Is buying a home always better than renting?

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Is buying a home always better than renting

Client profile

portrait of Kevin, a 32-year-old professional with short dark hair, smiling in a relaxed indoor environment.

Alisha

30-year-old, single, with a stable full-time income
First-time home buyer purchasing for personal use
Looking for a 1–2 bedroom apartment
Prioritizes living within walking distance to work and social circle
Uncertain about staying in the city for the next 5+ years

Decision

Should I buy a place now, or keep renting and invest the difference?

Decision

Should I buy a place now, or keep renting and invest the difference?

Decision

Should I buy a place now, or keep renting and invest the difference?

Paths explored

What assumptions are we making?

Path 1 — Buy now and hold long-term

Higher monthly cost, but builds equity over time
Works well if lifestyle and location remain stable

The breakeven rent of $2,039 per month is shown on a slider between renting and buying. The text below explains that if rent is higher than this amount, buying may make more financial sense.

Conclusion:

Since the market rent (~$2,400) is above the breakeven point, buying is financially favourable in this scenario.

Path 2 — Rent and invest the difference

Assuming all upfront costs and monthly savings are invested
Assuming fixed rent. Rising rent can reduce how much can be invested over time, thus reducing returns.

Bar chart showing investment growth over time, with contributions and gains stacked for each period from years 1 to 25. Total value increases from about $173K to $905K, with investment gains making up most of the growth over time.

Conclusion:

Investment returns are similar to the final home value (~$820K), but can drop if rent rises or savings are not invested consistently.

Path 3 — Buy now and sell in ~5 years

Buying gains come from leveraging a larger asset (home value vs invested cash)
Selling costs reduce buying gains, but do not fully offset the leverage benefit

Side-by-side comparison of buying and selling versus renting and investing over 5 years. Buying results in $182,678 in net cash after selling, while renting and investing grows to $173,025, showing a small advantage for buying.

Conclusion:

Buying is slightly better because it benefits from leverage on a larger asset, but the gap is small and can easily flip with changes.

Recommendation

Buy if Alisha plans to stay long-term. If the timeline is uncertain, renting and investing offer similar or slightly better returns with more flexibility.

What could change this decision?

👉 Time horizon

Planning to stay longer → Buy, because upfront and selling costs are spread over more years
Likely to move soon → Rent, because short-term ownership is more sensitive to transactional costs and market changes

👉 Rental price

Rent is too high → Buy, because renting becomes more expensive relative to owning
Rent is low → Rent, because more savings can be invested and grow over time

👉 Investment return

If it increases significantly → Rent, because invested savings grow faster
If it decreases significantly → Buy, because renting loses its compounding advantage

👉 Home appreciation

If it increases significantly → Buy, because gains from a larger asset are amplified
If it decreases significantly → Rent, because ownership gains are limited

👉 Investment discipline

Confident you will invest consistently → Rent, because consistent investing maximizes returns
Likely to spend the difference → Buy, because ownership forces saving through equity

👉 Mental security

Want stability and don’t want to move → Buy, because control and certainty matter more
Value flexibility or be uncertain about plans → Rent, because it keeps options open