# Renting vs. Buying a Home: The Reckoning Source: https://www.youtube.com/watch?v=aU7v87EhDBI Recap page: https://rapidrecap.app/video/aU7v87EhDBI Generated: 2026-02-22T11:03:42.514+00:00 --- ## Quick Overview The analysis concludes that for the 2005-2024 period in Canada, renting generally resulted in slightly higher net worth accumulation than owning a home across 12 major cities, with an average renter/owner net worth ratio of 1.14, meaning renters ended up with 14% more wealth than owners, despite the common narrative that home ownership is always financially superior. **Key Points:** - The average Renter/Owner Net Worth Ratio across 12 Canadian cities from 2005-2024 was 1.14, indicating renters accumulated 14% more wealth than owners over this period. - The worst price decline for inflation-adjusted home prices since 1975 occurred in the 1980s with a 31% peak-to-trough drop, while the current decline (as of Dec 2025 projection) sits at 28%. - The study used a rent vs. own model comparing a hypothetical renter investing surplus cash flow in a globally diversified stock portfolio (like VEQT) against an owner paying mortgage, property tax, maintenance, and insurance. - In Toronto, the Renter/Owner Net Worth Ratio was 1.37, meaning renters ended up 37% wealthier than owners over the 20-year period. - Factors like high recent housing prices, rising interest rates, increased immigration, and supply shortages have made housing affordability a major issue in Canada, challenging the assumption that owning is always financially superior. - The analysis noted that the cost of borrowing was extremely cheap during the period, which artificially inflated the advantage of owning a home, but this advantage has since shrunk. ![Screenshot at 0:06: The chart titled "Canada Real House Price Index Q1 1975-Q4 2025 \(2005=100\)" visually depicts the massive, recent spike in inflation-adjusted home prices, highlighting the period of extreme price growth that preceded the current decline.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-00-06.jpg) **Context:** The video presents an updated financial analysis comparing the long-term net worth outcomes of renting versus owning a home in Canada between 2005 and 2024, updating previous work. The presenter, Ben Felix, Chief Investment Officer at PWL Capital, uses a comprehensive model that accounts for various costs associated with home ownership (mortgage, taxes, maintenance, insurance) versus investing the difference in a diversified stock portfolio for the renter. The analysis aims to challenge the common belief that owning a home is universally the wiser financial decision. ## Detailed Analysis The analysis, comparing renting versus owning in 12 Canadian cities from 2005 to 2024, demonstrates that on average, renting resulted in greater net worth accumulation than owning. The overall geometric mean Renter/Owner Net Worth Ratio was 1.14, meaning renters ended up 14% wealthier than owners. This result challenges the common narrative that owning is always financially superior. The model assumes the renter invests the cash flow difference (savings on housing costs) into a globally diversified stock portfolio (like VEQT, with a 2.25% annual fee), while the owner incurs costs for mortgage, property tax, maintenance, and insurance. For instance, in Toronto, the ratio was 1.37, indicating renters were 37% wealthier. The presentation highlights historical context, including the 1980s housing decline (31% drop) and the recent sharp price run-up fueled by cheap borrowing costs, immigration, and supply shortages. The presenter notes that while home ownership offers non-financial benefits (like stability/hedging against housing cost increases), the financial performance shown by the data suggests that renters who diligently save and invest can outperform owners financially in many major Canadian markets over long periods. The tool used for this comparison is available online. ### Historical Context of Canadian Real Estate - Housing prices have seen the second-worst decline for inflation-adjusted prices since 1975, following the 1980s drop - Current decline projections show a 28% drop as of December 2025 - Housing affordability has become a major issue driven by high prices, immigration, and low supply. ### Rent vs. Own Model Methodology - The model compares a hypothetical renter (investing cash flow difference in stocks) against an owner, using historical data from 2005-2024 for 12 cities - Key inputs for owners include mortgage financing (20% down, 5-year fixed rate), property tax, maintenance, and insurance costs. ### Full Period Results (2005-2025) - Average Renter/Owner Net Worth Ratio is 1.14 (renters wealthier) - Toronto showed a high ratio of 1.37 for renters, while cities like Calgary (0.39) and Edmonton (0.35) heavily favored owners. - Kitchener-Waterloo and Victoria showed near parity (0.99 and 0.85, respectively, favoring renters slightly or owners slightly depending on the previous data set mentioned). ### Financial Outcomes Comparison - The model shows that under the simulation's assumptions, the renter's portfolio (investing in stocks) accumulated wealth faster than the owner's net worth in the average Canadian city over the 20-year span. ### Psychology and Reality - The common belief that owning is always better is challenged by data; while owning provides a hedge against rising housing costs, renting provides flexibility and the ability to invest surplus cash flow, which proved advantageous over this specific 20-year period. ![Screenshot at 0:06: The chart titled "Canada Real House Price Index Q1 1975-Q4 2025 \(2005=100\)" visually depicts the massive, recent spike in inflation-adjusted home prices, highlighting the period of extreme price growth that preceded the current decline.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-00-06.jpg) ![Screenshot at 0:45: The title slide for the analysis, "Renting vs. Owning a Home in Canada 2005 – 2024," sets the scope of the comparison being conducted by Benjamin Felix and Hamza Bin Arif.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-00-45.jpg) ![Screenshot at 0:57: Table 1 displays the 'Main Results of Renting vs. Owning in Canada 2005-2024', highlighting the average Renter/Owner Net Worth Ratio of 1.14, indicating renters accumulated more wealth overall.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-00-57.jpg) ![Screenshot at 2:37: A formula demonstrating the discounted expected future cash flows of a business, used as an analogy for valuing assets like housing or stocks.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-02-37.jpg) ![Screenshot at 7:47: The Sankey diagram visually separates the Monthly Income for Housing \($1,466\) into Rent \($975\) for the renter and Investing \($476\) plus Insurance \($17\) for the owner, illustrating the initial cash flow divergence.](https://ss.rapidrecap.app/screens/aU7v87EhDBI/00-07-47.jpg)