Should You Rent or Buy in Toronto Based on Today’s Prices?

Both home prices and rent are through the roof in Toronto and the surrounding GTA, putting both buyers and renters in a difficult financial position. If you’re looking to make a move soon, should you buy or rent?

Of course, the biggest factor to consider when making this decision is the price to buy versus rent. And right now, either option comes with a huge price tag.

The rise in interest rates is another issue that’s hitting buyers where it hurts. Because of soaring rates, many Torontonians are making the switch to renting. But it’s worth noting how much rent costs these days.

Average Rent in the GTA is Up by 21% Annually

According to TorontoRentals.com Toronto and Greater Toronto Area (GTA) Rent Report for September 2022, the GTA’s average rent price for all property types is up 21% year-over-year and now sits at $2,528. That’s a stark contrast from April 2021 when the average rent was just $1,972 per month.

That seemed to be the valley of rent prices, as rent has since continued to spike. Here’s how average rents breakdown according to the number of bedrooms:

 Studios: up 22% annually to $1,771 per month

 1-bedrooms: up by 19.6% annually to $2,093 per month

 2-bedrooms: up 26.3% annually to $2,746 per months

 3-bedrooms: up over 25% annually to $3,337 per month

Meanwhile, the average price for home sales has actually dropped over the past few months in several areas in the GTA. So, does this mean now is the right time to buy a home, or should you rent?

Home Sale Prices in the GTA Have Decreased

According to the MLS Home Price Index (HPI) Composite benchmark, the average home price in the GTA is now $1,086,762. That’s actually a decrease of 4.3% year-over-year.

But while prices may have gone down, just under $1.1 million for a home is a tall order for most buyers. For this reason, condos are becoming increasingly attractive to buyers, though these types of dwellings are also incredibly expensive.

The average price for a condo in Toronto is $744,092. They’re slightly more affordable in Peel Region at $616,876 and York Region at $687,843.

Should You Rent or Buy?

Based on the information above, you’ll be spending an average of $2,528 in monthly rent, or $1,086,762 to buy. If you’re deciding whether to buy or rent, you’ll need to crunch some numbers to see how your monthly costs will compare.

Let’s assume the following:

 Down payment: 10% down payment

 25-year amortized mortgage

 5% interest rate

 5-year term

To buy a $1 million home, your monthly mortgage payments would be $5,234. To buy an average-priced condo in Toronto at $744,092, your monthly mortgage payments would be $3,894.

You could bring down these monthly payments by making a bigger down payment. For instance, by making a 20% down payment on the same properties, your monthly mortgage payments would be as

follows:

 $1 million home: $4,652

 $744,092 condo: $3,462

If you’re still unsure about whether to buy or rent, reach out to a seasoned real estate team to find out what your options are. Call the April Williams Group today!