Is It Time To Jump Into the Housing Market Yet? – Millennial Revolution

The Wanderer retired from his engineering job at a major Silicon Valley semiconductor company at the age of 33. He now travels the world, seeking out knowledge from other wealthy people, so that he can teach people how to become Financially Independent themselves.

Ever since we had a kid, my friends and family were like “well, I guess you’re going to have buy a house now!” After all, they reasoned, we couldn’t possibly raise a kid in a one-bedroom apartment, right?

FIRECracker was determined to prove them wrong, and since room sharing with an infant is recommended for the entire first year of life to avoid SIDS, one bedroom was fine for at least the first year. And as Little Match Stick got older and we needed to sleep train, we slept in the living room on our sofa bed and gave up the bedroom. It felt slightly less comfortable than year 1, but still doable. Sure, we could’ve afforded to upgrade to a larger space, but we didn’t.

Was it pride? Maybe. Was it the need to prove the haters wrong? Possibly. Was it the fact that we were paying $1600 a month for a one-bedroom apartment in midtown Toronto? DEFINITELY.

I love many things about FIRECracker, but by far my favourite non-sex-related thing I love about her is her ability to find the best rental deals. When we were working, we were living on the top floor of a house in the Greektown neighborhood of Toronto for $800 a month. When we returned back to Canada due to the pandemic, we stayed in a series of AirBnbs that cost next to nothing. And when we settled into a place for a long term lease, it was for $1600 a month.

Each time, we (or rather, she) were taking advantage of price arbitrage opportunities that others couldn’t (or wouldn’t). The $800 a month rental in Greektown was so cheap because the unit didn’t have laundry, and so we needed to use a laundromat a block away. Coin laundry cost maybe $20 a month, so that seemed like a clear win to us, so we took it.

During the pandemic, borders closed, and tourism dropped to zero. That’s when AirBnb owners panicked and dropped their prices, to the point we were paying $30 a day for downtown condos nobody would touch.

And when COVID drove everyone to flee city centers everywhere towards farmland in the suburbs, that’s when FIRECracker pounced.

The point of all this is to stay, FIRECracker is really good at finding rentals.

That being said, now that Little Match Stick has turned from a squirmy blob into an energetic, destructive toddler, the one-bedroom apartment is starting to run out of space, so with a great deal of trepidation, we are now looking two expand our living space to a two bedroom apartment.

Let’s go through our thought process on whether it finally makes sense for us to buy or not.

So without further ado, let’s…MATH SHIT UP

Rent vs Buy

For the purposes of this comparison, we are going to be using a two-bedroom, 1 bathroom apartment with a unit size of 800 square feet.

Right now, according to Zumper, which is a rental listing site, the average rent for a 2 bedroom in Toronto of this size is $2395 a month.

So to figure out whether it makes sense to buy, we have to figure out how much of our portfolio we’d be willing to liquidate. Each $1 we spend out of our portfolio means we lose $0.04 of passive income, as per the 4% rule. So in order to justify losing that passive income, we’d have to be saving at least that amount in ongoing housing costs by buying an equivalent property.

At first glance, you might think that since by buying we’d be saving the rent, then the Housing Costs Saved would be simply the annual rent, like so.

HousingCostsSaved = Rent x 12

However, we know that when you own a property, there are new ongoing costs you have to pay that renters don’t. So we have to take that into account.

The biggest one is condo or strata fees. In order to make the comparison fair, we want to compare renting or owning a similarly sized property, so in this case, we’d be buying a condo.

Condo fees in Vancouver are on the more expensive side, with the median amount being $0.70 per square foot. We’re looking at comparing an 800 square foot unit, so this would amount to 800 x $0.7 = $560 per month. We need to subtract this from the HousingCostsSaved since this is a new amount we’d by paying as an owner.

HousingCostsSaved = Rent x 12 – CondoFees x 12

Then there’s maintenance. While building management is generally responsible for the maintenance of the common areas, you may still be hit with special assessments if the repair costs come in higher than expected. Plus, you are still responsible for damage that maintaining your unit. Real estate experts suggest budgeting 1% of the condo’s value, annually, to account for this. Again, this is something you wouldn’t have to worry about as a renter, so we have to account for that.

HousingCostsSaved = Rent x 12 – CondoFees x 12 – BuyPrice x 1%

We don’t actually know what the Buy Price is yet, so we’ll leave that as a variable that we’ll solve later.

The third thing we need to account for is property taxes. In Toronto, the current property tax rate as of 2025 is 0.75% of the property’s assessed value.

Again, this cost is a percentage of the purchase price, which we don’t know yet, so we’ll express it in terms of the variable “BuyPrice” and solve for it later.

HousingCostsSaved = Rent x 12 – CondoFees x 12 – BuyPrice x 1% – BuyPrice x 0.75%

These are the top 3 recurring costs associated with owning that renters don’t have to deal with, and while there are many more, like insurance, utilities, and real estate transaction costs, let’s see what effect these top 3 have on our purchase price to see if owning a condo even makes sense to look into.

If we sub in the numbers we know, this is what it looks like

HousingCostsSaved = $2395 x 12 – $560 x 12 – BuyPrice x 1% – BuyPrice x 0.75%

HousingCostsSaved = $28,740 – $6,720 – BuyPrice x 1% – BuyPrice x 0.75%

HousingCostsSaved = $22,020 – BuyPrice x 1.75%

Remember, in order for owning to make sense, the amount of passive income I’m giving up has to equal the housing costs saved. So to put this into a mathematical expression, that means.

BuyPrice x 4% = HousingCostsSaved

Let’s sub in that equation from earlier.

BuyPrice x 4% = $22,020 – BuyPrice x 1.75%

Cool. Now the only variable is BuyPrice. We can solve it.

So that means that for the equivalent condo to be cheap enough for me buy it, it has to sell for $382k or less.

Umm…that’s not likely. Even with the recent real estate correction that’s been happening in Toronto, condos are still not that cheap. According to the Toronto Real Estate Board’s Q3 2025 report, the average selling price of a 2BR condo was $650k. In order for condo prices to be low enough to entice me away from renting, they would need to fall by more than 40% from current levels.

So that’s a hard no.

This tells us a few things.

Toronto real estate is STILL overpriced compared to rent, even with the recent drop in the real estate market. Even though I can buy it without a mortgage, my money is still generating way more passive income in the stock market to make it worthwhile.

And second of all, owning a condo is the worst, most expensive way to own real estate. You get to plop down all this money to buy the place, yet you don’t even get that much control over your property. You have to ask the condo board’s permission to make any changes to your unit, you have no control over how well they fix stuff in the common areas, and if they screw up and do something that damages the property, they get to bill you for it in the form of special assessments! It costs you all the money, yet you get none of the control.

So even now, with more than enough money in our investment accounts to afford real estate in on of the most expensive cities in Canada, it STILL doesn’t make financial sense to buy. I would lose more than twice the passive income that money would be generating while invested than I would gain back in saved housing costs.

So, is it time for us to jump into the housing market? No, no, a thousand times no!

What do you think? Would you buy if you were us? Let us hear it in the comments below!

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