The honest answer includes the arithmetic, and the places where investing wins.
A first-time buyer asked me this directly, and it deserves a direct answer: why should I buy a house when I could invest the money in the market instead?
What the numbers say
I ran it as a fair test. This is an illustrative example, not a forecast and not a quote. Take a $700,000 home with 20% down ($140,000), closing costs of 1.5% ($10,500) and a 25-year amortization. For the mortgage I assumed a 4.5% rate, for illustration only. Over ten years the buyer pays down about $153,000 of principal.
The renter pays rent equal to everything else the owner spends: interest, property tax, insurance and maintenance. That keeps shelter cost equal on both sides. The renter then invests the same cash the buyer commits: $150,500 up front, plus each month the amount that goes to the buyer's principal. Both put in about $303,600 over ten years. At the end, the buyer sells, pays 5% in selling costs and pays off the mortgage.
View as table
| Home price growth per year | Buyer ends with |
|---|---|
| 0% | $258K |
| 2% | $404K |
| 3% | $487K |
| 4% | $577K |
| 5% | $676K |
View as table
| Market return per year | Tax-free account (best case) | Taxable account (illustrative) |
|---|---|---|
| Market 4% | $407K | $381K |
| Market 6% | $472K | $430K |
| Market 8% | $548K | $487K |
| Market 4% | Market 6% | Market 8% | |
|---|---|---|---|
| Home 0% a year | -$149K | -$214K | -$290K |
| Home 2% a year | -$3K | -$69K | -$145K |
| Home 3% a year | +$80K | +$14K | -$61K |
| Home 4% a year | +$170K | +$105K | +$29K |
| Home 5% a year | +$269K | +$204K | +$128K |
Put plainly: if prices stay flat for ten years, the buyer finishes with about $258K on $303,600 put in, a loss of roughly $45,000, and the renter comes out ahead in every market scenario shown. For the buyer to tie, the home has to rise about 2.0% a year if the market returns 4%, 2.8% if it returns 6%, and 3.7% if it returns 8%, assuming the renter's account is tax-free. These are scenarios, not forecasts, so I'd rather test them against history.
What 40 years of data says
CREA's national average price rose from $94,113 in 1986 to $668,219 in August 2026, about 5.0% a year. Over the 36 years from 1988 to 2023, the S&P/TSX Composite returned about 8.2% a year with dividends reinvested.
View as table
| Scenario | Buyer ends with | Renter (tax-free) | Renter (taxable, illustrative) |
|---|---|---|---|
| Long-run averages (home 5.0%, market 8.0%) | $676K | $548K | $487K |
| 1990s-style decade (home 1.5%, market 10.5%) | $363K | $661K | $571K |
At those averages the buyer comes out ahead: about $676,000 against about $548,000 for the renter in a tax-free account. The reason is leverage. The buyer earns the price growth on the whole $700,000 while only $150,500 of their own cash is in, and the gain on a principal residence is generally tax-free. The market would have to return about 10.8% a year to catch up.
Averages hide the path, though. From 1990 to 2000 the average price rose only about 1.5% a year, and in that kind of decade the buyer finishes far behind: about $363,000 against $661,000, even with the market at 10.5% a year, which is what the TSX delivered in the 1990s. Over the long run both have worked. Over any one decade, either can win.
What the numbers leave out
A spreadsheet counts dollars. Three things it can't count are the reasons buying can still make sense.
Forced savings. Every mortgage payment includes principal. In the example that is about $1,013 in the first month, rising to about $1,581 by year ten, and it adds up to about $153,000. It happens whether or not you feel like saving that month. The renter in the model gets the same result only by investing the difference every month for a decade. If the renter invests the $150,500 up front and spends the monthly difference, a 6% market gives about $270,000, no better than a buyer in a flat market. The habit matters as much as the math.
Stability. Ontario has real tenant protections. In a unit first occupied before November 15, 2018, the annual rent increase is capped by the provincial guideline: 2.1% for 2026, and 2.5% in 2025. Newer units are generally outside that cap. A cap controls the price, though, not whether you can stay. If a landlord, a family member or a buyer wants the home for their own use, a tenancy can end with proper notice under the rules. That is how renting works, and it means the decision to stay is not entirely yours. When you own, it is, and your payment is set for the term, though it can change at renewal.
Ownership. A home you own is yours to paint, renovate and plan around. Pride of ownership has no line in the table, but it is a large part of why people buy and why they stay.
View as table
| Year | Principal paid in the year |
|---|---|
| 1 | $12,406 |
| 2 | $12,976 |
| 3 | $13,572 |
| 4 | $14,195 |
| 5 | $14,847 |
| 6 | $15,529 |
| 7 | $16,243 |
| 8 | $16,989 |
| 9 | $17,770 |
| 10 | $18,586 |
| Total | $153,113 |
How I'd decide
My position: don't buy a house because it is the best-return investment. Over some decades it is not. Buy it because you want to live in it for five years or more, and because the payment works even if the price doesn't rise. Then the home gives you what the portfolio can't: a place that is yours, savings you can't skip, and stability. And you don't have to choose. Buy the home, and keep investing.
Renting and investing the difference is a legitimate alternative if you will really do it every month. I'm a mortgage broker, so for the investing side, talk to a licensed investment adviser.
What to do
Decide how long you expect to stay, and what would change that.
Price the full cost of owning: payment, property tax, heat, insurance and maintenance.
Test the payment: would it still work if the home value is flat and the payment is higher at renewal? Ask for a number that fits your life, not just a pre-approval.
What to avoid
Buying as a bet on prices, or stretching to get in. The flat-price row is the one to take seriously. The aim is to choose knowing the cost, and knowing what you get for it.
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