With the National moving day quickly approaching (July 1), we decided to take a look at what the average rental costs were like across the city! Our information was provided by Centris and Zipplex to provide accurate data to our readers!
Interest rates may be higher than the average over the last 5-10 years, which makes it a very tough decision for first time home buyers to purchase in today’s market, but the cost of renting on the Island of Montreal remains one of the highest in comparison to similar cities around Canada and the US! So what should young buyers do? Rent until they can save up for a down payment, or purchase with the help of their parents or loved ones? Let’s take a look at a list of the average monthly rent for a two bedroom apartment in some of the cities most popular boroughs:
Plateau Mont-Royal: $2,028 [Avg 870ft2]
Rosemont/La Petit-Patrie: $1,822 [Avg 870ft2]
Villeray: $1,548 [Avg 835ft2]
HoMa: $1,513 [Avg 863ft2]
Town of Mount Royal: $2,018 [Avg 1,000ft2]
Ville Marie: $2,218 [Avg 940ft2]
Le Sud Ouest: $2,089 [Avg 882 ft2]
Although these are some of the city’s most popular neighbourhoods to live in due to the proximity to everything a tenant would need such as public transportation, universities, grocery stores, restaurants, coffee shops and all other services and amenities, they are extremely expensive for a young couple looking to move out of their parents’ place! We do understand that there is a direct correlation between the cost of ownership and the cost of rent… but how can someone afford to pay $1800/Month to live in the city when they may have just finished their studies. Let’s take a look at other boroughs to see if costs remain similar
Rivière-Des-Prairies/PAT: $1,336 [Avg 900ft2]
Anjou: $1,491 [Avg 863ft2]
Saint Leonard: $1,462 [Avg 940ft2]
Ahuntsic/Cartierville: $1,597 [Avg 848ft2]
Verdun: $1,602 [Avg 846ft2]
It seems as though, no matter how far out we trek into the suburbs, the city still remains relatively expensive with the extremities being the only place we see a cool down on costs. So if the average price of a condominium in Montreal is roughly $500,000, are you better off renting, or buying a property in the city? If we calculate quickly, the cost of ownership with a 20% down payment and an average 5% interest rate today is about $2,134/Month + taxes, and condo fees you are easily looking at an expense of roughly $2,800/Month+-
Now here is what a lot of people forget about… When you are comparing the cost of ownership vs. the cost of rent and what makes more sense, you must remember that when you are renting a property.. The money you spend every month does not build a fund, a piggy bank, or any type of savings for you. So although it does pay for your shelter… It definitely does not build up your future. If we look at the average cost of owning a condo and remove from the monthly expenses the amount of principle you are paying toward your mortgage (which is basically a piggy bank // savings account if you will) the actual “non refundable” cost of ownership drops by 496.33$ per month to $2,303.67/Month.
We say this because logically, the amount of money you are paying back to your principal amount on a monthly basis goes back in your pocket one day when you sell the property. Now when we compare the cost of renting a two bedroom apartment in Homa at $1,513/Month, vs. owning a property in HoMa at $2,303 per month, the total difference is only $790/Month between home ownership and being a tenant, and we still haven’t looked at the appreciation of your asset yet….
If we take into account an average appreciation of your property per year, which in Montreal looks like roughly 3.75% over the last ten years, that means your condo value also went up roughly $18,750 in the same year that you purchased it, which accounts for $1,562.50 per month of increase in value … So it would technically cost you almost eigh hundred dollars more per month to rent than it would to own a unit in the long term…
So what is your choice? Would you rent, or buy in today’s market?
