Ditching the ownership dream: Why lifelong renters in Canada are winning the wealth game

Comparing 12 major cities from 2005 to 2024, portfolio manager Benjamin Felix and co-author Hamza Bin Arig measured what a homeowner’s equity actually grew to against what a renter’s portfolio would look like if they invested the difference between their rent and the cost of owning.

The results don’t crown renting the automatic winner. But they do puncture the myth that owning always wins — and they show exactly what has to go right for renting to pay off.

Why fewer Canadians are buying in the first place

Affordability is the biggest driver. Between 2016 and 2021, the average value of an owner-occupied Canadian home jumped 39.6%, more than double the 18% rise in median household income over the same period. That gap has pushed a growing share of new construction into the rental pool — 40.4% of homes built between 2016 and 2021 are now occupied by tenants rather than owners.

The shift shows up on the ground, too. Jennifer Boyd, vice-president of operations at Ottawa-based landlord InterRent, told Renx that long-term renting has become the default housing choice for a growing share of Canadians, driven by affordability pressure and a housing supply that hasn’t kept pace with demand. That’s changing what renters expect — from durable finishes to workspaces and pet-friendly amenities built for people who plan to stay years, not months.

So do renters actually come out ahead?

Nationally, PWL Capital found renters and owners finished close to even, with a geometric average renter-to-owner wealth ratio of 0.99 across the 12 cities studied — essentially a tie.

But that national number hides sharp local swings. In Montreal, where rents stayed low relative to home prices for years, disciplined renter-investors ended up with 48% more wealth than owners. Toronto told a similar story: A renter who invested the gap between rent and ownership costs from 2005 to 2024 would have finished with 37% more wealth than a buyer. Vancouver condos flipped the script — owners there came out 29% ahead, thanks to rents that ran as high as 91% of what it cost to carry the equivalent condo.

The catch that makes or breaks the strategy

The renter advantage in PWL’s model depends entirely on one habit: Actually investing the money saved by not owning, every single month. The firm also tested what happens when discipline slips. At 90% savings efficiency, owners pulled ahead in 6 of the 12 cities. Drop to 80% efficiency, and owners won in 8 of 12, with the average ratio tilting to 0.79 in owners’ favour.

That gap between theory and habit shows up in real-world numbers, too. Statistics Canada’s 2023 Survey of Financial Security found families under 35 who owned their principal residence had a median net worth of $457,100 — more than 10 times the $44,000 median for renters of the same age without an employer pension. Most renters, in other words, aren’t running PWL’s model. They’re not investing the difference at all.

Before you pick a side

The real lesson isn’t that renting wins or owning wins. It’s that the wealth game goes to whoever actually saves and invests, not whoever signs a mortgage.

Before deciding, Canadians weighing rent versus buy should:

• Check the price-to-rent ratio in their own city, not the national average
• Automate a transfer into a TFSA or RRSP for the gap between rent and estimated ownership costs
• Revisit the comparison every few years as rates, rents and home prices shift
• Be honest about whether they’ll actually invest the savings or just spend them

For Canadians who know they won’t save consistently, a mortgage still works as forced savings, which may be reason enough to buy despite the math. For those who will actually invest what they save, the data says the ownership dream is optional, not mandatory.