Buy a Home, Rent, or Put the Money in the Stock Market?

There is no single right answer here. Buying makes sense if you can carry the full cost of ownership and expect to stay fifteen to twenty years. Renting makes sense if the monthly gap is wide and you genuinely invest the difference. Either way, use the tax sheltered accounts first.

Kevin O'Leary, the well known Canadian investor and entrepreneur, has told young people for years not to rush into buying a home. Some of what he says is solid. The part people argue about is whether a first home counts as an investment at all.

What Kevin O'Leary Tells Young Canadians, and Where He Is Right

His position is that until you are married, have started a family and have reached long term stability, you are better off renting and putting your money into stocks, bonds and diversified investments. In the early years, he argues, a home is more of a large expense than an asset, and the bigger the home, the heavier the upkeep and the financial pressure.

Part of that lines up with what economic and financial experts say. He warns against borrowing too much and suggests the mortgage payment should not exceed one third of after tax income. He also says that if you plan to hold the home for less than five years, buying may not be a good decision. I have no argument with any of that.

What a Straight Stocks Versus Housing Comparison Leaves Out

The controversial part is his view that buying a home is not a suitable investment for young people, and plenty of people disagree. For better or worse, home ownership in Canada is still one of the most important routes to building wealth over the long run. Push the purchase too far out and you can miss the chance for the property to appreciate and for capital to build. There are ways in, too. Some people buy jointly with someone else, some look for a property where part of it can be rented out, and some buy in a city where land and homes cost less.

Ownership also uses a mortgage, and with each payment part of the principal is retired, so the owner's equity grows over time. A home can act as a long term savings plan alongside other investments. There is a tax point as well: in Canada the gain on a principal residence is usually exempt from income tax, and experts point out that a direct comparison of stocks against housing ignores advantages like that. One more thing matters. The common advice to invest the difference between rent and ownership costs is good advice, and many experts note that in practice most people do not do it consistently.

Why First Time Buyers in Canada Are Getting Older

The statistics show young Canadians becoming homeowners later than earlier generations, and the main reason is not that they want it less. It is that housing got more expensive and the costs got harder to cover. The age of first time buyers in Canada has reached one of the highest levels in the world. As of August 2026, the median age of a first time buyer in Ontario had reached about 40, and in British Columbia about 46. A purchase that used to happen early in a career now lands in the middle years of one, because people need more time to gather a down payment and starting capital.

There is also the part that does not show up in a spreadsheet. Owning a home gives many people a sense of security, independence and belonging. A home is where people build memories, start families and build their own future, and for many middle class families it is one of the most important tools for creating wealth across generations.

Fill the Tax Sheltered Accounts First

If you might buy a first home, even a few years out, the First Home Savings Account is where I would start. It combines part of what an RRSP does with part of what a TFSA does. Money going in can be deducted from your taxable income, so some of the tax you already paid may come back at filing time. Money inside can be invested and grow, and both the contributions and the growth come out tax free for a first home purchase. As of August 2026 the annual limit was $8,000 and the lifetime limit was $40,000. If you open one and never buy, the money is not lost, because in many situations you can move the balance into an RRSP without using up your normal RRSP room.

The TFSA is next, and it is better understood as an investment account than a savings account. You pay tax on the money before it goes in, but growth inside is untaxed and withdrawals are untaxed. Its real power is compounding over twenty or thirty years, where your returns start producing returns of their own. That is why pulling money out of a TFSA for day to day spending, easy and tax free though it is, is rarely a sound decision. You are not only taking out today's dollars, you are giving up the future growth on them.

The RRSP is built differently. Contributions reduce your taxable income, which appeals most to higher earners, the money grows without current tax, and withdrawals later count as taxable income. The idea is to contribute in years when your income is high and withdraw in retirement when your income and your tax rate are likely lower. For many younger people who do not yet earn a lot, the TFSA can be the higher priority. Once the registered room is largely used, non registered accounts start to matter more, and there interest, dividends and capital gains each carry their own tax rules.

Leverage Works Both Ways, and Owning Costs More Than the Mortgage

One of the real differences between buying a home and buying stocks is leverage. You might pay 20% of the price yourself and borrow the rest from the bank. If a $1 million home rises 5%, that increase applies to the whole $1 million, not just your $200,000 down payment, which can lift the return on your initial capital. But leverage always has two sides. It looks excellent when values rise, and when values fall the loss also lands on the larger asset.

The cost of ownership is not only the mortgage either. There is property tax, maintenance, condo fees if it is a condo, a roof that can fail and a heating and cooling system that may need replacing. So do not compare rent against a mortgage payment. Compare rent against the full cost of ownership. In some parts of Toronto and the GTA as of August 2026, the monthly cost of owning a condo could run $1,000 or even $2,000 above the rent on a similar unit. In that situation the question to ask yourself is whether you can genuinely afford that difference. If you have a reasonable rent and you truly invest the gap, renting can be an entirely rational decision.

Decide on Your Time Horizon, Then Plan for What Comes After

If you find a home you can afford and you intend to live in it for fifteen to twenty years, buying can be the rational decision too. I will say it again: a home is not only an investment, it is the place you live in, and for many people owning a home free of a mortgage by retirement is a goal worth a great deal on its own. None of that means every dollar belongs in property. Investing properly in the market is genuinely valuable, and I have warned before that investing badly in housing can lose money. Buy a home above its real value and you will most likely lose financially.

The last piece is the one most people leave too late, and that is planning for what happens to your property and assets in the future. If you own a home, a rental property, a TFSA, an RRSP or other investments, it is better to know in advance what becomes of them. In practice, when one home passes to several children, each may want something different. One wants the cash, one wants to keep the property, one has no interest in being a landlord at all. Planning ahead can lower the tax and prevent a good deal of family conflict.

If I compress all of this into a few lines: use the accounts with tax advantages first, take the FHSA seriously if there is any chance you buy a first home, do not treat the TFSA as a simple savings account, and look at the RRSP through both today's income and tomorrow's likely tax rate. On buying against renting, do not look for an absolute answer. The right one depends on your finances, where you live, your lifestyle, your time horizon and the risk you can carry. The ideal case is not having to choose between a home and a portfolio at all, because if your finances allow it you can own a home and build a long term investment portfolio at the same time. If you want to work through your own numbers, fill out the form at the bottom of this page or book a free consultation with broker Moe Asgarian. Stay well and take care.