Rent or Buy in Toronto? What First-Time Buyers Should Know

Should you rent or buy in Toronto right now? If you have a steady job, a down payment saved and plan to stay put for five years or more, this winter is a better time to buy than we've seen in a few years. If any of those pieces is missing, keep renting and keep saving.

For three years, renters had the upper hand. That's starting to change, while buyers still hold most of the negotiating power.

Are rents going up in Toronto again?

Yes. Average asking rents in Toronto rose 1.6% in October from a year earlier, the first increase after 36 straight months of declines, according to Rentals.ca and Urbanation. Urbanation's president, Shaun Hildebrand, put it plainly: "The window for cheaper rents is closing in Toronto and Vancouver."

One month isn't a trend. But the free months and landlord discounts are getting harder to find.

Is it cheaper to rent or buy in Toronto?

Month to month, renting is usually still cheaper than owning the same place, especially for condos, once you add property tax, maintenance and condo fees.

But the gap is narrower than it's been in years, because prices came down. Here's what the TRREB numbers showed for October across the GTA:

• Average selling price: $1,024,108, down 2.7% from last year
• The MLS Home Price Index benchmark was down 4.3% year over year
• Sales fell 7.9% to 5,603, and new listings dropped 11.9%

TRREB's chief economist, Jason Mercer, said GTA buyers "continued to benefit from substantial negotiating power on price." The board also said monthly payments are still much more affordable than in 2023 and 2024.

The catch is rates. The Bank of Canada raised its rate to 2.5% in October, so get pre-approved before you shop and know your real payment.

Is now a good time to buy a house in Toronto as a first-time buyer?

The best time to buy is when your life is ready. I've been investing in real estate since 2008, and the questions that matter haven't changed:

1. How long will you stay? Under five years, the cost of buying and selling usually wipes out any gain. Rent.
2. Is your income steady? A rent increase is annoying. A mortgage you can't carry is a crisis.
3. Do you have a cushion? Down payment, closing costs and a few months of savings left over.

Yes to all three? Buying while sellers are negotiating is a real opportunity. I wrote about why fewer listings change the math this winter last week.

How first-time buyers in Ontario can build a down payment faster

Two federal programs do the heavy lifting:

• First Home Savings Account (FHSA): You can put in $8,000 a year, up to $40,000 lifetime. Contributions are tax-deductible and growth is tax-free.
• Home Buyers' Plan: You can withdraw up to $60,000 from your RRSP. For a first withdrawal from 2026 through 2028, repayments don't start until the fifth year after.

Renting another year or two? Open an FHSA now anyway. Your room starts building the year you open it.

Frequently asked questions

Is it better to rent or buy a condo in Toronto?

For short stays, renting a condo usually wins, since condo fees and closing costs add up fast. If you plan to stay five years or more and the fees fit your budget, buying lets you build equity instead of paying your landlord's mortgage. Compare the full monthly cost, not just rent against the mortgage payment.

How much do I need for a down payment in Ontario?

The federal minimum down payment is 5% on a home up to $500,000. Between $500,000 and $1.5 million, it's 5% of the first $500,000 plus 10% of the rest. At $1.5 million or more, you need 20%. Put less than 20% down and you'll usually pay for mortgage loan insurance.

Will Toronto rents keep going up?

Nobody knows for sure, and one month of data isn't a trend. What we do know is that Toronto rents just rose for the first time in three years, after a long stretch of landlord discounts. If you're renting, plan for higher rent at your next renewal, not lower.

Curious what your rent could buy? Search homes for sale in Toronto. Not sure whether renting or buying fits you? Book a no-pressure call with me and we'll run your numbers together. Or start with my free buyer's guide.