Imagine that you can climb a travel machine in time and return in 2005.
What would be your reflex: rent accommodation, or buy it?
Many people would rush on the purchase. We all know that real estate sold for the equivalent of a half -nibbled bagel and a bag of empty cans in 2005. And that prices have increased a lot since.
And, after all, your mother told you: “To rent is to throw her money by the windows! »»
To be clear, Benjamin Felix, investment director, portfolio manager at PWL Capital in Ottawa and author of a YouTube channel on finance with more than 450,000 subscribers, analyzed the data.
His conclusion: in Montreal and Quebec, as well as in five other big Canadian cities including Toronto, the person who has rented accommodation for 20 years and who has invested the difference between the cost of being owner and the cost of being a tenant in a diversified portfolio of shares is richer today than the person who became the owner in 2005. He explains his calculation in this video.
Watch Benjamin Felix’s video
“It is a result that surprised me,” explains Benjamin Felix in an interview. “We often hear about the meteoric increase in real estate prices for 20 years, and the bad posture of tenants. That the rental option was more paid on average, even in a city like Toronto, for example, is surprising. »»
Before you write to tell me gently and tenderness where I can put this analysis, take two minutes to read more.
7 out of 12
To make his comparison, Mr. Felix examined the prices of purchase and rental apartments in 12 major Canadian cities from 2005 to 2025. He made this choice because data on apartments, especially rents, are more reliable and complete than those of unifamilial houses.
Mr. Felix issued a person’s hypothesis in 2005 who had accumulated 20 % of the average sale price of an apartment. This person had to decide between the purchase of the average apartment, or the rental of the average apartment, and to invest the difference in a portfolio of shares composed at 30 % of a diversified basket of Canadian shares and 70 % international action.
He then calculated the irrecoverable costs for the tenant (rent, insurance) and the irrecoverable costs for the owner (interview, school and municipal taxes, insurance). It also took into account the increase in rents, which was 6.24 % per year on average in the 12 cities studied.
Result: in 7 of the 12 cities studied (ie Toronto, Montreal, Quebec, Ottawa, Winnipeg, Hamilton and Halifax), the tenant finished with more wealth than the owner during this period. In Vancouver, Calgary, Edmonton, Kitchener-Waterloo, and Victoria, the owner finished in front of the tenant.
How to explain this result? Everyone knows that real estate has taken a lot of value for 20 years. But few people realize that the value of an action portfolio has increased even more spectacular.
The price of real estate in Canada increased by 5.11 % per year on average from 2005 to 2025, notes Mr. Felix. However, a diversified share portfolio offered a compound annualized return of 8.62 % during this period.
And a difference of around 3.5 % per year, over 20 years, it gives big figures.
For Montreal, the person who chose the rental arrives in 2025 with an average wealth which represents 1.48 times that of the owner. In short, for each branch of $ 100,000 of wealth from the owner, the tenant-investor has $ 148,000 in 2025.
I know, in reality, owners are generally richer than tenants. But it’s a bad way to look at the question. “It’s a bit like saying:” People who have a private jet are rich, so buying a private jet is a good financial decision “, notes Mr. Felix.
The tenants are generally younger, have lower income and devote more of their housing income than owners, he says. “Advising an average tenant to buy a house will not allow him to obtain the income or the wealth of an owner. »»
Behavioral advantage
One of the points in favor of the purchase is the behavioral aspect. Beyond the higher monthly costs, all that the owner had to do is reimbursed his mortgage. The tenant had to have the discipline to invest his money in an action portfolio every month. He also had to have an ideal behavior, like not to sell in the stock market falls. In reality, very few people can do it.
The owner also has an advantage: that of an important tax gift. During the sale of his house, he was not imposed on his capital gain. The tenant will be imposed on the sale of his financial assets. Although Mr. Felix calculated that the sums at stake could be invested in registered accounts (RRSP, CeliAPP) when these accounts have become available.
Also, in many places, few unified houses are offered for rental. So the question does not arise.
On the other hand, in addition to the yield, the tenant has other advantages. He can liquidate part of his investment portfolio quickly and at low cost. If he has to move for all kinds of reasons (children, divorce, work, etc.), he can do so without having to execute an expensive transaction.
Benjamin Felix notes that the costs of becoming an owner are often ignored or minimized in the ambient discourse. “We see home ownership as an investment, but there are costs related to real estate consumption,” he said. The data of my analysis show that, all other things being equal, a tenant and an owner have a potential for accumulation of similar wealth. »»
Personally, I was both owner and tenant during the period from 2005 to 2025. I was able to see that, in the two scenarios, we throw a lot of money by the windows.
You see? I knew you could get along.