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Ever since we had a kid, my friends and family were like “well, I guess you’re going to have buy a house now!” After all, they reasoned, we couldn’t possibly raise a kid in a one-bedroom apartment, right?
FIRECracker was determined to prove them wrong, and since room sharing with an infant is recommended for the entire first year of life to avoid SIDS, one bedroom was fine for at least the first year. And as Little Match Stick got older and we needed to sleep train, we slept in the living room on our sofa bed and gave up the bedroom. It felt slightly less comfortable than year 1, but still doable. Sure, we could’ve afforded to upgrade to a larger space, but we didn’t.
Was it pride? Maybe. Was it the need to prove the haters wrong? Possibly. Was it the fact that we were paying $1600 a month for a one-bedroom apartment in midtown Toronto? DEFINITELY.
I love many things about FIRECracker, but by far my favourite non-sex-related thing I love about her is her ability to find the best rental deals. When we were working, we were living on the top floor of a house in the Greektown neighborhood of Toronto for $800 a month. When we returned back to Canada due to the pandemic, we stayed in a series of AirBnbs that cost next to nothing. And when we settled into a place for a long term lease, it was for $1600 a month.
Each time, we (or rather, she) were taking advantage of price arbitrage opportunities that others couldn’t (or wouldn’t). The $800 a month rental in Greektown was so cheap because the unit didn’t have laundry, and so we needed to use a laundromat a block away. Coin laundry cost maybe $20 a month, so that seemed like a clear win to us, so we took it.
During the pandemic, borders closed, and tourism dropped to zero. That’s when AirBnb owners panicked and dropped their prices, to the point we were paying $30 a day for downtown condos nobody would touch.
And when COVID drove everyone to flee city centers everywhere towards farmland in the suburbs, that’s when FIRECracker pounced.
The point of all this is to stay, FIRECracker is really good at finding rentals.
That being said, now that Little Match Stick has turned from a squirmy blob into an energetic, destructive toddler, the one-bedroom apartment is starting to run out of space, so with a great deal of trepidation, we are now looking two expand our living space to a two bedroom apartment.
Let’s go through our thought process on whether it finally makes sense for us to buy or not.
So without further ado, let’s…MATH SHIT UP
Rent vs Buy
For the purposes of this comparison, we are going to be using a two-bedroom, 1 bathroom apartment with a unit size of 800 square feet.
Right now, according to Zumper, which is a rental listing site, the average rent for a 2 bedroom in Toronto of this size is $2395 a month.
So to figure out whether it makes sense to buy, we have to figure out how much of our portfolio we’d be willing to liquidate. Each $1 we spend out of our portfolio means we lose $0.04 of passive income, as per the 4% rule. So in order to justify losing that passive income, we’d have to be saving at least that amount in ongoing housing costs by buying an equivalent property.
At first glance, you might think that since by buying we’d be saving the rent, then the Housing Costs Saved would be simply the annual rent, like so.
HousingCostsSaved = Rent x 12
However, we know that when you own a property, there are new ongoing costs you have to pay that renters don’t. So we have to take that into account.
The biggest one is condo or strata fees. In order to make the comparison fair, we want to compare renting or owning a similarly sized property, so in this case, we’d be buying a condo.
Condo fees in Toronto are on the more expensive side, with the median amount being $0.70 per square foot. We’re looking at comparing an 800 square foot unit, so this would amount to 800 x $0.7 = $560 per month. We need to subtract this from the HousingCostsSaved since this is a new amount we’d by paying as an owner.
HousingCostsSaved = Rent x 12 – CondoFees x 12
Then there’s maintenance. While building management is generally responsible for the maintenance of the common areas, you may still be hit with special assessments if the repair costs come in higher than expected. Plus, you are still responsible for damage that maintaining your unit. Real estate experts suggest budgeting 1% of the condo’s value, annually, to account for this. Again, this is something you wouldn’t have to worry about as a renter, so we have to account for that.
HousingCostsSaved = Rent x 12 – CondoFees x 12 – BuyPrice x 1%
We don’t actually know what the Buy Price is yet, so we’ll leave that as a variable that we’ll solve later.
The third thing we need to account for is property taxes. In Toronto, the current property tax rate as of 2025 is 0.75% of the property’s assessed value.
Again, this cost is a percentage of the purchase price, which we don’t know yet, so we’ll express it in terms of the variable “BuyPrice” and solve for it later.
HousingCostsSaved = Rent x 12 – CondoFees x 12 – BuyPrice x 1% – BuyPrice x 0.75%
These are the top 3 recurring costs associated with owning that renters don’t have to deal with, and while there are many more, like insurance, utilities, and real estate transaction costs, let’s see what effect these top 3 have on our purchase price to see if owning a condo even makes sense to look into.
If we sub in the numbers we know, this is what it looks like
HousingCostsSaved = $2395 x 12 – $560 x 12 – BuyPrice x 1% – BuyPrice x 0.75%
HousingCostsSaved = $28,740 – $6,720 – BuyPrice x 1% – BuyPrice x 0.75%
HousingCostsSaved = $22,020 – BuyPrice x 1.75%
Remember, in order for owning to make sense, the amount of passive income I’m giving up has to equal the housing costs saved. So to put this into a mathematical expression, that means.
BuyPrice x 4% = HousingCostsSaved
Let’s sub in that equation from earlier.
BuyPrice x 4% = $22,020 – BuyPrice x 1.75%
Cool. Now the only variable is BuyPrice. We can solve it.
BuyPrice x 5.75% = $22,020
BuyPrice = $22,020 / 5.75%
BuyPrice = $382,956
So that means that for the equivalent condo to be cheap enough for me buy it, it has to sell for $382k or less.
Umm…that’s not likely. Even with the recent real estate correction that’s been happening in Toronto, condos are still not that cheap. According to the Toronto Real Estate Board’s Q3 2025 report, the average selling price of a 2BR condo was $650k. In order for condo prices to be low enough to entice me away from renting, they would need to fall by more than 40% from current levels.
So that’s a hard no.
This tells us a few things.
Toronto real estate is STILL overpriced compared to rent, even with the recent drop in the real estate market. Even though I can buy it without a mortgage, my money is still generating way more passive income in the stock market to make it worthwhile.
And second of all, owning a condo is the worst, most expensive way to own real estate. You get to plop down all this money to buy the place, yet you don’t even get that much control over your property. You have to ask the condo board’s permission to make any changes to your unit, you have no control over how well they fix stuff in the common areas, and if they screw up and do something that damages the property, they get to bill you for it in the form of special assessments! It costs you all the money, yet you get none of the control.
So even now, with more than enough money in our investment accounts to afford real estate in one of the most expensive cities in Canada, it STILL doesn’t make financial sense to buy. I would lose more than twice the passive income that money would be generating while invested than I would gain back in saved housing costs.
So, is it time for us to jump into the housing market? No, no, a thousand times no!
What do you think? Would you buy if you were us? Let us hear it in the comments below!
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I mean, it makes no sense to buy. We live in the vancouver area and sold our townhouse (luckily at the covid real estate highs). Put the money we got into ETFs and have been putting a huge chunk in every month still. We sold and moved into my parents basement suite for cheap rent (with 2 kids) after coming across your blog and others like it. It made no sense after that to keep owning when we had this option.
Okay that’s for city living. I am thinking of splitting my time between US MA where I own a home (mortgage 3.5%) and either buying or renting an apt (flat) in Scotland. This is cause my Mum is there and getting elderly and needing more help, but if I move in with her I shoot myself 😜 I see apartments for sale at £85k-120k or rentals at £1k per month. Now if I want to be there 6 months a year (avoid becoming UK tax resident) I can’t decide if I should buy or rent. Even though only there 6 months I would likely keep the rental year round so I know what I am dealing with. 🤷♀️
Hi Fiona,
Be careful with the UK as there are more rules than just the time spent to establish whether you are a Uk tax resident or not. See link below.
https://www.gov.uk/tax-foreign-income/residence
Some markets are still overpriced in my opinion, interest rates are still too high and tax laws are different in different countries. Here in the US we can deduct mortgage interest on our taxes. I don’t think you can do that in Canada. I own 3 condos and a primary home in the US but I bought them a long time ago. I’m not sure I would advise anyone to buy now. Especially with all the stock market gains we’ve seen. If you were to buy, I would suggest buying a small house in the suburbs or in a place that has a backyard where your kid can play. If the suburbs do not appeal to you, then I’d keep renting in the city. Lots of people in cities rent for their entire lives– even with kids. Having kids does not mean you need to buy real estate. I’m not sure why people seem to think those two things must occur together– especially if the math does not make sense for their family.
Even a one-bedroom can be made to work with kids. A wall bed for the parents in the living room is an investment but more comfortable than most pull out couches and cheaper than buying a house by far! I highly recommend the blog 600sqft.com for inspiration, written by a Canadian woman living with her husband and two kids in Vancouver.
I was going to say the same thing! We absolutely love the 600sqft.com blog for ideas on living small with kids. Instead of moving when they learned they were pregnant, the Vancouver couple rejigged their one bedroom apartment that they loved to fit their growing family. They ended up staying there until their kids were 9 and 7, and then upsized to a one bed plus den. They promote the benefits of living small with families. The site has excellent design hacks, and features beautiful small house tours from around the world showcasing families living large in a small space. Highly recommend!
Also the book Simplicity Parenting is great. All about using the power of less to raise extraordinary kids.
We will never rent. I loathed it when I was a student and we love the freedom of owning a house and doing what we want. And we have made more money on real estate than our investments. That said, I understand how this may not make sense in Toronto or Vancouver
It seems that renting certainly makes financial sense for high cost of living areas (like Toronto, Vancouver) but I wonder how compelling renting would look like in a lower cost of living area like Edmonton.
The only way buying in Vancouver would make sense is if you bought a large single family house and renovated it so it had 4 suites…. Live in 1 suite and rent out the rest… that’s the only way to make those numbers work… but then you’re managing a property manger to manage tenants so not worth it. I agree renting seems to be the best
Very good analysis. But seems like the data you have put for 2 bedroom condo in Toronto is wrong. When I checked zumper for average rent for 2bedroom in Toronto. It’s coming out to be $3000. Even Gemini is showing $3200, which is more realistic than $2395 than what you have put. I mean sure you can somewhere get a good deal for $2395, but that’s a anomaly not average.
For condo apartments, it’s not fair to put the home maintenance fee at 1%, since the exterior and some of the interior (plumbing garage cleaning etc) is covered by the building. So wouldn’t it be fair to put the maintenance fees at 0.3 or 0.5% ?
One thing which I find is missing, is that if you’re only looking at Toronto, the rent prices increases more than inflation in Toronto, where as in buying, you would only increase your maintenance fees and property tax with inflation. So you should factor this in your calculation.
From Gemini,
“Based on recent market data for a 2-bedroom apartment in Toronto, the average rent generally falls in the range of: C$2,479 to C$2,914 per month.”
This is equivalent to about $1,770 to $2,100 US Dollars.
Here. This for C$2000/month, or US$1,400/month:
https://www.zillow.com/homedetails/120-Broadway-Ave-1501N-Toronto-ON-M4P-1V8/458299498_zpid/
And this one for C$2,600/month, or US$1,800/month:
https://www.zillow.com/homedetails/117-Broadway-Ave-706-Toronto-ON-M4P-1V2/443029284_zpid/
I don’t see a square footage on either of these zillow listings. I’d be surprised if either of these were 800 sq ft. I live down the street from these buildings.
Stick with investing the money in the market. A home is not an investment unless you have multiple properties where you can rent out and flip.
Put FireCracker on the task and if she can’t find a housing deal that makes math sense, then rent. Maybe a small home. Condos/townhomes are a financial sink hole, especially older ones. And you have the hassle of feeling like you’re in an apartment with neighbors right thru the the wall.
As a sidebar — hopefully you have patented or copyrighted the phrase ‘Math Shit Up’. You could sell t-shirts, mugs, stickers….. side hustle, man….. 🙂 Thanks.
I want the mug.
I think you will still eventually buy at least one home (condo and/or SFH) — and I predicted that ~7 years ago on this blog!
Given the enormous portfolios now you have accumulated (both Portfolios A and B), the likelihood of that happening is even higher now than 7 years ago. It just makes too much sense in terms of providing familial and financial stability.
Whatever you do, though, I wish the best of luck!
Hi Wanderer and Firecracker,
I was wondering if you could run the numbers for buying a house? (Without the condo fees, would that change the outcome?)
Hey, it is a great analysis. Financially, the math makes sense not to buy but rent. Totally agreed.
I live in Melbourne. Property rent is super expensive. However, it still makes sense to buy for main reasons like;
a. Piece of mind not moving around,
b. not dealing with landlord for rent increases and essential maintenance of the property etc.
c. limited option to change anything
Coming back to financials again, the capital growth and taxation should be factored in to the equation to understand the full picture as a Total Rate of Return to make an informed decision to-Buy/Rent.
2c from down under.
They don’t have duplexes? You live in one side, and the other side you rent out. Still “passive”, and may help reduce costs of living and allow you to reduce withdrawals. But meh. Up to you.
What about taxes on investments and house price increases?
These are good points.
First of all, as noted, in an example like this, where the people actually have the money to buy with no mortgage, that’s exactly right that the taxes paid to sell those assets to get cash is a huge consideration.
Also agreed on the second point. To me, if one is going to log the lost return on the capital that is used by the house (i.e. according to the 4% rule), that assumes there is no chance that the real estate will appreciate in value.
Don’t get me wrong, I’m not a real estate fan, but I think that conclusion is too harsh.
The way I look at it for myself (I own the worst kind of real estate, an apartment style condo), I don’t deduct the forgone return on the money that I invested in the condo (again, according to the 4% rule), because as noted, that would assume that the condo has NO CHANCE of appreciating.
So, I don’t deduct the loss return as a cost in my analysis, but I just recognize that he chance of my condo appreciating is low, in other words, it’s probably a sucky investment.
Thank God I have non-real estate investments, again, not a real estate fan!
To become financial independent in Germany, you have to live in rent and buy a house or combo to becoming a landlord…. First of all, you can buy with huge leverage, can deduct all costs as a landlord from your tax and can sell after 10 years tax free. This you cannot do with for own house, where you live in.
So for me, it is clear: Own house = liability, house for rent = asset.
Thank you for this article. Personally, it really helps to get perspective on how to proceed.
We currently live currently in Majorca, Spain which is an (extremely) inflated market. Yet, there is a lot of pressure in relation to owning a property within the wider family and mainly to provide stability for our family. We are not FIRE (yet) and therefore are not lucky enough to buy outright the property. When taking into account mortgage cost, local real estate taxes, property transfer tax (between 8 to 11% here), one-off buying cost, and most importantly (and detrimentally) the opportunity loss for the down payment to grow in the stock market (assumed at 5%), the resulting price for the property to buy (using ChatGPT fast computation) would get us a studio apartment and it is not like we have a small rental budget (>2200€/month). So buying in Majorca is only for the ones who either have a lot of money and don’t care so much or don’t MATH SHIT UP I guess!
Feedback welcome.
I would agree in your case, especially you travel quite a bit. Owning a house is less a financial choice than a life choice anyways. It would make sense to own a reasonably priced house, pay it off in a place you enjoy in general so the later life expenses could drop quite a bit and also enjoy the bigger space and privacy etc. The sense of community brought by owning a house in a nice neighborhood could not be simply measured by numbers. Of course there is always a financial risk due to today’s job market. But more and more I observe that people tend to search for employment closer to their main residence once established, especially with family and friends nearby or kids going to schools etc. I feel like people don’t like to uproot when they have stayed in an area for a few years and like it well enough. This tendency grows as people age as well. Kids could adapt well whatever lifestyles the parents choose as long as parents are attuned to the kids’ emotions and gentle and loving to them in general.
I remember my unwillingness to move to a bigger city at the end of second grade because I missed my friends. Then I made new friends in the bigger city until I moved to a different city for college. Then I moved to the US after college for education and eventually stayed. Once we had our house and the child went to school and I found the community very nice, I don’t really want to move for a while. It is like a home base that I could return to, maybe like a sense of belonging in the bubble. There is only one childless friend who moves quite a bit and lives like a digital nomad and I guess that runs in her blood. Most other friends, with or without kids, eventually want to settle down in one area to establish a home base, which typically involves purchase of a property if applicable.
You forgot to factor in appreciation of the real estate.
While I agree that many times it does not make sense to buy, I’m not sure you “Mathed Shit Up” in quite the right way. The purchase price + ownership costs has a yield equal to the rent you no longer have to pay + an assumption on capital appreciation. You then need to compare the excess of the purchase price + ownership costs to the return you would be receiving in the market (as you will still need to liquidate the amount needed to pay your rent.
Your way basically assumes you have lit the money that went into the property on fire. The truth is that, even with minimal percent appreciation, you would likely get most of that money back when the property is sold (assuming a minimum of 5 year hold period), which isn’t the case with the rent you are paying. It may well be that it still doesn’t make sense to buy, but I think you at least need to give the comparison a fair shot.
The house/condo prices mentioned in this article, $600K-ish, that’s roughly the same as 1,000 shares of VOO…
…I’ll take the VOO over the house/condo every time.
There are tons and tons of good 2-bedroom Toronto apartments available at and below $2395. A casual Zillow search confirms that.
I’ve spent my whole life delivering messages that nobody wants to hear. So here’s another one. The article dances around the real issue. What would it cost to buy a 3 bedroom, 2-3 bathroom, 2000 square foot modest single family house in a nice area of Toronto? $1-2 million? Maybe just under a million if you get a fixer upper? Sure, you could liquidate some of your portfolio to pay for that, but then you wouldn’t have enough left over to pay for its ongoing expenses and still be FIRE. You’d have to go back to slavery and servitude, uh hum, ah, I meant “work.”
That is the real issue. The life of our parents and grandparents is too often no longer possible, even for people like you and me. Why? Basically, because there are too many human beings on the planet and not enough natural resources, including land area. Sure, there are some areas where population density is low and prices of life are cheap. Many others simply have too many people crammed into too small a space, with nowhere to go. Earth’s population in 1960: 3 billion. 2025: 8.2 billion. Toronto mirrors that growth trend. We have too many human beings: too many rulers, too many administrators, too many servants, too many of every kind. That’s it. We’d better start colonizing space.
Read Isaac Asimov, The Caves of Steel.
But once again you have missed the point I make on my own site. ” a Mortgage is a hedge against inflation” Why? In my example i bought in 2012, doesn’t matter the price, but it doubled in value. My mortgage is based on 2012 pricing, not today.
Yes if you base your comparison on prices of today, it will always be cheaper to rent. But compare what you are paying now, to what your mortgage would be today, if you had purchased 10 years ago.
I pay $2000 to the bank, of which less than $600 is interest. Even calculating extra property insurance, maintenance etc, my overall housing expense, today is under $1000 a month for a 3 bdr Million Dollar house in Victoria. That expense stayed the same, and in actual fact, went down as inflation went up, because of the extra payments we made on principal when we had the cash, mostly from income tax returns.
My son has just closed on a Townhouse, the builder dropped the price $55,000 to get it to move, as nothing is selling in Victoria. It is a buyers market here, and across the country. If you need a home, and your tired of renting ( we rented for 10 years after getting married, and got so sick of being kicked out of our home… it wasn’t our home) then now is the best your going to get. What will happen next year ? Who knows, but I will tell you this, rent will keep going up with inflation, mortgages don’t. (they just fluctuate with interest rates)
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I think a lot of buyers are asking the same question right now. While market conditions can vary by area, taking time to review trends, pricing history, and local data can make a big difference before making a decision. I recently found some useful insights through LA Property Market, which helped provide a clearer picture of property activity and valuation patterns. Thanks for sharing this perspective—it’s a helpful discussion for anyone considering a move into the housing market.
This is a great discussion, especially with so many buyers trying to determine the right time to enter the market. Understanding local trends and property data can make a big difference when making such an important decision. I’ve found that provides useful insights through its Shelby Property Trends resources, helping people better evaluate market conditions before taking the next step. Thanks for sharing these practical points and encouraging informed decision-making.
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