Buying a home or renting in Canada is often framed as a lifestyle decision. This article deliberately treats it as something else: a strict financial comparison based on one clearly defined simulation over 25 years.
There is no attempt here to generalize, moralize, or defend homeownership. The goal is narrower and more useful: take one realistic set of assumptions, apply them consistently, and examine what actually happens when renting is paired with disciplined investing in the stock market.
The result is not intuitive, but it is coherent.
Buying vs renting in Canada: what this 25-year simulation is really comparing
This analysis compares two specific strategies over a 25-year horizon, matching the length of a typical Canadian mortgage.
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Strategy A: buy a median-priced home in Canada
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Strategy B: rent a comparable home and invest the monthly cost difference in the stock market
Nothing else is optimized or adjusted mid-stream. The value of the comparison depends entirely on keeping the assumptions fixed.
The assumptions used in the simulation
Homeownership assumptions
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Purchase price: $675,000
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Down payment: 20% ($135,000)
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Mortgage amount: $540,000
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Mortgage term: 25 years
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Average mortgage rate: 4.5%
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Home price appreciation: 3% annually
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Maintenance and repairs: 1.5% of home value per year
Renting assumptions
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Initial monthly rent: $2,000
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Annual rent increase: 3%
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Renter’s insurance: $30 per month
Investment assumption (critical)
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The renter invests 100% of the monthly cost difference
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Annualized investment return: 9%
This 9% assumption is intentionally conservative relative to long-term U.S. equity market history and recent decades, while still reflecting an equity-heavy portfolio held over a full market cycle.
The outcome after 25 years
At the end of the 25-year period, the simulation produces a clear result:
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Net worth when renting and investing: ~$3.14 million
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Net worth when buying: ~$1.36 million
The renter ends the period with roughly $1.78 million more in net worth.
This is not a marginal difference. It is a structural one.
Why renting plus investing outperforms in this scenario
Compounding dominates home appreciation
A home growing at 3% annually roughly doubles in value over 24 years.
A portfolio compounding at 9% doubles approximately every 8 years.
Over 25 years, the difference in growth velocity overwhelms the slower appreciation of residential real estate, even when investments are made gradually rather than upfront.
The true cost of ownership reduces effective returns
This simulation does not treat mortgage payments as “forced savings” alone. It includes:
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interest paid over the life of the loan
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ongoing maintenance and repairs
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recurring ownership costs that never disappear
These expenses materially reduce the owner’s ability to compound wealth elsewhere, even with moderate home appreciation.
Leverage is not enough at this rate differential
While real estate benefits from leverage, the effect is muted here:
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borrowing costs exceed property appreciation
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interest erodes the leverage advantage
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net asset growth remains slower than equity markets
The leverage exists, but it does not dominate the outcome.
What this simulation deliberately does not claim
It assumes perfect investment discipline
The renter invests the cost difference every single month for 25 years.
No skipped years. No panic selling. No lifestyle inflation.
Without that discipline, the results collapse quickly.
It ignores individual tax structures
The 9% return is a gross return. Tax-advantaged accounts can preserve much of it, while taxable accounts will reduce it. This affects magnitude, not direction, over a multi-decade horizon.
It excludes non-financial value
Stability, control, emotional comfort, and protection from housing insecurity are real benefits of ownership. They are simply outside the scope of this analysis.
What this comparison actually demonstrates
Under a single, coherent 25-year scenario in Canada:
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moderate home price growth
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realistic mortgage costs
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disciplined long-term investing
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no behavioral shortcuts
Renting and investing the difference can produce substantially more wealth than buying a home.
This does not mean buying is a mistake.
It means buying is not inherently superior from a financial perspective.
The common claim that “renting is throwing money away” does not survive this type of controlled comparison.
Why running your own version of this simulation matters
Small changes can materially shift outcomes:
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lower realized investment returns
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higher or lower rent growth
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different maintenance assumptions
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long-term mortgage rate changes
The conclusion should never be borrowed. It should be tested.
The simulation used here is adjustable and transparent:
https://realist.ca/
That is where the debate stops being emotional and starts being analytical.
