Edmonton Homeownership Delivers Financial Edge Over Renting, According to New Analysis
A comprehensive new study from national real estate firm Zoocasa has revealed that homeowners in Edmonton are achieving superior financial outcomes compared to renters in the city. The research, which examined 28 Canadian housing markets, demonstrates that Edmonton's relatively affordable real estate landscape creates favorable conditions for property ownership.
The Monthly Cost Comparison
According to the Zoocasa analysis, the average monthly mortgage payment for a typical Edmonton home priced at $408,600 comes to approximately $1,700. This calculation assumes a five-year fixed mortgage rate of 3.89 percent. Meanwhile, the combined average rent for one- and two-bedroom units in the city stands at $1,615 monthly.
This translates to a mere $85 monthly premium for homeownership versus renting in Edmonton, positioning the city as the third most affordable market in Canada when comparing ownership costs to rental expenses.
Beyond the Monthly Numbers: The Equity Advantage
Local real estate experts emphasize that the financial benefits of homeownership extend well beyond simple monthly payment comparisons. Don Patterson, managing partner and broker at Re/Max Excellence in Edmonton, notes that while property taxes add to ownership costs, the Zoocasa study didn't account for the significant advantage of building equity through mortgage principal payments.
"Normally in a rent versus buy analysis, you need to consider total costs," Patterson explains. "The study didn't include the ongoing benefit of paying down principal with each mortgage payment. This builds equity, and over time, owners come out ahead, particularly if property values increase."
Patterson estimates that over a five-year period, the average Edmonton homeowner could see their equity increase by approximately $92,000. This projection includes $27,000 in mortgage principal pay-down and $65,000 in potential property value appreciation, assuming an average annual increase of three percent.
Additional Benefits of Homeownership
John Carter, broker and owner of Re/Max River City, highlights several intangible advantages that accompany property ownership. "Homeowners gain control and pride that comes with ownership," Carter observes. "Additionally, many single-family detached homes offer income opportunities through rental suites, which can help accelerate mortgage payments."
Another significant benefit is the principal residence exemption, which allows homeowners to avoid paying taxes on capital gains when they sell their primary residence. Patterson emphasizes this point, noting that the equity growth homeowners experience is completely tax-free under current Canadian tax regulations.
Market Realities for First-Time Buyers
Despite the clear financial advantages, Edmonton's housing market presents challenges for first-time buyers. Carter notes that the most active segment of Edmonton's real estate market involves single-family detached homes priced between $350,000 and $500,000.
"That segment is very tight for inventory and remains a seller's market, depending on the area," Carter explains. "As a result, more first-time buyers are turning to row houses or semi-detached homes, which offer greater affordability and face less intense demand and price pressures."
The study's findings suggest that while the initial monthly costs of homeownership in Edmonton slightly exceed rental expenses, the long-term financial benefits—including equity accumulation, potential property appreciation, and tax advantages—create a compelling case for property ownership in Alberta's capital city.
