Is now the time to get into the real estate market? – Millennial Revolution

At 33, the drifter retired from his engineering job at a major semiconductor company in Silicon Valley. Now he travels the world seeking knowledge from other wealthy people so he can teach people how to become financially independent.

Ever since we had kids, my friends and family have been like “well, I guess you should buy a house now!” After all, they thought, there’s no way we could raise kids in a one-bedroom apartment, right?

FIRECracker is determined to prove them wrong, and since it’s recommended to share a room with your baby for their entire first year to avoid sudden infant death syndrome, one bedroom will do just fine, at least for the first year. As Little Stick grew up and needed sleep training, we slept on the sofa bed in the living room and gave up the bedroom. It feels slightly less comfortable than the first year, but still doable. Of course, we could have upgraded to a larger space, but we didn’t.

Is it pride? perhaps. Is it the need to prove the haters wrong? Maybe. Is it because we pay $1,600 a month for a one-bedroom apartment in downtown Toronto? really.

There are many things I like about FIRECracker, but by far my favorite non-sexual thing is her ability to find the best rental deals. While we were working, we lived on the top floor of a house in Toronto’s Greektown neighborhood for $800 a month. When we returned to Canada due to the pandemic, we stayed in a series of Airbnbs that were almost free. When we found a place to lease long-term, the rent was $1,600 a month.

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

During the pandemic, borders were closed and tourism dropped to zero. That’s when the AirBnb owners panicked and lowered their prices to the point where we were paying $30 a day for a downtown apartment that no one would touch.

When the coronavirus forced everyone to flee urban centers for suburban farmland, FIRECracker swooped in.

It’s all about staying, and FIRECracker is really good at finding rentals.

That being said, now that Little Matchstick has transformed from a squirmy ball 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 to expand our living space into a two-bedroom apartment in Vancouver.

Why Vancouver? That’s a discussion for another day, but for now, let’s go over our thought process and see if it ultimately made sense for us to buy.

Without further ado, let’s…the math is messed up

rent vs. buy

For comparison, we will use a two-bedroom, one-bathroom apartment with 800 square feet.

Currently, the average rent for a 2-bedroom of this size in Toronto is $2,395 per month, according to rental listing website Zumper.

So in order to figure out whether buying makes sense, we have to figure out how much of our portfolio we’re willing to liquidate. According to the 4% rule, every $1 we spend in our portfolio means we lose $0.04 in passive income. So to justify the loss of passive income, we would have to save at least this ongoing housing cost by purchasing an equivalent property.

At first glance, you might think that since we save on rent by buying, the savings in housing costs are just annual rent, like that.

Housing cost savings = rent x 12

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

The largest one is the condo or strata fee. To make the comparison fair we want to compare renting or owning properties of similar size, so in this case we will buy an apartment.

Condos in Vancouver are more expensive, with a median price of $0.70 per square foot. We are comparing an 800 sq. ft. unit, so this would equate to 800 x $0.70 = $560 per month. We need to subtract this amount from HousingCostsSaved because this is the new amount we pay as the owner.

Housing cost savings = rent x 12 – apartment fee x 12

Then there’s maintenance. While building managers are typically responsible for maintenance of common areas, you may still be hit with a special assessment if repairs cost more than expected. Plus, you’re still responsible for any damage caused by maintaining the equipment. Real estate experts recommend budgeting 1% of the apartment’s value each year to address this issue. Again, as a tenant you don’t have to worry about this, so we have to take this into consideration.

Housing cost savings = Rent x 12 – Apartment fee x 12 – Purchase price x 1%

We don’t actually know what the purchase price will be yet, so we’ll leave that as a variable to be solved later.

The third thing we need to consider 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 using the variable “BuyPrice” and solve for it later.

Housing cost savings = Rent x 12 – Apartment fee x 12 – Purchase price x 1% – Purchase price x 0.75%

These are the top 3 recurring costs associated with owning a property that renters don’t have to deal with, and while there are many others such as insurance, utilities, and real estate transaction costs, let’s look at how these top 3 affect our purchase price to see if owning a condo is worth looking into.

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

Housing cost savings = $2395 x 12 – $560 x 12 – Purchase price x 1% – Purchase price x 0.75%

Housing cost savings = $28,740 – $6,720 – Purchase price x 1% – Purchase price x 0.75%

Housing cost savings = $22,020 – Purchase price x 1.75%

Remember, for ownership to make sense, the passive income I give up must equal the housing cost savings. So, converting that into a mathematical expression, that’s it.

Purchase price x 4% = housing cost savings

Let’s plug in the previous equation.

Bid price x 4% = $22,020 – Bid price x 1.75%

Cool. The only variable now is BuyPrice. We can solve it.

So that means that for the equivalent apartment to be cheap enough for me to buy, it would have to sell for $382,000 or less.

Well…that’s unlikely. Despite Toronto’s recent real estate correction, condos are still not that affordable. According to the Toronto Real Estate Board’s third quarter 2025 report, the average sales price for a two-bedroom apartment is $650,000. In order for apartment prices to be low enough to entice me to stop renting, they would need to drop more than 40% from current levels.

So it’s difficult.

This tells us something.

Despite the recent housing market decline, Toronto real estate remains overpriced compared to rent. Even though I could buy it without a mortgage, my money would still generate more passive income on the stock market, making it a good value for money.

Secondly, owning a condo is the worst and most expensive way to own real estate. You can spend so much money on the place but you don’t even have much control over your property. You have to get permission from the condo board to make any changes to your unit, you have no control over how well they fix things in the common areas, if they mess up and do something that damages the property they will get a bill you In the form of a special assessment! It costs you all your money but you have no control over it.

So even now, we have enough money in our investment account to buy real estate in Canada’s most expensive city, but it still doesn’t make financial sense to buy. The passive income I would lose would be more than double the passive income I would have generated while investing, which is more than twice the income I would have gained from saving on housing costs.

So, is it time for us to get into the real estate market? No, no, a thousand times no!

What do you think? If you were us would you buy it? Let’s hear it in the comments below!

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