Buy vs rent when you may relocate or work remotely

Why mobility changes the maths

Buying carries large one-time costs at both ends: closing costs when you buy and selling costs when you leave. Those costs are spread over the time you stay. If you stay a short time, each year carries a heavy share.

Remote work can cut both ways. It can free you to choose where to live, which may mean buying in a lower-cost area, or it can make you more mobile, which may make renting more appealing. The right reading depends on how settled your work arrangement actually is.

If you are not sure how long you will stay, treat the horizon as a range and look at the whole range.

What a short stay costs a buyer

Suppose a $600,000 home with 20% down ($120,000), a 4.5% mortgage rate and a 25-year amortization, compared with renting at $2,300 a month. Other assumptions: 3.5% yearly appreciation, 3% rent growth and a 5.5% return on the renter's investments. These are planning inputs, not market data.

Selling costs include commission, GST on the commission, legal fees and, if you leave before the term ends, a mortgage penalty. The calculator assumes three months of interest. Together with the closing costs you paid to buy, these are what a short stay fails to recover.

What repeated moves cost a renter

Renting is not free of cost when you move often. Assume each move costs $3,000, including movers, deposits, overlap and set-up. If a renter moves every two years, those costs add up to about $13,262 over 10 years in the calculator. Every three years it is about $10,147, and every four years about $6,762.

The comparison above is for a buyer who stays in one home for the full 10 years. In that case the buyer's lead is $58,974 if the renter moves every two years, $54,229 if every three, and $50,038 if every four. The figure without any renter moves is $41,686.

This is the point to be careful about. The buyer's lead only holds if the buyer does not also move. A buyer who relocates every three years pays selling and buying costs each time, and the lead reverses.

Staggered plans: rent first, then decide

A common approach for a mobile worker is to rent in a new city for the first year or so, learn the area and the job, and then decide. The cost is that you may face a higher price or rate later, and that you are paying rent in the meantime. The benefit is that you avoid committing to a place you might leave.

Another approach is to buy and rent out the home if you move. Different rules apply to rental use, including for tax and for how the home is treated when sold, and it also depends on your mortgage terms and any local rules. If you plan this, get advice before relying on it.

• Ask whether your mortgage is portable and what penalties apply if you break it.
• Check whether renting out the home is allowed by your lender, insurer and local rules.
• Keep a buffer so you can carry the home if it sits empty.

Remote work and choosing where to live

If you can work from almost anywhere, compare cities rather than just homes. Prices, rents and ownership costs differ across Canada, so the buy vs rent answer differs too. Check the city and province pages for local context, such as Calgary or Halifax, and run your own inputs.

Remember that remote work arrangements can change. An employer's policy may shift, and a move that seemed unnecessary can become necessary. Treat a flexible job as a reason to be cautious about a long commitment, not as proof that you will stay put.

How to decide when the horizon is uncertain

Run the calculator at several horizons, such as three, five and eight years, and see where the result flips. If buying wins at a three-year stay, it is robust. If it only wins beyond eight years, you need to be confident about staying that long.

Weigh the non-financial value of flexibility too. Being able to take a job offer without selling a home has value that the numbers do not capture. See time horizon and flexibility for more.