Spring 2026 Housing Market: Should You Buy or Keep Renting?
Every spring, the same question surfaces: is this the year to buy? With the Bank of Canada continuing to cut rates and spring listings picking up, 2026 feels like it could be the window. But "rates are lower" isn't a financial plan. Let's look at the actual numbers.
Where rates stand in spring 2026
The Bank of Canada has been on a rate-cutting path since mid-2024, bringing the overnight rate down significantly from its 2023 peak. That's pushed variable mortgage rates lower and made fixed rates more competitive as bond yields ease.
But lower rates don't automatically mean buying is the right move. Lower rates also mean higher prices — as borrowing gets cheaper, more buyers enter the market and bid prices up. The monthly payment might be similar to what it was at higher rates with lower prices.
Check current rates on our mortgage guide.
The real cost of buying (it's not just the mortgage)
When people compare their rent to a potential mortgage payment, they almost always undercount the cost of ownership. Here's what buying actually costs beyond the mortgage principal and interest:
- Property tax: 0.5%–1.5% of home value annually, depending on your municipality
- Home insurance: $1,200–$2,500 per year
- Maintenance: Budget 1%–1.5% of home value per year (roof, furnace, plumbing — it adds up)
- Closing costs: Land transfer tax, legal fees, inspection, appraisal — typically 1.5%–4% of purchase price
- CMHC insurance: If your down payment is under 20%, you'll pay 2.8%–4.0% of the mortgage amount as a premium
- Opportunity cost: Your down payment could be invested. At 7% annual returns, $100,000 invested grows to $197,000 in 10 years
The 5% rule: a quick rent vs. buy test
Financial planner Ben Felix popularized this simple framework: take the value of the home you'd buy and multiply by 5%. Divide by 12. That's your monthly "breakeven" cost of owning.
The 5% accounts for approximately 1% property tax, 1% maintenance, and 3% cost of capital (the opportunity cost of your equity). If your rent is less than this number, you may be better off renting and investing the difference.
Example: A $600,000 home costs roughly $600,000 x 5% = $30,000 per year, or $2,500 per month in unrecoverable ownership costs. If you can rent a comparable place for $2,000 and invest the $500 difference, renting wins financially — at least in the short to medium term.
This is a simplified model, and it doesn't account for principal repayment (which builds equity) or potential home price appreciation. But it's a useful starting point for the conversation.
The FHSA + HBP combo: up to $75,000 tax-advantaged
If you are going to buy, Canada offers two powerful programs that first-time buyers should absolutely use:
First Home Savings Account (FHSA)
Contribute up to $8,000 per year ($40,000 lifetime). You get a tax deduction on contributions (like an RRSP) and withdrawals for a home purchase are completely tax-free (like a TFSA). It's the best of both worlds.
If you opened an FHSA in 2023, you could have up to $32,000 contributed by now — plus investment growth — all available tax-free for your down payment.
RRSP Home Buyers' Plan (HBP)
Withdraw up to $35,000 from your RRSP tax-free for a first home purchase. You have 15 years to repay it starting the second year after withdrawal.
Combined strategy
FHSA ($40,000) + HBP ($35,000) = up to $75,000 in tax-advantaged down payment funds. For a couple, that's potentially $150,000. On a $500,000 home, that's a 30% down payment — no CMHC insurance required.
Even if you're not ready to buy today, opening an FHSA now and contributing annually builds your down payment with significant tax advantages. There's almost no downside to starting early.
When renting and investing wins
Renting gets a bad reputation in Canada ("throwing money away"), but that's not always accurate. Renting wins when:
- You might move in under 5 years. Closing costs, land transfer tax, and real estate commissions eat into your equity. You generally need 5+ years of ownership to break even on transaction costs alone.
- Your local rent-to-price ratio favours renters. In Toronto and Vancouver especially, renting is often significantly cheaper than owning the equivalent property. The savings invested in equities can outpace home appreciation.
- You'd be house-poor. If buying means stretching to 40%+ of your gross income on housing, you're sacrificing retirement savings, emergency funds, and quality of life. A smaller rent payment that lets you invest 15-20% of income may build more wealth long-term.
- You value flexibility. Job opportunities, lifestyle changes, and family situations shift. Owning a home is a leveraged, illiquid, concentrated bet on one asset in one city. Renting keeps your options open.
A decision framework
Before deciding, answer these honestly:
- How long will you stay? If less than 5 years, renting almost certainly wins. If 10+, buying has a stronger case.
- Is your income stable? A mortgage is a fixed obligation. Variable income + variable rate mortgage is a stressful combination.
- Do you have 20% down? If not, CMHC insurance adds thousands. Consider waiting and saving in a HISA or FHSA until you hit 20%.
- What's your total housing cost? Run the real numbers — mortgage + tax + insurance + maintenance — not just the mortgage payment. Use our mortgage calculator.
- Would buying prevent you from investing? If all your cash goes to a down payment and all your income goes to housing costs, you may build home equity but miss years of market growth in your TFSA and RRSP.
Bottom line
There's no universally right answer. Buying is a lifestyle decision as much as a financial one. But the financial side matters — and the math doesn't always favour ownership, especially in Canada's most expensive markets.
If you're not ready to buy, that's not a failure. Renting and investing aggressively is a legitimate wealth-building strategy. If you are ready, use every advantage available: FHSA, HBP, and a solid understanding of what ownership actually costs. Either way, make the decision with numbers, not emotions.