Trending
A red, white, and black flag with a white background.

Royal LePage study says owning has more benefits than renting

Two keys with a house keychain on a wooden table.

A new study from Royal LePage has found that homeowners who can afford 20% down payments are much better off in the long run than renters.

In fact, buying a home in Canada with an uninsured mortgage puts homeowners ahead of renters in 91% of cases analysed.

“Canadians strongly value homeownership for many reasons. Not only is it a great source of pride, it is likely the largest and most significant financial investment most people will ever make,” Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd., said. Historically, homeownership has been very profitable for Canadians, many of whom have factored their real estate investments into their retirement planning. Owning a home is widely viewed as a means to save money and build equity.”

The Royal LePage-sponsored study was conducted by Will Dunning, an economist and housing market analyst who analysed 278 scenarios based on city and housing type and took into consideration historical data and future projections. Dunning ultimately determined that owning is a better future prospect than renting.

Despite monthly ownership costs being greater than rental expenses, a mortgage’s principal payment component is a form of saving because it is not a true cost. Moreover, interest payments on the mortgage are greatest in the first month but gradually decrease over the life of the mortgage.

In 253 out of the study’s 278 cases analysed, the net cost of owning a home, which was calculated by taking the total cost of ownership and subtracting the savings through principal repayment, was lower than rent—the report referred to it as the “ownership advantage,” which was $769 less a month in Q2-2021 than renting. In the 9% of cases in which renting came out on top, albeit only by $245, the ownership homes were in the luxury segment.

“For many people, buying a home—especially the first—is a landmark event and one of the most challenging decisions we’ll make in our lives,” Dunning, president of Will Dunning Inc., said. “It is a decision that is usually based on a lot of hard work. This research tests a belief that is held by a lot of Canadians, that owning is better financially than renting. And, it finds that this belief is very often correct.”

About the Author

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

Post a Comment

Related Articles

In May 2024, Manitoba’s real estate market continued its robust performance, recording 1,883 home sales through MLS® Systems—an increase of 14.5% from May 2023. This...

Nicola Wealth Real Estate has submitted a proposal to the City of Vancouver for a twin rental tower project at 2111 Main Street in the...

Most Trending News

In May 2024, Manitoba’s real estate market continued its robust performance, recording 1,883 home sales through MLS® Systems—an increase of 14.5% from May 2023. This...

Nicola Wealth Real Estate has submitted a proposal to the City of Vancouver for a twin rental tower project at 2111 Main Street in the...

Despite the desperate need for new housing, many developers have been forced to put projects on hold because crippling taxes, fees and levies have made...