Written by: Elliot Funt, Real Estate Advisor, Engel & Völkers Vancouver
The number one question I get from people when they first start thinking about buying their first condo is pretty simple.
Why should I buy at all?
More specifically, why buy when, at least at face value, it doesn’t seem to match something like the S&P 500 or other investments?
It’s a fair question. And honestly, it’s one I’ve been torn on myself at times. Especially when I have clients who genuinely need a clear answer to figure out what’s actually right for them.
So I wanted to sit down and actually run this properly.
Before getting into it, a quick note on how this was put together.
I used ChatGPT quite a bit to build this out. A lot of prompts, reprompts, and back-and-forth to pressure test assumptions and try to get something that actually reflects reality rather than a clean, overly optimistic model.
That said, this isn’t new territory for me. I’ve built similar pro formas manually for years, well before ChatGPT. This just made it faster to iterate and sanity check different scenarios.
What We’re Actually Comparing
Most people aren’t deciding between buying an investment property or buying stocks.
They’re deciding between buying a place to live, or renting and investing the difference. That’s the comparison that actually matters.
The Scenarios
The starting point is simple. Buy a two-bed condo in 2026, live in it, and put 20 percent down with roughly a 5.25 percent mortgage.
From there, instead of assuming one outcome, I ran a few different paths that people realistically consider.
First, you live in the property for about ten years, then convert it to a rental and hold it for the full twenty-five-year period.
Second, a variation on that. You live in it for ten years, then sell and invest the equity instead of becoming a landlord.
Third, the simplest version. You just stay in the property long term and never turn it into a rental.
I also compared all of those to the main alternative, which is renting and investing consistently over time using TFSA and RRSP.
On top of that, I looked at a few variations that can change the outcome meaningfully, including using a 30-year mortgage instead of 25, and what happens if you try to replicate real estate-style leverage in stocks using margin.
None of this is meant to be precise. The goal is to see how the different decisions actually play out under reasonable assumptions.
To keep it grounded, I ran these scenarios across two typical entry points in this market: a Downtown Vancouver condo and a North Vancouver condo, since they tend to behave slightly differently in terms of pricing, rent, and long-term performance.
Rent You Avoid
Before getting into the numbers, there’s one piece that needs to be called out upfront because it drives a lot of the outcome.
The rent you don’t have to pay.
Most comparisons between real estate and stocks leave this out entirely. They focus on appreciation and returns, but ignore the fact that if you don’t buy, you’re still paying for housing.
If you ignore rent, real estate often looks worse than stocks.
If you include it, the gap narrows quickly, and in many cases, they end up pretty close.
That’s what’s happening in a lot of the scenarios below.
It’s not that real estate is dramatically outperforming. It’s that you’re converting a large ongoing expense into something that builds equity at the same time.
Downtown Vancouver Example
Start with a roughly $900,000 purchase. That’s about $180,000 down and a $720,000 mortgage. Payments land around $4,300 a month.
For the first ten years, the biggest thing happening isn’t appreciation. It’s the rent you’re not paying.
Using reasonable assumptions, rent starts around $3,200 and trends closer to $3,800 over time. Over ten years, that’s roughly $450,000 to $460,000 avoided.
Ownership costs, including strata, taxes, maintenance, and personal insurance, come in around $1,200 a month. That’s roughly $145,000 over the same period.
So just from living there, you’re ahead by about $300,000.
At the same time, you’re building equity. With about 3.5 percent annual growth, the property moves to roughly $1.27 million. That’s around $370,000 in tax-free appreciation, plus about $220,000 in mortgage paydown.
By year ten, you’re sitting on roughly $770,000 in equity. That’s really the engine of the whole outcome.
After Year 10
Once it becomes a rental, the dynamic changes.
Rent increases, but not enough to fully offset the cost of ownership. In most cases, you’re negative early and only gradually improve over time. Over fifteen years, it’s reasonable to expect something around $200,000 in total negative cash flow.
Assuming the same growth rate, the property ends up around $2.05 million.
After factoring in ownership costs, insurance, selling costs, and that cash flow drag, the total economic outcome lands around $1.6 million.
On the original $180,000, that works out to roughly 9.2 to 9.4 percent annually.
North Vancouver Example
The structure is the same, with slightly stronger numbers.
A $1 million purchase with $200,000 down results in a bit more rent avoided over the first ten years, closer to $470,000. Costs are also slightly higher, around $155,000.
Net benefit from living there lands in the low $300,000 range.
With slightly stronger appreciation, you’re around $1.45 million after ten years and about $890,000 in equity.
The rental phase behaves similarly, with roughly $220,000 in total negative cash flow.
By year twenty-five, value is around $2.4 million, and the final outcome lands in the $1.7 to $1.75 million range.
That puts returns closer to 9.5 to 9.7 percent annually.
Comparing That to the S&P 500
If you take the same $180,000 and invest it instead, assuming about a 9 percent long-term return, you end up in the $1.5 to $1.6 million range.
At face value, the S&P is extremely competitive.
Taxes and How People Actually Invest
This is where things tighten up.
Most people aren’t investing in taxable accounts. They’re using TFSAs and RRSPs.
Inside a TFSA, S&P 500 returns are effectively tax-free aside from a small withholding tax on dividends, putting real returns in the high eights to around nine percent.
Real estate has its own advantages. The principal residence portion is tax-free, but once it becomes a rental, income is taxable and future gains aren’t fully exempt.
Again, very close.
Looking Back: 2001 to 2026
For the historical comparison, I used benchmark condo pricing rather than trying to isolate a specific one-bed or two-bed unit.
The reason is pretty simple. Back in the early 2000s, the real estate board data was not broken out as cleanly by unit type the way it is now. You didn’t have the same consistent separation between one-bed, two-bed, and other condo categories that buyers and agents are used to seeing today.
So for the 2001 starting point, benchmark pricing is the most consistent way to compare across time, even though it blends product types a bit more than I normally would prefer.
A benchmark condo around 2001 was roughly $160,000 and is now around $770,000.
That 2001 to 2026 run still looks very strong in hindsight. But it was helped by lower entry prices, falling rates for nearly two decades, and better rental economics.
Even after all costs, returns in that period were closer to 11.5 to 12.5 percent annually.
Today is different. Higher prices, higher starting rates, and weaker yield mean you’re relying much more on appreciation.
25-Year vs 30-Year Mortgages
All of the above assumes a 25-year amortization, but more buyers today are looking at 30-year mortgages to make the numbers work.
On a $900,000 purchase, that’s roughly the difference between about $4,300 and $3,950 a month.
That helps with cash flow, especially if you plan to rent later. But it comes with higher total interest over time.
Where it gets interesting is what you do with the difference.
If that extra few hundred dollars a month is consistently invested over a long period, it can grow into a meaningful amount. In theory, that can offset the higher interest cost.
In practice, it only works if you actually invest it consistently. For most people, the 25-year mortgage remains the more efficient path, while the 30-year is more about flexibility.
What About Using Margin to Invest Instead?
One of the big advantages real estate has is leverage.
You put down $180,000 and control a $900,000 asset. That’s a large part of why the returns hold up.
You can replicate that with stocks using margin. Borrow against your portfolio, increase exposure, and amplify returns.
On paper, that can push stock returns into the same range as leveraged real estate.
But the risk is very different.
Real estate debt is long-term and not marked to market daily. You can usually ride through downturns.
Margin portfolios are marked to market constantly. If values drop, you can be forced to sell at the worst possible time.
So while the math can look similar, the experience is not.
What About Selling After 10 Years?
At year ten, you might have around $770,000 in equity. After selling costs, closer to $725,000.
If that gets invested for the next fifteen years at reasonable returns, you’re in the range of $2.2 to $2.6 million.
In many cases, that outperforms holding as a rental.
What If You Just Stay for 25 Years?
This is the simplest version.
No tenants, no rental tax, just long-term ownership and avoided rent.
When you include the full rent avoided over twenty-five years, plus appreciation and mortgage paydown, this ends up being one of the stronger outcomes.
Not flashy, but very efficient.
The Real Alternative: Rent and Invest Properly
If instead you rent and invest consistently, the outcome can still be strong.
Invest the initial capital, add annual contributions, and use TFSA and RRSP properly, and you can end up in the $2.8 to $3 million range.
Different path, similar result.
My Take
If I had to simplify everything above into one investment decision, it would be this.
I’d still buy.
I say this not because I’m a Realtor®. Particularly, if you’ve known me for a while, you may know that this has not always been my position. I’ve often advocated for the flexibility of renting. Especially between 2023 and 2025, when it was clear that the market may go down.
Not because real estate clearly beats the S&P 500 today. It doesn’t. And not because the numbers are overwhelmingly in its favour. In most of the scenarios above, they’re actually pretty close.
But buying a place to live still does a few things very well. It forces savings, gives you access to leverage in a relatively controlled way, and removes a major expense you’d otherwise be paying anyway.
Where I think people get it wrong is trying to map out the entire 20 to 25-year plan upfront.
You don’t need to decide today whether this becomes a long-term rental, a two-property strategy, or something you sell in ten years. That’s a decision you can make later, once you actually have equity, better data, and a clearer view of where things are going.
If anything, the right approach today is in the flexibility of a purchase. Buy something that works as a home first, but could function as a rental if needed. Don’t overextend. Give yourself options.
Then reassess in seven to ten years and make a decision based on what the numbers actually look like at that point, not what you’re guessing today.
That’s probably the most practical way to approach real estate right now.
Assumptions and References
For anyone who wants to sanity check the numbers, here’s where the key assumptions are coming from.
Benchmark pricing is based on data from Greater Vancouver REALTORS®:
https://www.gvrealtors.ca/market-watch/monthly-market-report.html
You can also pull historical HPI benchmark data here:
https://www.gvrealtors.ca/market-watch/home-price-index.html
Rental estimates reflect a mix of CMHC data and current listings:
CMHC Rental Market Report:
https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/rental-market-report
Zumper (Vancouver rent trends):
https://www.zumper.com/rent-research/vancouver-bc
Rentals.ca market reports:
https://rentals.ca/national-rent-report
Mortgage rates reflect current lender ranges influenced by Bank of Canada policy and major banks:
Bank of Canada (policy rate):
https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
RBC mortgage rates:
https://www.rbcroyalbank.com/mortgages/mortgage-rates.html
TD mortgage rates:
https://www.td.com/ca/en/personal-banking/products/mortgages/mortgage-rates
Equity return assumptions are based on long-term performance of the S&P 500:
S&P Dow Jones Indices (official data):
https://www.spglobal.com/spdji/en/indices/equity/sp-500/
Historical return reference (summary):
https://www.officialdata.org/us/stocks/s-p-500/
All numbers in this post are approximate and meant to illustrate how the pieces interact, not predict exact outcomes. Different properties, interest rates, and rent levels will shift results.
Contact me to get your search started today at Elliot@Funt.ca or (778) 991 - 3868 (text/phone).
Elliot Funt - Real Estate Advisor with Engel & Völkers Vancouver
