Should I rent or buy?

Buying a house has long been one of the milestones of adulthood — along with having kids, carrying around 15 extra pounds, and an unaccountable newfound fondness for Elton John ballads. But is buying a home necessarily the best investment?

To be totally honest — no, it is not. Number crunchers like Wealthsimple investor and financial services icon Joe Canavan is a rent-don’t-buy evangelist who did extraordinarily well by pouring all of the money he could have spent on a house in Toronto straight into the equities market, which historically has far outperformed the housing market. In the past 25 years, for example, the S&P TSX Composite Index has grown by about 325 per cent, while the average home price across Canada has risen about 200 per cent. Others have obsessively run the numbers and similarly discovered that between closing costs, property taxes, realtor fees, and the interest you’ll pay with a mortgage, home ownership is just not a great investment.

But before you give up the dream of home ownership, it’s important to ask yourself this question: will you, like Joe Canavan, take all that money you’re saving on home ownership expenses and invest it? Or might you rather be the type to spend that extra money on handbags or top shelf liquor at hotel bars? Because for many less disciplined souls, houses are really the only reliable savings plan that they can muster and without that monthly mortgage payment, they might put away nothing at all. Besides that, for many, home ownership provides the kind of joy it’s impossible to put a price tag on. Though it might have turned out that way for a lucky few on those reality TV house flipping shows, home purchase should never be viewed at as a pure money-making scheme.

As with any major investment you should absolutely have a long-term view. A house where you can raise your family? Great idea. An apartment you buy in hopes of making a killing by flipping it in a few years? Inadvisable.