Your child pursuing post-secondary education is a major milestone in their life, but also a pricey one. A problem that some parents find is whether it’s more cost-effective to rent in the often inflated post-secondary cities or purchase an apartment for them to live in, while you generate some equity. While there are pros and cons to each, more often than not the preference will be for whatever’s more financially prudent.
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To determine which cities mortgage payments may be more affordable than renting, Zoocasa analyzed a list of the best university towns and cities in Canada, according to Preply, and compared rental prices and monthly mortgage payments in cities where data was available for both.
Two Cities Stand Out as More Affordable for Buying
Edmonton and Winnipeg are the two cities on our list where the average monthly rent is higher than the average monthly mortgage payment. The average price of a condo is $180,600 in Edmonton according to the Canadian Real Estate Association (CREA), meaning the average mortgage payment would amount to $1,232. Rent in Edmonton is $1,335 as of October, meaning purchasing a condo would save you $103 on your monthly expenses. In Winnipeg, the average monthly mortgage payment would be $1,337 on a condo at the average price of $228,400, also according to CREA, which is $133 less than the monthly rent of $1,470.
Regina and Quebec City have negligible differences between their monthly rent and monthly mortgage payments. In Regina, rent would be $1,250, only $23 less than the average monthly mortgage payment of $1,273. In Quebec, the average mortgage payment of $1,458 is just $13 higher than the average monthly rent. Brandon and Saskatoon are the only other cities on our list where monthly mortgage payments come in below $2,000, at $1,793 and $1,308 respectively.
In every other city we covered, monthly mortgage payments are higher than rental payments. The most expensive city on our list to buy a condo in is Mississauga, where the average price is $645,200 as of October. This means the average mortgage payment will be $3,732 a month, $1,132 higher than the average rental payment. The second highest on our list was Cloverdale in British Columbia, where the average monthly mortgage payment of $3,373 is $1,073 higher than the average monthly rent.
Should I Rent or Buy?
While renting may be deemed more affordable at first glance, buying a condo has greater long term benefits. Owning your condo means you build equity over time, and may turn a profit if you keep it for four or more years and sell it at the end of your child’s post-secondary career. You also have the option to rent out the condo at the end of your child’s studies, providing an additional source of income, or purchase a property fit for roommates, making it a net positive or even better yet, generating some additional income.
Other factors you will need to consider when making a decision include how long your child will be studying for, what kind of future use the apartment will have and what city your child is studying. Choosing to rent in a city like Mississauga might be a more sensible choice if it’s a shorter course but there are greater long term benefits in a stronger real estate market if you buy, for example. Also worth considering is the cost of time and money for maintenance – renting removes this problem for you.
Whether you choose to rent or buy, our agents are on hand to help! Give us a call today and we can answer any real estate questions you may have.
