Invest or Rent? What Parents Should Consider for University Housing
Many parents prioritize saving for their child’s post-secondary education. While tuition fees are a primary consideration, living costs are equally important when creating a financial plan for this exciting milestone. This is where real estate investment can be beneficial. In some university towns, purchasing a condo may be the more affordable solution than paying rent over several years.
To help parents explore these options, below you will find the total mortgage and the average monthly mortgage payments in Ontario university towns. This will help you see if it was more affordable to invest or rent.
The total mortgage and average monthly mortgage payments were calculated by assuming a 20% down payment, a 25-year amortization, and a 5-year fixed rate of 4.29%. Average condo apartment prices were sourced from CREA and local real estate boards, and all rental prices were sourced from Zumper.
Invest or Rent? What Parents Should Consider for University Housing
| City | Average Condo Apartment Price | 20% Downpayment | Average Rent | Average Monthly Mortgage Payment |
| Toronto | $748,330 | $149,666 | $2,599 | $3,244 |
| Mississauga | $631,810 | $126,362 | $2,607 | $2,739 |
| Guelph | $536,900* | $107,380 | $2,233 | $2,327 |
| Kitchener- Waterloo |
$494,897 | $98,979 | $2,100 | $2,145 |
| Peterborough | $464,342 | $92,868 | $1,949 | $2,013 |
| Ottawa | $450,372 | $90,074 | $2,261 | $1,952 |
| London | $445,460 | $89,092 | $1,959 | $1,931 |
| Kingston | $431,300* | $86,260 | $1,929 | $1,870 |
| Oshawa | $420,575 | $84,115 | $2,140 | $1,823 |
| Windsor- Essex |
$385,900* | $77,180 | $1,600 | $1,673 |
*Benchmark price. **Median price. The total mortgage and average monthly mortgage payments were calculated by assuming a 20% down payment, a 25-year amortization, and a 5-year fixed rate of 4.29%.
Narrow Margins: University Cities Where Renting and Buying are Almost Equal
For parents of university students, investing in real estate can be a strategic move, especially in cities where the cost difference between buying and renting is minimal. Cities like Kitchener-Waterloo and Peterborough offer unique opportunities. The difference between buying and renting in these locations is often less than $100 per month. This small gap allows parents to build equity while maintaining affordability, turning what might otherwise be rental expenses into a long-term investment.
City Real Estate: The Case for Buying in Canada’s Urban Centers
The average condo price in Toronto is $748,330, leading to a substantial monthly mortgage payment of $3,244—$645 more than the average rent. While this represents a higher cost of homeownership, it comes with significant benefits. With five publicly funded community colleges and six universities, Toronto’s robust rental market promises a steady demand for rental properties, positioning it as a lucrative long-term investment.
Furthermore, the current Toronto condo market offers a unique opportunity for potential investors. There’s a dramatic increase in inventory. The Toronto Regional Real Estate Board’s Q2 2024 market report states that listings surged 83.6% year-over-year. With more available properties paired with a current dip in sales, buyers now have greater leverage to negotiate favorable terms.
On the other hand, Mississauga offers another promising investment option with a smaller financial gap. With an average condo price of $631,810, the monthly mortgage payment is $2,739—just $132 more than the average rent. Similar to Toronto, Mississauga is also experiencing an influx of listings. There were 2,121 units on the market at the end of July, a substantial gain of 54.1% from July 2023. “Active listings haven’t been this high in July in a decade,” CREA reports.
Funding Your Investment: Where to Get a Downpayment
Opting for a 20% down payment can make mortgage payments more manageable in many Ontario university towns and cities. In 60% of these areas, owning a home is more affordable than renting, providing parents with a cost-effective solution that doubles as an investment.
When financing your investment, banks provide several mortgage options for rental properties, particularly if you leverage the equity from another mortgage, like your primary residence. Areas with many post-secondary institutions typically have strong and growing rental demand, which can reinforce the bank’s confidence in the investment. Consulting with mortgage brokers and financial advisors can provide valuable insights and help ensure your decisions align with your family’s future success.
Over the years, I’ve had a lot of parents who also considered buying an investment property for their university or college-bound children. It’s a great way for them to assist their kids while also making money on their investment. If you have children who are close to graduating from high school and moving out-of-town to attend post-secondary education, and like many other parents, would like to explore your investment options, give me a call today at 905-683-7800. I will be more than happy to answer any and all questions you may have for me.
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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