On December 10, the Bank of Canada kept its policy rate unchanged at 2.25%. Many mortgage interest rates in the market are still around 4%, and are expected to remain relatively stable in the short term. The interest rate topic can finally be temporarily removed from the "hot search list".

In the daily debates between the "house-buying faction" and the "renting faction", some people shout, "De-financialize the house and return it to the essence of living!" Others believe that the "rich dad's" model of "living in an ordinary house and investing in other properties" is outdated and is not as practical as the "poor dad's" honestly upgrading to a bigger house. Young people and new immigrants were confused when they heard this. They jumped repeatedly between "renting" and "buying", and the soul torture lingered: In Toronto, renting a house for 30 years vs. repaying a loan for 30 years, how many "realms of life" are different? This article will settle this account.

Note: The calculations in this article use simplified assumptions and are only used to show the long-term cost difference between buying and renting a house. They do not constitute a commitment to housing prices, investment returns or loan approval. Actual results will vary due to interest rates, home prices, rent, taxes, repairs, closing costs and personal loan qualifications.

01 It’s not that I can’t get on the bus, it’s that I don’t dare to get on the bus.

Compared with November 2019, before the outbreak, it will be more difficult to buy a first-time home in Toronto in 2025, but overall it will not change much. On certain properties, such as condos, affordability has improved rather than worsened. A more pragmatic way to buy your first home is to buy a CONDO to live in. In November 2019, the average condo price in Toronto was 617,000, and the corresponding market rent was about 2,300 Canadian dollars; in November 2025, the average condo price in Toronto was 663,000, and the corresponding market rent was about 2,600 Canadian dollars. The house price increased by about 7.4%, and the rent increased by about 13%. In November 2019, the mortgage interest rate was approximately 3.4%, and in November 2025, many mortgage interest rates were approximately 4%, with relatively limited changes. In 2019, the average income of Torontonians was 52,000, and now the average income is 57,500, an increase of 10%. In 2019, the maximum loan term for borrowers with a down payment of less than 20% was 25 years; currently, for eligible first-time homebuyers, the maximum loan term for low-down payment insured loans can be up to 30 years. If the first-time home buyer is a condo in Toronto, the affordability of Torontonians has improved, not declined, compared to 6 years ago.

The reasons why first-time homebuyers are hesitant are both objective and subjective. In November 2019, Toronto's unemployment rate was 5.8%, and the current unemployment rate is as high as 8.9%. The unemployment rate is particularly high among young people and new immigrants, and their employment prospects are also shadowed by the tariff war. Another factor is that the voices against real estate are louder now than in 2019. First-time homebuyers are particularly afraid that the price of a house will continue to fall after they buy it because of their lack of experience. Taking 660,000 CONDO as the first step to buy a home, the down payment can be as low as 41,000, and the annual income is about 126,000. If you have parents' support, you can buy a 660,000 house with a down payment of 132,000 and an annual income of about 110,000. Specific loan amounts still depend on interest rates, debt, credit and bank approvals. The threshold has not grown higher, but people have become more afraid of heights.

02 Each generation has its own “real estate script”

Some institutions in Canada like to hype up the "intergenerational war", blaming the fact that young people cannot afford a house because the elderly occupy the house, and even suggest suspending pensions for the elderly. I made a series of videos in 2019 about how to balance lifetime income - one of the key points is: Canada's wealth is indeed concentrated in the hands of the elderly, and most of it is real estate. If young people want to get a piece of the pie, they must dare to borrow money and increase leverage. If you refuse leverage because of fear, it is equivalent to giving up the biggest "gold mine".

If every generation expects their parents to pass down a house, this is inevitably asking too much of their parents; if they expect other people’s parents to sell their houses to you at a low price, this idea is even more absurd. Every generation spares no effort when buying a house, and real estate is like marshmallows for adults. Those of the same age who are able to delay gratification will overcome all subjective and objective resistance and strive to buy a house. Only by doing so can they be able to sit on real estate wealth after retirement. From 1985 to 1989, Canadian housing prices experienced an extreme 4-year surge of 151%, with housing prices rising from approximately 109,000 Canadian dollars to 274,000 Canadian dollars. In the following seven years, there was a deep correction, once falling to approximately 190,000 Canadian dollars. If a 35-year-old person in 1990 was worried that house prices would fall and was afraid to buy a house, and then lost the ability to buy a house seven years later at the age of 42, he would probably never buy a house in his life. This person should be 70 years old this year and has no real estate wealth. We have seen a lot of news that some 70-year-old Toronto seniors are homeless and need government relief. This shows that not every senior Canadian is rich. It can only be said that seniors who own real estate usually accumulate more housing assets.

In 1990, Toronto's house price was 255,000, down 6.6% from 1989, and the mortgage interest rate was 14%. This began a seven-year decline in house prices. During this period, the media vigorously denounced real estate. Young people at that time were bombarded with noise just like young people today. The weak-willed among them may not be able to buy real estate in their lifetime. The following headlines are intended to summarize the typical tone of market discussions of the year and are not verbatim quotes:

1990 The Globe and Mail: "House prices plummet 40%: Investors' nightmare comes true"

1991 "Toronto Star" Toronto Star: "From heaven to hell: Toronto's housing market's cruel turn"

1992 Financial Post: "Toronto Real Estate: Has the Lost Decade Begun?"

1993 Financial Post: “Real estate’s luster as an investment tool has faded, experts say”

1994 Maclean's: "The Rise of the Rent Generation: New Choices for Young People in Toronto"

1995 National Post: “Toronto housing market hits bottom but shows no sign of recovery”

1996 The Economist: "Canadian Real Estate: From Star Asset to Ordinary Investment"

There are dividends in every generation, but if you don’t dare to enter the market or use leverage, the dividends will just be other people’s stories. The stock wealth in Canada is in the hands of the elderly, and the wealth of the elderly is hidden in real estate. You will not obtain this stock wealth without using leverage. There has always been an intergenerational wealth gap. The gap between the current generation of young people and the elderly is not because the elderly are unwilling to sell their houses, but because this generation of young people believe that light assets can overtake others in a corner, and put their few chips on digital assets and financial assets. However, the older generation of Canadians still believe in real estate wealth. There is currently an oversupply of second-hand housing in Toronto. First, it shows that the elderly are not hesitant to sell their properties because they are protecting their food. Second, it shows that young people are unwilling to compete with their predecessors on the straight road and take the initiative to take detours instead of putting their meager chips on real estate. Real estate opportunities are there. Whether or not to use leverage to leverage real estate wealth is a question of the foresight, ability and risk tolerance of renting families. People who live in poverty due to lifelong renting exist in every generation; even in Canada, not every elderly person is rich, but elderly people who own property usually have more assets.

03 What is the difference between renting a house for 30 years and paying a mortgage for 30 years?

Some people are still renting a house after they are 45 years old. The reason is that they are afraid of losing their job after buying a house. Please, rent a house and you can't owe the landlord rent even if you lose your job. The recently discussed Ontario Bill 60 stipulates that after a tenant fails to pay the rent due according to law, the landlord can issue a notice to terminate the lease. The termination date in the notice must not be earlier than the 7th day after the notice is issued. The bill reminds families who plan to rent a house for a lifetime: You can rent a house for a lifetime, but it is difficult to live in the same house for a lifetime, and you must be prepared for the interruption of cash flow caused by unemployment or illness. An important condition for the stability of renting a house is to pay the rent in full and on time; even if there is no breach of contract, the landlord may take back the property for his own use if the legal conditions and procedures are met. Not only is there no absolute guarantee of stability in renting a house for 30 years, but it is also difficult to simply say that it is a wise decision from an economic perspective.

Now if you buy a house in Toronto worth 700,000 dollars, the down payment is 20%, the loan interest rate is 4%, and the repayment period is 30 years. The principal and interest payment in 30 years will be about 960,000. Assuming that the total expenditure on property taxes, management fees and house insurance is about 2% of the house price per year, the total expenditure in 30 years will be about 420,000.

Assuming that house prices increase by 5% every year, the house price in 30 years will be about 3 million; after deducting the down payment of 140,000, the principal and interest for 30 years of 960,000, and the above-mentioned holding expenses of 420,000, the simplified calculation net amount is about 1.48 million.

Assuming that house prices increase by 4% every year, the house price in 30 years will be approximately 2.27 million. After deducting the down payment of 140,000, the principal and interest for 30 years of 960,000, and the above-mentioned holding expenses of 420,000, the simplified calculation net amount is approximately 750,000.

Assuming that house prices increase by 3% every year, the house price in 30 years will be about 1.7 million; after deducting the down payment of 140,000, the principal and interest for 30 years of 960,000, and the above-mentioned holding expenses of 420,000, the simplified calculation net amount is about 180,000.

If you rent, you save a down payment of 140,000 dollars. Assuming that the annualized return of this 140,000 dollars is 6%, the total principal and interest after 30 years will be approximately 800,000 dollars. The monthly rent is 2,600 dollars, and the total expenditure in 30 years is 936,000 dollars. Subtracting the above-mentioned investment amount at the end of the period of 800,000 dollars, the net expenditure is approximately 136,000 dollars. If the rent is 1,000 dollars lower than the holding cost per month, and the renter uses this 1,000 dollars for a fixed investment, and insists on it for 30 years, based on a simplified model with an annual return rate of 6%, the investment value-added part will be about 590,000 dollars. After deducting the aforementioned net expenditure of about 136,000 dollars, we get about 460,000 dollars. The results are highly dependent on investment returns, rental increases, taxes and continued investment.

The above is a simplified financial comparison between paying a mortgage for 30 years and renting for 30 years in Toronto. According to estimates based on different statistical intervals and calibers, the long-term average annual growth rate of Toronto housing prices over the past few decades has been approximately between 4.3% and 5.7%, with greater fluctuations in short- and medium-term growth rates. Paying a 30-year mortgage and paying 30-year rent is not only a financial difference, but also a difference in lifestyle and housing stability. You need to spend money to buy a sense of security in your home, and it is genuine. Planning to rent for life? Be prepared: You may move countless times in your lifetime, and you'll always need to be prepared for income interruptions and lease changes. History will not repeat itself, but it will charge interest - the mortgage you avoided 30 years ago may become the landlord's pension today.

04 Residential and financial attributes of a house

One of the areas with the most developed housing finance attributes is Seoul, South Korea. If young people cannot afford a large rental deposit, they can apply for a loan. After the loan is approved, the bank will pay the funds directly to the landlord. Many landlords use large prepaid rents as funds to buy more properties. In Canada, even in Vancouver, where rents are among the highest, it is not common to need a loan to pay rent. Housing problems can be alleviated through varying degrees of financialization. Some people are clamoring to "let housing return to its residential nature", as if financialization is a scourge. But in fact, a reasonable housing finance system can help more families improve their living conditions. De-financialization? That probably goes back to the primitive days of "cutting down trees and building your own house".

Countries with low levels of housing financialization are often also less developed countries. Hernando de Soto introduced the situation in countries such as Peru in "The Secret of Capital": the property rights of a large number of properties are difficult to confirm, and banks are unable to apply for mortgage loans. Some houses are mainly built by residents themselves, without complete addresses or clear property rights. The houses can only be lived in, cannot be mortgaged, and have limited financial attributes. If Canada de-financializes real estate, new homes may be difficult to sell because banks will not handle mortgage loans, and people may return to the era of relying on their own funds to build homes.

Taking out a loan to buy an investment house will not eliminate the residential nature of the house. I don’t understand if people who say “returning housing to residential properties” know what they are talking about. If the house does not have residential properties, will anyone still get a loan to buy it? The residential property of a house can be rented, but if you want to buy it, you need a loan. The residential property and the financial property are connected together. If the rent or large deposit rises high enough, like in Seoul, renting a house may also require financial support to solve the problem of young people who want job opportunities but cannot afford housing costs. The Canadian federal government is building some affordable housing in remote areas in an attempt to lure more people away from big cities with lower costs. But in fact, without a mortgage, most people cannot even afford land and building materials. Those who call for “de-financialization” probably have never built a house with their own hands.

The idea of de-financializing real estate and making real estate only have residential properties and not financial properties is unrealistic. Taking out a loan to buy a house is part of the modern economic system. It's difficult to participate in real estate wealth building without using a loan to buy a home. Real estate wealth is more likely to reward families who think independently, delay gratification, live hard, pay taxes honestly, use leverage judiciously, and pursue residential stability.

Conclusion

There are always people who say "real estate dividends are gone." From 1990 to 1996, many Canadians thought the same way, resulting in a group of seniors who still lack housing assets today. History does not simply repeat itself, but the rhymes are always similar. I don’t know if young people back then were also biased by “Internet stocks”, but today’s Bitcoin and Tesla have indeed attracted a lot of people’s attention. The long-term allocation value of real estate has not simply disappeared, and opportunities are still waiting for those who can use leverage prudently, take on debt, and pursue residential stability. Buying a home is a long-term financial decision that shouldn't be distracted only by market noise. Canada's home ownership rate is about 66.7%, which shows that most families still choose to "get into a car."

Over the past 30 years, there have been obvious differences in the economic growth rates of China and Canada. Many people have complained about Canada's low efficiency and slow development. My understanding is that if anyone feels that development is slow but dare not use leverage reasonably, he or she is actively giving up some opportunities for wealth growth. The wealth of Canadians is mostly concentrated in the hands of the baby boomers. Only through savings, investment and prudent use of leverage can the latter have the opportunity to gradually catch up with the wealth of their predecessors. Families that dare not use leverage, or do not have the chips to use as a fulcrum, can only move forward slowly on the road of wealth accumulation. Leverage is not the devil, nor is it a free elevator; it can magnify both returns and risks. What really matters is using leverage based on living hard, filing taxes honestly, and having an affordable cash flow, and learning to manage risk over time during the home buying process. Contemporary young people and new immigrants, come on!

Information reference (as of December 11, 2025)

December 11, 2025 Henry Wang in Toronto