a second," he said.
Haider said data shows higher wealth accumulation among homeowners than renters, and while not all of that wealth accumulation is due to home ownership, part of it relates to building equity through "forced savings."
"Your monthly mortgage is a forced savings program," he said.
Haider said young people might be overly pessimistic about their home ownership prospects. More realistic goals, such as considering condos instead of single-family homes and moving outside the city and commuting in, he said, might be more appropriate.
Questioning the home ownership orthodoxy
Ben Felix, a portfolio manager and the head of research at wealth management firm PWL Capital, has a different perspective on the rent-versus-own debate.
"There's not a clear choice," he said.
Felix, who has a YouTube channel and gets into personal finance topics including this very issue, said people often dismiss renting as "throwing your money away."
However, home ownership has unrecoverable costs as well, he said.
The portfolio manager uses what he calls the "five per cent rule" to compare renting and owning. He said if the cost to rent a home is five per cent of the price to buy it, then the two choices are financially comparable.
With the five per cent rule, Felix said renters who spend less than that five per cent are actually in a better financial position than if they were to buy.
Finances aside, people overestimate how happy home ownership would make them, said Felix. Felix said research shows mixed findings on whether homeowners are any happier than renters.
Felix said those who choose to move out of the city to buy a home face commutes, which can negatively impact well-being. That's in addition to the time spent taking care of repairs and other responsibilities of home ownership.
"I think taking other things like that into account is extremely important both on the financial side and the life satisfaction side."
ABOUT THE AUTHOR
Nojoud Al Mallees reports and produces stories for the CBC's business unit and is based in Toronto. Previously, she was a reporter with CBC New Brunswick. She can be reached at email@example.com and can be found on Twitter @nojoudalmallees.
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