Few investments have created wealth as broadly in Canada as real estate, but is it always the best return? A new study from wealth management firm PWL Capital compares homeowner equity to the invested savings of renters. The results were surprising: in most major markets—including Toronto—renters came out ahead. While past returns don’t guarantee future outcomes, the data offers insights that can help shape your financial future.
About Today’s Data
Today’s study compares renting and owning from 2005 to 2024 across 12 major Canadian cities. It examines how renter’s net worth would compare to a homeowner’s if they invest the difference between rent and the carrying costs of homeownership. Both the homeowner’s equity and the renter’s portfolio compound over time, and outcomes are expressed as a renter-to-owner ratio: 1.0 means equal net worth; above 1.0 means the renter did better, and below 1.0 means the renter did worse.
It may seem as clear as mud, but with a quick example, it becomes straightforward. Say the cost of ownership is $2,000/month and rent is $1,100, the renter invests the $900 difference. The renter’s portfolio accumulates alongside the owner’s equity. If the final ratio is 0.9, the renter ends with 90% of the homeowner’s wealth. A ratio of 1.1 means the renter ends up 10% ahead. See? Easy!
The homeowner’s net worth is equity (principal plus price gains, minus carrying and transaction costs), based on the CREA Apartment Benchmark Price—available from 2005 onward. Costs include taxes, fees, maintenance, insurance, and mortgage payments (20% down, 25-year amortization, 5-year fixed, renewed at market rates—generally favourable during this period).
The renter’s portfolio assumes 100% of the monthly savings are invested in a diversified ETF (30% Canadian, 70% global), with an 8.62% annualized gross return, 0.25% fee, and sheltered for tax optimization within registered accounts (RRSP, TFSA, FHSA).
There are plenty of rent-vs-own studies, but this one looks at renting by choice within a similar income demographic. Renters who can afford a home but choose to rent and invest the difference. Most studies tend to look at the government stats that show lower net worth for renters due to grouping the whole segment. That doesn’t tell us much about performance. All low-income households are renters—but not all renters are low income.
Canadian Real Estate Owners & Renters: Almost Even—But It Depends
At the national level, renters in Canada performed nearly as well as owners. The renter-to-owner ratio is 0.99—effectively tied. But a regional breakdown shows renters ahead in most markets, with owners pulling ahead in just 5 of 12.
While the data is interesting, it’s not a playbook. Markets are at different stages, and future outcomes will vary for each region depending on how they evolve. Still, the data yields valuable insights that can help inform your financial future—or your kids’.
When Does Canadian Real Estate Outperform?
Canadian homeowners outperformed in regions with early price booms and strong rent growth—Vancouver, Victoria, Kitchener-Waterloo, Calgary, and Edmonton. This tracks with how markets work: near the end of a business cycle, excess leverage moves into non-productive assets like real estate, pushing prices higher. Speculords try to pass on the costs to renters, who more readily absorb higher rents as affordability erodes—leaving them with few options: accept the hike or move.
As rents climb, the gap between ownership costs and rent shrinks—leaving renters with less to invest.
Start Investing As Early As Possible
Compounding is the key to growth—small, consistent contributions can produce more than much larger ones made later. A 40-year-old investing $2,000/month with an annual return of 8% would see their portfolio hit ~$2.17 million at retirement (67 years old). But a 20-year-old only needs to invest $500/month until they turn 40, and they would have $2.27 million by the time they retire at 67-years old.
Mo’ money, mo’ problems—Biggie was clearly warning that waiting to invest later in your career is a mistake that will fail to leverage the benefits of compounding. Probably.
A little pain for long-term gain, but the takeaway here isn’t that buying a home is a bad idea. This emphasizes how problematic steep rents are for young adults—it doesn’t just prevent them from saving for a home, it reduces investment income. Fostering cheap mortgage credit to boost home prices—and the rents that follow—amounts to short-term thinking, at the expense of a less prosperous future. This doesn’t just impact young adults—since they provide liquidity, property prices will eventually need to fall to levels they can absorb.
Rent or Own For Wealth Creation? The Right Place Is More Important
Wealth consultant Andrew Henderson has this mantra for entrepreneurs: “go where you’re treated best.” This typically brings to mind images of digital nomads in tropical tax havens, but the logic is good advice for households, too. Those aspects just need to be broken down into more relatable issues.
The place doesn’t need to be a different country, but any place that facilitates your success—a new neighbourhood, city, province, or country.
Governance is a service. If policies make life more expensive with little payoff, you’re being treated poorly.
What does this have to do with the real estate rent vs ownership data? Small, consistent contributions beat larger, later ones—so ask yourself if your region maximizes your disposable income. The earlier you figure this out, the faster your wealth can grow.
Toronto Real Estate Was Like Free Money—Until It Wasn’t
Toronto condos were a stellar investment for a long time, but the people who made the most were selling them. The study shows condo prices saw annualized growth of 5.74% from 2005 to 2024, while rents climbed 6.29% over the same period. Owners saw their net worth outpace renters for most of two decades, with a massive gap in recent years. That changed in 2024, when the tortoise surpassed the hare and the renter’s net worth gained a slight edge.
That trend is likely to continue in the medium term. Now that rents and home prices are pushing the boundaries of affordability, the city’s unemployment rate is elevated from the national average, and young adults are fleeing for more affordable provinces. Condos may rise again, but being bullish on condo prices is a short-term gain, and bearish on the region’s future.
Montreal’s Historically Affordable Rents Were A Huge Opportunity
Montreal was well known for its affordable rents 20 years ago, and taking advantage of that would have provided a sharp edge. The region’s renter-to-owner ratio is 1.48, meaning renters who invested could have accumulated 48% more wealth than owners. Since 2013, renters outperformed owners by a wide margin, as the low rents allowed for significant investment contributions early.
Vancouver’s Condo King Is The King For A Reason
Vancouver condos are one of the examples where high appreciation and high rents left owners on top. The renter-to-owner ratio was 0.71 in 2024, meaning owners would have accumulated 29% more wealth over the period. Vancouver had one of the sharpest home price trajectories in the country, but the skew’s biggest contributor was the sharp rental trajectory. Rental costs are close to 91% of the owner’s carrying costs, leaving little to invest.
Calgary Homeowners Beat Renters, But Really They Both Won
Calgary homeowners did much better than renters, but generally affordability is worth considering. The renter-to-owner ratio was 0.37, meaning renters had just 37% of the wealth of homeowners over the period. However, the price of a condo in 2024 was the same as Vancouver back in 2015. That means the gap between carrying costs and rents was small because condo prices remain relatively affordable. Owners had a clear edge, but relatively low housing costs meant both groups could accumulate wealth over time.
Whether any of these cities would play out the same over the next 20 years is anyone’s guess. There’s also no clear winner, and anyone who says there is one, is probably a Toronto condo investor, and we wish them luck.