Why you should rent that condo — even if you can afford to buy it

Danielle Kubes, Special to Financial Post | August 7, 2015 | Last Updated: Aug 11 9:27 AM ET

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Kathy and Henry Fiala put half of their belongings on the kitchen table of their midtown Toronto townhouse last year and invited friends, family and colleagues to take what they wanted. These two boomer professionals had no interest in holding a garage sale — they barely have time to take their Bouvier for her daily walks. Besides, they'd rather spend what free time they do have eating dinner with family and browsing boutiques.

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By the time they were done downsizing — having given away more than two moving trucks full of furniture and swearing never to accumulate so much stuff again, they were ready to move into their new luxury Yorkville condo.

But they didn't purchase it, though as two doctors they had the earning power to do so.

Instead, they rent for $5,500 a month, plus hydro.

In the previous century, the majority of Canadians saw home ownership as the coronation of their adult life. A mortgage, taxes and a leaky basement were precious jewels on a crown under which they sometimes staggered, but nevertheless remained certain that the effort required to maintain upright would pay off — both literally, when they sold, and in the legitimacy it lent to being a mature and stable member of their community. Those who rented were unfinished: transient, single, young or irresponsible.

This attitude is changing, it seems, with houses averaging over $1 million in two of Canada's biggest markets.

"The stigma that's attached to renting eventually begins to fade," says Shaun Hildebrand, spokesperson for Urbanation, a firm that researches the Toronto condo market. "I think that's a natural thing that happens when a real estate cycle, when it gets to the point where it has, where housing prices have gotten to the point they have."

In a searing hot real estate market, long-term renting is starting to look like the more prudent option, challenging the traditional view that signing a monthly cheque to a landlord is akin to using hundred dollar bills as fire starters.

The Fialas, in fact, found it was the opposite.

"Our townhouse was a money pit," Kathy Fiala says. "We had a mortgage — as two professionals, we weren't supposed to have one, but we did — plus taxes, maintenance fees, plus anything that got broken down."