B8 G THE GLOBE AND MAIL | F R I DAY , S E P T E M B E R 5 , 2 0 2 5 GLOBE INVESTOR | REPORT ON BUSINESS T here’s a common belief that for the last 20 years renting a home in Canada has been a financial mistake. That belief is wrong – or at least requires a more nuanced inter- pretation. To prove this, we looked at long-term financial outcomes for renters and owners based on apartments in 12 Canadian cities in the two decades ending De- cember, 2024. Our results chal- lenge the view that renting has hurt Canadians’ finances. It’s well known that the wealth of renters trails owners’ wealth by a wide margin. The problem with renter versus owner net worth data is that renter house- holds tend to be younger and lower income. The fact that they are renters does not fully explain why their wealth is lower. Own- ing a home would not increase their age or income. To sidestep these confounding factors, our analysis holds in- come constant and compares the hypothetical wealth outcomes of a renter and owner who made the decision to rent or buy in Ja- nuary, 2005. From there, using re- al Canadian data for home prices, rents, property taxes and infla- tion, we calculated the net worth of the renter and owner in De- cember, 2024. In our model, a hypothetical renter has saved up enough for a down payment and closing costs to buy an apartment. If they keep renting, they will invest their sav- ings in a diversified portfolio of stocks. If they buy a home, they will finance their purchase with a 20-per-cent down payment on a five-year fixed mortgage with a 25-year amortization. The model holds available cash flow constant at the owner’s cash flow needs including prop- erty taxes, maintenance costs, in- surance and their mortgage pay- ment. The renter has the same avail- able cash flow as the owner but doesn’t necessarily spend it all on rent. Any monthly difference be- tween the owner’s and renter’s cash flow needs is added to the renter’s diversified stock portfo- lio if it’s positive and withdrawn if it’s negative. This assumption is critically important. If you’re going to rent and spend instead of rent and save, you’re likely better off owning a home. But as the results of this analysis demonstrate, a disci- plined renter has at least an equal opportunity to accumulate wealth if they are saving diligent- ly and investing in a low-cost portfolio of stocks. After running the model through the full 20 years of his- torical data, we find that in seven of the 12 cities – including Toron- to – renters accumulated more wealth than owners. The reason is simple: Cana- dian real estate returns were mixed across cities, while diversi- fied stock market investments – an alternative for building wealth – increased in value for renters regardless of the city they lived in. To put some numbers to it, the average 20-year annualized price return for owners for the 12 cities in our sample was 5.11 per cent. Kitchener-Waterloo had the highest return with an annual- ized price return of 6.99 per cent while Edmonton was the lowest at 3.08 per cent. To contrast, the renter’s stock market portfolio in the model returned an annual- ized 8.35 per cent, net of estimat- ed fees. These returns are not a great comparison because renters do also need to pay rent. Rent in the model increases each year based on the historical rent increases in each city. On average, the annual rent increases over this period were 6.24 per cent per year. We find that owning tends to look better in cities with the highest rate of rent increases. This speaks to the hedging bene- fit of owning – it can protect you from getting priced out of a spe- cific home. We measure the final 20-year outcome as the ratio of renter to owner wealth. A ratio above one indicates that renters came out ahead while below one indicates that owners came out ahead. Taking an average of the results across all 12 cities, renters and owners are roughly even with a very slight advantage for owners. While these baseline results are encouraging for renters, changing the assumptions can make a big difference. The renter’s portfolio in the model consists of 30-per-cent Canadian equity and 70-per-cent global equity index funds with an annual fee of 0.25 per cent, simi- lar to VEQT. A more conservative portfolio would make renting look worse. The portfolio is not taxed, since the renter is using FHSA, RRSP and TFSA accounts (as they became available throughout the sample period). Using taxable in- vestments would make owning increasingly attractive at increas- ing personal income tax rates. Higher investment fees and a failure to save the cash flow cost difference between renting and owning would similarly reduce the renter’s wealth accumula- tion, putting them at a financial disadvantage to owners. The sensitivity of the results to those assumptions, and the fact that many Canadians have low fi- nancial literacy and invest in high-fee actively managed funds, suggests home ownership may make sense for a lot of people. However, as this analysis dem- onstrates, a disciplined renter could have matched the wealth of a homeowner in many cities across Canada for the period 2005-2024. For the right person, renting has not been a mistake. A more detailed description of the model, data sources and re- sults is available in our new pa- per. For some, renting was not a financial mistake An analysis finds that renters and owners were on fairly equal ground, provided the renters were disciplined with their money BENJAMIN FELIX OPINION Chief investment officer and a portfolio manager at PWL Capital Main results: renting vs. owning Toronto 5.74% 84.31% 6.29% 1.05 Montreal 4.91% 71.11% 5.03% 1.48 Vancouver 6.45% 91.43% 8.18% 0.71 Calgary 4.86% 110.14% 7.07% 0.37 Edmonton 3.08% 112.16% 5.56% 0.39 Ottawa 3.47% 75.03% 5.45% 1.97 Winnipeg 3.83% 71.18% 6.38% 2.93 Quebec City 4.55% 88.67% 4.46% 1.14 Hamilton 6.19% 74.99% 6.29% 1.12 Kitchener- Waterloo 6.99% 87.65% 5.83% 0.71 Victoria 6.01% 87.47% 7.60% 0.85 Halifax 5.20% 77.84% 6.70% 1.26 Average* 5.11% 86.00% 6.24% 0.99 CITY ANNUALIZED APARTMENT PRICE RETURN (2005-2024) AVG. RENT /OWNER CASH NEEDS ANNUALIZED RENT GROWTH (2005-2024) RENTER /OWNER NET WORTH RATIO Renter/Owner net worth ratio is a geometric average THE GLOBE AND MAIL, SOURCE: PWL CAPITAL Five-year mortgage terms have offered some of the lowest fixed rates for much of 2025, but that is starting to change. Ron Butler, founder of Butler Mortgage in Toronto, said many lenders are now offering promotional rates on three-year fixed terms at around 3.6 per cent. That compares to some of the cheapest five-year fixed rates being in the low 4-per-cent range. Mr. Butler said the drop in three-year fixed terms is a result of the three-year Canada bond yield moving lower in recent weeks, while the Canada five-year bond has stayed relatively level. Daniel Vyner, a mortgage broker based in Toronto, said the three-year bond yield has dropped because markets still expect the Bank of Canada to cut rates in the near future. By contrast, five-year rates carry more inflation uncertainty, he said. Meanwhile, markets are anticipating much higher chances of an interest- rate cut from the Bank of Canada this month. Data from LSEG shows that markets have priced in a 67-per-cent chance of a 25-basis-point rate cut when the central bank convenes on Sept. 17. (There are 100 basis points in a single percentage point.) Odds of a rate cut shot up following gross domestic product data that was released last week and showed that the economy contracted much more than expected in the second quarter of this year. Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of to- day’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates. Ratehub.ca is a mortgage-rate comparison marketplace and mortgage bro- kerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products. Rates shown are the lowest available for each term/type and category (in- sured versus uninsured) as of market close on Sept. 4. GLOBE STAFF The best fixed and variable mortgage rates for the week Mortgage rates 1-year fixed 4.79 Ratehub.ca 4.79 Ratehub.ca 2-year fixed 4.24 True Nth Mortg. 4.34 Ratehub.ca 3-year fixed 3.69 Ratehub.ca 3.99 Ratehub.ca 4-year fixed 4.29 Ratehub.ca 4.49 Nat Bk & CIBC 5-year fixed 4.04 Ratehub.ca 4.14 Ratehub.ca 10-year fixed 5.34 TD 5.39 First Nat & TD 5-year variable 3.95 Ratehub.ca 4.40 Ratehub.ca HELOC NA NA 5.45 Ratehub.ca INSURED PROVIDER UNINSURED PROVIDER *Not available in Nova Scotia THE GLOBE AND MAIL, SOURCE: RATEHUB.CA; DATA AS OF SEPT. 4. [ MORTGAGE RATES ] W orries over inflation, de- teriorating U.S. fiscal health, Federal Reserve independence and geopolitical instability are raising questions about the stability of long-term Treasuries, traditionally the world’s safest asset. In response, many central banks are turning back to that “barbarous relic,” gold. The fortunes of gold and gov- ernment bonds have diverged sharply this year, a split highlight- ed this week as the price of bullion struck a new high and many long- dated bond yields hit levels not seen in years or, in some cases, ev- er. U.S. Treasuries haven’t sold off nearly as sharply as European or Japanese bonds, largely because U.S. debt still enjoys solid under- lying demand from central banks and other official institutions ma- naging foreign exchange reserves. But Treasuries have essentially been “treading water” in global re- serve portfolios in recent years, while central banks’ gold hold- ings have mushroomed, thanks to accelerating demand and soaring prices. Gold has recently surpassed the euro to become the second- largest global reserve asset after the U.S. dollar and, for the first time since 1996, gold represents a bigger share of central banks’ re- serves than Treasuries. Central banks now hold 36,000 tons of gold, according to a Eu- ropean Central Bank study, hav- ing hoovered up huge volumes since the post-pandemic inflation spike and Russia’s invasion of Uk- raine in 2022. They have increased their holdings by more than 1,000 metric tons in each of the last three years, a record pace and double the average annual pur- chases in the preceding decade. With the price of gold currently above US$3,500 an ounce – up a whopping 35 per cent so far this year – central banks’ gold hold- ings are now worth around US$4.5-trillion. That’s significant- ly more than their US$3.5 -trillion stash of Treasuries. Moreover, Treasuries’ share of total reserves has been shrinking in recent years. It is now only 23 per cent, by some measures, down from previ- ous peaks of more than 30 per cent in the 2010s, and below gold’s current 27-per-cent share. The last time gold accounted for a greater share of global re- serves than Treasuries was 1996. That date is significant. Many Eu- ropean countries sold gold ag- gressively in the late 1990s ahead of the launch of the euro. Surpris- ingly, the biggest seller was Bri- tain, which wasn’t even joining the single currency union. Gold slumped to around US$250 an ounce in August, 1999, down 40 per cent from early 1996. This prompted central banks to adopt the “Washington Agree- ment” that September to effec- tively cap their sales. In broad terms, the late 1990s was not a gold-friendly time. It was a period of solid growth, low and stable inflation, subdued macro volatility and the rarest of rare occurrences – a U.S. budget surplus. Nearly three decades on, the global macro environment is very different, one far more con- ducive to gold. Treasuries, in rela- tive terms, are struggling. Tavi Costa, macro strategist at Crescat Capital, says there are clear parallels between what we’re seeing today and the 1970s when monetary instability, infla- tion and geopolitical shifts made gold a key strategic reserve asset for central banks. The fact that foreign central banks now hold more gold than U.S. Treasuries is a “significant milestone” that signals a deeper, longer-term structural change in reserve management, Mr. Costa argues. “What we are witnessing may well represent the early stages of a major realignment in global reserve composition.” Could gold recapture the eye- watering 75-per-cent share of cen- tral banks’ reserve assets it held in the late 1970s and early 1980s? That’s unlikely and would proba- bly require a prolonged economic crisis and years of double-digit in- flation. But what will stop the yellow metal’s footprint from expand- ing? That would probably require inflation pressures, geopolitical risk and economic uncertainty to cool significantly. From where we sit now, none of that seems likely in the near term, meaning reserve managers will continue to load up on gold. You wouldn’t bet against it. REUTERS Gold’s rise in central bank reserves appears unstoppable JAMIE McGEEVER ORLANDO, FLORIDA OPINION With the price of gold currently above US$3,500 an ounce – up a whopping 35 per cent so far this year – central banks’ gold holdings are now worth around US$4.5-trillion.