What’s the Truth About Renting Vs. Buying? What Makes Sense Right Now?

Renting in Saskatoon costs less month to month once property tax, insurance and upkeep are counted, but buying builds equity instead of paying it to a landlord, and which one makes sense depends on how long you plan to stay. At the Saskatchewan REALTORS Association benchmark of $444,700, the calculation turns on your down payment, mortgage rate and time horizon.

Renting in Saskatoon is almost always cheaper on a month-to-month basis than owning the same home, once property tax, insurance and routine upkeep are added to a mortgage payment. What renting does not do is build anything: every payment goes to a landlord and none of it comes back, while a portion of every mortgage payment reduces what you owe and becomes equity you keep when you eventually sell.

How quickly that equity outweighs the higher cost of owning depends on your down payment, your mortgage rate, and how long you stay, not on a fixed rule that applies to everyone. A larger down payment means less interest paid over the life of the mortgage, and putting down less than 20 percent triggers CMHC, Sagen or Canada Guaranty mortgage insurance, with a minimum of 5 percent up to $500,000 and 10 percent above that, plus a credit score of at least 600 to qualify. Buying and selling again within a year or two is the scenario where renting usually wins outright, since seller closing costs alone run 4 to 6 percent of the sale price and eat directly into whatever equity you built.

There is also a tax difference the rent-versus-buy comparison should not skip. The Canada Revenue Agency treats the sale of a principal residence as exempt from capital gains tax, so the equity built in a home you live in is not taxed the way investment gains are, which is one more reason the calculation tends to tilt toward owning the longer someone expects to stay in Saskatoon.

The Saskatchewan REALTORS Association reports Saskatoon's benchmark home price at $444,700, with 1.63 months of supply and new listings up 12.3 year over year, a market that still leaves room for a buyer to plan carefully rather than rush a decision either way. That relative breathing room is part of why the rent-versus-buy calculation in Saskatoon tends to favour buying sooner than it would in a tighter, more expensive market, provided the buyer is not planning to move again within a year or two.

For someone weighing a sale on the other side of this decision, whether to downsize out of a home owned for years and rent instead, the number that actually matters is what your current home is worth today, improvements and all, not what an online estimate or an old assessment says it is worth. Get your hand-reviewed valuation from Joel Dyck.